Mortgage Refinance Applications Up

Though much of the news in the mortgage market has been bleak as of late, with the mounting losses and foreclosures, and continuing fallout from the subprime-mortgage lending fiasco, the amount of application for new mortgage applications is on the rise as many try to refinance existing mortgages with lower rates or to get out of old mortgages to avoid the now-reset and much-higher adjustable rates.

The Mortgage Bankers Association said last week that the number of mortgage applications increased 48.1% when seasonally adjusted in the week that ended March 21 from the previous one. Applications for refinancing existing mortgages was up more than 82% from the week prior, while applications for new mortgages to buy homes was up more than 10%. Applications overall have increased more than 40% from last year. Read more

Real Estate Investments Drop

The number of residents buying homes isn’t the only statistic that has seen a sharp decline this year with the ongoing fallout of the credit crisis and subprime mortgage mess; the National Association of Realtors released a report last week that showed fewer people bought homes as investment in 2007. The number of houses bought solely for investment purposes last year dropped 18.1% from 2006, when the numbers were also steadily declining, off nearly 29% from the large numbers in 2005.

Many are saying that speculative buyers are the ones who have vanished from the real estate investment market, as those were the ones who some blame for the booming prices in real estate in recent years. Speculative buyers bought homes with the intent to sell them when their value increased to make a profit. But the continual increase in home prices couldn’t continue at its pace forever, and now many buyers of homes who were looking to sell their properties for a profit are finding the homes valued at less than what they paid for them, leaving them upside down. Read more

Foreclosure - The Other F Letter Word

Okay, so foreclosure’s not exactly a four-letter word, but it’s definitely the most dreaded 11-letter F-word for homeowners.  Foreclosures are at record highs and that doesn’t mean you have to be a part the statics.  There are 3 common reasons homes end in foreclosure and here is how to avoid letting your home become one.

1. You weren’t realistic and honest about your financial situation.  You were not completely honest or maybe you stretched the truth about your finances on your home loan application.

Solution:  It is important to view your financial situation honestly to succeed in the world of owning real estate.  Look at your budget and see if you can comfortably accommodate the monthly mortgage payment.  If it looks doubtful, wait a year, save your money, repair your credit history if necessary, and then try again.  Keep in mind that rates and payments can fluctuate depending on your loan type.  If you are already in the home, consider taking advantage of the recent Fed cuts and refinancing your current loan. Read more

Bank Foreclosures Hurt Real Estate Market

The final quarter of 2007 was a bleak one in the housing market, as foreclosures and delinquency rates reached record highs. The fourth quarter, from October to December, found foreclosures rising to 0.83 percent, passing the previous high of 0.78 percent set in 2007’s third quarter, adding to the economic woes the U.S. is suffering, mostly onset from problems arising in the housing sector.

The data, from the Mortgage Bankers Association’s quarterly report released this month, said that the delinquency rate — the rate of those more than 30 days past due on their latest mortgage payment — also climbed to a record high of 5.82 percent in the fourth quarter, up from 5.59 in the third quarter to reach the highest point since 1985.

The subprime mortgage mess continued to snowball, as the percentage of adjustable-rate mortgages entering foreclosure rose to 5.29 percent in the fourth quarter, and delinquencies rose to record-high 20.02 percent Read more

Lending Debacle Affects Real Estate

The struggling real estate market took another dip this last month, according to the Commerce Department. Housing starts, a measure of new homes being constructed, fell 0.6%, while permits for new construction, an important indicator of future activity, fell more than anticipated, decreasing 7.8% in February to the lowest level in 16 years. The Northeast saw the worst drop, as new construction fell 27.7%. It remained unchanged in the Midwest, with a slight increase was seen in the South and the West.

Experts expect that the rates will continue to fall this year but expect them to rebound in 2009. Lasts year, residential construction fell by a quarter amid the slumping economy and the subprime mortgage mess fallout, as banks and other lenders have found many with credit scores below the prime rate who were granted mortgage loans struggling to repay them and unable to sell or refinance as the prices of homes have fallen drastically. Read more

What the Housing Doctor Ordered

Is the Fed Rate Cut What the Housing Doctor Ordered?

Today, the U.S. Federal Reserve slashed the discount rate by 75 basis points down to 2.25%.  But how does the Fed rate cut affect you and your search for a new home?  Is the Fed rate cut the miracle elixir to cure the real estate market pain?
 
When the Fed makes a rate cut, it actually doesn’t affect consumers directly since the Fed funds rate is the rate that financial institutions are charged for overnight loans to fulfill reserve funding requirements.  However, this does affect consumers indirectly by allowing financial institutions to offer more financing options, possibly at lower rates.

The Fed cut should not directly affect fixed rate mortgages, but it can have a more immediate impact on short term loans, such as adjustable rate mortgages (ARMs).  Check online rate comparison tables to stay up to date with rates in this volatile market. Read more

Federal Reserve and Foreclosures

As the real estate market continues to go through an adjustment period caused by the run up in prices from the early 2000 real estate bubble. The Federal Reserve chairman Ben S. Bernanke said “the government is pledging new regulations to stop predatory mortgage lending practices that are affecting so many families”.

He also added that “loan delinquencies and the foreclosure rates have substantially increased over the past year and half. Many neighborhoods may be looking at clusters of foreclosures and many families are facing financial hardships during the months to come.” Read more