Category: Mortgage

Those were the days? Before the New Deal in the 1930s, a well-paid working person had to put somewhere around 40% down to buy a home. It would be up to a building and loan association (B&L) to say yes to the loan.

The borrower made large loan payments twice a year. The lender would expect repayment in just ten or twelve years. If that was not possible, the borrowers would need to refinance with the B&L.

During that time, a borrower would shoulder significant risk. If a B&L failed, so did its borrowers.

Things have changed. How did the mortgage evolve into what we have today?

Continue reading “Our Mortgage Loans: How They Became What They Are Today”

In 2020, a federal law called the CARES Act offered support for homeowners and renters coping with the impacts of a pandemic. Millions of homeowners requested and received mortgage forbearance.

Most recently, in March 2023, Fannie Mae and Freddie Mac renewed and enhanced their plans that let hard-hit homeowners defer up to six months of mortgage payments until their final payoff time.

Government-backed mortgage holders received similar support this year.

Continue reading “Mortgage Forbearance, Continued: Is Pandemic Assistance Still Available?”

Many renters, facing rising housing costs, feel stuck. They would love to buy a modest home. They’d love a modest loan to go with it. But…

Try finding a mortgage to buy a home under $150,000 these days.

Where small mortgages are available, the people who want them get turned down more often than people who seek larger loans — even when these loan applicants have similar credit profiles.

So the people looking for homes in “economy class” turn to alternative financing modes. Some go into co-ownership with their friends. Some buy homes from family. Others do whatever it takes to come up with cash. Or they just let go of their hopes.

What makes such a simple quest such a challenge?

Continue reading “Small Mortgages for Modest Homes: Where Are They?”

In May 2023, Fannie Mae and Freddie Mac rolled out a new upfront fee structure for mortgages. Some critics have claimed President Joe Biden is helping people with bad credit at the expense of people with good credit. Some call it the Biden Rule — a green light for risky borrowers, and a sign that a new housing crisis is around the corner.

In April, a group of U.S. senators wrote a letter to the director of the Federal Housing Finance Agency (FHFA) to call the new fee structure “a perverse incentive that punishes hardworking Americans for their fiscal prudence.”

When the changes are broken down, a more nuanced picture emerges. Let’s take a look.  

Continue reading “Did Biden Raise Mortgage Fees for Borrowers With Good Credit to Help People With Bad Credit?”

For every 15 people banks approve for mortgage loans, one applicant gets turned away. That one person is likely to be a member of a minority group. And the barrier could be a credit score.

But at least some good news is on the horizon: a credit scoring system designed to recognize the real-life financial activities of regular people.

Continue reading “Light at the End of the Tunnel? New Credit Score Models Are Coming”

The red-hot real estate market might have cooled somewhat. But with housing in relatively short supply, affordability is hard to come by. The major hurdles for buyers right now? Down payments, mortgage payments, and interest.

There are no simple hacks to work around these hurdles. But there are a few indicators worth watching closely.

Continue reading “Will the Cost of Borrowing a 30-Year Mortgage Ever Come Back Down? Are There Better Alternatives?”

Are you thinking of buying a home that could use some energy upgrades? Maybe the HVAC, water heater, or windows are old and inefficient.

A “green mortgage” — known to lenders as an energy-efficient mortgage, or EEM, — allows buyers to finance energy upgrades through a mortgage that allows a little extra borrowing to cover these features.

Why would a lender approve an EEM borrower for extra money? Two main reasons: Eco-friendly homes are more desirable, making the lender’s collateral more valuable. And the expected energy savings will support the homeowner’s ability to cover housing payments.

Continue reading “What’s a Green Mortgage? Energy-Efficient Mortgage Lets a Borrower Ask for More”

Let’s start with the good news. This month, the government cut the amount of private mortgage insurance needed by people with FHA-backed home loans. This will benefit hundreds of thousands of people. Most will be modest-income mortgage applicants, primarily first-time home buyers.

Here’s the scoop on this — plus a few other things relevant to anyone applying for an FHA home loan this year.

Continue reading “Thinking About an FHA Mortgage in 2023? Here’s What You Need to Know”

The chair of the U.S. Federal Reserve, Jerome Powell, calls the shots for U.S. monetary policies. And yes, we could say the recent change in the real estate market has a lot to do with the Fed.

Chair Powell, concerned about a sudden rise in inflation, announced a series of interest rate hikes in 2022. By raising interest rates for banks, the Federal Reserve indirectly dampened the seller’s market of 2020-2021.

What’s next? And what does it all mean for people who own homes — or want to? Let’s take a look.

Continue reading “What Jerome Powell’s Up To (And Why Home Buyers Care)”