Mortgage Rate News

One of the important considerations that mortgage lenders look at when deciding whether you will get a loan, and how much they will lend you, is your debt-to-income ratio. This ratio expresses what percentage of your income goes to paying off your debts.

For example, if your monthly income is $4,500, and your total debt payments amount to $1,300, you figure your debt-to-income ratio by dividing 1,300 by 4,500 and then multiplying the result by 100. In this case, the debt-t0-income ratio is 28.89%. Most will round it up to 29%.

Student loans and debt-to-income ratio

If you have student loans, your debt-to-income ratio will be affected. If it is too high, then you could be denied the mortgage loan you want. Helping pay down your student loans can help you improve your chances with the mortgage lenders. And, happily, there are some student loan forgiveness programs that can make this even easier.

Blueprint for Financial Prosperity offers insight into a variety of grants that can help you reduce your student loan amounts:

• Public Service Loan Forgiveness Program for those who work in a public service job for 10 years.
• Grants for teachers who work in certain areas (low income or rural, for example).
• AmeriCorps.
• PeaceCorp.
• VISTA.

I know that my mother is benefiting from a program that allows partial student loan forgiveness for those who teach in rural areas. Even though my mom already owns a home, having the student loan forgiveness will help alleviate the fact that she took them out later in her life to finish her degree.

Just as there are specific programs that can help you pay for schooling through scholarships, there are also programs that can help you pay off the debt you have incurred after you are done. Look around for opportunities to help you pay down your student loans. It’s one of the best ways to improve your debt-to-income ratio.

Tags: student loan forgiveness, student loans, home mortgage loan, mortgage loan blog,
debt-to-income ratio, mortgage lenders, public service jobs

It seems a little counter-intuitive that the government insurance agency would take over a failed bank and then continue its practices. But that’s just what the FDIC did back in 2001 when it took over Superior Bank FSB. As new information comes to light about the mortgage market crash, there are questions about the way the FDIC runs the banks it takes over. Instead of cleaning up some of the subprime mortgage lending practices, the FDIC continued on with Superior’s policy of approving subprime loans to homebuyers — some of which were obviously unqualified.

When the FDIC takes over a bank

When the FDIC takes over a bank, it basically operates the bank until it can find a buyer. The FDIC manages the day to day banking transactions, and allows people to withdraw their money from the bank if they wish. Indeed, IndyMac is a prime example of what happens when the FDIC takes over a bank. Most operations are moving forward, including the acquisition of some of the real estate and mortgage sections by Prospect Mortgage.

The problem is that sometimes it can take months to find a buyer. With Superior, the FDIC decided to keep on providing loans to homebuyers. Unfortunately, the FDIC decided to follow the trend back in 2001, rather than evaluating the lending practices. As a result, quite a few of the foreclosures we are seeing with the current mortgage market mess were given by the government — using some of the same shoddy (and even predatory in some cases) lending practices that caused the downfall of the housing market.

One hopes that everyone can learn from the current mortgage mess: lenders, government regulators and homebuyers alike. But until then, one hopes that we don’t receive any more revelations like those regarding the FDIC’s subprime mortgage lending practices.

Tags: subprime mortgage, FDIC, home mortgage loan, mortgage loan blog,
subprime mortgage, IndyMac

There has been a lot of scrutiny regarding Fannie Mae and Freddie Mac, the two government chartered mortgage lenders that are the biggest buyers of home mortgage loans in the country. There are worries that the banks might fail, and even suggestions by some that the mortgage loans that the two banks have be divided up and redistributed to Fannie and Freddie according to “good” and “bad”.

But what you may not be hearing much about is the prospect that regular (or conforming) home mortgage loans could become more expensive. The evidence for this is a recent filing with the SEC by Freddie Mac. Every so often companies have to make a filing with the SEC to explain where they are at in their finances, and warn of future changes. The Mortgage Reports Blog cuts through the legalese and double-speak to let you know exactly what Freddie is proposing for home mortgage loans, and how it may affect you:

Loan-level fees, you’ll remember, are mandatory charges on a mortgage. Not closing costs, per se, but an interest rate adjustment to every mortgage application.

In this sense, Freddie Mac’s plan to add new loan-level pricing adjustments is like a tax on borrowing and would mark the third round of such fees since loan-level pricing adjustments were first introduced December 2007.

Mortgage rates used to based on the price of mortgage bonds alone. Today, it’s bond prices plus fees from Freddie (and Fannie). In other words, even if Wall Street mortgage rates fall later this year, Main Street mortgage rates could still rise because of new, mandatory borrowing fees for all mortgage applicants.

It’s not enough that the subprime mortgage market mess has created conditions in which it is harder to get mortgage financing; mortgage lenders are exacerbating the problem by adding new fees into the mix.

Tags: Fannie Mae, Freddie Mac, home mortgage loans, conforming loans,
subprime mortgage, mortgage interest, mortgage loan blog