Financing – Karen's Perspective

FHFA Reports Mortgage Interest Rates

Need to get a loan? Rates are still ridiculously low! I hear on the news that rates are going up but I found these actual numbers and they’re inching up at best. Yes, in the next few years they will be higher, they have to be higher if we want to get through this inflationary period, but read these rates! Low, low, low.

The Federal Housing Finance Agency reported that the average rate on a conventional 30-year, fixed-rate, mortgage loan of $417,000 or less increased to 5.12 percent in June. The average interest rate on a 15-year, fixed-rate loan of $417,000 or less increased to 4.8 percent in June.

These results are for loans closed during from June 24-30. Typically, the interest rate is determined 30 to 45 days before a loan is closed so the reported rates show market conditions in mid-to late-May.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 5.08 percent in June, up from 4.87 percent in May. The effective interest rate, which reflects the amortization of initial fees and charges, was 5.16 percent in June, up from 4.95 percent in May.

These are definitely troubled economic times but we still can’t complain about mortgage interest rates!

07 / 30 / 2009
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Pre-qualification vs. Pre-approval

A pre-qualification is a relatively easy to obtain and not very valuable initial evaluation of your credit worthiness as a potential borrower. It is typically used to determine the estimated amount you can afford to borrow. Pre-qualification looks at your income and expenses in order to generate an estimated borrowing range that you should be able to repay to a lender.

A pre-qualification amount is not a guaranteed amount that a financial institution would approve. It is simply an estimate that gives you an idea of what you can afford to purchase.

To pre-qualify, a loan officer will take some of your information (employment, income, assets, current debt) and make a tentative decision without verifying any of it. Typically with a pre-qualification, you won’t even give your social security number so there is no credit check.

The Economy

Last week, General Motors began the fourth largest bankruptcy proceedings in history, joining the many other large and venerable companies that have sunk to the bottom during this economic crisis. In fact, eight of the 20 largest bankruptcies have happened during the last two years of crisis. Good Magazine’s latest Transparency is a look at the biggest sinking ships in business history.

found this on swiss-miss. thanks, Tina!

06 / 10 / 2009
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Home Equity Loan

photo by AMagill

What is a Home Equity Loan? Can you get one? Do you want one?

A Home Equity Loan or Home Equity Line of Credit (HELOC) is a loan secured by the equity value in your home. The property is the security for the loan, which is usable for any purpose. A home equity loan creates a lien against your house and reduces actual home equity.

There is a specific difference between a home equity loan and a Home Equity Line of Credit (HELOC). A HELOC is a line of revolving credit based on the equity in your home and has an adjustable interest rate. You will be charged monthly based on how much available credit you have used, whereas a home equity loan is a one time lump-sum loan, often with a fixed interest rate and a regular monthly payment amount.

Why use a Home Equity Loan or a HELOC rather than a credit card for larger expenses?

Credit Cards for finanacing deals?

Credit Card photo

How many ways are there to raise funds for deals? Many. Have you ever used your credit cards for cash advances? This is one quick way to get the financing you need.

There are a number of important things to consider here. Some of those include: What is the interest rate on the cash advance? How long can you use it? What is the fee to do the transaction?

When you get the offer in the mail, it can be very tempting. I just got a great 2.99% for a year with a cap on the cost of the transaction at $250. I took it and will use the money for a year. Where else can I get money at that rate? And I got a good sized chunk.

However, I have learned the hard way some pit falls to watch out for. First, of course, always make your payments on-time; early is better. If you’re late on any, you’ll pay the higher interest rate on the entire amount you borrowed for the entire time you’ve had it. All deals are off.