Mortgage, loan and property. What is a mortgage?

A mortgage is putting a property as a guarantee to a lender as a security for a mortgage loan.

While a mortgage in itself is not a liability or a dept, it is evidence of a debt. It is a transfer of an interest in property, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the property when the terms of the mortgage have been satisfied or concluded.

In other words, the mortgage is a guarantee for the loan that the lender makes to the borrower. In all but a very few states, a mortgage creates a lien on the title to the mortgaged property.

Wednesday, May 14, 2008

Home loan requests climb 2.9% last week as interest rates fall

Home mortgage applications rose 2.9% during the week ending May 9, according to trade group Mortgage Bankers Association's weekly application survey.

Finally good news: The MBA's application index increased to 674.4 during that week, compared with 655.4 one week earlier.

Refinance level increased 6.5% during the week, while purchase volume fell 0.7%. The refinance volume accounted for 48.7% of total mortgage requests during the week ending May 9.

The MBA's application index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

An index value of 100 is equal to the application volume obtained on March 16, 1990, the first week the MBA tracked application volume. A level of 674.4 means mortgage application activity is 6.744 times higher than it was when the MBA began tracking the data.

The MBA's application index provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all home retail mortgage originations each week.

The application volume rose a little as interest rates declined during the week. The average rate for a traditional, 30-year fixed-rate mortgage fell to 5.82% from 5.91% the previous week.

The 15-year fixed-rate mortgage, a popular option for refinancing a loan, fell to 5.38% from 5.49%.

The average interest rate for a one-year adjustable-rate mortgage fell to 6.6% from 6.77%.

Tuesday, May 13, 2008

The worst part of the subprime crisis could be history!

The nastiest part of the subprime crisis, which has prompted banks to tighten credit and led the U.S. Federal Reserve (Fed) to come to the rescue of Bear Stearns, could be history if we rely on what the short-term borrowing rates is showing us.

The difference between the yield of treasury bills of three months and the rate of loans denominated in U.S. dollars in London, an indication of credit risk, has narrowed by 7 basis points to 0.93 basis points, the smallest gap since February 25 last. This gap had risen to 2 percentage points on March 19.

"It indicates that at the very least, the worst is past," said Theodore Ake, head of trading in treasury bills at Mizuho Securities USA in New York, one of 20 brokers doing business in the primary market and trading directly with the Fed.

"There was a lot of panic integrated into these transactions, and it will continue to unwind, he adds. There has been a massive movement towards quality "

Ben S. Bernanke, Fed chairman, supports confidence in the credit markets after cutting interest rates seven times since last September, supported the takeover of Bear Stearns and injected over 900 billions US in the financial system.

These measures have helped to ease disruptions while there was loss and impairment losses related to mortgage-backed securities and loans disclosed by banks to the tune of 329 billion U.S. dollars.

Mr. Bernanke has reduced the target rate loans a day between banks by 3.25 percentage points since last September, including two cuts by three quarters of a point this year.

The Central bank has provided U.S. $ 29 billion of funding to ensure that JP Morgan Chase buys Bear Stearns. Loans were also offered to brokerage houses as part of the largest credit expansion since the Great Depression.

Monday, May 12, 2008

1 new rule for home buyers

My wife can't keep a secret!!!

It’s written with large letters, but people don’t seem to be able to read it: The house you purchase today will more than likely be worth less next year (ouch).

That could get you thinking about trying to time your purchase with the bottom of the curve. Resist. It's harder to do than you think, and right now... is the best buyers have had it in two decades, with inventories up and mortgage rates low.

Pace yourself, find the perfect place and make a super hard bargain: Pay no attention to the seller's asking price and bid over 10% below what comparable properties are selling for. If the seller complains, just move on.

Remember that if you're selling too, your home could sit. So make sure you sell before you buy, home prices are et their lowest now.