Home Loans -- Federal Regulators Warn Lenders to Be More CarefulWritten by Charles Essmeier
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a home’s value.
The problem with such loans is that they are both issued under assumption that home prices will continue to rise. Prices may continue to rise, but if they don’t or worse, if they fall, lenders could find themselves in ugly position of holding liens on property that is worth considerably less than amount of loan. As of yet, there’s no sign of a crash in real estate prices, but foreclosures are up in both Texas and Florida, and this could be an indictor of more difficult times ahead for lending industry. The banking regulators didn’t issue any orders regarding how high-risk loans should be handled, but they did caution lenders to check credit scores of borrowers carefully and to eschew or cut back on so-called “no-doc” loans, which do not require full documentation of a borrowers assets or income.
This should be of relatively little concern for average borrower, who would probably think that such guidelines represent ordinary common sense. Unfortunately, common sense sometimes gets ignored during boom times in business, only to be remembered when buyers start to default on their loans. By that time, it’s too late to do anything, and stockholders are left with debt.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation information and HomeEquityHelp.net, a site devoted to information on home equity loans.
| | Home Loans -- The Hot New Product? The 30-year MortgageWritten by Charles Essmeier
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who simply want to invest their money elsewhere. So why is 30-year fixed-rate mortgage back in style? Because interest rates have dropped to their lowest point in fourteen months, and they are nearly as low as they were in summer of 2003, when they reached lowest point on record. In short, 30-year fixed-rate mortgage is not only seen as competitive with other types of loans, but it is actually seen as safer. Borrowers who have adjustable-rate mortgages enjoy their biggest advantage when rates are high, knowing that their interest rate is lower than a fixed-rate mortgage. But when interest rates for market as a whole reach historic lows, borrower with an adjustable-rate mortgage knows that their rate can only go up. At times like present, when rates are only likely to go up, converting an adjustable rate loan to a fixed-rate loan is a smart move. First-time buyers can safely take on a 30-year fixed-rate loan and be comfortable in fact that their rate will stay fairly low for duration of their loan.
Sometimes, way things have always been done turns out to be best. While there are still some buyers who will benefit from adjustable-rate loans, most borrowers would do well to lock in their loan at a fixed rate now. Historically, fixed-rate mortgages have rarely been under six percent, so obtaining such a loan while they are available is one of smartest moves a homeowner can make.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation information and HomeEquityHelp.net, a site devoted to information on home equity loans.
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