Life is complicated for homebuyers these days. There can be lots of competition with other homebuyers — too much, in some cities. And the selection of homes for sale in many cities is skimpy. Add in rising home prices and jumpy interest rates and you’ve got a lot of stress. If you want to buy a home, you don’t need one more headache. And yet, here it is: Banks no longer want to pre-approve customers for a home loan.
If you are in the process of shopping for a new or used car or car loan, you may be very excited about the possibilities. However, many consumers are so excited about buying a car that they overlook some important factors, and this can cause them to take out a loan that they can’t afford. Here are some considerations that you need to keep in mind before taking out a car loan.
1. Used or New?
3. Credit Score
4. Car Loans
A big part of financial responsibility is maintaining adequate insurance coverage. Premiums act as a safeguard for your assets, and a little money spent now might pay off big time in the future. How much you pay now, though, will vary. You probably don’t have the same premiums as your brother-in-law or neighbor. How can you predict rates then? Credit Karma already provides your auto insurance score and now provides your home insurance score as well.
For a little history, prior to the big 2008 housing crash, the Federal Reserve had started quickly slashing the federal funds effective rate. The rate went from 6.25% all the way down to 0.5%. This rate is directly tied to the rate that banks charge their prime customers (the prime rate), by adding ~3%. Prime rate is directly correlated to mortgage rates. This led to banks cutting 15 and 30 year mortgage rates down to all-time historical lows of around 3% and 4%, respectively.
We’ve since seen a bit of bounce back over the last few months in mortgage rates, but they are still close to historical lows, at about 3.38% (15-year) and 4.48% (30-year). And all else being equal, refinance rates are about the same as regular mortgage rates on home purchases.
Through a new effort called the Streamlined Modification Initiative, borrowers with mortgages backed by Fannie Mae and Freddie Mac who are at least 90 days behind on payments will start receiving offers from lenders to lower their mortgage payments.
The Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie, won’t say how many delinquent homeowners will receive the modifications, but the Mortgage Bankers Association reported in May that about 1.1 million borrowers are behind on their mortgage payments by three payments or more. Not all of those mortgage holders have Fannie or Freddie loans, however.
Several people have asked me about a comment from Fannie Mae chief economist Doug Duncan as quoted in a NY Times article a couple of weeks ago: In a Shift, Interest Rates Are Rising
“There’s no strong correlation between interest rates and home prices,” said Douglas Duncan, chief economist at Fannie Mae.
Duncan is correct.
However, a key difference now compared to earlier periods, is that there is more investor buying. And investors will compare their returns on different investments – and rising rates will probably slow investor demand for real estate, even if they are all cash buyers. But, in general, I think rising rates might slow price increases but not lead to a decline in prices (we might see some seasonal declines).
When applying for a mortgage, having a stellar credit score (think: 720 or higher) is the best way to land a low interest rate. But did you know that you could pay additional money at closing to get an even lower interest rate?
Before you commit to a specific loan, your lender might ask you (and if he doesn’t, inquire yourself) if you’re interested in buying points. A point is essentially a fee that is 1 percent of the loan amount. For every point you buy, your interest will generally be lowered 0.125 to 0.25 percent in return…
Go here to Read More…
Rents are rising, time to buy a home?
Nationwide, average rent was $1,048 at the end of 2012, up nearly 4 percent over one year earlier. Also, the rent to mortgage ratio was nearly 108 in the same time period. Anything over 100 means a mortgage payment is cheaper than rent for the median homeowner. Analysts expect rents to rise 4 to 4.5 percent per year through 2016.
Indeed, renters spent over 24 percent of their disposable income on obligations like rent, car loans and other debt, compared with just 14 percent for the average homeowner.