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April's 15 (or so) Ways to Financial Literacy

2009-04-28T12:05:00.001-07:00

What makes April special? Let us count the ways:April Fool’s DayIncome Tax DayMy Brother’s BirthdayNational Frog MonthNational Autism MonthNo Housework DayInternational Guitar Month. . . and more!It’s also Financial Literacy Month. Even with 2 days left, it’s worth it to take a minute and get a little education. (And it still counts even if you wait until May!)Every couple years, the Jump$tart

Simple Real Estate Definitions: PITI

2008-08-21T07:10:00.000-07:00

Most homeowners make four housing-related payments each month:Principal on a mortgageInterest on a mortgageTaxes on the real estate ownedInsurance for the real estate ownedCollectively, these payments are known by the acronym PITI but don't let it fool you -- a homeowner's monthly expenses are still called PITI even if one or more of the elements doesn't apply.For example, a homeowner with an

Mirror, Mirror . . . Who’s the Best? (Hint: It’s Not Suze)

2008-06-20T19:08:00.000-07:00

This morning while paying bills on-line, I had CNNMoney.com’s video clips playing in the background. When I heard a piece on “who do you trust and what makes a good financial advisor” with Suze Orman, I was reminded again of how important it is when dealing with your finances to find someone who really knows you.“The best advisor,” Suze said, “is the one you see looking back at you when you look

What You Need To Know About Mortgage Rate Quotes

2008-06-19T21:08:00.000-07:00

Home buyers are often surprised when a "rate quote" from the morning won't be honored in the afternoon. Sometimes, the assumption is that the loan officer is just being sneaky.This couldn't be less true.Rate quotes change in the middle of the day because mortgage markets are in constant flux. All day, every day -- just like stocks.And like stocks, a mortgage bond's morning price will likely "

If That Home Is A "Good Buy", Make Your Offer Quickly

2008-06-19T21:01:00.000-07:00

Each month, University of Michigan researcher survey the U.S. population about their thoughts on the economy -- is it improving, it is worsening, is it staying the same.May's consumer confidence survey registered it's lowest reading since 1980.Given the recent headlines, that shouldn't be surprising:Unemployment is spikingGas prices are at an all-time highHousing markets keep getting bad pressBut

Guess Which 4 States Accounted For More Than 50 Percent Of May 2008 Foreclosures

2008-06-19T20:59:00.000-07:00

RealtyTrac released its most recent foreclosure statistics and if you only read the headlines, you think the entire country was on the verge of losing its homes.The underlying data tells a different story, however.More than half of the country's foreclosure activity in May 2008 was tied to just 4 states in the union:California (28 percent)Florida (14 percent)Arizona (5 percent)Michigan (5 percent

Cancel Your PMI Before It's Too Late To Cancel It

2008-06-19T20:56:00.000-07:00

When homeowners borrow more than 80 percent of a home's value, mortgage lenders often require a corresponding insurance policy called Private Mortgage Insurance.PMI provides a cash payment to lenders in the event of a homeowner defaults.But because PMI policies are designed for high LTV loans only, they usually contain cancellation options for when home equity percentages reach 20 percent or

Is The Federal Reserve Telegraphing Its Next Rate Hike?

2008-06-19T20:50:00.000-07:00

The Federal Reserve is stumping hard on inflation this week, creating speculation that Fed Funds Rate hikes may be in store for later this month.This is a counter-intuitive development because increases to the Fed Funds Rate are typically associated with periods of rapid economic expansion.Lately, we've seen anything but.Witness:High levels of unemploymentReduced consumer spendingFalling consumer

Why Your "Dear Seller" Letter May Be Met With A "Dear John"

2008-06-19T20:46:00.000-07:00

Several years ago, when homes sometimes sold within hours, prospective buyers often drafted "Dear Seller" letters, an accompanying personal note to help purchase offers stand out in a multiple-bid situation.Today, some buyers are writing a different kind of letter to win a seller's favor -- a letter explaining why the buyer's offer is so far below the seller's asking price.You can't blame buyers

Why It's Good News For Home Buyers When Unemployment Rates Surge

2008-06-06T10:24:00.001-07:00

On the first Friday of every month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report.More commonly called the "jobs report", today's 2-page analysis of May 2008 shows that the economy shed jobs and that unemployment surged.This is terrific news for home affordability.That may sound counter-intuitive, so let's dig deeper into the jobs report and what it really tells us about

160 Million “We’re So Sorry’s” and One Big Opportunity

2008-06-04T09:00:00.000-07:00

“We’re so sorry, Uncle AlbertWe’re so sorry if we caused you any painWe’re so sorry, Uncle AlbertBut there’s no one left at homeAnd I believe I’m gonna rain”Can you say “We’re so sorry” 160 times? And do it again a million times over?That’s exactly what one credit bureau promised last week.In the largest class action

The Proper Way To Give And Receive Gifts For Downpayments

2008-06-04T08:37:00.000-07:00

When a home buyer is gifted cash for a downpayment, there is a right way and a wrong way to receive the funds.The right way includes:Completing an acceptable gift letterDocumenting the withdrawal of funds with receiptsDocumenting the deposit of funds with receiptsThe wrong way is to ignore the rules that mortgage lenders clearly spell out for you.Mortgage lenders watch gifts closely because they

Did You Know : The Lifespan Of A Mortgage Approval

2008-06-03T07:53:00.000-07:00

Mortgage approvals don't last forever.A conforming mortgage approval from Fannie Mae or Freddie Mac has a shelf-life of 120 days.After 120 days, the approval expires and a mortgage applicant must re-submit his application for consideration.In addition, a mortgage approval can "expire" within the 120-day period for other reasons:-- Change of job status or income-- Newly-acquired monthly debt (i.e.

Guess What Number Could Doom Your Loan Now (Hint: It’s Not Your Credit Score)

2008-06-01T13:22:00.001-07:00

“I’m thinking of a number . . .”Unless you’ve been living under a rock for the past 10 years, you've seen the ubiquitous FreeCredit.com commercial featuring a too-smart-for-his-own-good looking guy in a director’s chair and those 5 famous words. In fact, I apologize if you’ve somehow finally succeeded in banishing this

The Impact of Falling Oil Prices on Mortgage Rates

2008-05-30T08:39:00.000-07:00

Falling oil prices is one reason why mortgage rates are dropping for the first time in 6 days.Oil is off $9 per barrel from last week, a shift that correlates to $0.23 per gallon of unleaded gas, roughly.This drop is good news for both home buyers and "rate shoppers" -- high gas prices is partly to blame for rising mortgage rates this week.The connection between oil prices and mortgage rates is

Why It Will Be Easier to Get a Mortgage Approval Today Than Monday

2008-05-30T07:04:00.000-07:00

Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.The new guidelines will force many Americans to face higher mortgage rates, higher loan fees, or to be shut out from "prime" mortgage rates altogether.The new "mortgage rules" include the following changes:Higher income levels required for basic approvalsInterest only loans

18 of 20 Real Estate Markets Show Signs of Improvement

2008-05-30T07:02:00.000-07:00

The monthly Case-Shiller Housing Price Index is a popular and often-quoted measurement of the housing market's health. The chart above is sourced from its report published yesterday.In 18 of the 20 largest metropolitan areas, home values declined at a slower pace than in the previously measured month. The report also showed that national home prices are down 14.4 percent from March 2007.

How Spiking Oil Prices Have Mortgage Rates In Tow

2008-05-23T10:53:00.000-07:00

High oil prices are derailing the mortgage market this week, taking an almost-vertical path higher.Since mid-February, prices are up by 50 percent.Rising oil prices can be a threat the U.S. economy because with every extra dollar that Americans pay to energy companies, there is less money available for every other company that makes up our national economy.Strangely, it comes at a time when the "

How We Know That Prime Rate Will Likely Rise Before It Falls

2008-05-22T21:47:00.000-07:00

Three weeks after adjourning, Federal Reserve officials release detailed minutes of their most recent meeting.The April 30, 2008 minutes were released Wednesday and it affirmed traders' beliefs that the Federal Reserve will not be in a hurry to lower the Fed Funds Rate again.This is bad news for two groups of people whose borrowing costs are tied to Prime Rate, the interest rate that is 3

Simple Real Estate Definition: Loan-to-Value

2008-05-22T21:36:00.000-07:00

Loan-to-value is a math formula that represents the relationship between how much a home is "worth" and how much money is borrowed against it.Loan-to-value is often abbreviated as "LTV" and is one of the many factors that lenders consider when underwriting a mortgage application.The math formula is straightforward:In the LTV equation, Loan Size is the amount of money borrowed from the bank and

Did You Ask: Has There Been A Mortgage Rate Reprice In The Last Hour?

2008-05-20T09:02:00.000-07:00

Yesterday, several mortgage lenders issued three separate "rate sheets" in response to the changing mortgage market.It was the fourth time in the last 6 trading days that mortgage lenders issued multiple rate sheets in a day, and continued the trend that started in mid-January.The yo-yo nature of mortgage rates underscores the importance of making mortgage rate comparisons within a limited time

Homebuilders Poised To Capture Different Kind Of Green? Not Quite Yet

2008-05-18T12:33:00.000-07:00

A recent study of the nation’s largest publicly traded homebuilders finds that despite a rapidly emerging market for “green homes,” they have yet to fully embrace environmentally sustainable design and construction.The study was released by Calvert Funds – one of the nation’s leaders in sustainable and responsible investing – and Boston College Institute for

What Mortgage Fraud Looks Like

2008-05-14T09:28:00.000-07:00

According to the FBI's 2007 Mortgage Fraud Report, more than 46,000 cases of suspected mortgage fraud were reported last year. This led to bank losses exceeding $813 million.If you're looking for reasons why mortgage underwriting is measurably more difficult in 2008 -- add "mortgage fraud" to the list. Lenders now perform extra scrutiny on each home loan application to protect against additional

Back To Basics: The 5 Key Components That Make Up Your Credit Score

2008-05-12T22:29:00.001-07:00

To those of us with more in our lives to worry about than how are tradelines look or how many points up or down our score went last month, credit matters are often complex and confusing. Sometimes, it pays to get back to basics.Today, we feature a clip from Linda Ferrari, President of Credit Resource Corporation. Linda is an expert on credit remediation and is great at putting it plain and

Your Mortgage Is Not a Big Mac (or Why It Pays to Have a Personal Mortgage Advisor)

2008-05-11T03:22:00.000-07:00

The typical way to order a Big Mac® looks something like this: step up to the counter, order your burger, pay and eat. Your order taker doesn’t ask whether you really need a Big Mac®. Nor does he question whether it’s the right burger given your unique dietary needs or taste preferences. And when you're done, he doesn’t give you a call to ask if you were happy with the burger, or let you know

A Simple Explanation of "Credit Crunch"

2008-05-11T03:00:00.000-07:00

News sources like to use the term "credit crunch" in describing the U.S. economy, but they rarely define what a credit crunch is and what it means for Americans.A credit crunch is when the amount of available loans suddenly decreases over a very short period of time.Usually, it follows a period of lending which, in hindsight, becomes known for its "easy money".The start of a credit crunch often

What's In Your Wallet? More Than You May Want!

2008-05-10T23:14:00.000-07:00

If you were to stop what you were doing and give yourself 10 seconds to list everything in your wallet or purse, what would be on your list?Cash, driver's license, credit cards, debit cards, membership ID, a receipt or two and a subway card -- that's my list.If after making your list, you actually emptied your purse or wallet in front of you, would there be more than you expected? An unpaid bill

The 80/20 Rule Applies to Foreclosures

2008-05-09T22:12:00.000-07:00

RealtyTrac released Q1 2008 foreclosure statistics and the data follows an interesting statistical phenomenon most commonly known as the "80/20 Rule".The 80/20 Rule states that 80 percent of the effects come from 20 percent of the causes.In this case, 80 percent of bank repossessions in the first three months of 2008 came from 20 percent of the states in the union.Accounting for 156,463

FHA Home Loans Emerge As A Cheap Alternative For Low-Credit Score Homeowners

2008-05-09T22:07:00.000-07:00

FHA stands for Federal Housing Administration, a by-product of the National Housing Act of 1934 and now a sub-group within the U.S. Department of Housing and Urban Development (HUD).The FHA is not a lender nor does it build homes. The FHA exists to insure lenders against loss in the event that a homeowner defaults on a mortgage.Mortgages backed by FHA are often called "FHA loans" even though it's

How The 84,000 Parts Of Inflation Impact Mortgage Rates

2008-05-09T07:58:00.000-07:00

When the everyday "Cost of Living" increases, our dollars don't go as far as they used to. Economists call this inflation.One popular method of measuring inflation is to track prices for 84,000 individual items and lump them together into a "basket". If the overall price is higher, then the economy is experiencing inflation.If a picture is worth a thousand words, this one from The New York Times

The Counties In Which Home Prices Are Rising

2008-05-08T07:30:00.000-07:00

When real estate news is reported on television or in the papers, it's usually told as a national story. Unfortunately, stories like these aren't helpful for everyday Americans because real estate is not a national market.Real estate is local.The graph above was used by Fed Chairman Ben Bernanke in a speech to Columbia Business School earlier this week. Using data from conforming mortgage

You're Not Immune -- No Matter What Your Credit Profile Looks Like

2008-05-07T09:01:00.000-07:00

Four times annually, the Federal Reserve surveys 84 different banks about general banking conditions.One of the survey questions asks about current mortgage lending standards and whether they are loosening or tightening.The chart at right is from the April 2008 survey and it illustrates what we already know: It's getting tougher and tougher to get approved for a home loan.Some of the areas in

Why Free Credit Reports Are Worth What They Cost

2008-05-06T08:53:00.000-07:00

The ubiquity of "free" credit reporting services like FreeCreditReport.com, TrueCredit.com, and AnnualCreditReport.com have helped breed a new generation of credit-aware Americans.Because credit ratings have more importance to everyday life than in years past, this is a welcome development. For example:Lenders use credit ratings to determine borrowing ratesInsurers use credit ratings to determine

Looking Back And Looking Ahead : May 5, 2008

2008-05-05T16:33:00.000-07:00

Mortgage rates ended higher last week on stronger-than-expected jobs data, strong consumer spending, and an appetite for riskier investments.But, investors were most excited about the Federal Reserve's hint that its rate-cutting cycle may be over.The week was quiet until Wednesday when the Federal Reserve voted to lower the Fed Funds Rate by a quarter-percent.The rate cut wasn't the big news,

Why Mortgage Rates Aren't Falling Even Though the Economy is Shedding Jobs

2008-05-02T08:44:00.000-07:00

According to the Bureau of Labor Statistics, the U.S. economy shed 20,000 jobs in April 2008. The labor force now counts at 146 million people as employed.Normally, a loss of jobs would foretell economic weakness and would be a good thing for mortgage rate shoppers. Today, though, traders had been expecting a larger loss of 70,000 jobs.In other words, today's jobs report looks surprisingly

Making English Out Of Fed-Speak (April 2008 Edition)

2008-05-01T10:14:00.001-07:00

The Fed lowered the Fed Funds Rate by a quarter-percent to 2.000% yesterday afternoon. Because it is tied to the Fed Funds Rate, Prime Rate also fell by a quarter-percent. Prime Rate is now 5.000%.Holders of home equity lines of credit and credit card debt benefited from the change and will see lower interest costs in next month's statements.Mortgage rate shoppers are also benefitting.Each time

Memo to Fed: Remember the Fool in the Shower

2008-04-30T23:43:00.000-07:00

The Federal Reserve announced yet another rate cut of .25% to the Federal Funds Rate this afternoon -- its 7th since September 2007. University of Chicago Economist and Nobel-laureate Milton Friedman had a favorite way of describing what the Federal Reserve did this afternoon. He called it the Fool in the Shower, and it goes like this:When the fool turns on the shower, the water is very cold. So,

Simple Real Estate Term: Discount Points

2008-04-30T21:59:00.000-07:00

More commonly called "points", discount points are up-front fees charged by mortgage lenders in exchange for lower mortgage rates.The cost of one point is one percent on the loan size and discount points appear on Line 802 of the HUD-1 Settlement Statement.As a general guideline, each point paid lowers a mortgage lender's offered interest rate by0.250%.For example, a $200,000 home loan offered at