mortgages
Heres some news which really doesn’t surprise me. Earlier this year and under pressure from the government, mortgage lenders made more than 200,000 loan modifications to delinquent homeowners. The modifications came in one of three forms, or a combination: Interest rate reduction Loan term extension Principal forgiveness But despite the modifications, as of October 1, more than half of the homeowners that received assistance were already two months behind on their modified monthly payments. This late-pay statistic was a focal point on Capitol Hill yesterday as the government admitted delinquencies “were larger than [they] thought they’d be”. Loan modifications are proving inadequate...
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...
Last week, federal regulators seized mortgage lender Washington Mutual. The Seattle-based thrift became the third “big name” lender to close its doors since July, joining IndyMac and Lehman Brothers. In 2007, these 3 lenders represented about 10 percent of the mortgage market and their subsequent failures are confusing American homeowners. The most prevalent question: If my mortgage lender fails, are my payments still due? And the answer is an unequivocal “yes”. If a mortgage lender is seized, goes bankrupt, or is otherwise closed, it doesn’t change the terms of the bank’s mortgages whatsoever – just maybe the mailing address. This is because...
On all principal + interest home loans, the first few years of payments include a lot more money going to interest than to principal. This is because mortgage repayment schedules are front-loaded with interest, meaning large-volume principal reduction won’t occur until late in the mortgage’s lifecycle. Comparing products at a 6% mortgage rate, did you know that after 15 years: A 15-year mortgage will be paid in full A 20-year mortgage will have 41.21% of its loan balance remaining A 30-year mortgage will have 73.19% of its loan balance remaining Of course, this doesn’t mean that 15-year mortgages are better than...
