If you're struggling with your finances and don't know what your options are, you're going to feel helpless in your situation. Here are some tips and tricks to avoid bankruptcy, and options that are available to help you resolve your outstanding mortgage.

The best advice you can ever get regarding your mortgage is that your highest priority in paying bills is to pay your mortgage first. That's hard advice to follow, though, because you can't live without utilities or food. It becomes even more complicated when you need to buy gas to look for a job or get to work to make money to pay for your bills. A mortgage often takes a backseat to these kinds of expenses.

You do need to scrutinize your spending while working on your mortgage payments. Have a family meeting to gain a consensus that everyone will pitch in and help save money. Identify areas of spending in which you can save. Oftentimes, there are areas you can cut back that you just never thought of.

For instance, rent movies from a local Redbox that only cost $1 per night, or rent from online sources like Nexflix or Blockbuster for a nominal monthly fee. They all can be found online. Instead of dinner and movie night outs for your family, have a dinner theme night at home, along with watching a rented movie. These are just a few strategies that can help you save lots of money.

At the onset of struggles to pay your mortgage, contact your lender. Talk to your lender about your situation. Maybe you've experienced a job loss or medical emergency - two of the most predominant reasons people end up in foreclosure. Discuss your situation with your lender, find out what they are willing to do. Most often, lenders don't tell you what your options are. Instead, they require you to complete a workout packet that includes providing a hardship letter, submit it for consideration and then wait.

If you are waiting on a response from your lender, don't let your mortgage fall into default. Understand the laws of your state in regards to foreclosure. Find out the timeframes of when certain notices need to be filed, and take action if your lender is taking its time in responding to you.

In regards to mortgage rescue companies. Proceed with caution. Many have fallen prey to mortgage rescue scams. You don't want to be one of them. Do everything you can yourself. You don't need to hire a mortgage company to assist you. You can do everything that a mortgage rescue company would do for you, anyway.

Contact HUD and find a foreclosure avoidance counselor in your area. Visit the HUD website for specific phone numbers and assistance. Find out what options might be available to you. You could also access the Making Home Affordable website at makinghomeaffordable.gov. The direct phone number is (888) 995-HOPE. They will refer you to a counselor that can assist you. Make sure you ask lots of questions.

Don't hesitate to enlist the assistance of a bankruptcy attorney if your situation becomes serious enough that you will lose your home. Many have lost their homes waiting for a lender to respond to their inquiries regarding forbearance, reinstatement, repayment, a modification loan or some kind of restructuring.

If you do have to hire a bankruptcy attorney, then you need to know that it won't be cheap. The average cost to hire an attorney for a Chapter 13 Bankruptcy is $2,500. It is expensive to go into chapter 13 and save your home. If you make enough income to keep your home through a bankruptcy, and you've built up significant equity in your home, it would be worth it to go through a bankruptcy in order to save it.

Your final option in avoiding foreclosure is a short sale. If you find that your home is not worth what you owe on it and you don't have much equity built up in it, then it may benefit you in the long-run to sell your home in a short-sale. It is especially advantageous if you are only in default and have not yet gone into foreclosure with your lender. It is often not that complex or drawn out, either.

The decision is up to you on how you avoid foreclosure. Take all the precautions available to you to mitigate foreclosure and do whatever you can to keep it if it's worth it to you. If not, do what you can to get it sold in a short-sale. Nowadays, lenders are much more likely to agree to one.

Ki works, and lives, in Central Austin. He built a website, which includes a free search for Austin Texas real estate. Future homeowners can search available homes in the Austin MLS. He also has a blog which tracks Austin real estate with statistics and news updates.

If you're obtaining a mortgage and contemplating whether to get a traditional home loan or adjustable rate mortgage (ARM), there are definitely some things you'll want to consider.

Before deciding on either, you'll want to understand the dynamics and look into the advantages and disadvantages of each. Some considerations to keep in mind are how long you intend on keeping the home; whether one of your intentions in buying a home is to build credit and what will give you the best annual percentage rate (APR) in the beginning and throughout the lifetime of the loan.

Traditional home loans are typically known as fixed rate mortgages (FRMs). The most popular FRM, a longer term mortgage, has the following characteristics:

* Payments are fixed throughout the term of the loan
* Are available from 15 to 40 years, in 5 year increments
* The shorter the loan term, the lower the interest rate
* The shorter the loan term, the less interest you will pay over the life of the loan
* The bulk of loan payments go to interest in the beginning of the loan
* There are penalties for early payoff on some FRMs - ask your lender

Included in FRMs is the balloon loan, a short-term, fixed-rate mortgage. The balloon loan has some advantages in that the interest is typically much lower and you have lower monthly payments than on a 15- to 40-year term loan. The terms are usually from 3 to 7 years, but you are required to pay the remaining balance in full at the end of the term.

If you are considering a balloon loan and think you will be keeping the home for a long period of time, obtain one with a refinancing option. Certain conditions will have to be met, but it allows you to convert the remaining balance of the loan into a longer fixed-rate mortgage at the end of the term without going through the buying process again.

With the caveat of the refinancing option, you don't have to go through another credit check or reapproval of the property. The interest assigned to the new loan will be at the current market rate at the time it is converted. A processing fee may be required when obtaining the new loan. You'll want to ask about this long before you agree to the balloon loan.

ARMs, on the other hand, provide you with a broad array of options, advantages and disadvantages. Similar to a balloon loan, the payments and interest rate are typically lower in the beginning of the ARM term. Periodic assessments are made throughout the lifetime of the loan, which can lower or raise your interest rate and monthly payment.

Keep in mind, interest rates typically are higher at the first assessment of the loan and often continue to rise. These kinds of loans, however, commonly have caps that put a ceiling on your maximum monthly payment that can be required of you throughout the lifetime of the loan. The excess will simply be added to the principal of your loan, which could extend the lifetime of your loan.

ARMs option ARMs are also available, can be very complex loans, so you'll want to understand the conditions of the loan, along with terminology applicable to the loan. Ask your lender prior to committing to an ARM about the advantages and disadvantages.

Generally, ARMS are best suited for those who are making an investment where rents are low and property values are high. This option allows you more cash flow. They also often benefit seasonal workers and those who own businesses where the revenues fluctuate.

Keep in mind, the interest rate on an ARM can adjust as soon as one month from the loan's inception, depending on the conditions of the loan. Some terminology to ask about and pay close attention to is:

* Lifetime cap limit
* Index
* Margin
* Periodic or adjustment cap limit
* Interest rate cap
* Loan recast
* Minimum payment factor

General advantages from a traditional mortgage are that you have significantly more flexible payment options and your monthly payments at the onset of your loan are much lower. One disadvantage is that if you only pay the minimum payment due monthly, your loan will recast at some point and your lender will recalculate your loan payments over the next 30 years based on your remaining balance. This could drastically raise your monthly loan payment.

Again, ask your lender as many questions as you can think of. Compare terms, advantages and disadvantages of each. Make sure you understand the terminology used and conditions prior to agreeing and signing to any loan.

Ki lives and works as a realtor in the Austin real estate market. There is comprehensive Austin home search on his website. His website also has detailed information on Austin real estate and a mortgage calculator widget.

If you are having trouble keeping up with your mortgage payments, you're not alone. If you are three months or more behind in your mortgage payments, then you are one in an estimated 3 million or more who are currently in one state or another of default.

In this situation, however, what are your options for avoiding foreclosure?

Regardless of where you are right now with your mortgage payments, the most important thing you can do is to contact your lender when you first realize you are having problems. Never ignore communication from your loan servicer.

It is to the lender's advantage to work out a solution with you if at all possible. Discuss options with your lender. Initially, most lenders will not discuss options available until you complete and submit to them a workout packet. A workout packet includes a detailed letter as to how you arrived at your situation, an income and expense statement and other information specified by your lender.

Some workable options may be a loan modification, which modifies the payment and even sometimes lowers the interest rate of your existing mortgage. The intent is to make it more affordable for you to make the payments. Typically, the result is a mortgage payment at 31 percent or below your current total household income.

In the meantime, respond to all communication from your lender. Become familiar with your rights. Read your loan agreement and find out what steps are built into your home loan regarding default.

Research your state's foreclosure laws and the relative timeframes, since laws differ from state-to-state. Information should be available online; however, you may also want to contact your State Government Housing office directly for details. The Department of Housing and Urban Development (HUD) is a great point-of-contact for information.

HUD housing counseling agents are on-hand to assist in this type of situation. You may contact one by calling 1-800-569-4287. You may also access resources in your state via the HUD website.

Once you understand the timeframes and obtain all the information you can regarding your situation, you may want to find a good bankruptcy attorney just in case your lender does not provide you with a feasible option, or does not provide you with a feasible option in time to avoid foreclosure.

In the midst of all your activity to prevent foreclosure, a primary consideration should be to modify your spending. It's amazing how much you can trim when looking at alternatives to entertainment and other purchases.

In the case of job loss or other reasons for reduced income, families often find it difficult to stop the prior cycle of spending. Even if a previous family budget was kept, it's critical to restructure the budget according to the new net income and eliminate any unnecessary spending in order to modify spending habits.

If brands were important before, ditch the brand name and opt for generic or less expensive brands. Hold off on buying clothing and accessories. If you just have to purchase such items, make sure you build a minimal amount into your monthly budget for items that can easily blend into your existing wardrobe. Look for alternative entertainment, like $1.00 video rentals at a local Redbox.

There actually could be a silver lining to this cloud in working with your family members to reduce spending. With input from all family members, you might be surprised at the savings. In addition, if you opt for a weekly eat-in family theme night, instead of that expensive dinner and movie you were used to, a greater sense of bonding might be the result. Also, ask everyone the question, "Are there assets we have that could be sold?" Again, input from all family members could result in some unexpected revenue.

Another benefit found serendipitously through a layoff is that some who have lost jobs have found other opportunities they never would have looked for had they never been laid off.

Finally, stay away from foreclosure rescue companies and schemes. You don't need to spend money that could be used toward your mortgage in trying to save it. Note that all avenues necessary to avoid foreclosure cost you nothing if you access the appropriate resources, unless you have to go into bankruptcy to save it.

Ki lives, in central Texas and works in the Austin real estate market. His website brings a free search of Austin homes for sale to future homebuyers. There is detailed information about Austin real estate along with a mortgage widget.

News articles throughout the U.S. headline stories about indictments for mortgage fraud. Although you may think you could never be scammed, you should think again.

Above-average, intelligent, middle-class professionals have been duped as well as the average Joe. Almost no one is beyond the long arm of a mortgage scammer's reach. You can, however, become better educated in the antics of fraudsters in order to thwart the most common scams used.

Today, the most common mortgage scams played out in the media are perpetrated against those who are in danger of losing their homes to foreclosure and homeowners who are eager to sell their properties. Other types of mortgage fraud exist, too, though.

A good example of fraudulent practices against homeowners facing foreclosure is in the case of a recent Florida indictment. One financial company with offices statewide was indicted on several counts of defrauding trusting homeowners in default or facing foreclosure. Promising to help homeowners who were in default of their mortgages to keep their homes, the company was taking money from the homeowners without providing any assistance. Homeowners ended up losing their homes to foreclosure. More often, low-income and Hispanics were the victims.

In order to avoid mortgage fraud, you'll want to understand the motivation behind it. There are two basic classifications of mortgage fraud - fraud for property or housing and fraud for profit.

Fraud for property or housing typically occurs when a potential homebuyer desires certain property that they clearly cannot afford. The borrower submits intentionally fraudulent information regarding income, employment, assets or debt in order for the income to appear inflated qualifying the applicant for the loan. This is done with the thought that no one will dig deep enough to discover the facts. Sometimes, the borrower will enlist family members or mortgage professionals to assist in the fraud.

Lenders, however, often detect this kind of fraud through thorough review and validation of documents and by keeping diligent records. Contrary to what many might think, it is against federal law to assert intentional incorrect information on loan applications. Those who do are at risk of being charged with a felony and serving time in prison.

Fraud for profit scams often involve a group of mortgage professionals who defraud a potential homebuyer, a potential lender or a homeowner in danger of foreclosure. One example of this is a mortgage scam played out in the Midwest just recently. A builder, real estate broker, mortgage broker, and appraiser were all involved in a scam to inflate the value of homes in order to skim off the excess of the actual value. The difference of the value of the home versus the loaned amount was distributed among everyone involved in the scam.

After the discovery of the fraud, homeowners find out that they are stuck with paying for property that is valued less than what they actually loaned. Lenders, on the other hand, were forced to foreclose on some of these properties that ended up being worth far less than the amount owed on the property.

Another example may be the case of a dishonest mortgage broker who presents loan documents for a straw buyer - a buyer who does not exist, so fraudulent information is presented on the loan documents to create the illusion of a real buyer who can afford the property. The loan is dispensed and the mortgage broker walks away with the money with no intent to live in the home or pay for the property.

Sometimes straw buyers are represented by real people who participate in the fraud for financial gain. This often occurs, again, when there is no intent to live in the home and often with no intent to pay for the mortgage.

There are more mortgage fraud examples than there is space to write about them. The Federal Trade Commission (FTC) provides thorough information on mortgage scams and how to avoid them. Just go to their site at ftc.gov and search under look for the tabs under Consumer Protection. You'll find all you'd ever want to know about how mortgage fraud occurs and how to avoid it.

If you are facing financial difficulties that are making it difficult to pay your mortgage payments, you may want to enlist the assistance of an experienced financial advisor. If you do, however, make sure the company you hire is reputable. Check with your lender to see what programs they may offer or if they can refer you to a reputable financial advisor. You may also want to visit Fannie Mae or Freddie Mac sites for new federal programs available.

In addition, free advice is available through the U.S. Department of Housing and Urban Development (HUD) certified agents. Speak to a HUD certified housing counseling user by calling (888) 995-HOPE.

Ki works and lives in Austin. He has been involved with Austin real estate for a decade. His site escapesomewhere.com developed a Austin MLS search with houses and commercial properties. His site also has a Austin real estate blog with news and statistics.

Mortgage rates have now dropped for 3 weeks in a row. We are not seeing a lot of movement. 30 year rates have only dropped from 5.14 to 5.04 in the last 3 weeks. What is interesting is that rates are dropping at all. Most of the news have focused on how inflation is pending for the US because of unprecidented government spending. But while the news has focused on pending inflation (and corresponding higher mortgage rates) mortgage rates have continued to drop. Mortgage rates are lower than at any point before 2009 (they were lower in April 2009). Below are rates for the last few weeks along with rates from February 12 (6 months ago)

Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58

Sep 10, 2009
30-yr 5.07 15-yr 4.50 5-yr ARM 4.51 1-yr ARM 4.64

Sep 03, 2009
30-yr 5.08 15-yr 4.54 5-yr ARM 4.59 1-yr ARM 4.62

Aug 27, 2009
30-yr 5.14 15-yr 4.58 5-yr ARM 4.67 1-yr ARM 4.69

Aug 20, 2009
30-yr 5.12 15-yr 4.56 5-yr ARM 4.57 1-yr ARM 4.69

Feb 12, 2009
30-yr 5.16 15-yr 4.81 5-yr ARM 5.23 1-yr ARM 4.94

As we can see in addition to the 30 year the other 3 major mortgage products all fell slightly as well. What interesting is how remarkably stable rates have been for the last 4 weeks. Comparing August 20, 2009 to today the most movement we have seen in any of the four mortgage products is the 1 year arm which has only fallen .11 points.

In addition to rates we like to look at mortgage payments. we calculated out the mortgage payment for a 200k house based on today' rates. We also did the same thing with rates from September 3 (2 weeks ago) and February 12 (6 months ago).

Sep 17
30-yr $1078.53
15-yr $1526.92
5-yr ARM $1014.55
1-yr ARM $1022.89

Sep 03
30-yr $1083.44
15-yr $1534.07
5-yr ARM $1024.09
1-yr ARM $1027.68

Feb 12
30-yr $1093.28
15-yr $1561.86
5-yr ARM $1101.93
1-yr ARM $1066.32

All in all we are not seeing much movement. For the 30 year rate compared to 6 months ago a payment for a 200k mortgage would only be 1.34 percent less (or $14.75 dollars).

So what should we expect to see moving forward. The majority opinion seems to be that we are headed for high inflation. And with high inflation we should also seem substantially higher mortgage rates. Although this is the majority opinion its not the only one. If the economic recovery fails to take hold we could see lower mortgage rates for awhile. Additionally, if the FED times things just right we could avoid inflation and high mortgage rates. I think this is unlikely though because the FED moving prematurely to hold off inflation could hurt the economic recovery.

What is our advice to people looking for a mortgage. My advice is to only consider a 30 year mortgage. With rates expected to increase there is no reason to get a 1 or 5 year arm. I often hear that someone is "sure" they will move in 3 years but plans often change, espically if the real estate market is slow and its difficult to sell the house.



Ki follows mortgage rates news and trends. He works as a Austin realtor. His site has a few mortgage widgets along with information on historical interest rates.

There were some expectations that mortgage rates would fall this week. Instead rates not only did not rise but fell slightly this week. The 30 year rate fell from 5.08 to 5.07 hitting a new low for the summer. The 15 year rate fell from 4.54 to 4.50. The 5 year arm fell from 4.59 to 4.51 while the 1 year arm rose slightly from 4.62 to 4.64.

The continuing fall of the 30 year rate is good news for the national real estate market which is in the midst of a lukewarm recovery. The 5 year arm is seeing more activity now that it is significantly lower than the 30 year arm. Personally I still would heavily favor the 30 year arm with the possibility of seeing double digit interest rates in 5 years because of heavy government spending. The 1 year arm since moving above the 5 year arm has moved into no mans land with there being virtually no reason to get a 1 year arm at this point in time. Below are rates for the last few weeks.

Sep 10, 2009
30-yr 5.07 15-yr 4.50 5-yr ARM 4.51 1-yr ARM 4.64

Sep 03, 2009
30-yr 5.08 15-yr 4.54 5-yr ARM 4.59 1-yr ARM 4.62

Aug 27, 2009
30-yr 5.14 15-yr 4.58 5-yr ARM 4.67 1-yr ARM 4.69

Aug 20, 2009
30-yr 5.12 15-yr 4.56 5-yr ARM 4.57 1-yr ARM 4.69

Aug 13, 2009
30-yr 5.29 15-yr 4.68 5-yr ARM 4.75 1-yr ARM 4.72

Feb 05, 2009
30-yr 5.25 15-yr 4.92 5-yr ARM 5.26 1-yr ARM 4.92

In addition to rates we like to look at actual mortgage payments to gain some more perspective on mortgage rate changes. Based on current mortgage rates we determined the mortgage payment for a 200k loan. We did the same thing with rates from 2 weeks ago and rates from 6 months ago.

Sep 10
30-yr $1082.21
15-yr $1529.98
5-yr ARM $1014.55
1-yr ARM $1030.07

Aug 27
30-yr $1090.82
15-yr $1538.17
5-yr ARM $1033.67
1-yr ARM $1036.07

Jan 29
30-yr $1085.89
15-yr $1560.82
5-yr ARM $1106.88
1-yr ARM $1061.45

Compared to 6 months ago the mortgage payment on a 200k loan is pretty much identical. The payment is $3.68 less a month or a third of one percent.

The real question of course is where mortgage rates are going. There are a few schools of thought. The first is that mortgage rates are going to skyrocket along with inflation caused by the massive government spending over the last few years. There is another school of that that mortgage rates should rise but only slightly and that massive inflation will be curbed by the Federal Reserve.

Either way no one is advocating that mortgage rates are going to fall much further. Therefore my advice would be to look at 30 year rates and to avoid 5 and 1 year arms like the plague. If the first school of thought is correct and mortgage rates rise they will probably not move dramatically until the economy recovers.

Ki lives in Austin Texas. He site has a graph showing historical mortgage rates. His site also has news and resources on real estate in Austin as well as a search of the Austin MLS.

Mortgage rates continue to fall this week. The 30 year rate fell from 5.32 to 5.20. While this is not lower than the rates we saw a few months ago this is lower than any recorded rate before the start of 2009. The 15 year rate fell as well dropping from 4.69 to 4.63. In the last 5 weeks rates have fallen steadily each week going from 5.59 to 5.14. Below are rates from the last 5 weeks and rates from December 31, 2009 (6 months ago).

Jul 16, 2009
30-yr 5.14 15-yr 4.63 5-yr ARM 4.83 1-yr ARM 4.76

Jul 09, 2009
30-yr 5.20 15-yr 4.69 5-yr ARM 4.82 1-yr ARM 4.82

Jul 02, 2009
30-yr 5.32 15-yr 4.77 5-yr ARM 4.88 1-yr ARM 4.94

Jun 25, 2009
30-yr 5.42 15-yr 4.87 5-yr ARM 4.99 1-yr ARM 4.93

Jun 18, 2009
30-yr 5.38 15-yr 4.89 5-yr ARM 4.97 1-yr ARM 4.95

Jun 11, 2009
30-yr 5.59 15-yr 5.06 5-yr ARM 5.17 1-yr ARM 5.04

Dec 31, 2008
30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85

So the question remains after rising a few months ago why are rates suddenly falling. Part of it can be attributed to the negative economic news that has been coming out. While the economy is not necessarily getting worse the recovery seems to be moving slower than first thought. The slow recovery has put the breaks (for now) on inflation fears and has probably helped to push down interest rates as well. This is of course good news for the real estate market. The longer rates stay low the better the prospects for the real estate market to get rid of some of the excess inventory that has built up over the last few years.

In addition to rates we like to look at mortgage payments. Using our free mortgage calculator we looked at mortgage payments based on today's rates for a 200k mortgage.

Jul 16
30-yr $1090.82
15-yr $1543.3
5-yr ARM $1052.96
1-yr ARM $1044.5

We also did the same calculation on rates from 5 weeks ago (when rates first started to fall) and rates from the beginning of the year.

Jun 11
30-yr $1146.89
15-yr $1587.84
5-yr ARM $1094.51
1-yr ARM $1078.53

Dec 31
30-yr $1085.89
15-yr $1563.93
5-yr ARM $1144.37
1-yr ARM $1055.38

As we can see the drop in rates over the last few weeks is rather significant. A mortgage payment would be 4.88% less today than it was 5 weeks ago. For a 200k it would be $56.07 cheaper a month.

So what is going to happen in the future? It's hard to tell and I will be the first to admin I was pleasantly caught off guard by the recent drop in rates. While its hard to know what is going to happen in the next few weeks over the next 6 months I would expect rates to rise significantly as the economy starts to recover. Over the next few weeks I would expect there is more of a risk of rates rising than falling simply because rates are incredibly low now.


Ki works as an agent in the Austin market and enjoys spending his free time in the hill country. His site provides information on mortgage rates along with a free mortgage calculator. It also provides extensive information on Austin Tx real estate.

Mortgage Rates spiked up this week. The 30 year rate jumped from 4.91 to 5.29. This is the highest we have seen mortgage rates all year. Last week mortgage rates moved from 4.82 to 4.91 last week. What is interesting is that in two weeks mortgage rates have moved from near all time lows (the all time low was 4.78) to the highest point of the year. The 15 year rate moved up from 4.53 to 4.79. We did not see as much movement in the arms. The 5 year arm rose from 4.82 to 4.85 and the 1 year arm moved from 4.69 to 4.81.

Two weeks ago 30 year rates and 1 and 5 year arms were all hovering around 4.8 making the arms somewhat pointless. There is no reason to get an ARM when one can get a 30 year fixed mortgage for the same rate. With the sudden rise in the 30 year rate the arms have become relevant again. I still think the 30 year mortgage product is preferable over the arms even at current rates. Although 30 year mortgage rates have risen the expectation is that they will continue to rise for the rest of the year. Below are rates for the last few weeks as well as from 6 months ago.

Jun 04, 2009
30-yr 5.29 15-yr 4.79 5-yr ARM 4.85 1-yr ARM 4.81

May 28, 2009
30-yr 4.91 15-yr 4.53 5-yr ARM 4.82 1-yr ARM 4.69

May 21, 2009
30-yr 4.82 15-yr 4.50 5-yr ARM 4.79 1-yr ARM 4.82

May 14, 2009
30-yr 4.86 15-yr 4.52 5-yr ARM 4.82 1-yr ARM 4.71

May 07, 2009
30-yr 4.84 15-yr 4.51 5-yr ARM 4.90 1-yr ARM 4.78

Dec 04, 2008
30-yr 5.53 15-yr 5.33 5-yr ARM 5.77 1-yr ARM 5.02

In addition to mortgage rates we also like to look at mortgage payments. Using our mortgage calculator we translated today's mortgage rates into a monthly payment on a 200k loan. We did the same thing with rates from last week and rates from December 4, 2008 (6 months ago).

Jun 04
30-yr $1109.36
15-yr $1559.79
5-yr ARM $1055.38
1-yr ARM $1050.53

May 28
30-yr $1062.66
15-yr $1533.05
5-yr ARM $1051.74
1-yr ARM $1036.07

Dec 04
30-yr $1139.34
15-yr $1616.18
5-yr ARM $1169.68
1-yr ARM $1076.08

Usually there is not too much difference from week to week. That is not true this week. The payment on a 200k loan has risen 46.7 or about 4.4 percent. Payments are down 2.63 percent from what they would have been 6 months ago.

So what is our advice to people looking for a home? Unfortunately I think mortgage rates will continue to rise so it's probably best to lock in rates now. Second although arms are a viable option I would still take the 30 year rate over the 1 or 5 year arm. There are some expectations this recent rise is just the tip of the iceberg and we could see rates above 12 percent before this is over with.


Ki maintains a website about Austin Texas. His site also provides information on mortgage rates along with a free mortgage calculator.

After moving down for the last 3 weeks mortgage rates finally started to move up. The 30 year rate jumped from 4.78 (equaling the all time low) to 4.84. This is the highest the 30 year rate has been since April 9th. The other 3 major mortgage rates rose this week as well. The 15 year rate moved up slightly from 4.48 to 4.51. The 5 year arm moved from 4.80 to 4.90 pushing it farther above the 30 year rate. It's been sometime since the 5 year arm was below the 30 year fixed rate. It looks like the 5 year ARM is becoming more of a relic for the conventional residential buyer. The 1 year arm kept mostly steady rising from 4.77 to 4.78. Below are rates for the major mortgage products for the last few weeks. We also looked at rates from November 6, 2008 (6 months ago).

May 07, 2009
30-yr 4.84 15-yr 4.51 5-yr ARM 4.90 1-yr ARM 4.78

Apr 30, 2009
30-yr 4.78 15-yr 4.48 5-yr ARM 4.80 1-yr ARM 4.77

Apr 23, 2009
30-yr 4.80 15-yr 4.48 5-yr ARM 4.85 1-yr ARM 4.82

Apr 16, 2009
30-yr 4.82 15-yr 4.48 5-yr ARM 4.88 1-yr ARM 4.91

Apr 09, 2009
30-yr 4.87 15-yr 4.54 5-yr ARM 4.93 1-yr ARM 4.83

Nov 06, 2008
30-yr 6.20 15-yr 5.88 5-yr ARM 6.19 1-yr ARM 5.25

In addition to mortgage rates we always like to look at mortgage payments. We took today's rates and converted them into a mortgage for a 200k loan. We did the same thing with rates from last week and rates from November 6th, 2008.

May 07
30-yr $1054.17
15-yr $1531
5-yr ARM $1061.45
1-yr ARM $1046.91

Apr 30
30-yr $1046.91
15-yr $1527.94
5-yr ARM $1049.33
1-yr ARM $1045.7

Nov 06
30-yr $1224.93
15-yr $1674.77
5-yr ARM $1223.64
1-yr ARM $1104.4

Compared to last week a mortgage payment on a 200k loan would be $7.26 higher a month. This pales in comparison to the difference between today's payment and what the payment would be on the same loan 6 months ago. Compared to November 6, 2008 monthly payments today are $170.76 less or down 13.94 percent.

It's hard to know how much longer 30 year mortgage rates will stay below 5 percent. Last week the government auction of 30 year bonds was met with a cool reception. If the US is not able to auction off its increasing debt we should start to see higher mortgage rates. Add this to the general perception that inflation is coming because of the massive stimulus plans that have been enacted along with an improving economy its unlikely mortgage rates will stay this low much longer.

Although some are seeing signs of improvement in the economy lenders have remained extremely strict in their lending practices. People that would have easily obtained a loan at most times in the last 20 years are being routinely denied. Therefore if you are considering getting a loan in the next few months it's important to start researching your credit score and talking to different banks or mortgage brokers early on in the home buying process.


Ki created a site escapesomewhere.com that has information on the Austin market. It also has a mortgage rates widget and a free mortgage calculator.

There's an old television program that aired in the 1960's called Hogan's Heroes. Sgt. Schultz (John Banner) was one of the main characters. His constant exclamation throughout his tenure on this show was, "I know nothing!" Is that where you are in regards to how to buy a home without a down payment? If so, you are about to become educated.

Believe it or not, if you have decent credit - and sometimes even if you don't! - you have alternatives as to how to purchase a home without a down payment. Look at the following examples:

* VA Foreclosure Loans - What's unique about these loans is that anyone can buy a VA foreclosed home with no-money down. You can find VA foreclosures through local real estate listing agencies, typically members of Multiple Listing Service (MLS). You can also do a search on the Internet for VA home foreclosures. You'll find plenty. VA sells their own repossessed homes. If you are not a veteran or on active duty, however, you won't be able to get a VA loan. Instead, you'll be required to obtain your own conventional or FHA financing. Still, there is no down payment required.

* Owner Financing - owner agrees to be your mortgage holder. You reach an agreed-upon price with the property owner. A legally binding agreement is drawn up that includes everything a mortgage loan would include as far as price, duration of loan, interest rate and loan payments. The property owner accepts payments from you just like a bank or mortgage company would for a traditional loan. You are considered the owner of the home, since your name is on the title/deed, along with the mortgage holder as the lien holder.

* Assume a Mortgage - Some owners are having a very difficult time selling their homes due to the mortgage crisis. Many are willing to allow a buyer to assume their mortgage in order to get it sold. This allows them to get out of the mortgage to a certain extent and purchase another home. Of course, there are requirements that the buyer must meet before the mortgage company will allow the assumption. In order to assume a home loan you must qualify for the loan and pay closing costs.

* Lease/Purchase - This has been a popular one for years. You find property you are interested in not only renting, but buying. Sometimes property will be advertised as such. There are various approaches to this option.

* Owner agrees to accept all rent payments over a specified time period in exchange for a down payment. At the end of the specified time period you will have to obtain your own loan to pay for the remaining agreed-upon sale price of the property.

* Owner agrees to accept part of the rent payment over a specified time period in exchange for a down payment. At the end of the specified time period you will have to obtain your own loan for the remaining agree-upon sale price of the property.

* Owner agrees to lease the home to you at a discounted rate, and you agree to obtain a loan to buy the home at a specific price within a specific timeframe. The agreed upon price is typically more than if you were paying the market amount for rental.

Ki's real estate business is located in central Texas. His website provides future home buyers with a free graphical search of the Austin MLS. It gives comprehensive information on Austin real estate along with a free mortgage calculator.

Though the housing bubble deflated about two years ago, its true effects are only now beginning to emerge. In late 2006, when the economy first began to show signs of weakness in the housing market, most economists predicted that a recession was very unlikely, and that any downturn in real estate prices would be localized and mild. In reality, a global downturn is now a real threat, with the final price of the credit crunch projected to exceed $1 trillion dollars.

Not only have falling house prices in the US spread to other markets abroad, they have contributed to massive losses in other areas of lending such as credit cards, and the financial industry, which is now reeling from the US government bailout of Bear Stearns. What does this mean for emerging economies like China and India? In the short term, volatility seems to be the order of the day, with India's fledgling exchanges rocked by jittery investors. Until financial centers and investors can regain confidence, market conditions will be exaggerated. Early trading also plays a psychological role for investors, as news developments impact Asia before Wall Street opens.

The US and the UK both face difficult home pricing corrections which will continue to hamper growth. Most homeowners expect, if not to make a profit, not to sell their houses at a loss, which is a difficult pill to swallow. And if they can't sell their homes for what they think they're worth, then waiting it out contributes to prices falling, thus exacerbating the problem.

While government intervention has been exceptionally forthcoming in efforts to preserve confidence in financial markets, less attention has been given to homeowners who are being foreclosed on %72 more than last year. Hedge funds which invested in these home loans and were mostly falling into the sub-prime category, collapsed as borrowers were increasingly unable to make payments, leading to unprecedented defaults. Many of these sub-prime loans were predatorily given to borrowers with low or little credit history, often without explaining the terms.

This crisis was instigated by a combination of lax internal regulation of the real estate industry and easy credit based on speculation, a potent combination that the global marketplace will do well to remember. In the meantime, global growth will probably slow at least .5% over the next year, which is only so low because of robust growth in Asia.

Another prospect which looms over every government is the specter of inflation, which threatens to overtake the slumping economy as the number one priority for the Federal Reserve and other central banks, who have had to take extreme action to prevent further liquidity losses. The Fed has sold off over $100 billion in auctions and lowered interest rates five times in an attempt to lower mortgage interest rates, but confidence will remain shaky until the full extent of investment bank's sub-prime exposure is realized. Stuck between a rock and a hard place, central banks are taking decisive action in hopes that the economy will level out without pushing inflation to dangerous levels.

Ki operates in Austin Texas as a realtor helping clients looking for Austin real estate. His site provides a search of the Austin MLS along with a free mortgage calculator.

In the past I used to tell people to look at different mortgage rates for different loan products and determine what was best for them. If they were planning on moving soon a 5 Year ARM might work. If they planned on staying on the house longer they might consider a 30 Year Loan. I don't say this any longer. Why? Because of recent developments the 30 Year Loan is king. If you can get a 30 Year loan in the current market 95% of the time it's the best choice.

If we look back to the beginning of 2006 both 5 Year ARMS and 1 Year ARMS where significantly lower than the rates on 30 Year Loans.

Begin 2006
30 Year Fixed - 6.22
5 Year ARM - 5.79
1 Year ARM - 5.15
At the time banks saw 5 and 1 Year ARMs as a short time commitment. But now banks are starting to see more foreclosures on ARMs than they are on 30 Year Fixed loans. This has started to make banks more nervous about ARMS. In response banks have raised rates on 5 and 1 Year ARMs even as rates on 30 Year loans have decreased. Using a tool that graphs mortgage interest rates Here is a chart comparing the loan products over the last few years.



What we will notice is that historically all 3 products moved in concert with each other. But recently that trend has changed. 5 Year ARMs and 1 Year ARMs have gone up while 30 Year Rates have come down. So if we look at the rates today we will find them much closer together than what we saw at the beginning of 2006.

Today
30 Year Fixed - 5.85
5 Year ARM - 5.67
1 Year ARM - 5.24

So how much does this affect your potential mortgage payments? Let's look at the mortgage you would get on a 200k house based on the interest rates.



First let's look at the mortgage payments you would make at the beginning of 2006.

Begin 2006
30 Year Fixed - 1227.53
5 Year ARM - 1172.23
1 Year ARM - 1092.05

So the difference between a 30 Year Fixed loan and a 5 Year ARM was 4.72 percent or $55.30. Now let's look at the mortgage payments one would make based on today's rates for the different loan products.

Today
30 Year Fixed - 1179.88
5 Year ARM - 1157
1 Year ARM - 1103.16

So today the difference between a 30 Year Fixed loan and a 5 Year ARM is only 1.98 percent or $22.88. The difference has decreased by more than half. In addition, if we also consider the fact that mortgage interest rates today are relatively low compared to the last 15 years there is a good chance when ARM's expire interest rates will be higher.

Now if someone is absolutely certain they will sell their house in 5 years it still makes sense to get an ARM. But this is rarely the case. People often move to a city only planning on staying for a few years and then end up staying. Or they end up renting out their house instead of selling. The way life changes it's hard to predict what one will be doing in 1 year much less 5 years. I talked to someone recently that said every time they got a 5 Year ARM on a property they ended up keeping the property for longer than 5 Years and every time they got a 30 year loan they ended up selling in less than 5 years. In summary it's hard to tell what will happen in the future.

In the future the difference in mortgage rates between 30 Year Fixed loans and ARMs might start to make ARMs more attractive. But if you are looking to get a loan in the current market the security of the 30 Year loan outweighs the small savings you would gain from the different ARM products.

Ki is a realtor in Austin. He runs a site about Austin real estate that provides users a free search of the Austin MLS along with a free mortgage calculator and information on current mortgage interest rates

On March 14th, Bear Stearns, the fifth-largest investment bank in the United States, entered a period of insolvency. As growing lack of confidence in the firm's subprime exposure grew, other banks eventually refused to lend to the stricken company, which has existed for over 85 years. Were Bear Stearns a commercial bank, (i.e. institutions that loan money to people or businesses) it would be able to, as a last resort, take advantage of the Federal Reserve's so-called "discount window," thus receiving a government loan at the lowest available interest rate. The reasoning behind making loans to private businesses is sound, because overall confidence in banks is much stronger. But for equally obvious reasons, the discount window cannot by definition extend to institutions that take on risk as their business because they have less or no accountability to taxpayers.

However, after Bear Stearns seemed on the brink of collapse, everything changed. Bear Stearns shares began to falter as investors took flight. The Federal Reserve took decisive action to save the beleaguered bank by guaranteeing a $30 billion loan to their biggest competitor, JPMorgan Chase, so they could buy BS without fear of acquiring more dangerous subprime mortgage-related debt. In effect the government has now bought a troubled investment bank for pennies on the dollar, (their first offer was $2 a share, when BS traded at a high of $170 a year ago) knowing that taxpayers might have to foot the entire bill themselves. At the same time, the Bush administration has maintained that no government bailouts would extend to the financial sector. Moreover, wealthy BS shareholders balked so much at the firesale of their investments that the Fed, under pressure from potential litigation, increased the bid for BS by five times, to $10 a share. This means that, while the potential losses will be felt by millions of taxpayers (many of whom are in danger of losing their homes to foreclosure), while profits will most certainly be reaped by the corporate executives at JPMorgan.

Even with its exceptional exposure to subprime securities, BS is still worth well over a billion dollars. Profit-taking was the name of the game on the heels of the announcement, as day traders bought up huge amounts of BS stock at $2 or $3 a share and sold after the bid increased. By taking responsibility for the BS takeover, the Fed has changed the course of America's financial future. By guaranteeing the discount rate to BS, they implicitly must be able to do so for other investment banks in trouble in the future, which implies continued taxpayer absorption of Wall Street failures without any corresponding kickback from banks. Unless the Fed intend to rein in on banks more as the economy struggles through the recession, this policy clearly demonstrates a dramatically different view of finance than the Federal Reserve of 1913, when there was a real discount window you could use to keep your bank alive. Now, it seems, the most secure economically secure institutions are those most separated from average American lives. Politicians who recognize the increasing resonance of populist messages in the present climate are sure to turn this takeover into a major issue.

Ki works and lives in Austin Texas. As a realtor he helps investors interested in Austin real estate. His site provides a search of the Austin MLS for visitors along with a Austin real estate blog to keep people up to date on the market.

autoupdating mortgage rates widget
<a href="http://www.escapesomewhere.com/mortgageinterestrates.html"><img alt="Mortgage Interest Rates" src="http://www.escapesomewhere.com/mort_images/current-mortgage-rates.gif"></a>

Mortgage rates fell this week. 30 Year mortgages fell from 6.13 to 5.87. 15 Year rates fell from 5.6 to 5.27. It looks like lenders are trying to stay away from ARMS due to the heavy losses they are taking from ARM's from foreclosures. Although rates did not fall as much as the .75 points the FED cut the discount rate by last week but its encouraging that rates did fall somewhat as the last few FED cuts in 2008 failed to push mortgage rates down.

Ki is a realtor in Austin. He runs a site with information on the Austin real estate market. He also writes a Austin real estate blog. He also recently wrote a Mortgage Interest Rates Widget

During the subprime crisis we saw the advent of numerous bizarre loan products. In general the new loan products were designed to get people into houses they could not normally afford. As people started to default on their mortgages banks realized many of these loan products were not a good idea. During the subprime crisis we saw most of these new loan programs fall to the wayside. I think in most cases this is a good thing. Many of these new loan products reduced the chances that individuals could gain equity in their homes by paying off principle. When difficult times arose for people they were in a difficult position because although they had made years of payments their loan balance had not changed. The worst of the new loan products had "teaser rates" so that individuals made low payments for a few years until the rate and their mortgage shot up. Its a wonder why banks are surprised by the number of foreclosures.

The one product that has seemed to survive the subprime meltdown is the 40 year loan. I am not a fan of the 40 year loan. Mostly because the savings are minimal. Lets look at the current mortgage interest rates from Wells Fargo for a 40 year, 30 year and 15 year loan.

40 Year Loan = 6.375
30 Year Loan = 5.75
15 Year Loan = 5.125

Now using a mortgage calculator lets look at the mortgage payments on a 200k house.

40 Year Loan = 1153.14
30 Year Loan = 1167.14
15 Year Loan = 1594.64


While the difference between a 30 year loan and a 15 year is substantial, $441.50, the difference between a 40 year loan and a 15 year loan is only $14 per month. A little savings but is it really worth adding a whole extra 10 years to your mortgage. So over 30 years $14 dollars a month amounts to $5040. On the other hand an extra 10 years of mortgage payments comes out to $138,377. To run the numbers a different way by putting down a mere $2400 on your 30 year loan you would get the same mortgage payment as you would on a 40 year loan.

Obviously everyone's situation is different and in a small number of cases a 40 year loan might be warranted. But in general the 40 year loan adds extra years to a person's loan for a minimal benefit.

Ki works as a realtor in the Austin real estate market. He provides updated stats on the market on his Austin real estate blog along with a free search of the Austin MLS.

On February 14th, a manufactured day devoted to romantic love, Wall Street wasn't interested or feeling any good vibes: The Dow, as well as most of the other major stock markets around the world, finished down on recession fears. Why so spooked? For one, Federal Reserve chairman Ben Bernanke elected to announce that, despite recent encouraging news on the market floor, the sub-prime crisis has not remained contained as he had previously predicted, but had spread to other sectors of the economy, in particular consumer spending. The recent contraction in new jobs (a loss of 17,000, the first such loss since 2001, was reported for the last quarter of 2007), coupled with the deflated housing market, seemed a bit distant until the Fed's announcement. Fortunately, more rate cuts are sure to be on the way, but as news of rate cuts always implies that the economy is sicker than the average joe can tell, investors became more scared than reassured. Another factor behind the Valentine's Day losses was the continued bad news out of Wall Street, with UBS reporting over $11 billion in write-downs. Even though other markets finished down as well, most of the selling trades were related to the slowdown in America, which begs the question: How decoupled are emerging economies and other developed nations from this supposedly American downturn? In the banking world, the risk is spread so thoroughly because pf how easily US mortgage debt could be repackaged into seemingly safer securities and sold to other nations. Evidence can be seen in the recent government bailout of troubled German bank IKB and UBS's increasing writedowns. It can be concluded that rather than spreading risk more effectively, modern investment vehicles are making debt more difficult to track down (and thus more expensive), and most firms are loath to cooperate because of their accountability to shareholders. In other sectors, the weakened dollar makes it clear that US spending, if not growth, still wields considerable stopping power on emerging economies. The only things that stand in the way of the US slipping into recession are the weakened dollar and the recent economic stimulus tax break signed into law recently. This tax rebate, when combined with initiatives for small businesses to invest, has the potential to contain the drop in consumer spending. While it was signed into law in record time, it may still have been implemented too slowly to have maximum impact on the recession. It surely increases debt, and now only time will tell. Without some more effort on the part of central banks worldwide, some fallout is the best possible scenario for all concerned. At worst, a sharp slowdown is not remotely out of the picture. Many developing economies are already taking advantage of both the housing downturn and the dollar's fall by investing, often in the form of sovereign-wealth funds, so their turnover is directly linked to the shares in the troubled financial sector. This means that, for once, these economies are benefitting from other country's malaise for the first time. While it may be difficult to swallow, the US is poised to bounce back quickly with a little help from it's would-be friends. Ki helps buyers and sellers looking for Austin real estate. His site has up to date information on his Austin real estate blog along with a search for Austin homes for sale.