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…)