Mortgage Rates & Trends: Mortgage Blog

View the lowest rates we have to offer.
Read our RSS Feed Policy

  1. AIG Profit Indicates Housing Stability

    By on May 11, 2010

    AIG Profit Indicates Housing Stability

    Nearly 20 months after receiving a $85 billion bailout from the federal government, AIG’s (American International Group) mortgage group, United Guaranty Corp, has once again posted a profit for the first time since 2007. For the first quarter of 2010, United Guaranty AIG posted a profit of $73 million due to improved levels of delinquencies and defaults.

    The news is welcomed as the insurer’s recovery stems from taxpayer funds. The reported profit also strongly indicates that mortgage default rates in the U.S. are lessening, yet another gauge demonstrating a return to stability for the housing market.

    AIG posted a $61.7 billion loss in the fourth quarter of 2008 that represented the largest-loss ever reported in a single quarter by a company in the United States. For the entire year of 2008, AIG posted a $99.3 billion loss. During the first quarter of 2009, immediately following the record-setting loss, AIG narrowed their losses by 44% by reporting a loss of $4.4 billion, and $10.9 billion for all of 2009. In 2007, the last time the insurer posted a profit, AIG reported a profit of $9.3 billion.

    United Guaranty Corp., AIG’s mortgage subsidiary, is an insurer of mortgage loans. United Guaranty AIG does not recoup costs when a homeowner defaults on their monthly mortgage obligation. Instead, they pay mortgage lenders in cases of homeowners defaulting on their mortgage payments.

    Robert Hyder

    Category: Mortgage Insurance

  2. What is an LTV (Loan-to-Value)?

    By on September 16, 2009

    ltv

    In essence, the LTV is a ratio of loan-to-value used by mortgage lenders to evaluate the risk associated with approving a mortgage loan. When trying to determine the LTV of a home on a purchase transaction, simply divide the mortgage loan size by the lower of an appraised value versus the sales price of a home. On a refinance transaction, simply divide the mortgage loan size by the appraised value of the home solely, as there is no purchase price.

    For example, assuming a home is being purchased for $300,000 and the appraised value is $310,000, and the buyer has $60,000 for a down payment, the mortgage loan size will be $240,000. By dividing $240,000 by $300,000, the LTV is 80%. The reason the purchase price was used to determine the LTV in this scenario is because it is the lesser of the purchase price versus the appraised value in a purchase transaction as explained above.

    Typically, if an LTV ever goes above 80%, private mortgage insurance (PMI) will be required. PMI protects lenders against a borrower defaulting on their monthly mortgage payment and secures them against foreclosure.

    As far as mortgage rates are concerned, the lower the LTV, the lower mortgage rate. Again, this has to do with the risk associated with the mortgage loan. In general, the association between LTVs and mortgage rates are based on a sliding scale, usually in 5% increments. For example, an LTV of 70% could have a lower mortgage rate than an LTV of 75%.

    Once an LTV is established, an online mortgage calculator can help determine monthly principal and interest payments. If the annual property taxes and homeowner’s insurance payments are known, an online mortgage calculator can accurately conclude the entire monthly mortgage payment.

    –Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Current Mortgage Rates, General, Mortgage Insurance, Mortgage Rate Trends and Analysis, Purchase, Refinance

  3. Renting versus Owning: The Scales Are Tipping to Ownership

    By on August 26, 2009

    rent-or-buy

    For most, the biggest part of the American dream is owning a home. For those Americans who are currently renting, the scales are beginning to balance and shift toward homeownership in the great debate of whether to rent or buy a home. Besides building equity for the future, the three major components that are tipping the scales in the favor of homeownership are the declining values of homes, historically low mortgage rates and the federal government’s $8,000 tax credit for first-time homebuyers.

    For an additional $221 (estimated per an Associated Press analysis of 45 metro areas for the first quarter of 2009), renters can buy their own home. With the gap between a median-priced home and a median rent down to $221 from $777 just three years ago, this realization could signify a quicker conclusion to the national housing crisis if renters start buying up available housing. Some areas of the country have an estimated gap of approximately $100.

    As home values have continued to decline over a two-year period, the timing couldn’t be better for renters to delve into the realm of homeownership. The National Association of Realtors recently reported that the median home price in the United States peaked in 2006 at just above $230,000. Today, the median home price has fallen over 25% to well below $175,000.

    If this weren’t enough, current mortgage rates are still hovering near historic lows. Federal Reserve Chairman Ben S. Bernanke recently stated that he expects current mortgage rates to remain “exceptionally low for an extended period.” But don’t wait too long, as rates unexpectedly skyrocketed last month, but have since settled a bit.

    In addition to the historically low mortgage rates, first-time homebuyers can take advantage of the $8,000 federal tax credit. Only available until November 30, 2009, this tax credit can be utilized immediately, rather than waiting to file taxes at the beginning of 2010. It is important to note that this tax credit does not have to be repaid, unlike the tax credit from 2008 that was more comparable to an interest-free loan that must be repaid through tax returns over a 15-year period.

    So if you’re currently renting, don’t just throw your money away on rent. You owe it to yourself to at least take a look at the possibility of owning your own home.

    –Robert Hyder

    twitter6

    Category: Adjustable Rate Mortgages, Condominium, Credit Score, Current Mortgage Rates, FHA, Fixed Rate Mortgages, General, Mortgage Broker/Banker, Mortgage Insurance, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Purchase, Stimulus

  4. MGIC to Infuse Up To $1 Billion into Subsidiary

    1 By on July 16, 2009

    mgic

    After posting a nearly $340 million loss in the second quarter, Milwaukee-based Mortgage Guaranty Insurance Corporation (MGIC) intends to infuse as much as $1 billion into an inactive subsidiary, which will allow the nation’s leading private mortgage insurance (PMI) provider to continue to offer coverage for homeowners. With eight consecutive quarters of no profitability, the intention is for the subsidiary to take control of policy sales as of January 1, 2010. However, MGIC must attain approval from state insurance regulators before this plan can come to fruition.

    In the midst of the worst housing market since the Great Depression, the losses sustained by MGIC are due to the ever-increasing mortgage defaults. According to a recent Bloomberg report, Chief Executive Officer Curt Culver maintains that reactivating this unit, “would allow MGIC’s subsidiaries to continue to support the U.S. housing market.” Earlier, however, Culver forecasted that additional losses by the end of 2009 by MGIC’s other subsidiaries would thwart their effort to write new policies.

    Back in April, Culver said that MGIC was probing state insurance regulators to relax some accounting standards. In addition, MGIC was attempting to persuade the federal government to grant them bailout money to keep them afloat. Over the past two years, a record number of homeowners have defaulted and ultimately foreclosed on their homes. When a mortgage insurer such as MGIC insures these homes, they face mounting losses. It has been estimated that MGIC has lost nearly $3 billion since the housing crisis began.

    –Robert Hyder

    Category: General, Mortgage Insurance, Mortgage Rate Trends and Analysis, Stimulus

  5. Refinance to Modification Program by PMI

    By on July 14, 2009

     mi

    Mortgage Insurer PMI is pitching in to help struggling homeowners with their Refinance to Modification Program.  The overall goal of this program is similar to that of other mortgage loan modification programs already in place; help homeowners stay in their homes by lowering their monthly mortgage payments.  To qualify for this program, an existing mortgage must be insured by PMI.  In the Refinance to Modification Program, the mortgage insurance coverage and premium rate remain the same, and the existing insurance certificate is modified to cover the new refinanced loan.  Additionally, PMI is not charging any fees to change the existing insurance certificate, giving borrowers a little break.  Whether a borrower is modifying their loan with their existing servicer or lender, or a new one, as long as the mortgage insurance is from PMI they can take advantage of the Refinance to Modification Program.

    A mortgage loan taken out several years ago, not requiring mortgage insurance may now be underwater (the loan balance is higher than the value of the home).  There are already several modification programs in place to help counter this tough situation, including the HARP, but many people argue that the programs are not working fast enough, or in some cases, not working at all.  The PMI program is simply one more tool borrowers can use to help fix their broken mortgages.  However, unlike the HARP, where a mortgage loan is specifically owned or backed by Freddie Mac or Fannie Mae, as long as the current mortgage insurance is through PMI, the coverage can easily be rolled over into the newly refinanced mortgage.  In most cases, this will benefit homeowners, as mortgage insurance is measured and assessed in several ways, like loan-to-value.  If a borrower took out a loan several years ago at 85% loan-to-value and now the loan-to-value is 95%, the MI payments would usually be significantly higher on the new scenario. 

    As always, there are some catches.  Borrowers must be current on their existing home loan.  The purpose of the new loan must improve the borrower’s financial position- reducing the rate, reducing the monthly mortgage payment, altering the terms or switching into a more stable program (like going from an ARM to a Fixed Rate).

    It’s fairly obvious that home values are still declining in many areas in the United States.  As homes continue to decline in value, homeowners will be looking for any and all assistance that is available.  The recent drop in mortgage rates earlier this year has definitely helped.  Even today, rates are still incredibly low by historic standards.  Nonetheless, millions of American homeowners are still struggling. 

    It is encouraging to see companies like PMI (among many others) doing what they can to assist homeowners lower their monthly mortgage payments.  PMI has also demonstrated their commitment to help struggling homeowners by providing useful information on their website regarding servicers, lenders, and typical loan modification processes along with tips and solutions regarding foreclosures.

     

    -Darren Daneault

    Category: Adjustable Rate Mortgages, Current Mortgage Rates, Fixed Rate Mortgages, General, Mortgage Insurance, Refinance

  6. Mortgage Insurance (MI) Option When Home Equity is Under 80%

    By on July 10, 2009

    What is Mortgage Insurance(MI)?
    If you are in the market for a new mortgage these days, one of the many acronyms that you will probably hear is ‘MI‘. This stands for Mortgage Insurance which is an insurance policy that is typically paid through your monthly mortgage payment that is meant to protect the lender from loans that go into default. MI is required on most loan products where the Loan to Value (LTV) exceeds 80% – meaning that the loan amount cannot be above 80% of the home’s current value. The monthly cost of the MI will depend on several things but the primary drivers are credit score, LTV and Debt to Income (DTI) ratio.

    mortgage-insurance-options-mi3

    Importance of Mortgage Insurance(MI)
    MI (Mortgage Insurance) has become more important over the last 2 years as we have seen the demise of most 2nd mortgage products. In the past if a borrower did not have 20% to put down they would typically take a 1st mortgage at 80% (thereby satisfying the 1st mortgage lender) and then take a 2nd mortgage for 10, 15 or even 20% to complete the transaction.

    Mortgage Insurance (MI) Option for new purchase or refinance
    With the disappearance of most 2nd mortgage lenders that we have seen over the last 24 months MI has again become a power player in the mortgage arena. If you are thinking about refinancing or are looking at a new home purchase and you feel that your equity position in the property may not meet the 80% standard, it is imperative that you discuss your MI options with one of our Mortgage Consultants.

    Learn more about PMI

    Category: Mortgage Insurance, Refinance

LOOKING TO BUY OR REFINANCE?

Or Call us at 877-868-2503