Paying off your home ahead of schedule can feel great. But don’t let it interfere with the funding of your retirement accounts.

For the past year my wife and I have been putting an additional $500 per month toward the principal on our 5.25% [tag]30-year fixed mortgage[/tag]. The psychological freedom of not having a mortgage is very appealing to us, but the argument for trying to invest the extra cash at a higher rate is compelling too. What’s your take on paying off the mortgage early?

As you note in your question, there is a psychological dimension to this decision. And that psychological or emotional element deserves to be taken into account as well. The question is, how much weight does it get? If the idea of dumping that mortgage really appeals to you – if it will make you enjoy life more – then I can see devoting at least some money to prepaying your mortgage. This can especially make sense if you’re timing the payoff so you enter retirement without a [tag]mortgage payment[/tag] hanging over your head. (more…)

Trouble seen with looming end of short-term loan rates

With many [tag]interest-only[/tag] and other “[tag]non-traditional[/tag]” [tag]mortgages[/tag] set to adjust upward, some local [tag]real estate[/tag] and lending professionals think the end of the year might bring some unpleasant news. In late 2006 or early 2007, many homeowners will see introductory fixed rates expire on interest-only and other types of adjustable loans they first took out over the past five years.

Some [tag]homeowners[/tag] with interest-only and other nontraditional adjustable loans could be squeezed in the current atmosphere of rising interest rates, slowing sales appreciation and growing inventories of unsold homes. What to do in the meantime? “My advice would be to lock into something fixed now, even if you have to get a second job to make higher payments,” said Carl Ingram, an agent with Keller Williams Realty in Rancho Mirage, pointing to long-term rates that remain historically low. (more…)

[tag]Interest rate[/tag], [tag]inflation[/tag], [tag]financial market and pension[/tag] worries make a midyear [tag]financial checkup[/tag] more important than usual this year. Even if you made New Year’s resolutions for your money, the scenario has since changed and your family situation may have too. Unfortunately, many Americans don’t know where their money goes each month, which is a hazardous situation now that we’re entering a period in which inflation could rise even further.

Debt can land your finances in trouble. U.S. consumer credit is at a record high $2.17 trillion and growing at its fastest clip in a year, according to the Federal Reserve. Credit card debt, in particular, is destructive because it can easily balloon out of control. Examine all that you owe and pay off highest-rate debt first. Develop a plan to pay down credit card bills, loans and car payments as quickly as possible so that in the long run you have more to invest. Next select your financial goals. Choose short- and long-term targets so it doesn’t seem like an endless treadmill. Write everything down and reassess progress every six months. (more…)

The [tag]30-year mortgage rate[/tag] is roughly flat at 6.63 percent as market weighs potential for inflation versus economic slowdown.

Mortgage rates stayed relatively unchanged this week after contradictory economic data left the bond market unsure over the direction the economy. The average rate on [tag]30-year fixed-rate mortgage[/tag]s was 6.63, for the week ending June 15, from the prior week’s 6.62 percent — that had been the highest level since June 2002, according to [tag]Freddie Mac[/tag]’s mortgage survey. In the year-ago period, the 30-year mortgage rate averaged 5.63 percent.

The average rate on 15-year fixed-rate mortgages rose to 6.25 percent from 6.23 percent last week. A year ago, that loan averaged 5.22 percent. Five-year adjustable-rate mortgages averaged 6.23 percent, 0.03 higher than last week. The five-year ARM averaged 5.10 percent last year. The average one-year adjustable-rate mortgage rose to 5.66 percent from 5.63 percent. At this time last year, the one-year loan averaged 4.25 percent. (more…)

Are investors are pulling out of the housing market because of continued [tag]stagnation[/tag]? The UCLA Anderson Forecast for the second quarter of this year predicts a sluggish U.S. economy due to cooling of the housing market. Forecast Director Edward Leamer said, although the economy will remain sluggish throughout the year, he sees little likelihood of a [tag]recession[/tag]. Nonetheless, Leamer and his colleague, Michael Bazdarich, believe conditions for a recession are in place. Leamer told MBA4success.com: “Our feeling is that there are certain precipitating events that must occur before a recession can be forecast, and these events have not occurred yet. The conditions are in place for a recession (such as the cooling of the housing market and the related wealth effect), but we are not seeing evidence that it will happen within our current forecast period.”

According to [tag]HUD[/tag], housing market performance in the first quarter of this year was mixed. Production levels set new records, but housing sales declined. Single family starts and completions set new records, while sales of new and existing homes declined but still were at high levels. There was growing concern that the inventory of [tag]new homes[/tag] for sale was at record-high levels, and the number of existing homes on inventory was up 40 percent in the last year. [tag]Homeownership[/tag] dropped to 68.5 percent in the first quarter of 2006. (more…)

Almost a third of U.S. home buyers chose the riskiest types of [tag]mortgage[/tag]s in 2005, as a record jump in prices drove affordability to its lowest point in more than two decades, according to a Harvard University study. The average [tag]mortgage payment[/tag] in 2005 rose to 24 percent of the U.S. median income after taxes, the highest since 1984, according to the report issued Tuesday by Harvard’s Joint Center for Housing Studies. Home prices rose 9.4 percent in 2005, the biggest annual gain in more than 40 years, the report said. Thirty percent of new mortgages last year allowed buyers to skip paying money toward principal, the report said.

Interest-only adjustable-rate mortgages that defer principal payments in the early years of the loan rose to 20 percent of the dollar value of all mortgages. Payment-option adjustable mortgages rose to 10 percent of mortgages. Both were rare two years ago, the study said. (more…)

The [tag]30-year fixed-rate mortgage rate[/tag] averaged 6.63% in the week ending June 15, according to the survey. The average rate was up from 6.62% last week and 5.63% a year ago. The 15-year fixed-rate hit 6.25%, up slightly from its 6.23% average last week and its 5.22% average a year ago. The average rate for 5-year Treasury-indexed hybrid [tag]adjustable-rate mortgages[/tag] landed at 6.23% in the survey, up from 6.20% last week and 5.10% a year ago. The 1-year Treasury-indexed ARM averaged 5.66%, up from 5.63% last week and 4.25% a year ago.

“Mixed economic indicators are causing some volatility in financial markets. This invariably leads to the fluctuations in mortgage rates like what we have seen recently,” said Frank Nothaft, Freddie Mac chief economist. “Still, there has been no drastic movement in mortgage rates and we see nothing on the horizon that would bring about any extreme rise or fall in rates going forward. Our economic forecast still indicates strongly that, even with gradually rising rates, 2006 may well be the third strongest year on record for housing,” he said. (more…)

The Bush administration is starting special reviews of the financial operations of mortgage giants [tag]Fannie Mae[/tag] and [tag]Freddie Mac[/tag].

The administration has long been critical of the two companies, and officials have pointed to the accounting scandals to bolster their case that the massive mortgage portfolios are improperly managed and pose a risk to the financial system.

“The time is right for Treasury to review its debt approval process to ensure that we continue to act as appropriate custodians of the power that Congress gave us when the charters of Fannie Mae and Freddie Mac were created,” Quarles said in a text of his speech to the Women in Housing and Finance group. “I have asked the Treasury staff to undertake such a review to ensure that the process by which we exercise this responsibility is appropriate in light of all the circumstances.” (more…)

[tag]Wells Fargo & Company[/tag] (NYSE: WFC – News) and [tag]Reilly Mortgage Group[/tag] announced today the signing of a definitive agreement for Wells Fargo Bank, N.A. to acquire the assets of Reilly Mortgage Group, a privately-owned, national, multifamily real estate finance firm headquartered in McLean, Virginia. Terms of the definitive agreement were not disclosed. Subject to regulatory approval, the acquisition is expected to close in the third quarter of 2006. The business will become part of Wells Fargo Wholesale Banking’s Specialized Financial Services Group.

Reilly Mortgage was the first mortgage banker approved under [tag]Fannie Mae[/tag]’s Delegated and Underwriting Servicing Program in 1988 and also one of the first companies approved as an FHA MAP (Multi-Family Accelerated Processing) lender. It has received the Multi-Housing News Capital Choice Award for Freddie Mac program Plus® Loans and FHA Loans, the Apartment Finance Today Readers’ Choice Award for FHA Loans, and was named a top multifamily lender by [tag]National Real Estate Investor[/tag], Midwest Real Estate News and Multi-Housing News. Reilly Mortgage was sold by a group of investors led by Stonehurst Capital, LLC and was advised in the sale by Beekman Advisors, Inc. (more…)

With gas at $3 a gallon, buyers are less willing to spend hours driving from one open house to another. [tag]Real estate agent[/tag]s wonder whether it makes sense to burn through a tank of gas taking prospective buyers or renters around to look at places they may find of little interest. Everyone is trying to make better use of the [tag]Internet[/tag] to save money on gas.

Higher [tag]energy prices[/tag] are also helping push some would-be buyers out of the market. Lance McDaniel, 40, an environmental engineer with a wife, two children and a baby on the way, would seem to be an ideal [tag]homeowner[/tag] candidate: stable employment with the [tag]Air National Guard[/tag], [tag]good credit[/tag] and only a small amount of [tag]debt[/tag]. And he’s the adult son of a [tag]banker[/tag] father who knows the value of a good [tag]investment[/tag]. (more…)

[tag]Tax breaks[/tag] are frequently cited as motivation for buying a home. But [tag]homeownership tax benefits[/tag] are not always clear-cut. Here are five myths that could cost you. 1) My mortgage interest will reduce my tax bill. This is true for the majority of homeowners, but not for all. And this tax break won’t work forever. To take tax advantage of your [tag]home loan’s interest[/tag], you must itemize and come up with a total that exceeds your standard amount. On 2006 tax returns, the [tag]standard deduction[/tag]s will be $5,150 for single taxpayers, $7,550 for [tag]head of household[/tag] filers and $10,300 for married couples who file jointly. These amounts increase each year to account for inflation.

Taxpayers who buy a home late in the year, for instance, might find the standard deduction is more beneficial initially. If you make only a few payments in a tax year, you might not pay enough interest to exceed standard amounts. The benefit of mortgage interest also could be a myth if you’ve lived in your home for a long time since you likely are paying more toward your loan’s principal instead of interest. 2) All costs related to my home are deductible. This is flat-out false. “Some buyers think, hope, they can write off everything connected with the house,” says Kathy Tollaksen, a CPA at Sikich LLP in Aurora, Ill. “Not so. Association fees and property insurance costs are not deductible.” Neither is private mortgage insurance. And you can’t deduct basic maintenance, repair or home improvement costs either. You should keep track of home-improvement expenses, however. They add to your home’s basis, which you subtract from the sale price to determine your profit and whether any of it is taxable. (more…)

Assuming that [tag]John Talbott[/tag] in his book [tag]Sell Now![/tag] has established his case for an actual and vulnerable [tag]real estate bubble[/tag] and regardless of his reasoning as so what has caused it, where is all of this going? If you own [tag]residential property[/tag], maybe even if you don’t, you may want to sit down. Talbott sees the bubble not so much bursting as unraveling and he sees it happening on a number of fronts. He sees the biggest threat as [tag]adjustable rate[/tag] and [tag]interest only mortgages[/tag] coming home to roost.

With a glut of houses on the market, prices fall even further. Adding to this is the author’s perception that real estate is not subject to the usual requirements of supply and demand. That is, he perceives the housing market as being capable of instantaneously switching from a buyer’s to a seller’s market literally overnight with prices changing accordingly even if no properties have actually changed hands. Inventories can move in a matter of days from a two to three month supply to a six or eight month supply if new houses already in the pipeline are completed while sales slow and sellers need to get out or decide to cash out. (more…)

If you would, imagine that [tag]mortgages[/tag] were automobiles, and you had the power to witness every sale. Every day, you would watch, dumbfounded, as pizza deliverers passed up Priuses and bought Hummers instclick here for articleead. You would cringe as 16-year-olds screeched off the lot in souped-up cars, destined to die young.

If mortgages were cars, you would see people making these mistakes all the time. Too often, consumers get home loans that are inappropriate or too risky. Regulators are wrestling with the question of what to do about it. Whose job is it to decide that a particular loan is unsuitable for a specific customer? “Who am I to tell you that you’re eligible for this kind of loan, but you’re not suitable for it?” banker Robert Broeksmit asked at a recent Federal Trade Commission workshop. A consumer advocate retorted in an interview, “It can be boiled down to this: Don’t offer things that people can’t pay and really are rip-offs.” (more…)

With the [tag]real estate market[/tag] slower than anytime in the last three years, more [tag]realty agents and loan brokers[/tag] are looking for customers in segments often forgotten by the mainstream real estate industry — minority communities. “For the longest time it wasn’t quite popular to be a minority,” said Hilda Ramirez, a director of the Santa Clara County Association of Realtors and co-founder of the [tag]Hispanic Association of Realtors and Affiliates[/tag]. “But suddenly corporate America has awakened and it’s the hottest ticket in town.”

Nationally, 58 percent of Asians, 48 percent of Hispanics and 46 percent of blacks own their homes, compared with 74 percent of whites, according to 2004 data from the U.S. Census Bureau. But 60 percent of first-time U.S. home buyers in the next decade will come from these “underserved” communities, said Maria Valentin, diversity marketing director for First American Title Company, which hosted the conference. (more…)

A [tag]flattening yield curve[/tag] and [tag]rising interest rate[/tag]s are usually indicators of a faltering financial sector. But the sector’s performance has risen steadily since October. In fact, since then the S&P 500 financial sector has outperformed the S&P 500 – in contrast with the preceding 15 months.

Help for Struggling Homeowners could, in turn, help the lenders. Success is tied to real estate for [tag]Old Canal Financial Corp[/tag]. also, but from a different angle. The firm (number 408 on the 500) purchases nonperforming real estate debt from banks, and works out payment plans with distressed borrowers. This focus enabled the company, founded in 2003, to grow revenues nearly 65 percent in 2005, to $8.65 million. Greg Fernandez, Old Canal’s president, expects his business to grow at a similar rate in 2006 as borrowers who used creative financing such as [tag]interest-only loans[/tag] and [tag]adjustable-rate mortgages[/tag] experience difficulties with rising interest rates. “So many loans are tied to fluctuating interest rates,” and banks are often eager to sell [tag]non-performing debt[/tag], Mr. Fernandez explains. “After 90 days of no collection, a bank would rather get rid of that debt so it doesn’t have to increase its loan loss reserve.” (more…)

A faulty or even fake [tag]appraisal[/tag] is said to be at the basis of every [tag]fraudulent mortgage transaction[/tag]. But not every appraiser is at fault, or at least willingly so. James Blaydes of Blaydes & Associates, a Peru, Ill., appraisal firm says that in many cases, appraisers can’t stand up to pressure put on them by [tag]mortgage broker[/tag]s. Either they “hit the numbers” as instructed, he said at the [tag]Mortgage Bankers Association[/tag]’s National Fraud Issues Conference in Chicago recently, or they are blackballed.

Speaking for the Appraisal Institute, which has been calling on lawmakers to address mortgage fraud since 1981, when the problem was believed to be in its infancy, the Illinois appraiser said there are plenty of ways to fudge a [tag]valuation[/tag] besides packing the final number. Among other things, appraisers can ignore the best comparables, or use properties in better neighborhoods as comps, he said. They also can mis-describe a property, such as labeling a commercial building as single-family. Or they can fail to mention physical problems. But appraisers aren’t the only ones who commit such flagrant fouls, Blaydes told the conference. Sometimes loan brokers do their own dirty work. (more…)

Many experts project that [tag]foreclosures[/tag] will continue to increase. Interest rates are rising, property taxes and insurance are up sharply, and aggressive loans have put more home buyers at risk, especially as [tag]adjustable mortgage[/tag]s reset. In many areas of the country there hasn’t been enough price appreciation to bail out [tag]overextended borrower[/tag]s. When homeowners try to [tag]refinance their loan[/tag]s to take out cash or get lower adjustable mortgages, many discover that they don’t have much [tag]equity[/tag] to tap. Some would even have to bring cash to the table to close a deal.

Brown, president of All-American Title Service in North Richland Hills, says that plenty of homeowners have been caught off guard by tax and insurance bills. A few years ago, more lenders began dropping the requirement for [tag]escrow payment[/tag]s, which collect those bills in advance, because borrowers can qualify for bigger loans. When they can’t make the payments at year’s end, trouble hits. Brown says that he’s seen a surge in tax-service companies that step forward, pay the tax bills and then attach a lien to the property. Some buyers face a [tag]first lien[/tag], a [tag]second lien[/tag] (which covered their down payment) and a third for taxes. The service companies can be quick on the trigger if borrowers struggle. “They’ll foreclose in the blink of an eye,” Brown says. (more…)

[tag]African-Americans and Latinos[/tag] are 30 percent more likely to receive higher rates for home loans than white borrowers despite similar credit scores and risk factors, according to a study published Wednesday by [tag]The Center for Responsible Lending[/tag]. The Center for Responsible Lending’s study found that African-Americans and Latinos face different levels of pricing disparities when compared with white borrowers. African-Americans were more at risk when the subprime mortgages included a prepayment penalty. African-American borrowers were 31 percent more likely to receive a higher rate on a subprime fixed home mortgage while they were 15 percent to 16 percent more likely to pay more to take out an adjustable rate mortgage.

African-Americans also faced pricing disparities when it came to refinancing their existing homes. Two-thirds of refinancing loans include prepayment penalties, putting African-Americans at a significant disadvantage to their white counterparts. The study found that lenders tended to offer African-American borrowers 34 percent higher rates on fixed-rate refinance loans and 17 percent higher on ARM refinance loans. The latest study follows in the wake of a Federal Reserve report last September that analyzed 2004 data provided by the [tag]Home Mortgage Disclosure Act[/tag] (HMDA) and highlighted alleged discriminatory practices by around 200 lenders, including 100 banks. The study sparked outrage among minority advocates and propelled increased scrutiny of mortgage lenders by government agencies, such as the [tag]Department of Housing and Urban Development[/tag].
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News of slowing job and wage growth has [tag]mortgages[/tag] in a retreat from another run towards 7 percent, and the 10-year T-note down to 5.01 percent from a 5.2 percent May high. A Fed pause at its June 29 meeting is again a medium probability. The [tag]employment numbers[/tag] provide substantial support for [tag]Federal Reserve Chair Ben Bernanke[/tag]. In the last month he made plain his belief in a soon-ahead inflation-dampening economic slowdown, and his desire not to overdo the Fed’s 2-year, 16-hikes-so-far campaign. For his pains he has been widely criticized as an [tag]inflation[/tag]-fighting pantywaist. News that May payrolls and wages grew by only one-third of forecast is exactly what he needed.

Prior Fed chairmen never wanted the world to see these forecasts in real time (they were released on five-year delay!) for three reasons: first, not to tip the Fed’s hand; second, not to reveal how frequently the Fed forecast is wrong; and third, not to be confined by the forecast. One prior Fed chairman for four years in the late 1990s ignored the forecast risk of overheating and inflation, believing his pants-seat hunch that technology-pushed [tag]productivity[/tag] would remove the inflation risk from above-trend growth. Nice call, that was. (more…)

A [tag]reverse mortgage[/tag] (a lifetime mortgage in the UK) is a type of loan available to seniors 62 and older in the US. It is used as a way of converting [tag]home equity[/tag] (the value of the home, minus the amount of any existing mortgages) into one or more [tag]cash payments[/tag] while retaining ownership of the property. The owners continue to live in the home yet avoid the [tag]monthly payments[/tag]. Repayment of the loan is deferred until the borrower is no longer living in the home.

The borrower must be at least 62 to qualify for a reverse mortgage in the [tag]United States[/tag]. The borrower must pay off any existing mortgage(s) with the proceeds from the reverse mortgage and additional personal funds. There are no minimum income or credit requirements, and for most reverse mortgages, the money can be used for any purpose. Some types of dwellings, such as lower-value mobile homes, do not qualify. Before borrowing, applicants must seek HUD approved counseling. (more…)

[tag]North Carolina existing home sales[/tag] are up 12 percent in the first four months of 2006, compared to the same period last year. More than 41,000 existing homes were sold across the state in the first four months of the year, according to statistics compiled by the [tag]North Carolina Association of Realtors[/tag]. Those figures include more than 11,300 home sales in April alone.

In a reversal from 2005 real estate trends, which saw mountain and coastal regions leading the state in terms of positive growth in home appreciation, coastal areas in North Carolina appear to be experiencing a downturn in both unit sales and prices. Total dollar sales decreased slightly in the first four months of the year in the[tag] Outer Banks[/tag], [tag]Carteret County[/tag], [tag]Brunswick County[/tag] and [tag]Wilmington[/tag], according to NCAR statistics. (more…)

Rates on [tag]30-year mortgages[/tag] climbed this week for the eighth time in the past nine weeks, hitting the highest level in nearly four years. [tag]Freddie Mac[/tag], the mortgage company, reported Thursday that rates on 30-year, [tag]fixed-rate mortgage[/tag]s averaged 6.62 percent, up from 6.60 percent last week.

The [tag]housing sector[/tag], which has enjoyed five boom years, is exhibiting numerous signs of slowing under the impact of [tag]rising mortgage rate[/tag]s. The latest such evidence came Thursday with a report from the National Association of Realtors that sales of existing homes fell 2 percent in April with the median price of homes sold last month rising at the slowest pace in 4 1/2 years. Analysts believe that housing will experience a gradual slowing this year but not a crash as long as the [tag]Federal Reserve[/tag] calls a halt soon to its two-year campaign to push interest rates higher to slow the economy and control inflation. Federal Reserve Chairman [tag]Ben S. Bernanke[/tag] said last week that while housing is slowing down this year, “this looks to be a very orderly and moderate kind of cooling.” (more…)