Financing
The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent. In its press release, the FOMC noted that the U.S. economy âhas continued to strengthenâ, that the jobs markets is getting better, and that financial markets are supportive of growth....
APR is an acronym for Annual Percentage Rate. It’s a government-mandated calculation meant to simplify the comparison of mortgage options. A loan’s APR can always be found in the top-left corner of the Federal Truth-In-Lending Disclosure. Because APR is expressed as a percentage, many people confuse it for the loan’s interest rate. It’s not. APR represents the total cost of borrowing over the life of a loan. “Interest rate” is the basis for monthly mortgage repayments. The main advantage of APR is that it allows an “apples-to-apples” comparison between loan products. As an example, a 5.000 percent mortgage with origination points and fees will...
An escrow account is a designated savings account into which funds get deposited for a specific purpose. With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments. Escrow accounts are managed and disbursed by lenders. When a homeowner “escrows” his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home’s annual real estate tax bill plus 1/12 of the annual homeowners insurance bill. By sending a pro rata portion of the tax and insurance...
If you’re thinking about buying an Indianapolis home in the next few months, you may want to move your date up. New Fannie Mae guidelines will make getting approved for an Fannie Mae loan more difficult. For the second time in less than 3 months, Fannie Mae announced changes to its mortgage guidelines. Inits official announcement, Fannie Mae details the updates, meant to reduce the mortgage firm’s overall risk. The first major change is with respect to credit scoring. All Fannie Mae loans — whether underwritten electronically or manually — require a 620 credit score minimum. There are very few exceptions. A...
In light of the changes in conventional financing guidelines, FHA loans have once again become a popular choice for home buyers. In the good ol days, (heck, that was just a few years ago) almost anyone could get 100% financing on practically any home. Not so, today! Today’s savvy buyers understand the market leans in their favor. However, financing may not. While showing homes in the last few weeks, buyers who are looking for a deal and most are – find the deals may have faults which prevent traditional financing....
A mortgage is a contract between a lender and borrower, defining the terms by which a home loan must be repaid. The paperwork, signed by both parties, includes provisions for things like: The interest rate The length of the loan The amount of money to be borrowed But, like all loans, a mortgage loan can be paid off at any time. So, when market interest rates fall, homeowners will often exercise their right to an “early payoff” by securing a new loan that pays off the old one. This process is most commonly known as a refinance. A refinance is the...
The Federal Open Market Committee voted to cut the Fed Funds Rate by one-half percent today. The benchmark rate now stands at 1.000 percent. In its press release, the Fed wasted no time addressing the key issue at-hand, stating that economic activity has “slowed markedly”, pointing to three main causes: Consumer spending is falling Business equipment spending is falling Slowing foreign economies are hurting U.S. businesses Furthermore, the voting FOMC members are wary of an “intensification” of the current financial market turmoil. The announcement’s 4th paragraph is noteworthy, too. It lists the plethora of growth-stimulating steps that the Fed has taken so far this...
