With the credit crunch and the huge number of defaults on the market, banks are really starting to get tough on credit and whom they approve for housing loans. During the early 2000s practically anyone with any type of credit was approved for a housing loan.

Why this is the case is rather confusing since it just doesn’t make sense to give people with bad credit and low incomes a home loan.

Nevertheless, this is exactly what occurred and we are seeing the fallout today. There are so many foreclosures in the market that real estate is really plunging. Prices are going down by seconds and sellers are wondering if they will ever be able to sell their house.

Current Trends

Current trends show property prices dipping down to 25% of their highest value and then going back up again. However, this may not occur and a full out recession may occur with house prices dropping as much as 40%. If this happens then you will see the home loans get even tighter.

This will make it harder to buy homes and then the prices will drop even more. People think that one thing does not have to do with the other but that simply is not the case.

The amount of bank loans being approved goes hand in hand with the real estate market as well as the economy. You can really tell if the country is in a recession by the amount of credit being issued.

For the moment, things are not so bad. Credit is getting tighter and banks are not being as generous with the home loan approvals as they were in the past. However, people with good credit are still being approved for lines of credit for their house every day.

This is important to keep in mind because those who are interested in buying a home and who can afford to do so should check out interest rates and their likelihood of being approved.

This will allow them to buy a home for a much lower price than they typically could and really get more houses for the money.

What banks plan on doing in the future in regard to mortgage loans is uncertain. The market is in turmoil and it seems that every day something new happens to make the market even more vulnerable.

One thing is for certain and that is that every person who walks into a bank hoping to leave with a house loan will not be able to do so. In fact, those with impeccable credit and big down payments may even find themselves worrying over whether they will be approved for a house line of credit or not.

Hopefully the problems in the banking sector and the real estate sector will right themselves sooner rather than later.

This would certainly help those who are trying to sell their houses and show that the country is not in as a big a recession as many believe. Of
course, only time will tell!

By: Ajeet Khurana

A jumbo mortgages is a home loan that exceeds the limits set by Fannie

Mae and Freddie Mac.

How are jumbo loans different?

What differentiates jumbo mortgage loans is the loan amount. At present, loan amounts that are higher than $417,000 are usually deemed jumbo mortgages. This determination is made by comparing industry standards for average housing loans as governed by the two biggest secondary mortgage lenders, Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac set industry standards for ‘conforming loans’; Home loans beyond those maximums are regarded as jumbo mortgages. These two agencies cap the dollar figure for loans that they will buy (that’s where the $417,000 figure comes from). Larger loan amounts are funded by other investors such as banks and insurance companies. Note that the dollar figure set to qualify jumbo mortgages differs by locale, so the limit is higher in Hawaii and Alaska (and in some other states). In the majority of the U.S., jumbo mortgages are those larger than $417K.

Available Terms – 15 Year Fixed, 30 Year Fixed, or Variable 30 Year

Jumbo Mortgage

The terms for jumbo mortgages vary similarly to other types of housing loans. Buyers can choose between variable rates, like 3/1 or 5/1 ARMs, for a 15-30 year jumbo mortgage, or a 15 or 30 year fixed jumbo mortgagerate.

Whether a 15 or 30 year fixed jumbo mortgage or an adjustable rate is best for you will depend on your plans and situation.

A 30 year fixed jumbo mortgage is better for those whole plan to own the home for a very long time. With this type of mortgage, the rate will not go up but it will never go down, either – it stays the same for the life of the loan. This is good because the payment is predictable, and cannot rise sharply if interest rates do. On the downside, the 30 year fixed jumbo mortgage rate is higher since lenders know they can never charge more than the original rate.

The lowest jumbo mortgage rate is usually an adjustable 30 year jumbo mortgage rate. Lenders understand their potential to benefit from increases in rates over time, so they are willing to lend at a lower rate in the beginning. Although, the lower rate won’t last. A variable 30 year jumbo mortgage rate will be fixed for 3 to 5 years, and then will adjust annually according to an index. Even small increases could mean significantly larger monthly mortgage payments.

Going with an adjustable 30 year jumbo mortgage rate works well when a buyer plans to move within the 3 to 5 year fixed period. For a buyer more concerned with smaller initial payments, or who will likely refinance in the near future, the variable 30 year jumbo mortgage rate is better than the 30 year fixed jumbo mortgage. Why pay the higher fixed rate when the buyer knows this isn’t their long-term plan?

All jumbo mortgage products – 15 year, variable 30 year, or the 30 year fixed jumbo mortgage – have their benefits. A trustworthy mortgage lender with experience financing jumbo mortgages is a buyer’s best resource for determining which product is right for them.

By: 1st American Mortgage

Why is it important to consult your calculator loan in the first place?

The amount of money you have available for the payment impacts on all aspects of buying a home, ie how to write your purchase offer and the mortgage loan you qualify for programs. A mortgage calculator is a useful tool that tells you what you can afford, you need to know before you start looking for your dream home.

Use a mortgage calculator to decide on the right mortgage programs

With the home loan calculators, you can tell if there will be enough for a minimum payment. This is important because some home loan programs are limited to only a few types of mortgages. If you have enough to pay, but need the lender or seller to cover all or part of their closing costs, this new limit their options and it is important that you know this in advance before you start talking to home sellers or promoters.

If you intend to borrow all or part payment of your 401K or retirement plan, different loan programs have different rules on how to qualify. If a potential borrower has enough money for a down payment, and then they have a lot of options.

Loans to fixed rate conventional, adjustable rate mortgages, purchase rebates, VA, FHA and graduated payment mortgage programs are varied options for housing loans.
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