A no-cost mortgage (NCM) is one on which all lender fees are waived, and (subject to the possible exceptions described below) other fees are paid by the lender. The quid pro quo is a relatively high interest rate, which makes the NCM costly for borrowers who expect to have their mortgage a long time. But if the borrower has limited cash, avoiding an upfront cash drain may be much more compelling than the higher interest cost spread over many years.
No-cost mortgages have one feature that I like a lot. Because lenders offering NCMs pay for services obtained from third-parties, such as title companies and appraisers, they have an incentive to find the service providers offering the lowest price. When borrowers pay for these services, which is most of the time, lenders generally accept high prices that make the service providers beholden to them.
The relative simplicity of a mortgage with only one price dimension is also attractive. In principle, it should make price-shopping much easier. Unfortunately, ambiguity about which costs are covered and which aren’t can nullify this benefit.
via No-Cost Mortgages – Mortgage Professor.
She had gone through a foreclosure after losing her job, and he was finishing his M.B.A. and had not yet found his current position. But they had managed to put together a down payment of more than $550,000, or three-quarters of the asking price for a four-bedroom house in Los Gatos, and thought they would find a bank willing to lend the rest. They didn’t.
So the Arroyos found an alternative: a subprime mortgage.
If you haven’t had an appraisal completed on your home recently, one of the first things that may come to your mind is, “What do I need to get ready for this?”. Here are some helpful things you can do prior to the appraiser coming to your home.
“We see a lot of boomerang buyers. I’d say about 20 percent of my current clientele has either suffered a short sale or a foreclosure in the past and are now re-buying back into the marketplace,” said Matt Weaver, a lender with PMAC Lending Services in Florida.
via ‘Boomerang’ Homebuyers Getting a Boost from Uncle Sam – NBC News.com.
Besides all this news, something else that caught everyone’s attention was the New Home Sales numbers yesterday. New Home Sales dropped 14.5% in March to a 384,000 annualized pace, lower than any forecast of economists and the weakest since July and were down 13.3% from a year earlier. (It follows Tuesday’s drop in Existing Home Sales.) But the median price of a new home reached its highest level ever in March at $290,000, the report said, up 11.2% from February. (And remember that sales of new homes represent a small portion of houses purchased in the U.S. and can be subject to large revisions.) Quicken Loans Vice President Bill Banfield offered, “The sharp decline in March’s new home sales is further evidence that winter weather is not the catalyst for the sluggish housing data the past few months. The rise in interest rates and prices of new homes is leaving some potential buyers with sticker shock and ultimately prolonging their home search process.” Bill – let’s not forget loan level price adjustments, no inventory, the narrow QM box, and the fact that many don’t want to leave their cozy 3.5% 30-yr fixed rate financed homes!
Liberals advocate many wonderful things. In fact, I suspect that most conservatives would prefer to live in the kind of world envisioned by liberals, rather than in the kind of world envisioned by conservatives. Unfortunately, the only kind of world that any of us can live in is the world that actually exists. Trying to live in the kind of world that liberals envision has costs that will not go away just because these costs are often ignored by liberals.