Mortgage Rate News

Things are getting crazy out there. As the economy continues to worsen, more and more people are in danger of losing their homes. Job loss and other issues are starting to take their toll on even the most responsible of home owners. And, as foreclosures  mount, so, too, does foreclosure fraud.

Foreclosure fraud

Foreclosure fraud comes in a variety of forms, from scammers who claim that they can fix your foreclosure problem if you pay them an upfront fee (you can guess where that fee ends up in reality) to scammers who convince you to sign your house over to them. The SUU Journal reports on the warning given by the State of Utah:

Scams often include a fraudster offering to allow the homeowner to sign over the home and take the credit hit, then sell the home back to the homeowner. The Department of Commerce, in its warning, urges people never to sign their homes over to a third party.

Another misconception is that declaring bankruptcy will help. This should only be considered as a last resort, according to the Department of Commerce.

The Utah Department of Commerce is concerned because Utah has a rather high mortgage fraud rate, and the office has issued a warning that foreclosure fraud is on the rise. If you are concerned about foreclosure, here are some of the things you can do:

1. Contact your lender as soon as possible. Perhaps you can get a loan modification or refinance.
2. Try to cut unnecessary expenses so you can make your mortgage payment.
3. Consider selling your home (even doing a short sale).

Avoid signing your deed over to anyone, and do not trust offers that sound too good to be true. Do not pay money up front for a foreclosure avoidance service, and be especially wary of those who tell you that declaring bankruptcy is a good idea. It should only be a last resort.

If you are facing foreclosure, there are programs that can help you — even more mortgage lender may be willing to help. Keep a close eye out, and watch out for scams.

One of the debates that often surfaces surrounding the home mortgage loan is whether or not it is worth it to pay your mortgage off early. Since I am of the school that it is better to get out of debt as soon as possible, I tend to be on the side of doing what you can to pay off the mortgage early. Others are not so sure. The Greenest Dollar has a great article examining the debate over whether or not to pay your mortgage off early:

Don’t pay your mortgage off early

There are some compelling arguments for keeping your mortgage:

• You get a tax deduction for your mortgage interest.
• You can make your mortgage payments, and then invest the extra in the stock market. (Although for those looking to make immediate returns, this may not be the best move right now.)
• You have more liquidity when your assets aren’t all tied up in your house.

Pay your mortgage off early

Of course, the flipside is that there are definite advantages to paying your mortgage off as soon as possible. (The Greenest Dollar points out that “mortgage” is French for “death contract.”)

• The feeling of freedom you have when you get rid of a rather large obligation. (Stress is reduced as well.)
• Once you pay off the mortgage, your monthly liquidity returns, since you have that cash that would have gone to the mortgage payment.
• You actually own your home. Remember: As long as you have a mortgage, you do not actually own your home. The mortgage lender does.
• You save a great deal of money in interest payments — more than you can save in tax deductions.

One way you can pay off your mortgage early is to set up payments on a biweekly schedule, rather than a monthly schedule. This way you get one extra payment a year. Another thing you can do is send an extra payment when you have the money, designated as “for principal only”, to reduce the amount you owe. Just make sure that your mortgage doesn’t come with a prepayment penalty.

Mortgage interest rates are much lower now than they were a few months ago. In fact, long term mortgage rates are at lows not seen for four years. Mortgage News Daily reports on the new 30 year fixed mortgage interest rates:

The 30-year fixed-rate mortgage (FRM) averaged 5.47 percent with an average 0.7 point for the latest week compared to 5.53 percent with 0.7 point during the week ended December 4.  This is the lowest interest rate for the 30-year FRM since March 2004 when it averaged 5.40 percent.

This is an interesting development, spurred in part by a huge decline in the initial jobless report for November. When the mumbers showed record unemploymnet, it caused bond yields to fall. And, as bond yields pull back, there is room for long term mortgage interest rates to ease as well.

Will lower mortgage rates help the housing market?

Of course, it remains to be seen whether or not these new, lower mortgage loan rates will help the housing market. While the rates certainly look inviting to new homebuyers (and even those looking to refinance), it may not help prevent foreclosures. And it may not mean more houses bought. While more people may apply for home loans, there is not guarantee that they will get them: Mortgage lenders are still showing reluctance to finance those whose credit may not be perfect, or who may not have a larger down payment.

Another consideration is the fact that lower mortgage interest rates are not very likely to help in terms of foreclosures. Even though the foreclosure rate drew back last month, there are predictions that next year will see a huge increase. Loan modifications and foreclosure moratoriums and other efforts to fight foreclosures are only like to work in the short term, and this is a long term problem.