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What To Do if You Think You Owe More Than Your House is Worth
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More people are finding themselves in the situation of being “upside down.” That is the term the housing industry uses when they owe more on a home than it is worth. Experts say this is becoming more common with the current affairs of our economy and latest trends in home sales. Unfortunately, most people don’t know how to remedy this problem and are left holding on to a house that isn’t worth what they have put into it. If You Do Not Need to Sell Analysts and experts are now advising people that if it isn’t necessary for them to sell, then they should stay in the house and pay down the principal. Try paying more than the minimum monthly payment. Experts agree that the market always bounces back. If you choose to sell later, you will have built in equity by that time. Making Up the Difference When You Owe More Than Your House is Worth What if you do need to sell the home now? In that case, you may have to make up the difference. This is one of the least recommended options for people faced with a house that is worth less than they owe. However, some people may fee left without a choice. The Short Sale Option When You Owe More Than Your House is Worth A short sale is a viable option for anyone owing more than their house is worth. In the simplest terms, a short sale is when the mortgage company attempts to sell the house for less than what you owe. If you are trying to avoid foreclosure, this is a possibility worth exploring. However, most realty companies will ask that your house stay on the market for at least 90 days before discussing a short sale. You should also be prepared to prove that a short sale is the only option. Whichever option you choose, make sure your home is properly appraised first. You should thoroughly check it over and make comparisons with the current market. You may be surprised at the worth of your home. Having your home re-evaluated could mean the difference between losing your shirt and comfortably living out your days. Leave Comment
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Are Home Sales Really on the Rise in the U.S. (according to the National Association of Realtors)
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Mixed messages about the housing market are everywhere. In some areas, you hear that home sales are on the rise, while in other areas you hear the opposite. Is it any wonder that homebuyers and sellers do not really have a firm grasp on what to believe when it comes to housing market trends? Whether you are looking to buy or sell a home in the coming months makes no difference. What does matter is how to decipher whether or not home sales are really rising. If you are looking to buy, you will find no shortage of homes from which to choose. In part, this is because sellers are not looking to drop prices on their homes any time soon. How that affects homebuyers really depends on what they can afford and where they want to live. Location Has a Hand in Home Sales According to the National Association of Realtors (NAR), location has much to do with where you will find the most luck buying a home. The current economic situation has left many people opting to nest in their homes instead of making a move. In addition, areas where home sales are more stagnant than others have also taken a hit from job losses. People in places like the Midwest are more likely to hold fast to their homes than take a gamble on the housing market, so says financial experts and home buying analysts. However, the northeast part of the U.S. has seen home sales continue to climb over the last six months. As the National Association of Realtors announced that current success could remain through the New Year, but other experts are hesitant to agree with the reports. Among some of the more shocking news that comes out of the housing industry is the willingness of homebuilders to cut prices in the hopes of getting rid of many unsold new homes. The price cut has a slight effect on home sales in areas considered in danger of remaining in a slump. One thing that the NAR and other experts can agree on is the hope for current home sales to mirror what's happening in the northeast. In fact, the NAR expects that home sales will rise coming into the New Year, which is a relief for many in the housing industry. How the rise in home sales will pan out is too soon to say for some of the industry’s leading experts. However, they all agree the time for home sales to rise is now as the quarter ends. |
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Falling Mortgage Rates: Monumental Downs
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In these past months, mortgage rates and prices have drastically gone down making it appear as if it is a risk-free buyer's market. From an outsider, it definitely looks that way, but once you look at all the contributing factors, you'll realize that there is more going on than you think and the buyer is not coming out on top. Lenders Aren't Being as Generous Advertising surrounds the general public notifying them of the plummeting mortgage rates. They're encouraging people to take advantage of the rates and purchase a property. However, this is where the public reaches a Catch-22. Mortgage rates and prices are at a record low during these past five months, but banks and lenders are hesitant with providing potential buyers with loans. Lenders have made stricter requirements and most buyers simply do not qualify. A couple years ago, Countrywide Financial Corp was carelessly giving loans out to almost anyone who applied. Now they are stuck with foreclosures and people who cannot afford their new adjusted mortgages. In response to this $1.2 billion upset, they have taken measures to prevent any further financial damage, which in turn leads to their stricter qualifying requirements. They are rarely lending money to a zero down mortgage and they desire a high FICO score. The Countrywide example has spread to other lenders and banks, giving them precedence to be picky with their money. Another reason for the spiraling mortgage rates are due to the recent trend of buyers purchasing investment properties or second homes, instead of the purchasing of a primary home. Last year showed that 40 percent of homes that were purchased were bought as second homes. The National Association of Realtors recorded this as the highest percentage of non-owner-occupied purchases in history. Since these homes are not primary residences, these homes are more likely to be sold and put out in the market again. The owners will less likely want to refinance and will decide to sell their property. So now the demand for housing has also gone down. Having Lower Mortgage Rates Won't Fix the Problems With the low housing demand, you would think that the lower mortgage rates would entice investors to come back to the market. However, the recent situation shows that even with the declining mortgage rates, the housing market is still suffering. There are about 3.86 million existing homes and 568,000 new homes currently on the market. These numbers reflect our over-abundant supply of homes. And since lower rates aren't doing much for the market, the future may hold higher rates with the same outcome. The housing market would like buyers to think that the low mortgage rates will be in your favor, but make sure you look at the big picture. Why aren't more people buying? What's causing all these rates to go down? Is my investment a risk? If you play your cards right and you look into all the scenarios, you could totally take advantage of this desperate market. Like any investment, don't get involved with anything unless you know what your choices and information are. |
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30-Year Fixed at its Lowest Average Rate This Year
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With the subprime mortgage lending era ending, homebuyers are looking forward to the upward swing of fixed mortgages. In recent months, 30-year fixed rate mortgages have stabilized, making them highly sought after in the buyer’s market. Experts predict the fixed rate will stick around for the end of 2007, which puts potential buyers in shopping mood. 30-Year Fixed at its Lowest Average Rate This Year — Say Goodbye to Subprime Mortgage industry experts are looking forward to the end of subprime loans, which had a large hand in the home selling industry’s poor performance. This doesn’t mean that homebuyers should be thanking the subprime mortgage lenders, many of which are now out of business thanks to foreclosures and defaulting loans. However, until the need for mortgage loans becomes harder to obtain, buyers are hopeful and advised to take advantage of the deals on 30-year fixed rate mortgages. 30-Year Fixed at its Lowest Average Rate This Year — Looking for a Turn in the Economy The downside to the positive mortgage rates is that unless America’s economy takes a turn upwards, mortgage loans could become more expensive and drive the rates back up. Fortunately, the sluggish economy is driving down the price of houses, making it more likely that a house on the market right now will sell. Rates Could Dip Lower Some analysts are already seeing that mortgage rates are dipping lower into the high fives, with fixed rates hovering between 5.73 percent and 6.10 percent. This is a significant dip from two years ago, when subprime mortgages were just beginning to gain speed. People are starting to shop the housing market, looking to take advantage of great rates before they change again. However, the likelihood of an interest rate climb doesn’t look like it’s going to happen until after the New Year. Now is the perfect time to shop since most closings take between 30 and 45 days. What This Means for Sellers If you are considering selling your home, now might be the perfect opportunity. There is currently a steady market of potential buyers, as the market begins its upswing for the end of the year. However, sellers must realize this is still a tight market. Homes are under rigorous scrutiny, as buyers want the absolute best for their dollars — even if a 30-year fixed rate is exceptional, buyers are still holding out for a home in top condition. 30-Year Fixed Rate — Final Words of Caution Before you head out the door with your checkbook in hand and ready to make the purchase of a lifetime, be aware that home prices have to be low in order to make the low 30-year fixed rate work for you. While some buyers take advantage of low fixed rates, they fail to realize that the home of their dreams may still be too pricey. This is probably the biggest problem that brokers and realtors are facing. However, it shouldn’t derail you from purchasing. As anyone who deals heavily in the housing market knows, there is always room for bargaining. By and large, most everyone in the housing industry is hopeful that the housing slump will end with the low fixed rates currently on the market. Almost as hopeful are those looking to recover from the subprime market. With buyers wanting to cash in on 30-year fixed rates and sellers regaining faith that this is a prime time to sell, spirits throughout the housing industry are looking brighter. |
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Are Return of Premium Polices the Premium Choice?
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Return of premium insurance policies have gotten a lot of attention because they guarantee that the insured will get the total amount spent on the insurance policy’s premium payment if he or she stays alive for the full term of the policy. On the surface, return of premium policies seem like a no-brainer. Instead of wasting your money on term life insurance policies that won’t give you any return on your premiums if you outlive the policy, you are certain to get the full amount of your payments back. By taking a closer look at return of premium policies, though, you can take a more critical look at these insurance policies to see if they are the premium choice for you. Paying for Return of Premium Policies Return of premium insurance policies give you a guarantee on the premiums that you invest, but there is a cost for this. When you decide to take a return of premium insurance policy, one of the first things that you should notice is how much higher the payments are than those for regular term life insurance. These higher payments don’t bother many people because they are fairly certain that they will get all of the money back. They think that instead of spending less money that they will never see again, they will spend more money that will be returned to them in the future. The Danger of Making High Payments for Many Years This is sound thinking if you have enough money to pay for the return of premium policy for the duration of the policy, but the future is always uncertain. You might be able to afford the higher payments now, but it is almost impossible to determine what your financial situation will be like in 15, 20, 25 or 30 years with any accuracy. Things happen that are completely out of a person’s control. You could lose a job or suffer medical problems that would make it impossible for you to make the high payments. The problem is that many policies will only give you a return of premium if you pay for the entire policy. Some return of premium policies are only 15 years long, but you do not get returns that are as good as those on longer policies. Since most people get the policies because they expect to be alive in 30 years, they decide to take the longer-term policies that pay off better. Returns on Death Benefits Making high premium payments with the expectation to get the money back makes sense, but you should also consider what kind of benefits your family will get if you do not outlive the policy. Unfortunately, if you don’t outlive the policy, your family might not get more from a return of premium policy than they would a term life insurance policy with lower payments. This means that you could throw away hundreds of dollars a year. When you take out a return of premium insurance policy, you are betting that you’ll outlive the policy, which is usually between 15 and 30 years. If you don’t outlive the policy, though, the extra money that you spent on the return of premium policy would have been better spent through other investments. Protection from Taxes Despite the possible negatives of a return of premium insurance policy, many people still decide that they are the best choice. Not only are they betting that they will outlive the policy and be able to get all of their money back, the money that they get back when they outlive the policy is protected from taxes. If you invest $1,000 a year on a 30-year policy, you will be saving taxes on $360,000. The amount that you save will depend on how much money you make and where you live, but regardless of these variables, the savings can be significant. Knowing the pros and cons of return of premium insurance policies can help you understand if they are a good bet for you. The bottom line is that if you can afford to make the payments throughout the duration of the policy and you outlive the policy, then return of premium insurance policies can be a good choice for you. If this seems a little too risky for you or you don’t think that you can afford the high payments, then a regular term life insurance policy is probably best for you. |
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Congress Takes Their Time In Discussing Mortgage Reform
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Amidst this troubled housing market, thousands of American homeowners are dealing with foreclosures or mortgage payment resets. Their situation seems to be getting worse, with no outlook of change or assistance. Unfortunately, congress is showing no signs of immediate action. The House Looking Out for the Consumer The house has become very much involved in attempting to fix the suffering mortgage market and appear to be passing some relief measures. One in particular is H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. This bill is currently pending in congress. However, the outlook of it passing any time soon looks dismal. Mortgage Reform and Anti-Predatory Lending Act of 2007 This specific bill is designed to put structure and provisions in the mortgage lending market. Some have referred to this bill as the plan to help repair the current situation. This is simply not true. The bill focuses on changing the lending system to prevent future crisis. The main goal of this bill is to eliminate the negligent nature of the current mortgage lending market. It calls the licensing and registration of mortgage originators, a minimum standard for mortgages and a limited liability to secondary securitizers who sell interest for mortgage loans beyond the standards. By providing certain restrictions and provisions, the consumer will receive some protection. It will lessen the foreclosure market and hopefully prevent recessions similar to the one we are currently experiencing. Why the Senate Is Stalling Legislation There are numerous reasons the senate has chosen a sluggish approach to any housing reform bills. Some republicans within the senate appear to be unsympathetic to the mortgage market's current situation. Others are allies with private mortgage insurance companies. Were they to go along with the Federal Housing Administration's (FHA) reform bills, their allies would have to contend with the proposed low-down payment market. Another excuse for the senate is that the FHA's reform proposal requires an extensive floor debate. The Negative Buzz Around the Mortgage Reform Bill The buzz about the Mortgage Reform and Anti-Predatory Lending Act of 2007 hasn't all been positive. Those within the mortgage industry have been gathering concerns and voicing them through blogs and lobbyists. Most people objecting to this bill believe it harms the "free market's ability to enforce responsibility on behalf of the borrowers." Others feel that these restrictions will also lock some potential borrowers out of the mortgage market. Another anti-bill supporter is the Blue Dog Coalition of moderate and conservative democrats. They have expressed the belief that this bill could get in the way of applying the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The BAPCPA passed in 2005. It promises that the borrower has the ability to pay back some of his or her debt, as well as maintain access to the bankruptcy system. With all these justifications coming to and from the senate, all seems to have come to a standstill, and the cries for help from struggling homeowners remain unheard and ignored. |
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How The Mortgage Rate Is Predicted To Look During The Holidays
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With the Holiday season upon us, people are wondering whether mortgage rates will increase or decrease. Homeowners or potential homeowners are constantly checking the mortgage rate forecast for the right time to lock in their rates. Since the jolly retail season is here, many speculate this will transfer to the housing market and cause a dip or rise in mortgage rates. Others predict the mortgage rate will stay the same or close to it. So, who do you listen to? The Skinny on Mortgage Rates If you are holding out for the lowest possible mortgage rate, it may be a gambling process. When it comes to mortgage rates, rates will lower at a smaller pace — for instance, it'll probably decrease around 1/8 percent. However, when a rate increases, it takes a major leap, blindsiding you and then you have missed your chance with a low mortgage rate. This happens to be the nature of the beast. Those involved with setting the mortgage rates are obsessively monitoring the rates. They are waiting for any minute decrease, no matter how small it is. In addition, when rates are making their way up, they wait until the last second to announce the rate, which ends up being an enormous jump from the previous rate. The Plateau Phase and Predicting Mortgage Rates During the Holidays The majority of experts and analysts have predicted that during the holiday season, mortgage rates will stay the same. The main projection is that rates will not go any lower. The holidays center around the retail market and the interest in the housing market will not gain extra demand during the season. The value of housing appears to be stuck in a secondary market. Buyers aren't looking for primary housing, they are investing property as a secondary home. Mortgage Rates and the Holidays — An Upward Battle A few analysts have expressed their concern that mortgage rates will rise during the holidays. Since the value of the U.S. dollar is falling and oil prices are at record highs, mortgage rates will soon reflect the struggling economy and try to balance out by increasing the rates. Mortgage Rates and the Holidays — A Downward Spiral A handful of experts predict that mortgage rates will continue to fall. They believe that the increasing oil prices are a sign of a future recession, which in turn will cause mortgage rates to follow the existent downward spiral. The housing market and rates will reflect the economy. The best prediction is that no one really knows what will be going on in the next few months. Currently, the rates are pleasingly low. Consider the rates during the past few years. These rates are comparable or even better. Check out the HSH Associates website. They provide historical data and rate information. It can help you with putting the mortgage rates into a different perspective. On the other hand, if you have the drive to wait for the mortgage rates to drop even further, then wait away. You must trust your own instincts and lock into a mortgage rate that you feel is the best for you. |
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The Holidays and How a Higher Body Mass Index May Affect a Term Life Insurance Policy
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For many people, the time of year between Thanksgiving and New Year’s Day is a mixed blessing. During this time of year, families and friends get together to celebrate. One of the best aspects about it is the great holiday food — and lots of it! Many people struggle this time of year, for they know they will put on “holiday weight.” Of course, the plan is to take it off as part of a New Year’s resolution. Not a big deal right? It happens to all of us. However, if you are planning to purchase a term life insurance plan after the start of the New Year, you may want to change your tune. What is Term Life Insurance? In general, there are two types of life insurance available: whole life insurance and term life insurance. Simply stated, whole life insurance covers a person for a longer period, whereas a term life insurance policy is for shorter durations. Typically, a person may take out a term life insurance policy to protect the financial needs of a loved one in the event of an unforeseen death. For example, a parent may take out a term life insurance policy while the child is in high school for say $250,000. How Does Holiday Weight Affect Term Life Insurance? Since term life insurance covers only a short duration, a company will only renew your policy after evaluating questions about your general health. The insurance provider takes into account your smoking status, prior history of illness and present health. Life insurance companies are also concerned about your weight. As a major problem in the U.S., obesity results in many major illnesses, including heart disease and diabetes. Your life insurance company will often use your Body Mass Index (BMI) to determine the risk for obesity. The more a person weighs the higher the BMI number. Adding a few pounds over the holidays gives you a higher BMI, which leads to more perceived risk and causes the insurance company to offer a policy at a slightly higher weight. The point here is that if you are considering the purchase of a term life insurance policy, it would be a good idea to make that purchase before the holiday season begins. A Tip for the Holidays — Exercise! People should exercise for their overall health. Studies have shown that exercising during the holiday season at least a few days per week will help decrease your appetite, as well as burn off that holiday ham and eggnog. In addition, be sure to drink plenty of water to keep your body operating and peak condition. If you still plan to apply for term life insurance after the holiday season, begin a New Year’s resolution immediately! It will save you money right away when you apply for a policy. |
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Using Weekly Mortgage Rates to Your Advantage
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Weekly mortgage rate analysis can help you determine many things about the types of loans that you can get on real estate. Perhaps most importantly, a good analysis can tell you what kind of rate you can expect to get on a mortgage. A good analysis might also tell you the difference between the average mortgage rates from this week, the week before and one year ago to the week. When you look at the weekly rates over a length of time, you can see the shifts in the mortgage rates during this time. This can often point toward what these rates will be like in the near future. Changes in Housing Rates When you’re buying real estate, you want to take out a mortgage when the rates are low. The lower the mortgage rates, the less money you will spend buying your property. When you look at the changes in the mortgage rates from week to week, you can predict the direction the market is heading. It’s impossible to be accurate 100 percent of the time, but many people can get a good idea of where the market is heading by looking at a weekly mortgage rate analysis. This is similar to making projections with the stock market. While it’s often easy to recognize the direction that mortgage rates are heading, knowing how long they will continue to head in that direction is not so easy to predict. Small Changes Make Big Differences Small differences in mortgage rates can make a big difference when you look at how much money you will spend in interest on a loan that lasts several years. Real estate is probably the most expensive purchase that you will ever make, which means that the interest on the mortgage can add up quickly. Let’s say that you have a 30-year mortgage with 6.5 percent interest rate on a $200,000 home. Your monthly payment for this mortgage will be $1,254.14. If you can use the weekly mortgage rate analysis to determine when the mortgage rate will be just .5 percent lower, your monthly payments will be $1,199.10. That’s a saving of over $50 every month, which comes to $660.48 per year. Over the course of this loan, you will save almost $20,000 just by finding an interest rate that is half a point lower. Analyzing Weekly Mortgage Rates When analyzing weekly mortgage rates, the rates of the top mortgage dealers are used. The amount of mortgage firms that are considered in the analysis depends on the company that is conducting the analysis. The more firms that the analyzer includes, the more accurate the average rates are. However, most mortgage brokers follow those that are at the top, so it doesn’t always make a large difference. By using a weekly mortgage rate analysis, many people can determine when the best time for them to purchase real estate is. If you already have a mortgage and are thinking about refinancing, then you can also use the weekly rates to determine how much money, if any, you can save by refinancing at a certain time. |
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Foreclosure Forecast: What Direction Are They Going? Up Or Down?
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Amongst the dropping prices of homes and mortgages, foreclosures joined the downward spiraling market. During these times of decreasing housing demand, it's unfortunate to think that people are locked in a financial predicament, left to foreclosure. Unfortunately, this trend does not appear to be changing course in the near future. Foreclosure Forecast — What's Happening? Nationwide foreclosures in 2007 have increased a monumental 42 percent since 2005. There have been 1.2 million foreclosure filings this year. Amazingly, this is not a record high but this does raise speculations that the future holds a worse fate for foreclosures. No one anticipated this trend of foreclosures. Some experts did not predict the foreclosures, since national economic conditions offered no signs. The stock market is doing fine and employment numbers are steady. However, David Lereah, chief economist for the National Association of Realtors, said that economists calculated that foreclosures would occur in response to the decreasing housing market. He further pointed to markets that contain unsustainable price appreciations. Characteristics of Recent Foreclosures In 2003, 30-year fixed rate loans were at their lowest, but the trend was on adjustable rate mortgages (ARMs). The buyers immediately went for the lower rates from the adjustable rate mortgages. Now that the introductory period is over, the interest rate immediately goes to the market rate, continuing to adjust every year. Those buyers are stuck making ends meet to afford the new mortgage. Along with the teaser interest rates, buyers also chose to purchase enormously expensive homes. Many believed that buying a more expensive home would offer a greater appreciation. Once the ARM would reset, they would have the ability to refinance for a lower fixed rate with a longer period. Now these home owners have new interest rates for homes they originally could not afford. Many jumped to sell their properties and others tried to refinance. However, since the housing prices have gone down, current value does not match original value. The buyer loses money instead of making money and selling the home will no longer answer the financial problem. This leads many of homeowners to unfortunate foreclosure. Foreclosures and the Future Experts predict that 2008 will be one of the worst years for foreclosures. They are mainly referring to sub-prime mortgage loans. During the next two years, a projected amount of 1 million homes will be lost due to foreclosures. John Robbins, chief executive officer of American Mortgage Network, explains that most of the foreclosures will occur in Michigan, Nevada, Arizona and Ohio because of the unemployment numbers and appreciating home prices. If housing prices continue to fall to 20 percent, states like Florida, New York, California and Texas, may lose 2 million homes to foreclosure through 2009. Along with sub-prime and ARM mortgages, interest-only and negative amortization mortgages may lead the buyer into potential financial problems. There is no way to correctly predict if a property will appreciate, so buying within your means is the best way to approach the housing market. |
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