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The Mortgage Professor: Do large principal payments reduce monthly payments?

Consumer / Home and Consumer News /

On home mortgages, a large payment to principal reduces the loan balance and with it the fully-amortizing monthly payment, or FAMP. FAMP is the level of monthly payment required to repay the mortgage fully over its remaining term. Many borrowers would like a mortgage on which the monthly payment would drop to the new, lower FAMP following a ...Read more

The Mortgage Professor: Do reverse mortgages work for owners of expensive homes?

Consumer / Home and Consumer News /

As a federally insured reverse mortgage program under the Federal Housing Administration, the home equity conversion mortgage program is not designed to help the wealthy. In calculating maximum draw amounts, the highest property value it will recognize is $625,500. If your house is worth $1 million or $10 million, you can't draw more than the ...Read more

The Mortgage Professor: Homebuyers lose a useful mortgage option to overzealous regulation

Consumer / Home and Consumer News /

Before the financial crisis, many mortgage contracts contained a provision stating that borrowers who paid off their loan early had to pay a penalty. Penalties were usually expressed as a percent of the outstanding balance at time of prepayment or a specified number of months of interest. In most cases, the penalties declined with the passage of...Read more

The Mortgage Professor: How to pay off a 30-year mortgage in 15 years without being scammed

Consumer / Home and Consumer News /

The 15-year fixed-rate home mortgage is far and away the best option for consumers because of the low interest rate. All other things the same, including originations fees, the 15-year rate in today's market is 0.75 percent below the 30-year rate.

I recently assessed a $240,000 loan to a borrower with a high credit score who will put 20 percent...Read more

The Mortgage Professor: Is making extra mortgage payments better than refinancing?

Consumer / Home and Consumer News /

Many mortgage borrowers at some point consider making extra payments or refinancing but are confused as to which would serve them better. This article is directed to them.

EXTRA PAYMENT DECISIONS VERSUS REFINANCE DECISIONS

While borrowers refinance for a variety of reasons, only refinancings undertaken to reduce the interest rate can be viewed...Read more

The Mortgage Professor: Should home sellers pay the settlement costs of buyers?

Consumer / Home and Consumer News /

Q: In an effort to sell my house, I agreed to pay up to $8,000 of the buyer's closing costs. Is there anything I can do to keep the amount as far below $8,000 as possible?"

A: At this point, no. If you agreed to pay "up to" $8,000 of the buyer's costs, you will almost surely end up paying $8,000 or very close to it.

WHY A SELLER'S COMMITMENT ...Read more

The Mortgage Professor: How to unleash the reverse mortgage market

Consumer / Home and Consumer News /

Last week's article indicated that the market for home equity conversion mortgages -- the federal government's reverse mortgage program -- is not a shoppers market because the product is not well-defined, the prices charged are obscure, and borrowers have no reason to be confident that the product selected will be delivered at the agreed-upon ...Read more

The Mortgage Professor: How to unleash the reverse mortgage market

Consumer / Home and Consumer News /

The need for a robust reverse mortgage market is large and growing. At the end of 2015, there were about 24 million homeowners ages 65 and older, and that number is growing by about a million each year.

The Center for Retirement Research at Boston College estimates that more than half of them "may be unable to maintain their standard of living ...Read more

The Mortgage Professor: Rent or buy? The question that never seems to go away

Consumer / Home and Consumer News /

Should you rent or buy?

The question never goes away because it is confronted anew by every new cohort of households. The letters I receive on the topic, such as the one below, haven't changed in the last 20 years:

"I am a 48-year-old divorced female. I have been renting for the last 10 years. ... My friends keep telling me that renting is '...Read more

The Mortgage Professor: 4 ways to purchase a house with a reverse mortgage

Consumer / Home and Consumer News /

Many home purchasers are seniors. Some become homeowners for the first time, but most have been and want to remain homeowners. They just don't want to remain in their current house. They may want a house that has no stairs, or one that is closer to family or friends, or one in a warmer climate. In many cases, they want to downsize, both the ...Read more

Mortgage rates drop to lowest level since May 2013

Consumer / Home and Consumer News /

Concerns about the strength of the global economy plus the Federal Reserve's decision this week to keep interest rates from rising have driven mortgage rates to the lowest level since May 2013.

According to Freddie Mac's most recent survey, 30-year fixed-rate mortgages have dropped to 3.54 percent. A 15-year mortgage dropped to 2.81 percent. ...Read more

The Mortgage Professor: Mortgage document deluge

Consumer / Home and Consumer News /

Last August, the Consumer Financial Protection Bureau put into force new regulations that integrated the mortgage loan disclosures required by the Truth in Lending Act, or TILA, and the Real Estate Settlement Procedures Act of 1974, or RESPA. The new regulation is named the TILA-RESPA Integrated Disclosure Rule, or TRID.

The first three parts ...Read more

The Mortgage Professor: Mortgage document deluge: Educational docs and those to hold on to

Consumer / Home and Consumer News /

In the first two parts of this series of columns, I explained how the large number of documents involved in a mortgage closing can be divided into four basic groups, each of which should be viewed as distinct by borrowers. In this installment, I'll review the categories I refer to as "educational documents" and "future use documents."

...Read more

The Mortgage Professor: Mortgage document junk docs to breeze through

Consumer / Home and Consumer News /

Everyone who has ever closed a real estate transaction knows that the number of documents that must be signed at the closing table is enormous. I refer to this as the "mortgage document deluge," which I've been exploring in a series of articles aimed at helping borrowers cope with the barrage. Borrowers need to know which documents in the pile ...Read more