Many People In Dark When It Comes To Mortgage Calculations!!

New research from Nationwide has shown that as many as three in four Americans don't know how much money they can save if their mortgage rate changes by one percent. The financial illiteracy that has led many to slide into the world of bad credit scores is most evident among 18-24 year olds, the study suggests, with just 16 percent of this group doing their sums correctly.

By contrast, 31 percent of 55 to 64-year olds were able to work out the solution.

People's lives are busier than ever in the run up to the festive season and, as a result, they may be less inclined to shop around for the best deal," said Nationwide divisional director for mortgages, Matthew Cartner.

"The temptation may be to take a slightly higher rate as an easier, less hassle option."

"But, as our research shows, most people don't understand the impact that just a one percent difference can make, meaning they could be wasting thousands of dollars," Mr. Cartner added.

With the base rate of interest set to change in coming months, it seems many won't be aware of exactly how much they're saving.

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Mortgage Interest Rates Headed Below 6%???

Yields on 10-year Treasury notes dropped below 4 percent for the first time in two-and-a-half years Monday, as investors pulled money out of equities for the safe haven of bonds. Yields on the 10-year Treasury note fell to 3.83 percent Monday, down from a recent high of 5.26 percent on June 12. The 10-year Treasury note is closely watched in the real estate industry because it tends to track with interest rates on 30-year fixed rate mortgages.

While yields on 10-year Treasury notes have been falling faster than 30-year mortgage rates - the spread between them has increased from 1.5 percent in June to more than 2 percent this month - 30 year mortgage rates are headed down, and are nearing 6 percent.

Freddie Mac last week reported that interest rates on 30-year fixed-rate mortgages averaged 6.2 percent with an average 0.5 point, down from a recent high of 6.73 percent in July. Last week's average rate was the lowest since May, when lender's charged an average of 6.15 percent.

More bad news about financial markets outweighed reports that retailers did brisk business after the Thanksgiving holiday, sending the Dow Jones industrial average down. HSBC Holdings on Monday said it will move two structured investment vehicles (SIVs) it manages totalling $45 billion onto its balance sheets, providing up to $35 billion in funding as debts issued by the two SIVs mature.

Existing investors will continue to bear all economic risk from actual losses up to the full amount of their investment, HSBC said in a Securities and Exchange Commission filing. Because they rely on short-term "commercial paper" loans to finance mortgages and credit card debt, some SIVs have run into trouble when they are unable to roll over, or refinance, those debts because of fears about rising delinquencies and foreclosures. Several other banks have established a multi billion-dollar investment fund intended to lessen the SIV credit crunch.

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GMAC Mortgage Eyes Mortage Firm!!!

GMAC LLC, the former financial services division of General Motors Corp., could buy another large non-U.S. mortgage firm and contribute it with Residential Capital LLC, a struggling GMAC-owned mortgage company, according to a GMAC news release Wednesday.

Once a cash cow for GM, GMAC's problems have been cause for concern at GM, which owns 49% of GMAC after selling a 51% stake in the financial services firm last year to a group led by Cerberus Capital Management.

GM lost $757 million in the third quarter attributable to its share of GMAC. Residential Capital, known as ResCap, has been at the heart of the problems, posting a $1.8 billion operating loss in the third quarter amid a crunch in the home-loan market.

GMAC would not name the mortgage firm being considered for purchase to combine with ResCap, but said in Wednesday's release that it had recently entered a second round of nonbinding interest for the firm. British mortgage lender Northern Rock was the target, accroding to a Reuters report citing unidentified sources.

In addition, GMAC management will recommend to the board to continue supporting ResCap so that it meets the requirements of certain covenants made with the credit firms. GMAC has injected $2 billion in ResCap through the first three quarters.

In a note issued Wednesday, Gimmie Creidt analyst Kathleen Shanley said the ambiguity of the release raised questions about whether an acquisition would go through and whether all of GMAC's backers agree to contribute to prop up ResCap.

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Mortgage Calculators Provide Mathematical Reason Behind Mortgage Payments!!!

The one thing that virtually all borrowers know about their mortgages is the amount of the initial scheduled payment. This is the amount they are obliged to pay each period under the terms of the mortgage contract. They know that failure to pay that amount is a violation of the contract, leading to late charges, delinquency reports and ultimately to foreclosure.

While borrowers know the amount, they are often hazy about how it is calculated and what it includes. In this post, I will illustrate the possibilities related to a $100,000 loan at 6 percent. In the simplest possible case, the scheduled payment includes only interest until the final payment, when it includes repayment of the balance. The interest payment each month is .06/12, or .005, multiplied by $100.00, which equals $500. The final payment, assuming the borrower paid only interest throughout, would be $100,500.

Most mortgages written during the 1920s were of this type, usually with terms of five or 10 years. Their weakness is that they must be refinanced at term, which during the depression of the 1930s became very difficult because properly values and borrower incomes had fallen. The notion took hold that it was prudent for borrowers to pay down the balance over time by making a mortgage payment larger than the interest. This additional amount is called the principal payment.

The principal payment is always a residual - the total payment less the interest, if the borrower in the example paid $600, the $500 of interest would be deducted, leaving $100 as the principal payment. If the borrower paid $700, the principal payment would be $200.

The scheduled payment may not be limited to interest and principal. The monthly mortgage insurance premium, if there is one, will be included. If the borrower has agreed to escrow property taxes and homeowners insurance, most lenders treat the monthly escrow payments as if they are also part of the scheduled payment, if the escrow payment is short, the payment is considered delinquent. A borrower can start down a slippery path to foreclosure by failing to pay required escrows.

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New Bill Passed Could Hurt Companies Like Nationwide Home Mortgage Loan Company!!!

With home foreclosures skyrocketing, the House on Thursday voted to crack down on mortgage lenders by enacting federal licensing, making them responsible for knowing if borrowers can repay loans and fining them for steering people to risky sub prime loans when other funding is available.

The measures are designed to keep more people from sinking into the current mortgage crisis, where prospective home owners with shaky credit got mortgages with low interest rates only to see the rates rise and bring monthly mortgages up to prices they cannot afford. More than 2 million adjustable rate mortgages are scheduled to reset by the end of 2008.

Many American homeowners are expected to go spiraling into debt, with the number of homes involved in foreclosure proceedings nationwide almost doubling in the third quarter of this year when compared with 2006, according to RealtyTrac Inc.

Republicans and the White House warned that congressional meddling with mortgage markets could make things even worse. Many Republicans argued the bill would make it harder for borrowers to refinance loans due to reset at higher interest rates, and make it almost impossible for poor people to get loans to buy a house.

Democrats said the sub prime market needs to change to ensure that people get loans that are beneficial to them, not just good for the bottom line of some corporation. "This bill is not designed to harm the sub prime market, it's designed to reform and correct it and make it work properly," said Rep. Ralph Ellison, D-Minn.

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Current Mortgage Rates For 30-Year Fixed Mortgage Rates Decline!!!

Rates on 30-year mortgages fell for the third straight week, dropping to the lowest level in five months. Freddie Mac, the mortgage company, reported last Thursday that 30-year, fixed-rate mortgages dipped to 6.24 percent this week, down 6.26 percent last week.

It was the third straight weekly decline after rates hit 6.40 percent. Analysts attributed the decreases to mounting evidence that the economy is starting to slow. "Reports of weaker consumer spending in September and a decline in manufacturing activity in October kept mortgages at bay this week," said Frank Nothaft, chief economist at Freddie Mac.

The Federal Reserve last week cut a key interest rate by a quarter-part, marking the second rate reduction in the past six weeks. Fed officials, however, disappointed investors by signaling that there may not be further rate cuts, given their worries about higher inflation from surging energy prices and a weaker dollar.

Mortgage rates fell across the board last week. Rates on a 15-year fixed-rate mortgage, a popular choice for refinancing, averaged 5.90 percent, down from 5.91 percent last week. Rates on five-year adjustable rate mortgages averaged 5.89 percent, down from 5.98 percent laws week.

Rates on one-year ARMs dropped to 5.50 percent, down from 5.57 percent last week. The mortgage rates do not include add-on fees known as points. Thirty-year fixed-rate mortgages carried a nationwide average fee of 0.4 point while 15-year mortgages and five-year adjustable- rate mortgages carried an average fee of 0.5 point. The one-year ARM carried an average fee of 0.6 point.

A year ago, 30-year mortgages stood at 6.33 percent, 15-year mortgages were at 6.04 percent, five-year ARMs averaged 6.08 percent and one-year ARMs were at 5.55 percent. The worst slump in housing in more than two decades worsened in recent months in the face of rising mortgages mortgage defaults that triggered a severe credit crunch that has roiled financial markets since August.

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US Home Mortgage Rates Fall In Latest Week!!!

Average rates on U.S. 30-year mortgages dropped slightly this week, mortgage giant Freddie Mac said today. U.S. 30-year mortgage rates fell to an average of 6.24 percent from 6.26 percent last week, as 15-year mortgage rates dipped to 5.90 percent from 5.91 percent last week.

Short-term mortgage rates experienced more pronounced declines following the U.S. Federal Reserve's cut of the benchmark federal funds rate by a quarter-percentage point to 4.5 percent last week.

One-year adjustable rate mortgages decreased to an average of 5.50 percent from 5.57 percent in the prior week. Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.89 percent, down from 5.98 percent a week ago.

A year ago, 30-year mortgages averaged 6.33 percent, 15-year mortgages averaged 6.04 percent and the one-year ARM average 5.55 percent. The 5/1 ARM averaged 6.08 percent.

"With mortgage rates remaining low, approximately 38 percent of applications were for refinance transactions in the third quarter, down from 42 percent in the second quarter of this year," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

"In addition, Freddie Mac estimates that families withdrew approximately $60 billion in home equity over the same quarter, down from about $81 billion in the second quarter 2007," Nothaft said.

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Do Not Be Afraid To Fight Mortgage Scams On Mortgage Loans!!!

The home mortgage crisis is one of the great problems looming on the horizon for Americans. A combination of forces - including fraud, sub prime lenders with lighter credit standards, decreases in the market value of homes, and interest rate increases - have led to a dire situation. With many Americans facing foreclosure and at risk of losing their homes, the Office of the Attorney General is working with major lenders to protect homeowners.

Home ownership lies at the heart of the American dream, so foreclosures can be devastating for homeowners, their families, and ultimately for the community. Equally troublesome, foreclosures are already negatively impacting the economy, affecting interest rates, decreasing property values and harming financial markets.

Homeowners are not the only ones harmed by mortgage-related scams. A growing number of scam artists are duping lenders, mortgage companies and other businesses in the mortgage industry. Mortgage fraud involves intentionally or knowingly making a false or misleading written statement to obtain property or credit, including a mortgage loan. This type of fraud can take many forms, but the most common schemes include fraudulent appraisals, inflated income on loan applications, and even identity theft.

According to the FBI, mortgage fraud is on the fastest-growing white collar crimes in the United States. Fraud may be committed by a sole borrower seeking a mortgage loan, or it could be committed by a criminal seeking to obtain and purchase loans as part of a larger scheme, such as money laundering. Mortgage fraud may also include unlawful kickbacks to buyers, investors, property or loan brokers, appraisers, and title company employees.

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Reverse Mortgage Consumer Alert!!

Before you sign on the dotted line for a reverse mortgage, make sure you know all of the facts. Reverse mortgages may be a great idea for some seniors, but officials warn be careful if you are looking into this plan, because the consequences could effect your family.

So what is a reverse mortgage? It is only for those 62 years or older who own a home and who have little or no mortgage left. Homeowners will receive an up-front cash payout with no obligation to repay the loan. It lets seniors live in their own homes with no monthly mortgage payment and have a few extra dollars a month to enjoy retirement.

It is a good idea for those who are not concerned about leaving behind property for their heirs. But, everyone should know that a reverse mortgage can reduce or eliminate your inheritance, because now the mortgage company or lender owns the home. You should consult your family before making this financial change.

People have to be educated about the process. It is very good if your children or heirs are educated about the process. The more people understand the better. If you are interested in learning more about reverse mortgages you can contact the U.S. Department of Housing and Urban Development. Officials also warn if you are approached about a reverse mortgage by a lender and feel pressured or if something sounds fishy, you should report it to your state attorney general's office.

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