A New Alternative to the Fixed Mortgage

I've always been a 'fixed' rate mortgage kinda-guy. I liked the fact that the rate stayed the same and allowed us to plan out our expenses, month after month. We also liked the 30 year mortgage, since it minimized the required monthly payment. We recognized that a 15 year fixed mortgage provided for a lower interest rate (currently a full point lower), but at a substantially higher required payment. At the time the 15 year mortgage payment was prohibitive.

Enter a new alternative. How about a 30 year loan that's fixed for the first 15 years, then 'adjusts' once (only once!) for the remaining 15 years? How about if the starting rate is just a small increment above the 15 year fixed rate, but still well below the 30 year fixed rate?  Since the average mortgage is held for only about 7 years, this seems a no-brainer.

Of course this loan has some fine print, but doesn't seem to be too unusual. It has a 'jumbo' upper loan limit of $2M. This mortgage is offered by Prospect Mortgage, which as an office in Orleans. Call them at 508-862-6175 for more details.

Robo-Signing Settlement - Homeowners Q & A.

The long awaited mortgage foreclosure Robo-signing settlement has finally been agreed-to by the Federal government and the 5 key banks. The $25 billion (thats Billion with a B) settlement, announced yesterday, is expected to help many borrowers who are struggling to make their loan payments, owe more than their homes are worth or have lost their homes to foreclosure.

A lot has been written about this deal, but the Wall Street Journal has compiled a Q&A that should be very helpful. Check it out....

Adjustable Rate Mortgages - Time to Reevaluate Your ARM

With 30 year fixed rates at historically low rates and the likelihood of higher rates in the future on the rise it's time that you reevaluate your adjustable rate mortgage (ARM). It might make sense to refinance to a 15 or 30 year fixed rate mortgage

Check out this article for some background and ideas relative to your ARM evaluation.

Foreclosed and Sued - The Double Whammy!

Did you know that forty-one states (Massachusetts??) and the District of Columbia permit lenders to sue borrowers for mortgage debt still left after a foreclosure sale? The banks are simply responding to the serious losses they have had to eat  due to today's battered housing market. This is true because foreclosed homes seldom fetch enough to cover the outstanding loan amount, both because buyers financed so much of the purchase price—up to 100% of it during the housing boom—and because today's foreclosures take place following a four-year decline in values.

The Wall Street Journal covered this phenomena on its online Homes section. Go check it out.

Adjustable Rate Mortgages - Bad News?

We have all heard the bad press about adjustable rate mortgages (ARMs). "They suck you in with their low initial rates, but ultimately the rates go up".  Many folks have been taught that the 30-year fixed rate mortgage is 'best' because your monthly mortgage will remain constant (ie fixed) for the duration of the mortgage. This conservative thinking is certainly safer, particularly for folks just starting out as homeowners. All that said,  ARMs may be the right choice for some folks. The current rate for a 30 year fixed mortgage is 5.00% with the 3/1 ARM at 3.50%.

As an example, when I bought in Eastham, I knew that I was going to be selling my New York home in a few years and moving to Eastham. For us, the low 3/1 ARM rate made sense since we could simply pay-off the Eastham loan before the rates went up. Interestingly, at the end of my 3 year hold period, my rates floated down.

The Wall Street Journal's MarketWatch website had a very interesting article on this choice ...here.

Wanna Mess Up A Closing?

Jeff Kobold, of the Cape Cod 5 mortgage department in Orleans, sent me this article about how to torpedo what should be a fairly 'normal' closing. The article, from BankRate.com, warns against doing 3 specific financial things just prior to your closing. They are, simply,

• getting a new credit card or a car loan
• charging up your credit cards
• or starting a new job.

Don't do these! Read the details in the BankRate article...Here.

Mortgage Underwater - Walk Away?

What should you do if your mortgage is seriously underwater and you are having difficulty making the payments? One of the options is to simply walk away - giving the keys to the bank and letting the situation be resolved with a short sale or foreclosure. Another is to just tough it out and make the sacrifices necessary to continue making the payments. The banking website, BankRate.com, answered this question. Take a look!

Mortgages at 4.5% ? - Maybe!

Will it be possible to get a mortgage for your Eastham home at rates as low as 4.5% ? Maybe!

The Treasury Department is contemplating a proposal that would cut mortgage rates for new loans for homes, according to the Wall Street Journal. The plan would employ Fannie Mae & Fannie Mae to offer mortgages with rates as low as 4.5%, roughly 1 percentage point lower than current rates. The measure is under consideration as part of the Treasury Department's continued effort to limit foreclosures, which has been at the core of the financial crisis. The plan would seek to revitalize the financial market without bailing out homeowners and lenders. Go to MarketWatch.com for the whole story.