image credit, user sgback at StockExchange
If you’re trying to complete a short sale or loan modification on your home, do not keep money in a checking or savings account with the bank that holds your mortgage.
Open accounts with another bank, savings and loan, credit union (or whatever) that is not related to your mortgage(s) and move your money there.
Of course, if you’re doing a short sale or loan modification, you should hire an attorney or a CPA/accountant, or both. Don’t take my advice as gospel. I’m a Realtor, not an attorney or CPA or accountant. Hire an expert who looks at your unique situation.
From Inman.com newswire service:
Banks routinely obtain a “right of offset” in agreements with depositors, which allows them to take money from one account to settle a debt in another account with the same bank.
. . .
[normally this doesn’t apply to mortgages and checking accounts but] Rosemary Ybarra, lead foreclosure intervention counselor [with] Neighborhood Housing Services of Phoenix, said she was aware of instances in which banks have exercised their right of offset against delinquent mortgage borrowers. (emphasis mine, not Inman’s)
Although Ybarra could not say how common the practice is, when clients seeking loan modifications are unable to cure their loans, “we let them know that the servicers will exercise their right (of offset), and that if they have an account open with them, to liquidate it.”
This seems like just common sense and street-smarts. You wouldn’t take a loan from a loan shark and then tell him “I can’t pay you” while clutching a wallet full of $100 bills. Would you?
What’s left in your checking/savings account might be only a couple of hundred dollars, but you’ll be really, really angry if your bank takes it and applies it to your mortgage balance.
The quote above is from an article posted August 23, 2010 on Inman.com which is a subscription news service for the real estate industry. Like a lot of news sites, Inman has a fee section and a free section. The article the quote comes from was free on August 23, 2010 and pay-for-viewing after that.
Heather Barr is a Realtor. She's a chow hound, a gym rat, and a political junkie and a happy workaholic.
Tagged as:
Economics,
Personal Finance
A snippet of an article from CNN’s Money section:
NEW YORK (CNNMoney.com) — Mortgage rates continued to decline this week, plunging to the lowest level in decades, according to surveys from Freddie Mac and Bankrate.
Freddie Mac’s weekly report said the 30-year fixed rate slipped to 4.44% for the week ended Thursday, the lowest since the government-backed lender began tracking the rate in 1971. Last week’s rates stood at 4.49%, and a year ago it was at 5.29%.
Wow! Some of our readers are doubtless old enough (like us) to remember the early 1980s rates of 14%, 16% and higher.
Here’s a nifty chart from The New York Times that gives a great visual of the history of home mortgage interest rates going all the way back to 1900!
What’s it mean to you, the home buyer?
If you’re buying, a 1-point drop in interest rates means you can buy more house. A lot more. Call or email us to help you figure out the numbers for your own situation. But here’s an example.
Let’s say you’re financing $150,000. . .
| Amount Financed = $150,000 |
4.5%
Mortg Rate |
5.5%
Mortg Rate |
6.5%
Mortg Rate |
Monthly Payment
(principal & interest only) |
$760 |
$852 |
$948 |
Let’s work it the other way.
Let’s say you’re trying to keep your payment at about $950 per month, for principal and interest (not including property taxes, HOA fees, etc).
| Desired Payment = $950/month |
Interest Rates are 4.50% |
Interest Rates are 5.50% |
Interest Rates are 6.50% |
| How much home can you buy for desired payment? |
$187,000 |
$167,000 |
$150,000 |
Holy cow! If rates drop from 6.50% to 4.50%, the homebuyer who’s aiming for a monthly mortgage payment of $950 can suddenly buy $37,000 more house for the same monthly payment.
Given that mortgage rates change almost daily, but home prices change much more slowly, home buyers do themselves a favor if they watch long-term mortgage trends instead of focusing only on home prices.
What does this mean for home sellers?
If you’ve been considering a price drop lately, you might be able to put it off for a few more weeks. The rate drop means potential buyers’ money goes further. Of course whether you need a price drop or not depends on your situation. Check with your Realtor. And ask yourself why you didn’t hire Chris & Heather, The Phoenix Agents at Thompson’s Realty in the first place. We’re awesome and here’s some of our clients who say so.
Heather Barr is a Realtor. She's a chow hound, a gym rat, and a political junkie and a happy workaholic.
Tagged as:
Interest Rates
