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Archive for June, 2008

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Understanding The Good Faith Estimate

June 30, 2008 By: Mortgage Refinance Category: Uncategorized No Comments →

If you are in the process of refinancing your home mortgage loan the Good Faith Estimate can be a source of confusion. While the Good Faith Estimate (GFE) can be a useful tool for evaluating a loan offer, keep in mind that it is just an estimate and treat it accordingly. Here are several tips to help you understand Good Faith Estimates when refinancing your home mortgage loan.

What is the Good Faith Estimate?

Mortgage lenders are required to give you the standardized form known as a Good Faith Estimate within 24 hours of receiving your application for a mortgage loan. Of course this isn’t the most helpful time to get your Good Faith Estimate when comparison shopping; most mortgage lenders will provide you a copy for the loan you are considering upon request.

Your Good Faith Estimate is an itemized list of fees associated with your loan. Pay close attention to your loan origination fees and Yield Spread Premium as this is where most people overpay when refinancing. If you’re not familiar with these terms don’t worry…you’ve come to the right place to learn how to save money when refinancing.

Loan Origination Fees

Non-bank originated mortgage loans are arranged by a third person, typically a mortgage company or broker. These people work for an origination fee which is paid by you at closing. A reasonable amount to pay for loan origination is one percent of your loan amount; however, it is not uncommon to find mortgage companies and brokers charging four percent or more for loan origination. Your goal when refinancing your mortgage should be to find a mortgage broker willing to work for a one percent origination fee without charging you Yield Spread Premium.

Yield Spread Premium

Most people have never heard of Yield Spread Premium. Simply put, this is a commission paid to the broker by the lender behind your loan. Yield Spread Premium is paid because the broker marks up your mortgage rate beyond what your lender approved you to earn a commission. Your mortgage broker earns a commission of 1% of your loan amount for every .25% they overcharge you. Yield Spread Premium can add hundreds of dollars to your month payment just to pay a bonus to the person arranging your loan.

The good news is that you can avoid this unnecessary markup of your mortgage interest rate and save yourself thousands of dollars in the process. You can learn more about avoiding Yield Spread Premium and other garbage fees when refinancing your mortgage by registering for my free video tutorial.

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Monday Market Commentary: Inflation Prospects, Stocks Driving Mortgage Rates

June 30, 2008 By: Alex Stenback Category: Uncategorized No Comments →

Last Week:
A statement from the Fed that talked tough on inflation but stopped short of suggesting an imminent shift to anti-inflation rate hikes, helped mortgage rates improve by .125-.25% last week.  This improvement also was driven in large part by flight to quality action as money moved from a beleagured stock market  - this was the worst June for the DOW since the great depression - into the relative safe-harbor of bond investments like mortgage back securities.

Over the long haul, the Fed's outwardly passive stance and attempts to jawbone inlfation expectations down may not work, and set the table for rates to move upward, but for last week anyway, stocks poor performance saved the day.

This Week:
We'll continue watching the stock market early in the week as mortgage bonds will be content to take their cues from equities - stocks - until the economic calendar tosses some raw meat into the trading cages.  Speaking of which, the employment report for June will be released a day Early - Thursday, rather than Friday, due to the 4th of July holiday Friday.  The economy is expected to have shed 50,000  jobs - any markedly worse number here could help mortgage rates, but beware of a miss to the positive side, which could spur a bounceback rally in Stocks (testing a level 20% down from last October) which would hurt mortgage rates.

The ISM Report/Index (a measure of manufacturing activity and health) on Tuesday also bears watching, and holiday shortened weeks can exhibit high-volatility and risk aversion.  Unless the chips fall just so, the path of least resistance may be for rates to rise this week.

Despite the improvement in mortgage rates we have seen in recent weeks, inflation is an elephant in the room. Oil is cruising above $140 per barrel, the Eurpoean union is dealing with out of range inflation and may hike rates.  Inflation is one thing that mortgage rates won't just absorb over the long haul - eventually, they will be forced up.  This fact tempers our optimism for mortgage rates going forward unless we see some bona-fide inflation fighting from the Fed and other central banks, we may be stuck in a cycle that makes it easier for rates to rise than fall.

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Ginnie Mae Ramps Up Securitization of Reverse Mortgages

June 30, 2008 By: Admin Category: Uncategorized No Comments →

An emerging area of the secondary market appears to be gaining steam, even as a large part of the private-party securitization market remains in the deep freeze. That emerging area? Reverse mortgages, of course.

Ginnie Mae said Friday that Financial Freedom, the reverse mortgage lending subsidiary of IndyMac Bancorp Inc., has issued two fixed rate reverse mortgage transactions and one LIBOR transaction under Ginnie Mae’s Home Equity Conversion Mortgage Mortgage-Backed Securities, or HMBS, program. The $177 million fixed rate issuances and the $104 million LIBOR issuance are among the first MBS pools backed by FHA-insured fixed rate and LIBOR reverse mortgages.

The three pools pushed the Ginnie Mae HMBS program to $648 million in issuance, the agency said in a press statement.

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Post from: Reverse Mortgage Loan Blog

Ginnie Mae Ramps Up Securitization of Reverse Mortgages

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