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Is it Time to Buy or Refinance Your Home?

April 6, 2009 | Mortgage Loans | No Comments

Mortgage rates and home prices have fallen to all time lows.  This maybe the perfect time to purchase or refinance your home.  The pot is even sweeter for first time buyers per the stimulus package which offers first-time homebuyer an $8,000 tax credit for primary residences purchased between January 1, 2009 and November 30, 2009.

Last month I posted an article titled, “Is it Time to Refinance Your Mortgage?”  It included a list of different reasons for refinancing your mortgage which included:

  • Switching to a fixed rate or an adjustable rate mortgage
  • Improving the features of your ARM
  • Building your home equity faster
  • Reducing your monthly payments
  • Turning home equity into cash


However, when looking to purchase a home or refinancing your mortgage there are many questions to answer, which involves crunching some numbers and your comfort level.  

Below is a list of questions linked to mortgage calculators to help answer your home financing questions?  I hope you find the calculators very useful!

Preparing for Home Ownership


Understanding Finances


Considering Home Equity Financing




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Having Trouble Paying Your Mortgage?

April 2, 2009 | Mortgage Loans | No Comments

If you are having trouble paying your mortgage, remember that President’s Obama Homeowner Affordability and Stability Plan is setup to help up to nine million families modify their mortgages to avoid foreclosure.

Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates maybe due to a decrease in the value of their home. While other homeowners are struggling to make their monthly mortgage payments maybe because their interest rate has increased or they have less income .

The government has setup a website at to help with loan refinancing and loan modification.

Eligible borrowers who are current on their mortgages but have been unable to take advantage of todays lower interest rates because their homes have decreased in value, may now have the opportunity to refinance. Through the Home Affordable Refinance Program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.

You may be eligible if:

  • You are the owner occupant of a one to four unit home,
  • The loan on your property is owned or securitized by Fannie Mae or Freddie
  • At the time you apply, you are current on your mortgage payments (current means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months or, if you have had the loan for less than 12 months, you have never missed a payment),
  • You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house,
  • You have income sufficient to support the new mortgage payments, and
  • The refinance improves the long term affordability or stability of your loan.


To find out more information visit

Is it Time to Refinance Your Mortgage?

March 28, 2009 | Mortgage Loans | No Comments

Mortgage rates are falling and you may be wondering if it’s time to refinance.  On the other hand, you may be also asking yourself if it would be better to wait.  Unfortunately, there are no specific guidelines on how long you should wait, but you should only refinance whenever there is a financial advantage to do so.

A good rule-of-thumb is to refinance when mortgage interest rates fall at least one percentage point from when you first acquired your mortgage.  If you acquired a 30-year fixed rate mortgage for $150,000 at 5.5%, but rates are now 4.5%, refinancing at the lower rate will save you $91.65 on your monthly payments.

There are other reasons you may consider refinancing which include:

Switching to a fixed rate or an adjustable rate mortgage
– ARMs (Adjustable-rate mortgages) initially offer lower interest rates but can fluctuate up or down.  Switching to a fixed rate may give you peace of mind and lower your risk of your mortgage payments going too high. On the other hand, switching from a fixed interest rate to an ARM will reduce your monthly payments and is especially beneficial if you plan to sell your home in a few short years.

Improving the features of your ARM – Refinancing to a different ARM could reduce your monthly payments.  ARMs have protective caps, which limits how much your payments can increase in a given year and over the full term of the loan.  You may not be happy with the caps on your current ARM and switching to a different ARM may be more favorable.

Building your home equity faster – Switching from a 30 year mortgage to a 15 year mortgage will allow you to build up equity in your home faster; however, your monthly payments will be higher.  Additionally, over the life of the loan, you will pay significantly less in interest fees.

Reducing your monthly payments – Switching from a 15 year mortgage to a 30 year mortgage will lower your mortgage; however, you will end up paying more in interest fees over the life of the loan.

Turning home equity into cash – You may want to take some of the equity out of your home, which is called cash-out refinancing.  The advantage is that taking a loan secured by your home has a much lower interest rate than taking out an unsecured loan or credit card.  However, if the interest rate offered to refinance is higher than your current mortgage, then a home equity loan or line of credit may be a better a choice.

You will have to crunch the numbers when making your decision to refinance.  Keep in mind that if you do refinance, you most likely will incur application, appraisal and legal fees.  You may also pay for points to obtain a lower interest rate.  Typically 1 point equals 1% of a loan amount and will lower the interest rate by .25%.  Additionally, some lenders may charge you a fee for paying off your loan early, which is not allowed in some states.  Crunching the numbers will have to prove that your savings will be greater than the expenses you incur to refinance your home.

Above is a calculator to help you crunch the numbers and below are links to 2 other calculators you can use:


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What is a Subprime Mortgage?

March 25, 2009 | Education | Mortgage Loans | No Comments

A subprime mortgage is a type of loan given to borrowers with poor credit histories; often below a 600 FICA Score.

As a result of poor credit scores, these borrowers do not qualify for conventional mortgages. Because subprime borrowers present a higher risk for lenders, subprime mortgages charge higher interest rates, above the prime lending rate.

There are several types of subprime mortgage available. However, the most common type of adjustable rate mortgage (ARM) charges a fixed interest rate and then converts to a floating rate based on an index such as LIBOR, plus a margin. The most popular types of ARMs include the 3/27 and 2/28 ARMs.

A 2/28 ARM has a fixed rate for the first two years and then the interest rate adjusts for the next 28 years, which completes the full 30 year term of the loan.  While a 3/27 ARM has a fixed rate for the first 3 years and then adjusts for the next 27 years. The 3/27 mortgage gives a longer period of fixed payments but comes with a slightly higher rate than a 2/28 arm would.

ARMs can be misleading because of the initial lower interest rate. However, when mortgages reset to the higher variable rate, mortgage payments increase significantly. This is the main reason that has caused the sharp increase in the number of subprime mortgage foreclosures that has lead to the current mortgage melt down.

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Video: Inside the Financial Crisis – Mortgage Madness

March 24, 2009 | Mortgage Loans | Videos | No Comments

Below is the first video of NBC’s Dateline report titled “Inside the Financial Crisis: Mortgage Madness” (aired last Sunday 3/22/09).

The show takes an in-debt look at the current mortgage crisis that we have been bombarded with by the media.  However, Dateline gave a good explanation as to how it all started and how we got here.

What is amazing about the show is how people were getting mortgage loans that they clearly couldn’t afford.  The entire system got so corrupted from the banks, brokers, Wall Street,  ratings agencies to even the borrowers that everyone was just looking to make money and ignored the fact the borrower would not be able to pay back the money.   Isn’t that absolutely crazy?

As an example, one borrower was able to get a $260,000 loan with a monthly payment of $2,100 but the borrower had an income of $1,600.  Clearly, people lied to get these loans approved.  In my opinion many people should be sent to prison over the current mortgage crisis.

Video: Inside the Financial Crisis: Mortgage Madness


Visit to view the rest of the Morgage Madness.

Stimulus Package Helps Military Families Sell Homes

March 14, 2009 | Mortgage Loans | No Comments

Many military families who were required to relocate because of change of duties have been hurt by the current real estate market.  Many of these families saw the value of their homes drop significantly. 

However, because they had to relocate, they sold their homes for a loss, couldn’t sell their homes or had to go into foreclosure.  Now there is help from the $787 billion stimulus package, signed into law by President Obama on February 17, 2009.  The stimulus package has a provision titled, “Military Homeowners Assistance Program (HAP)”.

HAP offers eligible applicants compensation for the difference between 95% of the appraised fair market value of the property prior to the announcement date, and the appraised value of the property at the time of sale, or the sales price, whichever is greater. Closing costs are reimbursed for private sales.  HAP extends to eligible n military homeowners who purchased homes before July 1, 2006 and who sell the homes before Sept. 30, 2012.

HAP was originally created because of the rising foreclosures and the credit crisis, and adds more than $400 million to help military homeowners who are in the middle of foreclosure, or unable to sell their homes in the event of a permanent change of station order.

HAP also assists wounded soldiers who must relocate due to medical reasons, and surviving spouses of fallen service members who are also forced to move.

For more information about the stimulus package go to

Citi Homeowner Unemployment Assist Program

March 12, 2009 | Mortgage Loans | Videos | No Comments

Citi has released an informational video called “Facing Foreclosure” showcasing how Citi is working with outreach programs across the country to help stem the tide of foreclosure and keep people in their homes.

Video: Facing Foreclosure by Citi

Citi has also announced the “Homeowner Unemployment Assist” program, which is the latest program offered under Citi Homeowner Assistance, their multi-faceted program to help people avoid foreclosure and stay in their homes. Citi understands that unemployment is a major concern facing the American economy right now, and it especially worries mortgage holders. Homeowner Unemployment Assist will help recently unemployed, delinquent CitiMortgage customers stay in their homes by paying a reduced monthly mortgage payment for three months.

Below is a Question and Answer from Citi about the program:

How does this program work?

CitiMortgage customers meeting certain criteria who have recently lost their jobs will be eligible to participate in the Homeowner Unemployment Assist program. Often when families lose their homes, they are forced to downsize to a one- to two-bedroom rental residence. Under the Homeowner Unemployment Assist program, Citi will lower required monthly mortgage payments for the majority of qualifying customers to an average of $500 for three months. $500 is below the cost of the nationwide average rent for a one-bedroom residence.

How to I know if I qualify for this program?

If you make payments to CitiMortgage, are more than 60 days delinquent or in foreclosure and have a first mortgage loan that is for your principal residence, please contact CitiMortgage at 1-800-283-7918 and our mortgage professionals will look up your loan file to understand if you qualify for this program. At this time, this program is only available to customers who have a first mortgage owned and serviced by CitiMortgage and does not apply to second mortgages or home equity loans.

What kind of documentation is required in order to be eligible this program?

You must:

  • Provide proof of unemployment
  • Be actively seeking work as verified through State Unemployment benefits receipt, letter, etc.
  • Be involuntarily unemployed for under six months

How are the payments determined and will the payment go towards my principal or my interest? What about escrow or insurance and taxes?

  • Customers with a monthly escrow account payment of $500 or less with their CitiMortgage loan will pay a lowered monthly amount of $500.
  • Customers whose monthly escrow amount exceeds $500 will be asked to pay the amount necessary to cover the monthly escrow.
  • Customers who do not have an escrow account with their CitiMortgage loan, but who pay their own property taxes and other real estate costs directly, will pay a monthly amount of $300. Payments will first be applied to escrow, taxes and insurance. Any remainder will go towards paying off the principal with no interest accrued.

Can I be Self Employed?

If you have been involuntarily unemployed for under six months and are actively seeking work as verified through State Unemployment benefits receipt, letter, etc. you can qualify for the program.

What if I find a job prior to the payment ending period?

Borrowers who find employment during the payment relief period must resume their original monthly payments, or if eligible, receive a long-term loan modification under Citi’s streamlined program adopted from the FDIC.

What if I can’t find a job by the end of the payment relief period?

Citi will work with customers on a case-by-case basis to explore the best solutions for the customer.

Are other Citi businesses, such as CitiFinancial, Citibank, Primerica, taking part in this program?

At this time, the program is only available to CitiMortgage customers with a first mortgage loan.

Do you expect the other Citi businesses to launch similar programs for their mortgage and other customers in the future?

Citi continues to evaluate the best ways to help its customers and run its business safely and soundly in this challenging economic environment.

For more information visit or call 1.866.915.9417.