Refinance Free Credit

The thing we always preach is the importance of knowing every single thing involving your mortgage. Today we are going to get a bit more specific. The following are some of the advantages and disadvantages of a 30 year fixed rate mortgage. This is often the mortgage of choice for many people. So let’s figure out why that is. Getting all the important information is what can help you make the best decision possible on a mortgage that works for you.

Advantages of a 30 Year Fixed Rate

• One of the best advantages of this fixed rate mortgage is that it offers people the opportunity to have a mortgage they can pay off on the long term. It allows for more financial flexibility.
• Because this is a fixed rate, you know you will be paying the same interest rate for the entire 30 year period.
• The monthly payments are lower on a 30 year fixed rate mortgage because the interest on this loan occurs over a longer period of time.
• You can use these lower payments to help you with other needs around the house. Home improvements are a great thing for a house.
• Because of the interest bill that comes, it helps you increase the amount consumers will be able to deduct at tax time.

Disadvantages of a 30 Year Fixed Rate

• You will probably have to pay higher interest rates on these loans then you would on a 15 year loan.
• You are now on the hook for a long mortgage. Know that it will not be a sprint, but a marathon. So keep track of it and do not fall behind.
• You also are set up to earn equity at a slower pace then normal. Your first payments will generally go towards interest before you even get to the principal part of the payment.

So now you know some of the advantages and disadvantages of a 30 year fixed rate mortgage. You must consider everything about your possible mortgage before you pull the trigger. You will be stuck with this mortgage for a while, so you do not want to make a bad decision.

Additional Resources:

• Rates on 30-year Mortgages Fall to Lowest Point in 2 years
• How Mortgages Work

30 year fixed rate, 30 year fixed rate mortgage, financial flexibility, fixed rate mortgage, home improvements, interest rate, interest rates, tax time, year fixed rate mortgage

I found this at www.paul.kedrosky.com and Paul got it from businessweek.com.    It’s a map of the concentration of option arms by state.   The thing that struck me about it is that if you look at the areas feeling the most pain in the real estate world, they are either in the categories of higher concentration of option arms or they are places like Michigan and Ohio who are undergoing structural recessions.    I hope you enjoy it…..

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Both the Wall Street Journal and Bloomberg reported Friday morning that the Financial Industry Regulatory Authority — FINRA for short — is investigating securities brokerage firms’ marketing and sale of collateralized mortgage obligations.

HW readers may recall coverage of Orange County, Calif.-based Brookstreet Securities Corp., which went belly-up in June over bad CMO bets.

In letters sent in mid-December, the Wall Street Journal reports that FINRA asked firms for marketing materials, a list of supervisory policies and procedures, and descriptions of how collateralized mortgage obligations were valued.

FINRA is the largest non-governmental regulator for all securities firms doing business in the United States.

From the Journal:

The letters, dated Dec. 14, were sent from Finra’s enforcement division in what has been described as a “sweep” investigation, which is a broad look at industrywide practices that doesn’t necessarily result in an enforcement action. The letter asks for PowerPoint presentations, sales scripts and detailed customer-account information from June 30, 2006, through July 31, 2007. Firms have until Tuesday to respond.

Bloomberg reports that FINRA’s concern is over the suitability of CMOs, with one lawyer interviewed characterizing the securities as “potentially risky and complicated products.”

I have all sort of comments here, harking back to discussions over Brookstreet’s failing.

First, and I’m far from the first to note this, most CMOs are of the plain-vanilla REMIC variety that currently dominates the market for FNMA and FHLMC pass-throughs (read this to get some background on REMICS and CMOs, if you aren’t familiar).

Tanta over at Calculated Risk has said that “the bond market is certainly going to change pretty radically if we declare that REMICs–as such–are too toxic for retail investors.” These are, after all and literally, your grandmother’s securities.

Which is precisely why I don’t think we’re talking about REMICs here, although neither the WSJ nor Bloomberg appear to have bothered with this important distinction.

Rather, I think we’re talking about IO strips here, part of what’s known as the stripped mortgage-backed securities (SMBS) market — by IO, I mean interest-only.

To put it lightly, IOs represent one of the riskiest fixed-income assets available. Allowing retail investors to dabble in this space would, IMHO, absolutely become an issue of suitability on behalf of any yahoo that actually went ahead and sold it to an investor (or even marketed it, put it into a PowerPoint — you get the idea).

What the FINRA investigation suggests here is that more securities brokerages than just Brookstreet decided to get into this complex game. Which is absolutely stunning.

This story gets extra credit if one of the as-of-yet-unnamed brokerages ends up being something other than a local shop.

The Missouri Department of Insurance, Financial Institutions and Professional Registration said Thursday that it has ordered two title insurance companies to pay over $240,000 in fines and to fix current title agency rating procedures.

The state regulator said that an investigation indicated St. Louis-based Land Title Insurance Company and Calif.-based First American Title Insurance Company allowed independent title agencies writing title insurance on their behalf to use incorrect risk rates or risk rates not filed with the department.

Risk rates are used in calculating the premium a consumer will pay for the cost of title insurance.

“The new title insurance reforms I signed provide for better disclosure to consumers and more accountability to companies and agencies to ensure they give Missourians consistent and fair prices for title insurance,” Missouri Gov. Matt Blunt said.

“The results of these examinations demonstrate the importance of new laws Gov. Matt Blunt signed last year,” DIFP director Douglas Ommen said.

“Missouri consumers deserve to be treated fairly and honestly during the home-buying process. Title agencies should not use varying rates or rates not filed with this department, and title companies should do a better job of overseeing the transactions of agencies that work on their behalf.”

Gov. Matt Blunt signed title insurance reform legislation that became effective with the new year. It clarifies a duty to fully disclose to consumers separate price information for insurance premium and for the title search and other services, and it requires title insurance companies to actively oversee title agencies writing business on their behalf by conducting annual audits of escrow, underwriting and claims practices.

In the fall of 2006, the department began a series of on-site investigations of title insurance agencies in an effort to review the marketplace and see how the title industry was marketing, underwriting and rating insurance coverage in the St. Louis area.

For more information, visit the DIFP Web site.

Disclosure: As of posting date, the author held no positions in the companies mentioned in this story.

From the Associated Press on Thursday:

Standard & Poor’s Ratings Services on Thursday downgraded $3.68 billion in investments backed by home loans as mortgage credit quality disintegrates, the ratings agency said Thursday.

S&P cut its rating on 89 tranches of collateralized-debt obligations from 22 deals.

I can’t seem to find evidence of the cuts on S&P’s Web site right now, but will update this post with particulars when I do.

U.S. consumer bankruptcy filings increased nearly 40 percent nationwide in 2007, according to the American Bankruptcy Institute. Data used by the Institute found 801,840 filings last year, compared to the 573,203 filings recorded during the similar period in 2006.

“The roughly 40 percent spike in consumer bankruptcies during 2007 presages even higher filings this year, as the heavy consumer debt load is made worse by the home mortgage crisis,” predicted ABI executive director Samuel J. Gerdano.

However, the data also showed that the 66,389 consumer filings recorded in December represented a 7.5 percent decrease from the 71,799 filings recorded in November. Chapter 13 filings constituted 38.32 percent of all consumer cases in December, a slight decrease from November.

For more information, visit http://www.abiworld.org.

With a hat tip to the Calculated Risk blog, who uses the term liberally, another bank has made a visit to the so-called confessional.

Birmingham, Ala.-based Regions Financial Corp. said Thursday it will boost loan loss reserves to approximately $360 million in the fourth quarter of 2007, an increase of $270 million one quarter earlier. The company cited “weakening credit quality,” primarily in its residential construction loan portfolio.

We are experiencing a sharp slowdown in real estate demand, especially in parts of Florida and Georgia, and are responding aggressively to counter its effects,” said Dowd Ritter, chairman and chief executive officer. “We are closely monitoring the impact of the declines in housing demand and values on our borrowers and are acting quickly to address current areas of weakness.”

Residential builder loans represent approximately 8 percent, or $7.5 billion, of Regions’ total portfolio of $95 billion. In addition to increasing the loan loss provision, the company said it reassign key managers to focus on work-out strategies for distressed borrowers.

The bank also said it will record approximately $131 million of additional pre-tax charges during the fourth quarter, including $42 million it said was related to its mortgage servicing business.

For more information, visit http://www.regions.com.

Disclosure: At time of post, the author held no positions in RF.

If you are a Colorado home owner considering a new mortgage loan, there are several steps you can take to avoid paying too much when refinancing. Comparison shopping mortgage offers will only get you so far unless you know how to negotiate for wholesale mortgage rates. Here are ...