MORTGAGE RATES » Home Mortgage Loan News

Zillow.com, a popular real estate website, has reported that 21.5 percent of borrowers with a mortgage loan owe more than their homes are worth. However, this high number of underwater mortgages is still lower than what was found in the previous quarter, when 23.3 percent of loans had an underwater status.

Since an underwater mortgage is a prime predictor of foreclosure, this number is closely watched. Unfortunately, in this case, the reason that the number of underwater mortgages have dropped is mostly due to homeowners already having lost their homes to foreclosure. However, in some markets, residents have been helped by dropping home prices which have narrowed the gap between what they owe and how much the home is worth (CNN Money).

New reports from Bankrate.com show that both mortgage rates and closing costs have increased–a sign it may be time to try to buy a home while you still can. According to the banking website, the 30-year fixed mortgage increased by 0.06 percent while closing costs having seen a 36.6 percent increase. So while home prices are still reasonable, it may be time to try to buy a home.

Mortgage Rates Increase Along with Closing Costs

If you finally get a little breathing room in your budget, you may find yourself with some extra money at the end of the month. Should you invest those extra funds or start to paying off your mortgage early? Many professional money managers have weighed in on this debate with mixed results and recommendations.

Here is a breakdown of the two options with some math to help:

Major mortgage lender Fannie Mae has decided to eliminate its HomeSaver Advance (HSA) Program, effective September 30. The HSA program was launched in February of 2008 as a way to help qualified borrowers make a delinquent mortgage loan current by allowing them to take on an unsecured personal loan to make their defaulted payments.

The loan amount was capped at $15,000 or 15 percent of the unpaid principle balance. The loan could also be used to pay up to six months’ worth of homeowner association dues.

Foreclosure is the process of shutting out or barring a homeowner’s right to his or her home after defaulting on mortgage payments over a period of time. Upon this shutting-out-process beginning, the homeowner terminates all rights to the home and is forced to vacate the property.

Unfortunately, millions of people have had this process occur in the wake of the weakened economy. If you are in danger of this happening to you, take this opportunity to learn some of the basics of this process.

Mortgage loan payments made by borrowers could increase by hundreds of dollars depending on the outcome of a conference held by the Treasury Department. The conference, which is set for Tuesday, will address the future of mortgage giants, Fannie Mae and Freddie Mac, and the types of mortgage securities that should be eligible for government guarantees.

The Debate Over Mortgage Securities

Economists say that a great way to stimulate the economy without spending any more money is by taking advantage of lowered mortgage interest rates.

More specifically, Morgan Stanley economist, David Greenlaw, says by making it easier for homeowners to refinance their homes, Americans could save more money, which could then prompt them go out and spend more instead. In his report titled Slam Dunk Stimulus, Greenlaw determined that by relaxing refinancing requirements for roughly 37 million mortgage loans that are already owned or backed by Freddie Mac, Fannie Mae and the FHA, $46 billion in savings could be the result (Wall Street Journal).

In a housing market where homeowners are battling or fearing underwater mortgages, homes in the Gulf of Mexico may have more to fear than oil-soaked waters. According to a new report released by real estate data provider CoreLogic, homeowners should also fear $68 million in lost property value over the next year—and possibly $3 billion over the next five years—as a result of the BP oil spill.

The report showed that Mississippi beachfront homes could see loss as high as $56,000 per home. This means anyone living in one of the 71,000 homes affected who tries to relinquish their mortgage loan could have a difficult time selling (CNN Money).

New research from Which?, the product testing and campaigning charity, revealed that there has been a surge in the number of mortgages and regular savings accounts that are only available for people who have another financial product with the same provider.

According to the research, 18 fixed-rate mortgage-tied products were available in June 2010, as opposed to only nine in Jan. 2010. The charity noted that having such a high number of products tied to already existing products discourages consumers from shopping around to find the best deals, even though many of the products offer poor value for their money because they’re not the best available (FT Advisor).

Under the new Emergency Mortgage Relief program offered by Congress, eligible homeowners may be able to receive their share of an extra $1 billion to help them pay down their mortgage loan. More specifically, those who are behind could receive up to $50,000 in federal loans.

In order to qualify for the loans, homeowners must not have been able to pay their mortgage due to unemployment or a medical problem and be at least three months delinquent. The funds will be made available to the U.S. Department of Housing and Urban Development on Oct. 1 (San Francisco Chronicle).