One of the main causes of the recent economic struggles has been the collapse of the housing market. That collapse has highlighted a lot of the problems that took place in lending over the past two decades, including the vast amount of loans given to those that could not afford to make monthly payments, in addition to the exorbitant fees and penalties taken by less than reputable lenders.
As such, mortgages is currently one of the hottest economic topics, with new changes in lending and lending policy occurring on a regular basis. Here are some examples of recent mortgage news and trends that may be of interest to borrowers looking for more information about home loans and lending.
Relevant News About Mortgages
- Average Debt Burdens Are Lowering
For a while, approximately 15% of an individual’s yearly income was going to pay back mortgages. This number was exceedingly high, and based in large part on loans being provided to those that did not have the means to pay them back effectively. But within the last year, that number has dipped to 14% for first time buyers and as little as 10% on average for all homeowners. This is great news with both lending and borrowing, as the fewer missed payments are made the easier it is for the economy to handle lower interest rates.
- Credit Cards are NOT an Acceptable Method of Paying a Mortgage
News out of the UK shows that a number of those that are coming close to missing payments are choosing to pay their monthly payment on their credit card in order to save a bit of extra money so that their next payment is easier.
Experts agree that this is an unacceptable method of making payments, and warn that reliance on a credit card will only increase their debt, lower their credit scores, and make it less likely they will be able to afford upcoming payments without a considerable financial increase. If you expect to not be able to afford a payment, see if there is a family member you can borrow from or call your lender right away to discuss any possible loan options. Do not use credit cards.
- Refinancing is Useful, But Be Wary
Mortgage rates over recent years have been dropping, with interest rates falling from as high as 10% to as low as 5% or less. This has allowed many homeowners to lower their monthly payments by refinancing their mortgage loans to the new interest rates.
Overall, refinancing can be very useful. The total savings can be substantial, since a single percentage difference in interest rate can save you over 40,000 or more over the course of the loan. But you must be just as careful refinancing your loan as you are choosing your mortgage in the first place. Every time you refinance your loan you risk lowering your credit score (though you also have the opportunity to improve your credit score). There are also several fees and penalties that may be associated with closing your loans – fees that may add up to as much as half a year’s worth of interest rates or more. In addition, often times mortgage brokers try to take additional fees to pay the commission of the loan, and it is not uncommon for some lenders to try to push adjustable interest rates that may ultimately lead to paying more over time.
Refinancing can be extremely useful, and is a great way to save thousands of dollars and reduce your monthly payment. But as more and more people choose to refinance, make sure that you still remember to carefully consider all of your options and choose only the refinancing option that is best for you.
Mortgage Trends Change Often – Keep Informed
If you are considering a mortgage, or already have a loan, be sure and check back with mortgage trends often. News and advice related to the current lending environment can be extremely useful for helping you decide the best way to manage your loans, and there is no greater tool at your disposal than the ability to be informed about possible changes with regard to property ownership and associated lending practices.
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