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The Mortgage Professor: How retired homeowners can avoid running out of money: Alternative strategies compared

Consumer / Home and Consumer News /

An increasing number of retirees, who are living longer and are less likely to be covered by a defined benefit pension than previous generations, risk running out of money. Those who have significant equity in a home, however, can reduce or eliminate the risk if they use their equity wisely.

This article will compare three strategies for using ...Read more

This company will help with a down payment, but it wants a stake in your new home

Consumer / Home and Consumer News /

CHULA VISTA, Calif. -- When Ricardo and Catherine Soto were looking to buy a home in Chula Vista, they knew that even after selling their old house they would be able to afford a down payment of only about 10 percent.

But when buying a home, 20 percent is the magic number. It means not only borrowing less but also avoiding mortgage insurance, ...Read more

The Mortgage Professor: Keep Fannie Mae and Freddie Mac until they are no longer needed

Consumer / Home and Consumer News /

In September 2008, Fannie Mae and Freddie Mac were placed in a federal governmental conservatorship. The crisis-induced rise in mortgage defaults had eroded their capital and made it impossible for them to continue operations without support from the U.S. Treasury.

Since then, the conservatorship has eroded the agencies' political support. ...Read more

The Mortgage Professor: When does it make sense for a house purchaser to pay all cash?

Consumer / Home and Consumer News /

Maria aims to purchase a house for $200,000. Because she has financial assets of $300,000, one of her options is to buy the house for all cash. Alternatively, she can obtain a mortgage of $180,000 for 15 years at 4 percent and zero fees. Maria has excess disposable income of $2,000 a month, which would more than cover the payment on a mortgage. ...Read more

The Mortgage Professor: Reverse mortgage foreclosures are not what you think

Consumer / Home and Consumer News /

A recent headline caught my eye. It read "Mnuchin's Reverse-Mortgage Woes Blemish Record of Treasury Pick."

As I read on, I realized that reverse mortgage bashing by the media, which had almost disappeared in recent years, was now being revived to tarnish a Cabinet pick of President-elect Donald Trump. The article quoted a researcher describing...Read more

The Mortgage Professor: Housing market will be a good test of Trump's ability to deregulate

Consumer / Home and Consumer News /

The incoming Trump administration has made very clear that eliminating regulations of all types is a top priority. The question is whether or not they can do that effectively, and the home mortgage market will be a good test case.

New home construction today is running well below what would ordinarily be expected at the current phase of the ...Read more

Mortgage applications jump, possibly from fear of a bump in interest rates

Consumer / Home and Consumer News /

The fear of rising mortgage interest rates may have nudged people into action on homebuying in November.

Mortgage applications are down 0.7 percent from a week ago, the Mortgage Bankers Association reported Wednesday. But over the last month, mortgage applications for buying new and existing homes jumped 12 percent. The surge came as interest ...Read more

The Mortgage Professor: Preventing mortgages from going underwater

Consumer / Home and Consumer News /

One weakness of the standard mortgage in the U.S., discussed last week, is the extreme rigidity of the payment obligation, which makes it very difficult to manage the repayment process efficiently. In last week's article, I suggested that this problem could best be fixed by defining the borrower's contractual obligation in terms of a maximum ...Read more

The Mortgage Professor: Improving the standard mortgage

Consumer / Home and Consumer News /

The standard mortgage in the U.S. has two major weaknesses.

First, because the payment obligation is rigid, it is very difficult to manage the repayment process efficiently. Second, because the loan balance that the borrower pledges to repay is not affected by any changes that occur in the economy, the borrower is forced to assume a risk that ...Read more

The Mortgage Professor: How senior homeowners can hedge property value risk

Consumer / Home and Consumer News /

The opportunity to accumulate growing equity in a home is one of the main reasons people are motivated to become homeowners.

Equity growth, however, is heavily influenced by market changes over which owners have little control. House prices appreciate much more in some areas of the country than in others, and there are some areas in which there...Read more

The Mortgage Professor: Mortgage shopping at multi-lender websites: What to look for

Consumer / Home and Consumer News /

While every mortgage lender has a website and would love to have you come by and initiate a transaction, for anyone looking to shop for the best deal, visiting individual lender sites is largely a waste of time. Every site is formatted differently and the data provided may or may not be comparable to that available at any other single-lender ...Read more

The Mortgage Professor: What happens to house secured by a reverse mortgage?

Consumer / Home and Consumer News /

Q: What happens to the house of someone who secures a reverse mortgage?

A: Before answering, let me clarify that my response applies only to the home equity conversion mortgage, or HECM, program administered by the U.S. Department of Housing and Urban Development, in which the investors in the mortgages are insured against loss by the Federal ...Read more