Category Archives: Mortgage Information

New Tool to shop for mortgage

Posted on January 25, 2016 | Leave a comment

First, some background. In October, the Consumer Financial Protection Bureau, or CFPB, launched its ambitious package of new disclosures and rules governing home-mortgage transactions as part of its “Know Before You Owe” campaign. The Loan Estimate is the upfront piece — lenders must provide it three business days after you apply — and it replaces the traditional Good Faith Estimate and Truth in Lending disclosures.

In three pages, it provides you an in-depth scan of the mortgage you’re considering: It details not only the mechanics of the loan — interest rate, annual percentage rate, monthly principal-and-interest payments, property taxes, insurance and other escrow items — but also the itemized charges you’ll be hit with and the amount of cash you’ll need to close the transaction. Better yet, you can pretty much depend on the cost disclosures as the final ones you’ll pay, because lenders face massive financial penalties if they play games and charge you more at closing. Under the previous system of disclosures, you couldn’t be certain about your final expenses, and the Good Faith Estimate didn’t even tell you how much you’d need for closing.

Under the CFPB’s rules, after you receive your Loan Estimate you have 10 days to shop the competition before agreeing to the deal or ditching it. The bureau recommends that borrowers obtain a Loan Estimate “from three or more lenders” before making a final choice. Sounds sensible, but are buyers actually doing that?

Mortgage Rates Continue falling over global economic concerns

Posted on January 25, 2016 | Leave a comment

Turmoil in global markets has been good for mortgage rates. China’s slowdown and cratering oil prices have created volatility in the markets and spurred investors to flee to safety in government bonds.

Demand for safe assets pushed bond yields lower, and the yield on the benchmark 10-year Treasury note fell below 2 percent this week. The movement of the 10-year Treasury is one of the best indicators of whether mortgage rates will rise or fall. When yields go down, rates tend to go down.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell for the third week in a row, sinking to 3.81 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.92 percent a week ago and 3.63 percent a year ago.

The 15-year fixed-rate average dropped to 3.1 percent with an average 0.5 point. It was 3.19 percent a week ago and 2.93 percent a year ago.

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How to pay off a mortgage faster

Posted on January 8, 2016 | Leave a comment

Make smaller payments more often. The easiest way to cut the size of your payments is, quite simply, to make more of them. As well as paying off your loan faster, you will ultimately pay less interest overall.

If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2400 a month, cut this in half and pay $1200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off $31,200 rather than $28,800.

Pay just a little bit extra. If you have additional expenses on the horizon make ad-hoc contributions wherever possible. A minimum repayment is just that – for most loans there is no reason you can’t pay more, whether here and there or regularly.

By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage.

It may also be worth considering to put all bonuses, tax returns and gifts into your mortgage.