Why Borrowers Pay For Mortgage Insurance…

Why Borrowers Pay For Mortgage Insurance…

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Because of the risk on default and loss of the loan. Lenders require private mortgage insurance known as PMI on mortgages with down payments less than 20% from the purchase price.

If lenders paid for mortgage insurance and passed on the cost to borrowers as a higher interest rate, they might have bumped up against those ceilings. If the borrower paid the premium, this potential roadblock is avoided.

Generally, the larger the loan amount, the more risky it is to the lender. Private mortgage insurance is protection for the lender against a borrower defaulting on the loan. If the borrower can’t pay back the loan, the lender has a way to get its money back.

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Sales of Existing Homes Increase, however not enough

Sales of Existing Homes Increase, however not enough

Sales of previously owned homes rose in September to the highest level in a year, adding to signs that residential real estate will be a plus for the economy.

National Association of Realtors reported today in Washington that closings on home sales advanced 2.4 % to 5.17 annual rate, and purchases rose 1.9% from the same month last year before adjusting for seasonal patterns.

Why this is a great time to sell your home?

Why this is a great time to sell your home?

On the way, easier lending standards and faster wage gains would attract even more buyers, including those making their first entrance to homeownership.

Sales of existing single-family homes increased 2% to an annual rate of 4.56 million in September from the prior month, also the fastest pace in a year. Purchases of multifamily properties including condominiums rose 5.2% to a 610,000 pace.

Of all purchases, cash transactions accounted for about 24%, down from 33% 12 months earlier, Investors, 63% of whom paid cash 14% of the market last month, in September 2013, they accounted for 19%. And First-time buyers accounted for 29% of the market for a third month in September. Distressed sales, accounted for 10% of the total

We are aware that residential real estate market has definitely gotten better; however it has not fully recovered. There is a lot more to be done!

Homeownership at Best!

Homeownership at Best!

Federal Housing Finance Agency has been working towards a plan to open what many we see as underwriting standards that are too restrictive.

Mortgage giants Fannie Mae and Freddie Mac, their regulator and lenders are close to an agreement that could greatly expand mortgage credit while helping lenders protect themselves from charges of making bad loans, according to people familiar with the matter.

Homeownership getting better!

Homeownership Gets Better!

If the agreement is completed, lenders may be more willing to lend to borrowers with lower credit scores and smaller down payments.

Now that lenders are starting to remove some of the credit overlays, it is time to improve the growth of homeownership in the country

We expect FHFA to report the steps to further move and clarify lender liability and support the return of the 97% LTV product at the GSEs, Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac have recouped tens of billions of dollars in penalties from lenders in recent years over claims that the lenders made underwriting mistakes on loans they sold to the mortgage giants.

However, Lenders have blamed those penalties for tight credit conditions and for prompting them to make loans only to borrowers with near-pristine credit.

We hope these initiatives will have a meaningful impact on the mortgage market, and we can see positive changes in the direction of the mortgages industry after years of tightening credit issues.

Next Tuesday will see the existing home sales report for September, on Thursday the FHFA purchase-only house price index for August, and Friday the new home sales report.