Mortgage Rate News

Even as individuals wonder how they are going to deal with rising gas prices and food prices inflation, commercial real estate is starting to see the problems associated with the mortgage market crisis. Large building projects are being scaled back, delayed and even scrapped altogether. Some are even being foreclosed on as real estate values plummet and access to domestic capital is harder to come by. The Wall Street Journal reports on commercial real estate and the mortgage market crisis:

The current downturn is particularly damaging to grandiose plans because so many of them rely heavily on debt financing. That’s something difficult to come by these days as major financial institutions struggle with huge losses from the commercial real-estate debt they’ve been unable to move off of their books.

Even deep-pocketed investors usually plan to borrow heavily to jack up their returns. “When debt is not readily available, even well-capitalized offshore groups, are going to take a step back,” says Michel Seifer, managing director for Jones Lang LaSalle, a real-estate brokerage, management and services firm.

So, it is not only those of us on the ground level worried about the economic slowdown and the mortgage market crisis. Even commercial real estate developers are feeling the pinch.

This is likely to affect other areas of the economy as well. Commercial real estate developments provide jobs and economic stimulus to localities, and the current troubles are likely to further exacerbate problems that are already being seen around the country in terms of individual financial situations. All of this comes as some analysts insist that the credit market crisis is coming to an end. But that doesn’t mean that the economic worries are. Add in gas prices, food prices and continued payroll data, and the economic problems may be just beginning.

Tags: commercial real estate, mortgage market crisis, home mortgage loan, mortgage loan blog,
foreclosures, mortgage market news, food prices inflation

New home sales in the United States are on their way down, plunging in March. Additionally, new home prices also dropped rather dramatically last month. Bloomberg reports on new home sales:

Sales dropped 8.5 percent to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department said today in Washington. The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades.

While spring usually signals one of the busiest home buying seasons of the year, this year things are different. Instead, buyers are wary of rising mortgage rates and falling home prices. Although, to be fair, mortgage rates aren’t that bad yet, and lower home prices could mean a better deal for home buyers who are planning on staying in their homes long enough for the cycle to play out.

But there are other forces at work as well.

Tightened lending standards on home mortgage loans

As subprime writedowns continue to plague mortgage lenders, and foreclosures continue to threaten, lending standards continue to tighten. Someone who could have qualified for a home a year ago may not qualify today. It is harder to get home mortgage loans now. Mortgage lenders are tightening lending standards in two main areas:

1. Credit score. You need to have a higher credit score to qualify. For some mortgage lenders, “fair” credit is just not good enough. And for most, forget about bad credit mortgage loans. In many cases, a credit score above 700 — or even higher — is expected by mortgage lenders.
2. Income verification. No more fudging the numbers a bit to make your income look a little higher than it is. And mortgage lenders are requiring stricter income verification methods. As well as eschewing “creative financing” methods (like ARMs) to help lower your initial payments. Many mortgage lenders aren’t giving out home mortgage loans that borrowers can’t afford.

These tighter lending standards are probably better in the long run — for the economy and for home buyers. But at the same time, they are creating short-term problems. Many who are ready to sell can’t because they can’t find buyers who are qualified.

Tags: new home sales, mortgage market news, home mortgage loans, mortgage loan blog,
subprime writedowns, mortgage lenders, lending standards

Whether it’s a first home mortgage, or a second home mortgage, it is possible to save money by going green. A product called a green mortgage is being offered by more and more lenders around the country.

Citi, Bank of America and JP Morgan Chase all offer some version of a green mortgage. And if you look around, you might find local mortgage lenders that do as well.

Green mortgage

A green mortgage is one in which the mortgage lenders offer special terms if you buy a home that meets certain environmental standards. If you buy a home that was built using green building practices, or if you have an energy audit before buying, it is possible to have the interest rate reduced — or the loan origination fees waived. It just depends on the green mortgage program in question.

Save money on green home improvements

This is an area that can help you save a great deal of money in the long run. Some mortgage lenders give you special rates on a second home mortgage that you take out to make green home improvements, like adding insulation or better windows. These green home improvements can also extend to getting new EnergyStar appliances and installing solar panels.

Not only are there green mortgage products available in terms of a home equity loan, but there are other savings as well. Many states offer grants to those wishing to build a wind power turbine or install solar panels. There are grants for energy efficient windows and insulation. Additionally, there are federal (and state as well) tax benefits when you make green home improvements. Speak with your accountant or other tax specialist to find out what you can do to take advantage of these tax offerings.

Going green doesn’t have to mean that you lose money. Indeed, many green home improvements pay for themselves in a few years, and then you start saving big over the long run.

Tags: home equity loans, green mortgage, home mortgage loan, mortgage loan blog,
second home mortgage, green home improvements, mortgage lenders