Desember 2018

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Five Ways to Get Home Improvement Funds - Homeowners have been bitten hard by the remodeling bug. For proof, consider that over 50 percent of those recently polled by Houzz indicated they plan to start or continue home improvement projects in the next 12 months.

Home Improvement Funds, Ca Home Refinancing,

What's more, Metrostudy reported that its second quarter 2018 Residential Remodeling Index hit an all-time new peak of 114.4, which was 5.2 percent higher than a year earlier.

Yet 30 percent of folks surveyed by Harris and LightStream earlier this year said they plan to use plastic to pay for some of their home renovations; keep in mind that some credit cards carry interest rates in the 18 percent-plus range, making them a terrible means of funding a fix-it project if you carry a balance.

So, what's a better option? The experts weigh in on these five safer financing choices:

• A cash-out refinance.

Refinancing your mortgage and taking extra cash out at closing -- money that can be devoted to remodeling dollars -- can be a wise decision, under the right circumstances.

"If you can refinance to a lower fixed interest rate or a shorter term, that's a win for your finances," says Jennifer Beeston, vice president of mortgage lending at Guaranteed Rate Mortgage, based in Santa Rosa, California.

Note, however, that you'll pay closing costs that can add up to thousands (unless you roll these fees into your loan in the form of a higher interest rate); this process can also take weeks to complete, but this is the best way to secure a fixed rate and one loan.

• A home-equity loan.

This option, often referred to as a "second mortgage," enables you to borrow against equity you've accumulated in your property. The interest rate is typically fixed, the funds are paid out in one lump sum, and the repayment term can range from five to 30 years.

"Say you have a lot of home equity, and the renovation project is long-term with a high return on investment. In that case, tapping some of that equity to invest back into your house without expending your savings could prove a smart way to go," Byron Ellis, certified financial planner with United Capital Financial Life Management in The Woodlands, Texas, says.

• A home equity line of credit (HELOC).

This route also allows you to borrow against your home's equity. But you get to choose when to withdraw the cash, up to a preapproved limit and over a specified period. The interest rate is variable based on current prime rates, and many HELOCs don't charge closing costs.

"A HELOC often has a very low introductory rate, and you are only charged interest on the amount you borrow," notes Randall Yates, CEO of The Lenders Network, headquartered in Dallas.

• An FHA 203(k) rehab loan.

This option is only available when you first buy a home or refinance, the lender must be FHA-approved, and it's applicable for older homes and fixer-uppers. But it simplifies the borrowing process because it rolls your mortgage and rehab funds into one loan. And FHA requirements are less strict -- for example, a low 3.5 percent down payment may apply, and a 620 credit score may qualify you.

"If your home currently doesn't have a lot of equity, an FHA 203(k) loan is the way to go, as you can borrow money based off the estimated value once the home is finished," Beeston notes.

• A personal unsecured loan.

The good news here is that your home isn't used as collateral for the loan, and the process occurs much quicker. The bad news is that the interest rate can be much higher than options No. 1 through 4.

"This can make sense if you are fixing up the house to sell immediately. But you need to read the terms and conditions carefully. Some private lenders, for instance, may want you to pay the whole amount back in three months, while others may give you three years," says Beeston.

Yates adds that a personal loan "may work well for someone with a commission job where their income fluctuates. If you face any financial issues, at least you don't risk losing your home."

Before committing to any financing vehicle, "research all options available to you carefully. Rates and fees will vary from lender to lender, so compare loan offers from at least three lenders to make sure you're getting the best deal," says Yates.

                                                          Best cash-out refinance lenders 2019
Choosing from the best cash-out refinance lenders

You’ll want to choose the lender that has competitive pricing and provides a good experience. For example, if you’re most comfortable doing business face-to-face, you may prefer a lender with a conveniently-located branch. But, if you prefer to engage online, you’ll look for a company with a highly-functional website.
Best cash, Refinance Lenders 2019, Ca Home Refinancing, Home Loan Mortgage,

Similarly, you may want the solidity of borrowing from a huge lender with trillions in assets and a long history. Or you may prefer to go with a young, hungry company that’s working hard to build a reputation.
Start your cash-out refinance here. (Dec 5th, 2018)

Either way, your final pick must offer the type of loan you want to people who are in your financial position. So make sure you meet a lender’s:
  • Credit score threshold
  • Cap on the proportion of your home’s value you can borrow (loan-to-value ratio or LTV)
  • Cap on the percentage of your monthly income that you expend on keeping up with your total debts (your debt-to-income ratio, or DTI)
This choosing process is a two-way street.
Our top pics

Some lenders are better than others for homeowners, depending on how they wish to do business. 
Here’s a quick rundown.
Best loan for people with credit issues – Lenda’s guidelines are flexible. Good for those with less-than-perfect credit
  • Best loan for low rates — Guaranteed Rate gets high marks from its clients. And their rates are excellent
  • Best loan for maximum cash out — Lenda allows up to 97 percent cash out. And any FHA lender allows up to 96.5 percent LTV, while VA lenders provide up to 100 percent cash-put refinancing
  • Best loan for people who hate applying for mortgages — Rocket mortgage advertises its simple application process
  • Best online experience — Quicken, loanDepot, Guaranteed Rate and Lenda
And here are our more detailed reviews.

How to compare lender guidelines

Many lenders do not publish their requirements for credit scores and LTV and DTI ratios. But don’t assume that automatically means they won’t be interested in borrowers with low scores and high LTVs and DTIs. Indeed, they might be signaling that they’re flexible.

Related: Should you do a cash-out refinance before retirement?

All lenders view applications as a complete package. Suppose a lender says it works with people with a score of 580. It may actually lend to just a handful of people with that score, and they must be better-than-average in other ways — perhaps with low LTV and DTI numbers.

The good news is that applying for a mortgage is a relatively quick process, with the initial underwriting performed electronically. If in doubt, just apply and get a decision in minutes.
Best cash-out refinance lenders

The following is The Mortgage Reports list of its best cash-out refinance lenders for 2019. It’s in alphabetical order.

Related: Cash-out refinance rules for conforming, FHA, VA and reverse mortgages

These are mostly national organizations. If you have an existing relationship with — or just like the look of — a regional or other lender, by all means get a quote from it, too. However, you’ll still need multiple quotes in order to be sure you’re getting the best deal. The more the merrier — and wiser.
Bank of America

With 67 million consumer and small business clients and around 4,400 “retail financial centers,” Bank of America is a behemoth. It can trace its roots back to 1784.

Better Business Bureau rating: A+ (accredited business)

Of course, every business with so many customers will have plenty who are dissatisfied. Those posting comments on the BBB website mostly address customer service issues.
Application experience

You can begin making your application online and all information you enter will be saved and accessible by your loan officer. Quite soon in the process, you’ll be prompted to call a loan officer or have one call you.

The bank says you can pursue your application “at a Bank of America Financial Center, online at or by phone.” You can use its online portal for prequalifying, making your application, uploading documents and accessing account management services.
Range of mortgage offerings

The bank offers Federal Housing Administration (FHA) and Veterans Administration (VA) loans as well as conforming and nonconforming mortgages.
How much?

Closing costs vary by transaction based on property type, loan product and market. If you’re a client of Bank of America or Merrill Lynch, you may be eligible for discounts.

Related: Best uses for your mortgage cash-out refinance

These depend on your membership of the Bank of America Preferred Rewards program, which is available to clients who have qualifying combined balances in their Bank of America deposit and/or Merrill Edge and Merrill Lynch investment accounts.

There are three tiers based on qualifying balances: Gold $20,000+, Platinum $50,000+ and Platinum Honors $100,000+. Depending on your tier, as a mortgage client, you should be eligible for a $200, $400 or $600 reduction in your origination fee. You’ll want to include this discount when comparing B of A pricing to that of other lenders.
Will you qualify?

Bank of America does share many of its lending  criteria:
  • Minimum credit score — 620 for a conforming mortgage, rising to 640 for one backed by the FHA and 660 for a VA loan. Nonconforming mortgages require 680
  • Maximum Debt-to-Income — 41 percent for VA loans, rising to 43 percent for conforming and nonconforming mortgages, and 55 percent for FHA loans
  • Maximum Loan-to-Value — 89.99 percent  for nonconforming mortgages, increasing to 95 percent for conforming ones, 96.5 percent for FHA ones and 100 percent for VA ones
However, remember that lenders view applications as a package. If you barely meet one criterion, you may have to exceed lender guidelines in another.

Request cash-out refinance rates here. (Dec 5th, 2018) Chase

Chase claims to serve almost one-half of all American households. It has 5,100 branches and a useful online banking presence.

It is the U.S. consumer and commercial banking business of JPMorgan Chase & Co, which operates globally and has assets of $2.6 trillion.

Better Business Bureau rating for Chase Home Finance: A+ (not an accredited business)
Application experience

Chase offers a full range of application options: call, apply online or make an appointment for a face-to-face meeting with a Home Lending Advisor.
Range of mortgage offerings

The bank has a range of mortgage offerings:
  • VA loans
  • FHA loans
  • Jumbo mortgages
  • Adjustable-rate mortgages
  • Fixed-rate mortgages
  • Options for 15-year or 30-year terms
Talk through your choices with an advisor.

How much?

Again, you can explore your likely closing costs with an advisor. Chase, in common with all mortgage lenders, must by law send you a Loan Estimate within three business days of receiving your application and that will include a good-faith estimate of your closing costs. Use it to compare their quote with that of other lenders.
Will you qualify?

Chase doesn’t appear to publish its lending criteria and didn’t respond to requests for that information. You can probably expect those to be roughly in line with other mainstream lenders.

It does suggest on its website that it may be sympathetic to those with troubled histories, providing their difficulties are in the past:

“Although your credit history is important, it’s still just one factor in our decision to approve your refinance. If you can demonstrate that your credit problem is in the past and you’ve been able to re-establish a good track record, speak to us openly and honestly about your situation. We’re happy to work with you to evaluate your current credit profile and determine what home financing options best suit your particular needs.”

CitiMortgage, which provides Citi’s loans for home purchase and refinance transactions in the U.S., originated $13.1 billion in new loans in 2017. The wider group serves 100 million customers in 19 countries.
Application experience

You can make your application by getting in touch with a local Home Lending Officer, phoning a call center or using the online portal. Citi says that completing its online application should take you about 30 minutes but you can save your form at any time and come back to it later.
Range of mortgage offerings

Citi offers a broad range of types of mortgages. In addition to other mainstream products, these include VA, FHA and jumbo loans.
How much?

Like all other mortgage lenders, Citi must by law send you a Loan Estimate within three business days of receiving your application. That will include a good-faith estimate of your closing costs.
Will you qualify?

Citi doesn’t publish its lending criteria. The only clue on its website is that “The preferred [debt-to-income] DTI ratio is generally around 36 percent.”

You can probably anticipate similar underwriting standards from Citi as you’ll get with most other mainstream lenders.
Guaranteed Rate

Guaranteed Rate is a 21st-century lender (literally: it was founded in 2000) that has grown quickly. In less than 20 years, its team has expanded from 15 to more than 3,000 professionals.

It’s especially proud of its innovative processes and technologies. They include Transfersafe, which allows customers to securely upload documents.

Better Business Bureau rating: A (accredited business)

Many customers on the BBB website are fans and the company has close to the highest star rating of all lenders on this list.
Application experience

If you’re expecting such a new company to offer a good online application experience, you’d be right. But Guaranteed Rate also has 170 offices nationwide. So help should be on hand if you need assistance or prefer a more traditional application experience.
Range of mortgage offerings

For cash-out refinancing, Guaranteed Rate recommends FHA loans and 30- or 15-year fixed rate mortgages.
How much?

Check out the company’s “What Will My Refinance Costs Be?” online calculator.
Will you qualify?

According to the Guaranteed Rate website, “The minimum credit score accepted is between 620-660, with FHA’s minimum is 580-670 depending on your state.” Of course, you’ll get a lower interest rate the higher your score.

You should probably expect requirements for debt-to-income and loan-to-value ratios to be roughly in line with other lenders.

Lenda is another new kid on the block, having been established in 2013. It’s yet to have a nationwide presence and currently operates only in Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Oregon, Pennsylvania, Texas, Virginia and Washington. However, it says it plans to expand into other states soon.

It claims to be “a first-of-its-kind platform that makes the home loan experience honest, fast and completely online from start to finish.”

Better Business Bureau rating: A+ (not an accredited business)

At the time of writing, only one disgruntled customer had left a review on the BBB website.
Application experience

Most of the heavy lifting is done online. Lenda says that its platform, built from the ground up, educates its users throughout the entire process. It also has licensed representatives available to answer borrowers’ questions by live chat, email or phone. So if you want a face-to-face meeting, you can have one via an online video service.
Range of mortgage offerings

The company offers FHA loans as well as other types of mortgages. But it can’t currently help with VA or USDA products.
How much?

One of its big strengths is that Lenda doesn’t charge any lender fees. The amount you pay will depend on your state’s title fees and the amount you’re borrowing. And, of course, you’ll have to pay third-party fees. As the company puts it, “We are zero cost to the consumer – no lender fees and no junk fees.”

However, almost any lender can engineer a so-called “no cost” loan by raising its interest rate. If you want one, compare offers from several and choose the program with the lowest interest rate.
Will you qualify?
Lenda reveals some very easy lending criteria:
  • Minimum credit score — 580
  • Maximum Loan-to-Value — 97 percent
  • Maximum Debt-to-Income — 55 percent
Bear in mind our earlier caveat: The chances of your qualifying if you’re on the threshold of all three criteria may be smaller than you’d hope.
lLoan Depot

As its name suggests, loanDepot is a relative newcomer, having been established in 2010. However, it’s already funded loans worth $150 billion.

If you expect it to be slick when it comes to technology, you won’t be disappointed. But it also has 150+ local loan locations nationwide, and employs 2,000+ licensed loan officers.

Better Business Bureau rating: A+ (accredited business)

Although some customers report bad experiences on the BBB’s website, many others are enthusiastic. Indeed, loanDepot has among the highest BBB star ratings of any of the companies featured on our list of the best cash-out refinance lenders.
Application experience

You can apply online or over the phone. And, thereafter, you can complete the whole process remotely. Your only face-to-face encounter can be at the loan signing, and you can opt for that to happen either in your own home or at an “approved settlement location.”
Range of mortgage offerings

loanDepot offers cash-out refinance customers FHA and VA loans as well as jumbo ones and mainstream fixed- and adjustable-rate mortgages.
How much and will you qualify?

loanDepot did not respond to requests for information for this list. Other online sources suggest its origination fees can range from 1 percent up to 5 percent.

One such source suggests the company requires a minimum credit score of 600 for a purchase mortgage. All these figures may vary for a cash-out refinance.Start your cash-out refinance application here. (Dec 5th, 2018)

PNC goes back more than 160 years. It now has 2,400 retail branches and 8 million consumer and small business customers.

Better Business Bureau rating: A+ (not an accredited business)

As with most other lenders, PNC customers post generally negative comments on the BBB website. These appear to mostly relate to customer service.
Application experience

PNC seems largely geared to handling mortgage applications in branches and over the phone. When you want to apply on its website, you fill in a form that should result in a callback.

The company says, “PNC has mortgage loan officers available in most of our 2,400 branches in our retail network which is in 19 states plus the District of Columbia, located primarily in the Middle Atlantic, Southeast and Midwest. We also have mortgage loan officers located in offices throughout most of the rest of the continental United States.”
Range of mortgage offerings

If you want a government-backed mortgage, PNC will consider cash-out refinances for VA, FHA and USDA loans.

In addition to others, it also has two special, proprietary programs:
  • PNC Community — An affordable lending product available to first time home buyers in certain Community Reinvestment Act (CRA) census tracts
  • Medical professional loans — Loans tailored for those in the medical profession
  • Both of these can be used for cash-out refinances.
 How much?

PNC’s fees on closing typically range from 3 to 5 percent of the total loan amount.
Will you qualify?

The company does not publish its requirements for credit scores, LTV and DTI. Expect it to assess your application across a full range of criteria.
Quicken Loans

The company says, “Quicken Loans Inc. is the nation’s largest mortgage lender. It is also the nation’s largest FHA lender and a premier Veteran Affairs (VA) lender.” It closed mortgages worth $400 billion during the period 2013-17.

Better Business Bureau Rating: A+ (accredited business)

Its customer reviews star rating on the BBB website is exceptionally good. That alone would justify its inclusion in this list of the best cash-out refinance lenders 2019. However, it has other qualities that recommend it.
Application experience

Quicken Loans says it offers, “The first completely online mortgage experience which gives consumers the ability to import and verify financial information, customize their mortgage, get approved and lock their rate without speaking to a human being.”

However, there is plenty of advice available from real human beings, if you need it. You can contact one of those by email, fax or phone throughout the process.
Range of mortgage offerings

The company says its most popular cash-out refinance mortgages are:

  • FHA loans
  • 30-year fixed-rate loans
  • Adjustable-rate mortgages
  • VA loans
Other types of refinance products may be available.
How much?

You can probably expect your origination fee to be in a range of 2 percent to 5 percent of your loan’s value. That will depend on the type of loan you choose.

Unusually, Quicken Loans charges an upfront fee when you decide to accept its quote. This is usually between $400 and $750. However, the amount you pay will later be deducted from your closing costs.

As with many lenders, you may be able to roll up your closing costs within your new loan in a “zero-closing costs” deal. However, these loans can be more expensive if you keep them for many years. .
Will you qualify?

The company can be more sympathetic than most when it comes to approving loans. Unlike many, it’s been known to lend to borrowers with scores below 600 for FHA loans. However, you’ll likely need a score of at least 620 if you want a conventional (non-government) loan.

Although it doesn’t appear to publish its requirements for debt-to-income and loan-to-value ratios, Quicken Loans hints on its website that it might be understanding about those, too.

Headquartered in Atlanta, GA, SunTrust has 4.4 million customers and 23,199 employees in 1,222 branches. It’s originated or purchased $24.4 billion in mortgages and refinances.

Better Business Bureau Rating: A (accredited business)

In spite of its size, SunTrust has fairly few customer reviews on the BBB’s website.
Application experience

SunTrust urges prospective cash-out refinance borrowers to call, email or find a mortgage loan officer in a branch. Loan officers can be found in branches in Maryland, Virginia, Washington, DC, North Carolina, South Carolina, Georgia, and Florida.

There seems to be no way to apply wholly online. However, you can initiate a pre-approval process on the website.
Range of mortgage offerings

For those wanting government-backed loans, SunTrust offers VA and FHA loans. It also offers a number of proprietary products. Ask your loan officer for more information.

SunTrust says, “We are a purpose-driven company, and our client-centric approach to serving clients means we work to understand our clients’ needs and provide the products and services that help them make financially confident decisions.”
How much?

Lenders’ fees vary depending on the loan product. Any additional fees levied by Fannie Mae or Freddie Mac for cash-out refinances are passed on the borrower.
Will you qualify?

SunTrust does not disclose its criteria for credit scores, LTV or DTI. Instead, it says, “We work with our clients to provide the right solution to meet their needs.”
TD Bank

TD Bank is one of America’s 10 biggest banks. Over its 150-year history, it has evolved into its current form: 9 million customers, 27,000 employees and 1,250 branches across the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida.

Better Business Bureau Rating: A+ (accredited business)

As with virtually all full-service banks with millions of customers, there are some negative reviews on the BBB website. These mostly relate to customer service.
Application experience

The TD Bank website allows you to track your cash-out refinance application and to access your documents. However, the bank seems geared for personal applications, either face-to-face in branches or over the phone.
Range of mortgage offerings

The bank supports a comprehensive range of mortgages, including FHA and VA loans.
How much and will you qualify?
TD Bank is reticent about its lending criteria and its origination and other fees. It urges visitors to its website to call a mortgage advisor via its call center.

In the absence of better information, you can probably expect its offerings to be roughly in line with other, similar mainstream lenders.

Request cash-out refinance quotes from top lenders here. (Dec 5th, 2018)
U.S. Bank

U.S. Bank has a history going back to 1863. Today, it is America’s fifth-largest bank and has 73,000 employees. At the end of 2017, it had assets of $462 billion.

Better Business Bureau rating: B+ (accredited business)

The bank gets only a B+ from the BBB because it has faced government action.

As is always the case with big banks, customers tend to post remarks on the BBB website only when they’ve encountered problems. Most complaints seem to relate to customer service in areas of activity not related to mortgages or other home equity finance products.
Application experience

If you want, you can manage your entire refinance, including your initial application and document uploads, online. But U.S. Bank has more than 1,300 mortgage loan officers across the country, many based in branches. So, if you prefer to conduct your business in the traditional way, you may be able to do so locally.

The U.S. Bank Loan Portal lets you choose how to engage. So you can set up live, online conversations with a loan officer if you wish.

Range of mortgage offerings

As well as offering cash-out refinances on VA and FHA loans, the bank has its own portfolio of programs.

In particular, it has a streamlined Smart Refinance option. One of these delivers:

  • Zero closing costs
  • A loan-to-value ratio of up to 90 percent without mortgage insurance
  • Terms of up to 20 years
For the right borrower, that could be a great deal.
How much?

If you can’t get or don’t want the Smart Refinance deal, you’ll likely have to pay lender’s fees on closing and possibly an application fee.

U.S. Bank doesn’t publish how much these might be. It says, “Fees can vary by state, loan size and loan to LTV.” However, it must disclose the ones that will apply to you soon after you make an application.
Will you qualify?

The bank says that its requirements for credit scores, LTV and DTI “vary per program and per unique borrower characteristics.” Which is another way of saying it views each application individually.
Wells Fargo

Wells Fargo may well be America’s most famous bank. Its romantic, 160+-year history has culminated in a strong modern-day presence that includes 8,050  branches, 265,000 employees and $1.9 trillion in assets.

Better Business Bureau rating: No rating (not an accredited business)

Wells Fargo has had widely publicized issues in recent years. BBB says its No-Rating status exists because “The business is in the process of responding to previously closed complaints.”

However, the bank still deserves inclusion in any list of best cash-out refinance lenders. It has quality products and a good application experience.
Application experience

You can use Wells Fargo’s online portal to apply for your cash-out refinance, including from a smartphone. It usually takes 20-30 minutes. At any time, you can save your application and then return to it later. And, after that, you can track your application online.

You can, of course, get help from a loan officer or apply in a local branch. The call center can also provide advice and get you going.
Range of mortgage offerings

Wells Fargo offers VA and FHA cash-out refinances, as well as other mortgage products.
How much?

The bank explains, “There is a processing fee on all originations and it is not specific to cash-out refinance transactions.  Processing fees vary by state.”

You should probably expect your Loan Estimate to reveal fees roughly in line with similar lenders.
Will you qualify?

Wells Fargo says that it regards its lending criteria (credit score and loan-to-value and debt-to-income ratios) as proprietary information. Again, the ones it employs are likely to be close to those of other similar banks.
Get a quote from a top cash-out lender

Tapping into your home equity can help you with financial goals such as home improvement, paying off debt, or even starting a retirement fund.

Get your best cash-out refinance rate now by getting quotes from multiple top lenders in the U.S.

RBI keeps repo rate unchanged at 6.5%, but home loan, car loan interest rates may still go up - The Reserve Bank of India, as widely expected, kept its key policy rate unchanged at 6.50% in its monetary policy review on Wednesday. Still, all types of loans – including home loans, personal loans and car loans – are likely to cost more in the near future, as per experts. In fact, many banks and housing finance companies (HFCs) – including SBI, HDFC Bank and ICICI Bank — have already increased their MCLR and lending rates in recent months, primarily owing to the rise in their cost of funds. For instance, while the current floating interest rates of SBI home loan range between 8.7% and 9.45%, the floating interest rates of HDFC Bank home loan are hovering between 8.8% and 9.2%.

It may be noted that a majority of industry experts and market analysts were already of the view that the RBI may maintain status quo on its policy rates in the December policy review.

For instance, Naveen Kukreja, CEO & Co-founder,, was of the view that the Monetary Policy Committee (MPC) may continue with the status quo on the repo rate due to lower inflation and moderating economic growth. “The rupee’s appreciation against the US dollar and a sharp fall in crude oil prices will also encourage the MPC to remain in a wait-and-watch mode,” he said.

Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities, was also expecting the RBI MPC to keep the repo rate unchanged along with maintaining the stance at ‘calibrated tightening’. “The RBI should maintain a watch on the core inflation too which continues to be at uncomfortable levels. While we believe that the RBI will likely pause for the rest of FY2019, it will likely remain watchful on any upside risks to inflation emanating from global and domestic factors,” he said.
Impact on borrowers

Whatever be the case, borrowers are unlikely to get any respite from the rising loan rates. According to experts, repo rate is just one of the several factors that banks consider while fixing their lending rates. They also consider their cost of deposits, tenor premium, operating cost, etc. while setting their lending rates. Therefore, any future increase in their cost of deposits might force them to increase their lending rates despite the status quo in policy rates.

For example, “despite the status quo in the repo rates during the October MPC meeting, many banks have increased their MCLR and lending rates since then, primarily due to the rise in their cost of funds. As far as Housing Finance Companies (HFCs) are concerned, their lending rates are most likely to increase due to the tight liquidity scenario. As a major chunk of their borrowing would need to be refinanced in the short term at higher rates, it will increase their cost of funds and thereby, their lending rates for both the new and existing investors,” informs Kukreja.

Here is a look at how any increase in the home loan interest rates will impact your EMIs:

Suppose, Delhi-based Rohit Kapoor is looking for a housing loan of Rs 60 lakh for buying a flat of Rs 80 lakh. If Kapoor takes a home loan of Rs 60 lakh at the current rate of, say, 8.75% for 20 years, this would imply an EMI of Rs 53,022. Over 20 years, Kapoor would be paying Rs 67,25,433 as interest. A 25 bps increase in the interest rate would increase the EMI to Rs 53,983 and the total interest paid to Rs 69,56,054. A 50 bps rate hike, on the other hand, would increase the EMI to Rs 54,952 and the total interest payable to Rs 71,88,482. That’s Rs 2,30,621 more in case of a 25 bps rate increase and Rs 4,63,049 more in case of a 50 bps rate hike.

Impact of Home Loan Rate Hike on EMI & Total Interest Payable:

RBI, Repo, Rate, Unchanged, Home Loan, Loan Interest Rates, ICICI Bank, SBI, HDFC Bank

What should home loan borrowers do?

According to experts, as home loan rates vary widely across various banks and housing finance companies (HFC), those planning to avail home loans should extensively compare lending rates offered by various lenders before making any application.

Similarly, “the existing home loan borrowers should compare the home loan rates offered by other lenders and find out the potential savings on transferring their loans at lower rates. If the savings are significant after accounting the transfer costs, they should first negotiate with their existing lenders for a rate reduction. If their existing lenders refuse to do so, they should opt for home loan balance transfer,” advises Kukreja.

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Unchanged Repo Rate to Boost Sales, Encourage Home Buyers: Realty Sector - Welcoming the Reserve Bank of India's (RBI) decision to keep the repo rate unchanged, real estate industry said the move is likely to reinforce confidence in home buyers resulting in improved sales.
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The apex bank Wednesday maintained a status quo on the repo rate keeping it unchanged at 6.5 per cent.

"The decision is on expected lines and will be a relief for the real estate industry that has been worried over a possible rate hike adversely impacting the market," Knight Frank chairman and managing director Shishir Baijal said.

Since the last Monetary Policy Committee (MPC) meeting, there has been a big relief with the fall in crude prices and the strengthening of the rupee, which reduced inflationary risk, he said.

"With sales and new launches in January-September period on an upward trend, the residential segment is definitely showing strong signs of recovery," JLL India country head Ramesh Nair said.

While back-to-back rate hikes in June and August had impacted buyers' sentiment in the interim, maintaining the status quo on policy rate in October and today, will reinforce the confidence of homebuyers and they will be encouraged to go ahead with their plans to buy house, he added.

CBRE Chairman, India and South East Asia Anshuman Magazine said the MPCs decision paves the way for RBI to work flexibly, supporting overall economic growth by strengthening bank lending. "We believe that the decision to maintain a stable repo rate will prove beneficial from a consumption and lending perspective, thereby boosting economic growth," he said.

Commenting on the move, Anarock Property Consultants chairman Anuj Puri said the politically, an upward revision would not have served the current government well as the 2019 elections are around the corner.

"From the economic standpoint, a hike in repo rates would have had a direct impact on home loan rates. High housing loan interest rates are known deterrents to many buyers, especially in the affordable segment where higher interest rates can and do weaken sentiment," he added. chief investment officer Ankur Dhawan said a hike in rates now would have been detrimental for the industry which is already going through fund constraints due to the liquidity issue in non-bank finance companies.

"In fact, industry was hoping if rates could have been reduced in this meeting to revive the industry. No change in repo rate is a slightly negative news for the industry," he argued.

Paradigm Realty managing director Parth Mehta said over the year the rate hikes have resulted in higher home loans thus impacting the demand along with GST impact begin major deterrent to demand for under construction projects.

Nahar Group vice chairperson Manju Yagnik called the RBI decision, a well-thought-out move as it will attract more home buyers with unchanged interest rates on home loans.

Spenta Corporation managing director Farshid Cooper noted that a rate cut at this stage would have helped in lowering the home loan interest.

Commenting on the policy decision, Amit Ruparel, managing director of Ruparel Realty said the sector has not facing the complications in sales owing to deficit in physical funds in the market.

"While RBI kept the repo rate unchanged, the market has been hit hard post the increment in stamp duty by one per cent on property to fund transport infrastructure projects in the city. There has been evident liquidity crunch owing to which festive season also did not fare well. The only way for real estate to float and sprint is if the levies like GST go down," he added.

Sai Estate Consultant co-founder Amit Wadhwani said residential home inventory being available at a great financial value and RBI maintaining the repo rate will translate into increase in demand and sales.

Interest on home, auto, MSE loans to be linked to new benchmarks like repo rate, treasury yields from April 1 - In a bid to ensure greater transparency, the RBI on Wednesday proposed that floating interest rates on personal, home, auto and micro and small enterprises (MSEs) loans will be linked to external benchmarks like repo rate or treasury yields, from April 1 next year. Currently, banks follow system of internal benchmarks, including Prime Lending Rate (PLR), Benchmark Prime Lending Rate (BPLR), Base rate and Marginal Cost of Funds based Lending Rate (MCLR). 

Interest, home, auto, MSE loans, Home Loan, Hme Finance, Loan,

The final guidelines to link the interest rate to external benchmarks will be issued by the end of this month, said the RBI's 'Statement on Developmental and Regulatory Policies'. The proposal to shift to external benchmarking of floating interest rate was suggested by an internal study group set up by the RBI to review the working of the MCLR System. " is proposed that all new floating rate (for) personal or retail loans (housing, auto, etc) and floating rate loans to Micro and Small Enterprises extended by banks from April 1, 2019 shall be benchmarked" to repo rate, or 91/182 Treasury Bill yield or any other benchmark market interest rate produced by the Financial Benchmarks India Pvt Ltd (FBIL).

"The spread over the benchmark rate - to be decided wholly at banks' discretion at the inception of the loan - should remain unchanged through the life of the loan, unless the borrower's credit assessment undergoes a substantial change and as agreed upon in the loan contract," the RBI said. It further said that banks are free to offer such external benchmark-linked loans to other types of borrowers as well.

Also read: RBI policy meet: What does 25 bps SLR cut mean for the consumer and the economy?

"In order to ensure transparency, standardisation and ease of understanding of loan products by borrowers, a bank must adopt a uniform external benchmark within a loan category; in other words, the adoption of multiple benchmarks by the same bank is not allowed within a loan category," the RBI said. In another decision, the RBI issued final guidelines regarding stipulating a mandatory loan component in working capital finance for borrowers.

With a view to promoting greater credit discipline among working capital borrowers, the RBI had earlier proposed to stipulate a minimum level of 'loan component' in fund-based working capital finance for larger borrowers. It had also issued draft guidelines in this regard. The RBI's statement also said final guidelines regarding board of management in Primary (Urban) Co-operative Banks (UCBs) will be issued during the month. An expert committee headed by Y H Malegam had recommended that a Board of Management (BoM) be constituted in every UCB, in addition to the Board of Directors (BoD) with a view to strengthening governance in the UCBs.

MBA: Mortgage applications rise 2% - Mortgage applications climbed 2% for the week ending Nov. 30, 2018, according to new data from the Mortgage Bankers Association's weekly Mortgage Applications Survey.
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Notably, the results for the week ending November 23, 2018, included an adjustment for the Thanksgiving holiday.

“Treasury rates continued to slide last week, driven mainly by concerns over slowing global economic growth and U.S. and China trade uncertainty,” MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan said. “The 30-year fixed-rate fell for the third week in a row to 5.08% and has declined a total of nine basis points over this span.”

On an unadjusted basis, the Mortgage Composite index increased 2% from the previous week.

“Application activity increased over the week for both purchase and refinance loans, and were 10% and 7% higher, respectively, than the week before the Thanksgiving holiday,” Kan continued. “Additionally, we saw a decrease in the average loan size for purchase applications to the lowest since December 2017.”

According to Kan, this might be an indication that there are fewer jumbo borrowers, or first-time buyers are having better success reaching the market.

The Refinance Index increased 6% from the previous week, and the unadjusted Purchase Index spiked 36% from last week and was 0.2% higher the same week in 2017. The seasonally adjusted Purchase Index inched forward 1% from the previous week.

The refinance share of mortgage activity grew to 40.4% of total applications, up from 37.9% the week before. The adjustable-rate mortgage share of activity decreased to 7.4% of total applications.

The Federal Housing Administration share of mortgage apps increased from last week’s 9.6% to 10.2%, and the Veterans Affairs' share of applications also grew, climbing from 9.9% the previous week to 10% this week.

The Department of Agriculture share of total applications slid, falling from 0.7% last week to 0.6% this week.

The MBA reported that mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 5.08% from 5.12% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) slightly increased from last week’s 4.88% to 4.89% this week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell from 5.11% last week to 5.08% this week.

The average contract interest rate for 15-year fixed-rate mortgages fell, slid from 4.53% last week to 4.5% this week.

Lastly, the average contract interest rate for 5/1 ARMs grew, reaching 4.33%, up from 4.29% last week.

5 Signs It's Time to Refinance Your Mortgage - Mortgage interest rates have gone up significantly over the past year or so but remain at historically low levels. Therefore, in many cases, refinancing your mortgage can still be a smart financial move. With that in mind, here are five common cases where it could be a good idea to explore your mortgage refinancing options now.

Refinance Your Mortgage, A Mortgage Refinance,
1. Your interest rate is about to adjust

If you have an adjustable-rate mortgage, or ARM, chances are that your rate has gone up over the past year or two. Or, if you’re still in your initial “teaser” rate period, you could be looking at a big rate increase when it’s over. Adjustable rate mortgages are tied to a certain benchmark interest rate, and since the Federal Reserve has raised interest rates several times recently (and is expected to continue doing so), your adjustable-rate mortgage could start to get much more expensive.

Fortunately, mortgage rates haven’t exactly risen as much as the Federal Reserve rate hikes might lead you to believe. The national average 30-year fixed rate mortgage APR is still about 4.7%, so if you have an adjustable-rate mortgage, now could be a smart time to refinance.
2. You need cash and want a low-interest way to get it

If you have a substantial amount of equity in your home, refinancing your mortgage to cash some of it out could be the lowest-cost way to obtain funding for renovations or to pay off high-interest credit card debt.

Let’s say that you want to renovate your kitchen and that you plan to spend $30,000. You have a few options. You can use credit cards to pay for it, but the average credit card APR is nearly 17%. You can obtain a personal loan, but the best APR buyers with top-notch credit are offered is currently about 7.5%. Even home-equity loans or lines of credit have average interest rates of 5.79% and 6.24%, respectively, as of this writing.

Meanwhile, borrowers with good credit should have no trouble obtaining a refinancing mortgage with an APR of under 5%. In short, refinancing can be your cheapest way of funding a major expense, so it could be a smart idea to take advantage.

3. Your credit has improved since you got your mortgage

You don’t need great credit to obtain a mortgage, but it can help you save lots of money over the term of the loan. And, you might be surprised at the difference a seemingly small improvement in your FICO® Score can make.

Based on today’s national averages, a consumer with a 670 FICO® Score can expect a monthly payment of $1,058 on a 30-year $200,000 fixed-rate conventional mortgage. With a 690, this drops to $1,032. Now, this may not sound like a big difference, but over 30 years it translates to $9,360 in savings. So, if your credit has improved since you obtained your mortgage, it can be a smart decision to refinance if your interest rate would be significantly lower.

4. Your monthly payment is too high

One good reason to refinance is if you have paid down a significant amount of your principal balance and your monthly payment has become too much of a burden.

For example, let’s say that you obtained a $200,000 30-year fixed-rate mortgage eight years ago with a 4.5% interest rate. Your monthly payment (P+I) would be $1,013 and you would still owe about $169,600 on the loan. 

If you were to refinance your remaining balance into a new 30-year loan at the same 4.5% interest rate, it would lower your monthly principal and interest payment to $859. The downside is that you’d be re-starting the clock until your mortgage is paid off, but if the priority is lowering your monthly payment, it could be a smart financial decision.

5. You want a shorter loan term

Consider this common scenario: You bought a home several years ago and obtained a 30-year mortgage in order to keep your monthly payment as low as possible. Since that time, your income has increased, you can afford a significantly higher payment, and want to pay your mortgage off faster.

You have two basic options here. First, you can keep your current mortgage and add more money to each of your payments. This will certainly achieve your goal of a faster payoff.

However, it could be smarter to consider the second option -- refinancing into a 15-year mortgage. Specifically, a 15-year mortgage may have a significantly lower interest rate than your 30-year loan, so more of your monthly payment will be applied to the principal, not to interest. Just for context, the current national average 30-year mortgage rate is 4.26% for consumers in the top credit tier. For a 15-year mortgage, it’s 3.73%.

Todays Best Mortgage Rates

Chances are, mortgage rates won't stay put at multi-decade lows for much longer. In fact, the Fed has already signaled that it expects rates to continue increasing. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.

Uptick in Home Refinancing Driven by Lower U.S. Mortgage Rates - Freddie Mac's latest Primary Mortgage Market Survey is reporting this week that the average fixed mortgage rate in the U.S. is moving slightly lower for the week helping to spur ongoing refinance activity. Sean Becketti, chief economist of Freddie Mac, "The 30-year fixed-rate mortgage fell 2 basis points to 3.44 percent this week. As mortgage rates continue to range between 3.41 and 3.48 percent, many are taking advantage of the historically low rates by refinancing. Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent." Freddie Mac News Facts
  • 30-year fixed-rate mortgage (FRM) averaged 3.44 percent with an average 0.6 point for the week ending September 8, 2016, down from last week when it averaged 3.46 percent. A year ago at this time, the 30-year FRM averaged 3.90 percent.
  • 15-year FRM this week averaged 2.76 percent with an average 0.5 point, down from last week when it averaged 2.77 percent. A year ago at this time, the 15-year FRM averaged 3.10 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.81 percent this week with an average 0.4 point, down from last week when it averaged 2.83 percent. A year ago, the 5-year ARM averaged 2.91 percent.

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According to Freddie Mac's latest Primary Mortgage Market Survey, U.S. mortgage rates moderated in mid-November, after increasing last week.

According to the American Institute of Architects (AIA), U.S. architecture firm billings growth softened in October 2018 but remained positive for the thirteenth consecutive month.

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 4.47 percent of all loans outstanding at the end of the third quarter of 2018.

According to the Mortgage Bankers Association's latest Mortgage Credit Availability Index, mortgage credit availability in the U.S. increased in October 2018.

The National Association of Realtors is reporting this week that single female buyers continue to be a powerful force in the U.S. housing market, while low inventory, rising interest rates and increasing home prices remain, holding back first-time buyers despite notable interest in buying a home.

According to a new report released by the American Institute of Architects, architecture firm billings growth slowed in September 2018 but remained positive for the twelfth consecutive month.

California Wildfires Helped Boost Fraud Risk in Mortgage Applications

The wildfires in the West helped boost the overall risk of defects, fraudulence and misrepresentation in mortgage applications in October, according to First American’s Loan Application Defect Index.
California, Wildfire, s Helped Boost, Fraud Risk, Mortgage Applications, Home Loan Calculator Amortization,

Nationwide, the risk of defects increased 1.3% compared with September but was down 4.8% compared with October 2017.

Metropolitan areas that saw the biggest annual increases in the risk for application defects included San Diego (+16.0%); Los Angeles (+12.5%); Memphis, Tenn. (+10.5%); Buffalo, N.Y. (+10.4%); and Richmond, Va. (+10.1%).

Mark Fleming, chief economist for First American, says the risk of defects in mortgage applications in the disaster-affected areas is likely to increase in the months to come.

“Unfortunately, on top of the damage to thousands of homes, historical data indicates that natural disasters and loan application defect risk go hand-in-hand,” Fleming says in a statement. “As we’ve seen too often, natural disasters create the potential and opportunity for significant misrepresentation of collateral condition.”

Fleming points out that in the aftermath of the December 2017 Thomas Fire in Ventura and Santa Barbara counties, mortgage defect, fraud and misrepresentation risk, as measured by the index, increased roughly 10% in one month in the impacted area.

“Fraud and misrepresentation risk remained elevated for five months after the wildfire, before trending down again,” he says. “Defect, fraud and misrepresentation risk in the Oxnard metropolitan area, which had been declining prior to the Thomas Fire, has yet to return to pre-wildfire levels.”

Fleming says although the risk of defects in applications in Los Angeles has trended down in recent months, “it’s fair to expect increases” in the near future.

He points out that there are other markets which also have the potential for higher defect risk due to the impact from natural disasters.

Despite the impact from natural disasters, the overall index is down 22.5% from the high point of risk in October 2013.

For the month of October, the risk of defects in applications for refinance transactions increased by 1.4% compared with September and was up 2.9% compared with October 2017.

The risk of defects in applications for purchases increased by 2.5% compared with the previous month but was down 8.9% compared with a year earlier.

“The Camp Fire wildfire in Butte county, which has been named the deadliest U.S. wildfire in a century, and the Woolsey Fire in Los Angeles and Ventura counties, are some of the worst wildfires in the state’s history,” Fleming says. “In addition to the devastating impact on human life, the likely damage to housing is staggering. According to the California Department of Forestry and Fire Protection, the Camp Fire destroyed 13,972 residences and Woolsey Fire destroyed 1,500 structures.

“While it’s too early to estimate the cost of the damage from these fires, the Associated Press recently reported that wildfires in Northern California last year gutted 6,800 homes and resulted in $12.6 billion in insured losses,” he adds. “Since the damage from the recent wildfires greatly exceeded the 2017 wildfire damages, we can expect a higher estimate in losses.”

Mortgage Rates at 8 - Year High: How to Refinance Before It’s Too Late - Whether you’re thinking of refinancing or buying a home, now might be the time to get that loan.

Mortgage interest rates are climbing. This week, mortgage rates for a 30-year fixed-rate home loan climbed to 5.05 percent, according to the Mortgage Bankers Association. That’s a nearly eight-year high.

Mortgage Rates at 8, Year High, Refinance, 10 Year Fixed Mortgage Rates Refinance, 10 Year, 15 Year Fixed Mortgage Rates Refinance
Mortgage rates may soon move even higher. The Federal Reserve is expected to continue to raise the federal funds rate in coming months. Although the federal funds rate doesn’t directly affect mortgage rates, the two types of rates tend to follow the same direction.

Mortgage rates also generally follow the same direction as the 10-year Treasury note, which has jumped in October.

So, it might pay off to lock in a rate now before home loan costs climb even higher. Here are some steps to follow when shopping for a mortgage.
Keep an eye on interest rates

Even small movements in mortgage rates can make a big difference in your monthly housing costs and in the interest you pay over the lifetime of your loan.

If you plan to borrow $240,000 at 5 percent, your payment will be $1,288 a month, not including property tax or insurance.

If rates rise to 5.5 percent — an increase of a half-percent — your payment will be $1,362 per month. That is an increase of $74 a month, or $888 a year.

You can play with the numbers on a mortgage calculator like this one. But the point is that the more rates rise, the more it increases your monthly costs unless or until you lock in a rate on a home loan.

Use Money Talks News’ mortgage rates page to find the best home loan rate where you live.
Figure out if refinancing will pay off

Will you come out ahead if you refinance? The devil is in the details.

Refinancing to a lower rate lowers a monthly mortgage payment. But it’s only worth it if the month-to-month savings exceed the cost of refinancing. In short, don’t do it unless you’ll stay in the home until you’ve saved more from the lower rate than you paid in refinancing fees.

Your break-even point is easy to compute: Divide your total refinance costs by your monthly savings. The result will be the number of months it will take to break even. Example:
  • Total cost to refinance: $2,000 (This includes all expenses and fees, from the initial appraisal to the final closing costs.)
  • Monthly savings from lower rate: $100
  • Months to break-even: 20

In this example, if we plan to stay in the house for more than 20 months, the refinance will pay for itself. If not, we’ve endured the hassle of refinancing and lost money in the bargain.

Use an online calculator like this one to compute your break-even point.

A lower monthly mortgage payment is always welcome. Refinancing to a lower interest rate should drop your payment. But you can’t be sure, since the details depend on your loan amount, your credit score and other factors.
Learn whether you can get rid of mortgage insurance

If you bought your home with a down payment smaller than 20 percent of the purchase amount, you probably were required to buy mortgage insurance. Private mortgage insurance (PMI) charged on conventional loans can cost 0.5 percent to 1 percent of your loan’s value. Federal Housing Administration (FHA) mortgages include mortgage insurance, too.

PMI adds $41.50 to $83 a month to your payment for every $100,000 of your mortgage. With FHA mortgages and some conventional loans, you have to pay mortgage insurance for the life of the loan — refinancing is the only way out.

However, if you have 20 percent equity in your home when you refinance — whether through your payments or from appreciation of your home’s value — you won’t need mortgage insurance.

Check with your lender to see if your principal payments have exceeded 20 percent of the loan value.

Watch the video of ‘Mortgage Rates at 8-Year High: How to Refinance Before It’s Too Late’ on
Decide if you want to extract cash

Home values have been rising in most parts of the country. That means you may have more home equity. One way to tap it without selling your home is to refinance and take out cash.
Consider a short-term adjustable mortgage

Thirty-year fixed-rate mortgages are a safe, traditionally popular choice. But an adjustable-rate mortgage (ARM) may meet your needs under certain circumstances — such as if you plan to sell your home before the loan’s introductory low-interest-rate period ends.

ARMs are attractive because their initial interest rates typically are lower than those of fixed-rate loans. But they are riskier: After a fixed-rate period, the interest rate can change regularly. The 5/1 ARM, for example, has a fixed rate for five years. After that, the interest rate can fluctuate each year — possibly higher, possibly lower.

Some ARMs adjust more often — twice a year or even every month. If the rate goes up, your mortgage could suddenly become a lot more expensive.

Hold Off on Short - Term Fixed-Income Assets and Refinancing That Mortgage - The FOMC meets next week and many predict -- given current economic conditions and given the possible stimulus effect the Tax Cuts and Jobs Act of 2017 Act (should it become the law of the land) might have on the economy -- the Federal Reserve will raise its benchmark interest rate target to between 1.25% and 1.5%.

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And here's what one advisor had to say about that.

"My primary thought on the impact of the likely Fed rate hikes is counterintuitive to what most people think and is based on economics," said Bob Pugh, president of Insight Wealth Management. "The Fed controls rates only at the very short end of the yield curve. Many economists argue that the Fed has little or no impact on longer rates. But I differ with that conclusion somewhat."

According to Pugh, when the Fed raises short-term rates, it has a suppressing effect on long-term rates. "Nominal interest rates are comprised of real rates and an inflation expectations component," he said. "So, when the Fed tightens on the short end of the yield curve it reduces expectations for inflation, and thus restrains the inflation expectations component of long-term rates."

Keep in mind, he said, that despite this effect, long-term rates could continue to rise because of other factors, such as strengthening economic growth.

"They just wouldn't rise as much amidst a Fed tightening," said Pugh. "So, if an investor is confident that the Fed will tighten they should hold off investments in short-term fixed-income assets until after the Fed moves, and go forward now with investments in long-term fixed-income assets."

As for equity strategies in light of expected Fed actions, Pugh recommends reading "Invest with the Fed: Maximizing Portfolio Performance" by Robert Johnson, Gerald Jensen and Luis Garcia-Feijoo.

One last note: Resist the urge to refinance your mortgage before the FOMC meets.

Pugh said homeowners with mortgages should resist the sales and marketing pitches to refinance their mortgage before the Fed meets next week. "The pitch we hear from mortgage companies is false," said Pugh. "They push people to refinance or get a mortgage in advance of the Fed's raising rates, claiming Fed actions will increase mortgage rates. It should be the opposite. Fed tightening on the short end of the yield curve makes it less likely 15- and 30-year mortgage rates will rise."

Current mortgage interest rates as of Wednesday on Zillow were: 3.74% for a 30-year fixed; 3.16% for a 15-year fixed; and 3.27% for a 5/1 ARM.

The Dangers Of A Reverse Mortgage - It's difficult to turn on the television these days without seeing a slew of commercials for reverse mortgages. They feature past-their-prime celebrities such as Henry Winkler and Fred Thompson, extolling the benefits of "guaranteed tax-free income" for those 62 and over. What they don't tell you is that reverse mortgages can be dangerous and can put your biggest asset - your home - at risk.

Reverse, Mortgage

A reverse mortgage really a misnomer. It is really nothing more than a regular mortgage, except that the loan proceeds are paid out to you in installments, rather than all at once. These plans mortgage the existing equity in your home, bleeding it down while it accrues interest on the growing debt. This mortgage does not have to be repaid until you either sell the home or die. Then the loan balance, interest and accrued fees are extracted from the sale proceeds. This type of loan can be beneficial in a very limited set of circumstances, such as allowing a senior to remain in his or her home, rather than having to sell it to pay for medical or other unexpected expenses.

In many circumstances, however, a reverse mortgage can be a risk to your financial security. Here are six dangers you should consider before signing on the bottom line.

ComplexityEach lender offers slightly different products under the reverse mortgage banner. The rules are often complex and the contract you sign can be full of hidden landmines. The program will outline fees and interest, along with rules for repayment or default. Regardless of what the salesperson says to you verbally, have a lawyer review the contract and explain it to you in plain English before signing.

PressureLike the sale of any product where the salesperson is being paid a commission, reverse mortgage pitches can be forceful and intense. Some financial planners tout reverse mortgages as a way to fund investments, such as annuities. The costs of the reverse mortgage, however, may completely erase any benefit of investing in other products, leading borrowers to risk losing their homes. Lenders cannot force you to use your reverse mortgage proceeds for any particular purpose. It pays to have some time to consider the product and the pros and cons of using it as a source of funding. Never sign a reverse mortgage contract on the spot.

Future HealthThis is perhaps the largest risk of a reverse mortgage. You can't predict the future. Reverse mortgages come with stipulations about which circumstances require immediate repayment or foreclosure on the home. Some outline how many days or months the property can sit vacant before the lender can call the loan. For example, if you have a heart attack and spend three months in hospital and residential rehabilitation, the lender may be able to call the loan and foreclose on the house because it is unoccupied. The same is true if you have to go into an assisted living facility. The reverse mortgage must be repaid or the house must be sold.

Eligibility for Government ProgramsCertain government programs, such as Medicaid, are calculated with reference to your total liquid asset base. If you have reverse mortgage proceeds that you haven't yet spent, they may affect your eligibility for some of these plans. Before signing a contract, check with an independent financial professional to ensure that the cash flows from a reverse mortgage won't impact other funds you receive.

High FeesWhen considering taking equity out of your home in the form of a reverse mortgage, all of the loan origination and servicing fees must be taken into account. Many of these fees can be buried in the expansive loan documents and should be thoroughly reviewed before signing the contract. Reverse mortgages can be a very expensive way to tap into the equity in your home, so be sure to look at other alternatives, such as home equity loans, if you qualify.

Spousal EvictionIn cases where only one spouse's name is on the reverse mortgage contract, the house can be sold out from under the other spouse if the borrower dies. All reverse mortgage contracts require immediate repayment on the death of the borrower. Federal law limits the amount due to the lesser of the total loan balance or 95% of the home's market value. If repayment cannot be made from other estate assets or other assets of the spouse, the house must be sold to repay the loan, leaving the spouse homeless.

The Bottom LineReverse mortgages can be an important source of emergency funds for some seniors who would otherwise have to sell their homes to access their equity. There are several dangers to these plans, however, that can put your home at risk and sap your asset base.

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