Image Courtesy:

Now You Can Get A Mortgage at Costco

There are many ways to get a mortgage, but have you ever considered getting one from Costco? The wholesaler's new program is gaining in popularity and it could be the future of finding a mortgage loan.

In addition to gallons of mayonnaise and the many other bulk items that you can get when shopping at Costco, the wholesale giant is now giving their members an opportunity to get a mortgage loan while visiting the store.

The idea has already been in a testing phase for about a year and it is getting some very positive feedback from members. Costco is working with major nationwide lenders to offer this service. In the last year, more than 10,000 Costco members have applied for mortgages under the program and those numbers are expected to increase as the program becomes more known. According to Lauren Kutschka, the manager of financial services at Costco, the company plans to aggressively market the mortgage plan in the upcoming months by putting more prominent displays in the stores and by advertising it in the weekly Costco publication – Connection.

Here’s how the mortgage lending program works through Costco: Log on to Costco’s website and look for the mortgage loan section of the site. Enter the information that it asks for and wait for the offers to come in. You could receive offers from any number of the 10 mortgage partners that the wholesale company is working with if you qualify under their standards. These offers will include information about closing costs, mortgage rates, loan terms and more right upfront. According to some members who have already tried the program, the closing costs that were offered by these lenders was only about a third of what other lenders were charging outside of the Costco program.

If this Costco program sounds familiar, it may be because the company tried entering into the mortgage lending industry a couple years ago. However, the service provider that Costco was working with simply wasn’t working out. So Costco started from scratch with this new program. One of the ways that the Costco program is different than other mortgage lending programs online is that the applicant’s identity is not revealed to the potential lender until the applicant chooses a mortgage company to go with. When using other websites, the information you fill out on your loan application is accessible by a multitude of lenders who can then start sending advertisements and marketing materials to you right away.

Just because it is so easy to use and the lenders that are partnering with the program are trusted by the Costco company does not mean that the borrower doesn’t have to do their homework, though. You will still need to compare the offers and the companies before making your final decision. Costco does try to police the lending partners to make sure they are complying with certain policies that are set forth by Costco, including giving accurate information about the rates that a borrower can qualify for and providing accurate information about mortgage terms. With the technology that is used, Costco is also able to monitor each application to ensure the lenders are handling each case property and efficiently.

In case you’re wondering, Costco is not making any profit from the home loans themselves. The company is only getting paid to market the service to its members. If you’re looking for a home loan, would you feel comfortable getting one through this program?

Compare mortgage rates across different mortgage products where you live.

Are New Lending Rules in Store for Mortgage Service Providers?

Have you been hesitant to purchase a home because of all of the unethical practices you have heard about lenders doing? There is a new proposal to curb these practices so you can have more confidence in buying a home and financing the mortgage.

In the latest effort to help homeowners avoid foreclosure and get a better understanding of their monthly mortgage payments, the federal government is proposing new rules this week for banks and borrowers. The department known as the Consumer Financial Protection Bureau is in charge of the proposed changes and here are some of the new rules and regulations that they have been discussing:

  • Mortgage servicers would be required to give all home loan borrowers a standardized monthly statement for paying their installment.
  • Home loan lenders would need to give borrowers a warning when they are about to receive an interest rate increase or a change in their homeowners insurance.
  • For borrowers who are in danger of facing foreclosure, the lender would have to make reasonable efforts to contact those borrowers and provide them with potential options to avoid losing their house.
  • If a borrower needs foreclosure counseling, the lender would be required to provide it as part of the proposed rules and regulations.
  • Mortgage servicers would be required to keep better records on all of their transactions and clients.

The proposal has not been formally presented to Congress or to the public. These are just some of the ideas that they have been discussing behind closed doors. The agency said that it plans to formally present these new rules sometime in the summer and if they pass, they hope to finalize them early in 2013.

The proposed new rules come on the heels of a foreclosure crisis that resulted in about 8 million American homeowners facing the problem of losing their home since 2006 when the housing bubble burst. Many of the homeowners that were affected blame mortgage companies because, as the homeowners say, the lenders did not verify the information on the foreclosure documents which meant that many people were wrongfully kicked out of their home. You may remember the “robo-signing” scandal in which employees in many of the major banking and lending institutions were told to simply sign documents for approving foreclosures without reading the papers to ensure they were legally required to move out of their home.

Just a couple months ago, five of the most well known mortgage lenders in the country decided to do an overhaul of their practices when providing mortgages to borrowers and they also paid a combined $25 billion to the various states in order to help people who were victims of the unlawful foreclosure process.

Maybe if these new rules go into effect, we will see the housing market start to turn around as buyers will have more confidence in the mortgage lending industry. Does that sound reasonable?

Find the best mortgage rates where you live.

Four Common Myths about the Home Buying Process

There is a lot of misinformation out there about buying a home and the various steps throughout the process. Here are some of the most common myths and misconceptions and the truth behind them.

Whether you are a first time home buyer or if you have purchased a couple homes in your lifetime, there are several myths and misconceptions that you may believe which can affect your purchase. And when it comes to real estate, knowing the difference between myth and reality can mean the difference of thousands of dollars and peace of mind as a buyer. If you want to avoid mistakes that are caused by misinformation, here are some common misconceptions that you should know about.

1. Eventually, the perfect home will fall into my lap if I wait long enough.
When it comes to buying real estate, it is virtually impossible to find the “perfect” home. That’s because the perfect home simply does not exist. Even homes that are brand new have things wrong with them that you may need to fix. It’s much better and more productive to look for a “perfectly acceptable” home that you will thoroughly enjoy living in for many years.

2. I should not limit myself to one real estate agent. I should have several working for me.
Some home buyers think that it is better to have several agents working on their behalf. While this might seem like the best idea, it is actually counterproductive. For one thing, all real estate agents have the same database that they are working from. So if you have several realtors working for you, you may end up looking at the same homes which wastes your time and theirs. Also, many agents insist that you sign an exclusivity agreement stating that you will only work with them. If an agent does not ask you to sign such an agreement, there is a good chance that they are just starting out and they may not have any other clients that they are working for at the time.

3. I do not need to read all of the fine print on the home buying contract.
Whether you are buying or selling a home, the process is very involved and there is a large sum of money at stake. As such, it is important that everything is spelled out in writing, including closing costs and other information that both parties should know. Also, home buying and selling practices change from time to time so it’s important that all parties know the agreements that they are entering into to avoid major misunderstandings which can lead to lawsuits and added expenses. Always read the fine print before signing a contract or you could be setting yourself up for major problems.

4. It is nearly impossible to qualify for a mortgage these days. I should not even try.
While there was a time in recent years when it may have been next to impossible to qualify for a mortgage, the regulations are starting to loosen and banks are starting to offer mortgages to buyers who have less than perfect credit. There are also several programs available to help buyers who do not have great credit and the buyers with great credit will have more options, but it’s always worth a try. Take a few months to clean up your credit report as much as possible and apply for a mortgage. The worst that can happen is that you get turned down.

Being an educated home buyer is essential in today’s market. Do your homework and research and you can be an informed buyer.

Compare the best mortgage rates where you live here.

Three Myths and Misconceptions about Mortgages

If you have been learning about mortgages and various aspects of having a mortgage, you may have run into some myths and misconceptions. But do not be fooled by misinformation. Here are some common myths and the truth behind them.

There is a lot of misinformation in the mortgage industry floating around. If you are considering buying a home or already own a home and have been considering refinancing, this information can lead you down the wrong path. In fact, these myths and misconceptions can end up costing you thousands of dollars or prevent you from owning a home. Here are some of the more common pieces of misinformation that you should be clear about when you decide to buy a home.

1. The Mortgage Interest Deduction isn’t going to be around for long.
One of the main benefits of having a mortgage is the major tax deduction that you can take advantage of when it comes time to do your taxes each year. But in the last couple years, there have been many people saying that this deduction may not last much longer. The National Commission on Fiscal Responsibility and Reform even recommended that this deduction be reformed in order to significantly reduce the size of the deduction.

The fact of the matter is this: While major changes were proposed regarding the Mortgage Interest Deduction, economists and housing industry experts have pleaded the case with Congress against imposing reform on this major tax benefit. They argue that it would only lead to a further crippling or the housing market which is something that nobody wants – including Congress. For this reason, the Mortgage Interest Deduction is going to be safe for quite some time.

2. Without equity, you can refinance your mortgage.
If you don’t have much equity built up in your home, you’ve probably heard from some people that you can’t refinance your mortgage. This is a common misconception that homeowners who are underwater in their mortgage are simply stuck. In some cases, you may be stuck in your situation. But there are some instances in which you have a couple options. For one thing, if your mortgage loan is secured by Fannie Mae or Freddie Mac, you may be able to refinance your mortgage for as much as 125 percent of its current market value. That means that if you have a $100,000 mortgage, you might be able to get your loan refinanced for an amount up to $125,000.

Another option that you might be able to take advantage of if your mortgage is not backed by Fannie or Freddie is the FHA “Short Refi” program. This program, however, is only available if you are current on your mortgage payments and if you need to refinance your mortgage loan for up to 115 percent of its current market value. At last check, only a few hundred people have applied for this refinancing program so you will probably have a good chance of benefitting from it.

3. If you lost your job, you should just let the bank take back your home. While being able to document your income is typically a requirement in order to get a refinance or a loan modification, there are some programs designed to help you if you have lost your job and your income. These programs are most prominent in the states that have been hit the hardest by the weak housing market, such as California, Nevada and Michigan.

The United States Treasury Department has a fund titled the Hardest Hit Fund and it allocated nearly $8 billion to the hardest hit states. Troubled homeowners can get as much as $3,000 each month for up to three years to help avoid foreclosure for those homeowners who have lost their jobs. If you have lost your job and need help paying your mortgage, you can contact the appropriate agency in your state to inquire about what is available for you.

With all of the mortgage problems and troubled homeowners in the United States, you should know the truth about your mortgage and the help and programs that are available to you. With the information above, you are in a better position to make an educated and informed decision about or you.

Check out the best mortgage and mortgage refinance rates in your area here.

With all of the mortgage problems and troubled homeowners in the United States, you should know the truth about your mortgage and the help and programs that are available to you. With the information above, you are in a better position to make an educated and informed decision about deducting your mortgage interest on your taxes, refinancing your underwater home and getting financial help for your mortgage if you have lost your job.

It has Been Awhile, But Mortgage Rates are Over the 4 Percent Mark

Mortgage rates have been below 4 percent for the last several months, but they recently went up. What does this mean for the mortgage industry?

It’s been awhile since mortgage rates for a traditional 30-year fixed rate mortgage have been above the 4 percent mark, but it happened this past week. According to Freddie Mac, the average rate for a 30-year fixed rate mortgage is now at about 4.08 percent for well qualified buyers. That’s a 0.2 percent increase from the 3.88 percent that these mortgage rates stood at about two weeks ago.

The last time that mortgage rates for a 30-year fixed rate were above the 4 percent mark was in October of 2011. But don’t expect this increased rate to decrease the interest in the housing market which is starting to experience a resurgence, even if it is minimal. Although Freddie Mac expects these rates to increase to as much as 4.5 percent by the end of this year, the impact that the higher rates will have on the housing market will be tempered by several factors, including the following:

  • The rates are still at historic lows. While these rates aren’t record lows, they are still much lower than they have been in years past. When you consider that the average mortgage rates were slightly above 7 percent for the greater part of the two decades spanning from 1990 to 2010, the 4.5 percent mortgage rates still look very attractive for today’s home buyers.
  • Home prices are still very low. In 2006, home prices were at their peak. But today, you can buy a house for a price that is more than 30 percent off of what the same home probably cost just 5 or 6 years ago. When you consider this huge discount, a 4.5 percent mortgage rate simply doesn’t seem that bad for many home buyers.
  • Since mortgage rates are on a bit of an upswing, some of the home buyers who have been considering buying a home may spring into action so they can get their mortgage rates locked in before they go higher.

There is some other good news in the housing industry, too. The number of homes sold in February increased by 9 percent when compared to the figures of homes sales in February of 2011. There were also signs of growth as the number of building permits for new single family homes increased last month to their highest rate in nearly two years. This figure is a good indicator of future construction so that’s definitely good news for the housing market and the economy in general.

Also, rates for a fixed 15-year mortgage are still below 4 percent. The average went from 3.16 percent to 3.3 percent which is just a small jump. The 15-year mortgage rates have quite a ways to go before they reach the 4 percent mark so there’s a good chance they will stay below 4 percent at least through the end of the year.

Compare mortgage rates in your area.

Three Things that Can Screw Up the Closing Process

The closing process for buying a new home can be an exciting experience. Unfortunately, there are some things that can keep the closing process from actually happening.

It is more difficult than ever to get a mortgage these days. Unfortunately, many first time home buyers and even some experienced home buyers think that once they get approved for a mortgage, the closing is a sure thing. But until you sign those final papers at closing, it is never 100 percent certain that you will be the new owner of that property that you are planning to buy. Here are three common things that can go wrong at closing which can keep you from buying the house that you want.

  1. One Final Credit Check
    If your credit is good enough to get approved for the mortgage loan, make sure you keep it that way at least until the closing process is complete. Avoid making major purchases that you will be financing, such as cars, boats or other things because this can bring your credit score down by increasing the debt to income ratio, which is a major factor in determining your score. Also, make sure you continue to pay your bills on time throughout the buying process. Any negative changes in your credit score before closing can put the purchase of your new home in jeopardy.
  2. Don’t Quit Your Job
    One of the worst things that you can do between being approved for a mortgage loan is to quit your job. If you don’t have a job with a verifiable income at the time of closing, the entire deal could be off. Even if you have a better job offer with a higher salary, it is important to have a secure job because it makes you look more financially stable to the lender. If it is at all possible, see if you can hold off on starting a new or better job until after the closing process is complete and you have signed those final papers.
  3. Having Improper Documentation
    When you arrive to sign your papers at closing, it is important to have all of the documentation that is required to make the sale final. Your mortgage lender will tell you what you should have in hand when you are closing, but some of the basic documentation you will need includes recent pay stubs, current tax returns, bank statements and more. If you simply forget the proper paperwork, you may be able to postpone closing on the house. But if you do not have the proper documentation at all, the process may be halted all together.

When you go through all the trouble of getting a mortgage loan, it would be a shame to get all the way to the point of closing on the house and then having the entire process shut down because you did something that you didn’t even know would mess up the process. By knowing what mistakes to avoid, you can have a smooth and successful closing on your home.

See the best mortgage rates here.

What is a Mortgage Rate Lock and How Does It Work?

You have probably heard the term "mortgage rate lock" or "lock in your rate" when you are searching for a home. But do you know what this term means and how it is beneficial to you?

Until the US entered a period of historically low mortgage rates, mortgage rate locks were very common for those seeking to close on a property purchase. Rate locks are basically a guarantee that you can get a certain mortgage interest rate on your loan, provided you close or complete the necessary paperwork within the agreed upon time period. For example, you may get a lender to agree to lock in a 3.5 percent interest rate for a 30 year fixed rate loan for 15 days. If you close or complete the necessary paperwork, the lender will release the funds for your loan within the 15 day lock period; if you do not, the rate lock agreement is forfeited.

Here are some other things you should know about rate locks to get a better understanding of how they work.

  • When you get a mortgage rate lock, the lender typically charges you points in exchange for locking in the rate. A 15-day rate lock generally costs 2 points and it can go up from there. For a 30-day rate lock, you may be charged 2.25 points and a 60-day rate lock may mean paying 2.5 points. Mortgage points are basically a form of interest that you pay upfront. Each point is equivalent to one percent of the amount of the loan and you can purchase points in order to reduce the interest rate on your loan which, in turn, reduces the monthly payment for your mortgage loan. You only have to pay for these mortgage points if you end up taking the mortgage so there really is no downside to getting a rate lock on your mortgage.
  • Lenders run the risk of losing money by offering a rate lock because mortgage rates can increase during the locked period. If you have a 4 percent rate locked in and mortgage rates go up to 5 percent, they cannot charge you the extra percentage rate as long as you purchase the house during the locked period.
  • While banks cannot charge you a higher mortgage rate during the locked period, some banks may offer what is known as a free float down. This means that if mortgage rates drop during the lock period, the bank will offer you the lower rate. However, many banks charge extra for this option.
  • Many times, a mortgage lender will only let you lock in an interest rate on a certain property that you are considering purchasing. There are times, however, where a lender will let you lock in a rate before you find a house that you want to purchase. This is often called a “lock and shop” program which is ideal if mortgage rates are steadily increasing.
  • If you are purchasing a home that is new construction, you may find lenders that offer long-term rate locks. These types of rate locks cost a little more in points and they may also require an upfront deposit in order to guarantee the mortgage rate. These long-term rate locks can be as long as 180 days because it can often take longer to close on a new construction home if it is still in the process of being built and you may have an opportunity to get a lower rate if the mortgage rates drop during that period of time.

If you have been wondering about rate locks, these are just a few of the things that may help you understand this concept better. Your mortgage lender can give you more information about how many points you will be expected to pay and their specific rate lock programs and details.

Compare the best mortgage rates here.