This downturn has resulted in a wide variety of low interest rates for home mortgages, and currently GMAC is on board with this trend.

GMAC’s a big name in the industry, serving on a national-level and providing thousands of people with loans on their houses.

The mortgage process is simple—the bank (in this case the GMAC Corporation) buys the property you’re wanting.  Over the span of several years (most frequently closer to 30) you pay the loan off in the form of monthly payments.  Like any other mortgage, you have an interest rate which (in most cases, but not all) is fixed.

GMAC has an online application process wherein you can find and apply for the loan that’s most suitable for your housing needs.  However, GMAC doesn’t deal directly with real estate agents nor do they help you find a house.  They’re more of a mortgage farm, being a third party to offer the money but not necessarily guide you along the process.

That doesn’t mean they’re not useful.  Their website even has calculating functions to help you figure out how much money you’d have to pay on a monthly basis.

Regardless, GMAC is a service you utilize after you’ve found the correct house.  Once you’ve found the house you’re wanting to purchase and reached a deal with the sellers and the real estate agents, you go to GMAC and apply for the loan.  GMAC gets back to you with the rate they can offer you, which is based on your credit score, and you can go from there.

Like any loan provider, GMAC requires monthly payments.  When it comes to a mortgage, weighing monthly payments versus the price to rent a place is always something worth looking into.  But unlike renting, when you have a mortgage you technically own the property and you’re making payments that go towards your loan, so you’re slowly plucking away at the total amount you owe.

Factors such as your credit score and the amount you’re willing to make on a down payment affect how much GMAC will lend you as well as your APR and interest rate.  If you miss a payment, you’re in danger of having a hefty late fee assessed and it’s probably going to dock your credit score.  If you miss several, you’re in an unfortunate situation, as GMAC can technically repossess the house and you still legally owe them all the money of the loan.

GMAC offers different types of loans depending on whether you’re going to refinance your current mortgage or you’re looking to purchase a home.  Some factors like APR and interest rate are different regarding which type of loan you’re looking to acquire.

Furthermore, GMAC also offers guidance into choosing the correct loan for you.  Their website has an extensive program that helps you find what kind of loan you’d need, be it a fixed rate, variable rate, home purchase loan, refinance loan, and so on.

And before you even apply, GMAC offers credit counseling so that you know what to expect based on your current credit score.  Since applying can be an arduous task, it might be worth looking into their credit counseling service before diving in so that you aren’t snagged by any nasty surprises.

GMAC also offers adjustable rate mortgages, which usually means that every five years or so your APR will adjust.  In some cases this is ideal, especially if you’re repairing credit and know that in several years your credit might change.  But it’s also one of the less common approaches when it comes to buying a home.

• Search for a credit counselor in your area
• Download a free budget worksheet
• Use miscellaneous calculators
• Read financial news on their site

The National Foundation for Credit Counseling’s vision is to create a national culture of financial responsibility. The foundation exists to provide their members with the resources they need to provide their clients with better financial education and services. It does not provide credit counseling itself.

The foundation has over 100 member agencies and has been around for 59 years. Their seal shows you that the counselors you are talking to have a reasonably high standard and have been trained well. After all, it would reflect badly on the foundation if they recommended counselors who did not do their job well. Many of their counselors provide free or low cost services. Once you find a credit counselor, you should still do your due diligence and find out what they charge for any services you may need right at the beginning.

The National Foundation for Credit Counseling will help you with housing counseling as well. This includes pre-purchase counseling as well as foreclosure counseling. Their members also provide reverse mortgage counseling for seniors. By law, only seniors are eligible for reverse mortgages.

A good place to start is their budget worksheet though. They list a lot of categories and your numbers are automatically added up so you can see, what your budget really looks like. It can be quite an eye opener to see it all listed separately. It may seem like only a $10 expense at the time, but those $10 expenses can add up quickly.

The National Foundation for Credit Counseling offers financial education classes through their members and basic information on their website. You can find tips and information on money management and savings, credit, insurance, housing, retirement and bankruptcy.

There are some really useful calculators in the Consumer Tools section. Need to find out what interest rate you have to earn on your savings in order to get the amount of monthly funds you will need in retirement? You can find out here. You will also be able to check what kind of mortgage you can afford and a number of other financial questions you may have.

In their Financial Literacy section you can find reports on identity theft, homeownership, and financial literacy. Who hasn’t heard of identity theft these days?  It is important to know how to protect yourself. Personally, I have had an account broken into and it took months to get the mess straightened out. It is practically impossible to totally protect yourself unless you only deal in cash and do not provide anyone with any personal information, but that is not realistic. Far better to learn how to reduce your risks than to be sorry later.

The National Foundation for Credit Counseling is trying to help in the nation’s effort to increase financial literacy among its citizens. Their information provides a good starting point and definitely some useful tools to apply to your own situation.

A reverse mortgage lets you tap into the equity in your home. The law does not permit reverse mortgages to be given to people under the age of 62. You also need to have substantial equity in your home for a reverse mortgage to make sense. As a rough guide you can expect to be able to get a reverse mortgage for up to half the value of your home if you own it free and clear. There are different options with reverse mortgages. You can receive it as a lump sum payment, as monthly payments or as a line of credit to draw on when you need it.

A reverse mortgage needs to be paid back when you move out of the house the mortgage is on, either because you decided to move or because you passed away. At that point you or your estate can sell the house to pay back the mortgage or refinance the mortgage. The title to the house remains in your name when you get a reverse mortgage. You are not selling your home when you decide to use this method to get monthly income. It is simply another investment tool. Fees are lumped in with your mortgage. Expect to get an inspection of your home. You will also be required to meet with an independent consultant to discuss whether a reverse mortgage makes sense for you.

The website for ‘One Reverse Mortgage’ has a fairly detailed description of the process you will go through to obtain a reverse mortgage. They also provide a calculator to give you an estimate of what you can expect to receive as a lump sum or monthly payment based on your home’s value, any mortgage you have remaining on the house and your age. The amount of money you qualify for is based on the age of the youngest person listed on the house title.

This is not a way to get out of taking care of your home. You are not selling your home when you a ‘One Reverse Mortgage’. You will still need to maintain it, pay taxes and insurance on it. In fact, it will probably be part of the reverse mortgage loan agreement that it is your responsibility to maintain that house in good shape.

No company wants to lend money on a deteriorating asset and you don’t want your walls to crumble around you either. Remember, you are looking at this type of loan because you want to stay in the home so expect to act accordingly and take care of it. Your children will thank you for it too. If the plan is to let your children inherit the home, they will have a much easier time refinancing a home that is in great shape than one that needs to be renovated to meet current building standards. For most people their home is their biggest investment. Getting a reverse mortgage is simply another way of allowing you to have some income while preserving title to the home you wish to keep.

As the Federal Reserve has lowered the Federal funds rate down to almost zero, the banks have enjoyed the low rates at which they can borrow overnight from other banks. The consumers have been able to get 30-year fixed rate mortgages at rates that have enticed virtually every mortgage holder out there to refinance. With that the yield curve for mortgage backed securities has changed. It still has the typical shape of diminishing increases as the length of time of the investment increases but the yields overall have decreased.

With the turmoil in the housing market many investors have shied away from mortgage backed securities. Those are the bonds which are backed by portfolios of mortgages. The only government agency that can issue mortgage backed securities is Ginnie Mae. Ginnie Mae does not originate loans but they do guarantee loans issued by the Federal Housing Administration, the Department of Veterans Affairs, the Rural Housing Service and the Office of Public and Indian Housing. Ginnie Mae is supposed to insure that low and middle income households have access to mortgages.

Ginnie Mae is the only agency that can offer mortgage backed securities that have the full faith and credit of the government behind them. Fannie Mae and Freddie Mac lend money to mortgage bankers so they can provide loans to low income and middle income home buyers. With the recent problems in the housing market, large portfolios of non performing mortgages were taken over and sold cheaply or refinanced.

The traditional relationship between mortgage rates and U.S. Treasury bonds has become less strong. The events in the housing market have been too severe to not have an impact. Bond prices do fluctuate with supply and demand. Risk of any kind affects the rates on bonds and their prices. With the length of the average mortgage lying closer to 10 years rather than 30 years, it would make sense to try to relate mortgage rates to 10 year U.S. Treasuries. It has also been suggested that the markets are so short term that the 90 day treasuries are actually the better indicator of where mortgage rates are headed.

Either way, mortgage rates have been very low for a number of years now. When the Federal Reserve adjusts the Federal Funds Rate, you can expect to see the impact on mortgage rates within days if not within hours. With the increased speed in communication, we have also seen faster reactions. The mortgage rates do not always go in the same direction as the Federal Funds Rate although they usually do. What really matters is the state of the economy. That is why you will see investors waiting with baited breath for the content of the Federal Reserve’s statements. That is where they announce their predictions of where they think the economy is headed.

However, as an astute observer of the world around you, you may be able to notice where the economy is headed on your own provided you don’t live in some part of the country that is moving counter to the general economy. If you do, you have probably figured that out by now.

Watching the economy is quickly becoming a national pastime. Things have been bad for long enough, there aren’t many people left who haven’t been affected in some way. If you are one of the lucky ones who still has a stable job, you probably were able to refinance your mortgage at a nice low rate. When the economy is slow, interest rates are usually low. The Federal Reserve does not want to push the economy into a depression so they keep the rate at which banks lend money to other banks low in order to stimulate the economy by giving the banks incentives to lend money.

Mortgage rates tend to track U.S. Treasury bonds, lately it seems the 90 day U.S. Treasury bonds may be a good indicator. Rate changes happen very quickly once the bond rates change. So if you want to predict mortgage rates, you will have to study the same data the people on the Federal Reserve look at. Or alternatively, read the analysts’ predictions as to what the Federal Reserve will do at their next meeting. You can find out more information about the Federal Reserve at www.federalreserve.gov.

You can also look at mortgage rates as a function of supply and demand. If the economy is doing well, people feel inclined to purchase a home or a bigger home, so the demand for mortgages goes up and along with that the interest rates. The banks can afford to be greedier during these times.

This is when banks thrive.

Mortgage rates also take into account the length of the loan, the risk assessment of the borrower,   the type of building the loan is on, and the location. I still remember the difficulties I had obtaining my first real estate mortgage. It wasn’t that I wasn’t qualified, I was. It was that the building had some rather unique features which we had to remove in order for a bank to be willing to lend money for the property. We had to put money in escrow until the features were changed. If you are wondering what it was, you will be surprised to hear that it was a trapdoor in the living room leading to the basement. We changed it to a nice open staircase with  walls and half walls surrounding it. Can you imagine that? I mean who wouldn’t want a trap door in the middle of their living room?

Interest rates are at all time lows. With the 90 day U.S. Treasury rate at only 0.16 %, 30 year fixed mortgage rates are a mere 4.2% higher. I believe this is a linear relationship since people would not have a chance at affording mortgages otherwise when the 90 day U.S. Treasury rates are much higher. Does anyone remember 17% interest rates? It seems like the distant past yet it was only in the 1980s. So if you are currently in the market for a mortgage and your parents are telling you how lucky you are, believe them.

Compared to that, obtaining a mortgage anytime in the next few years should appear like a bargain. Should the economy start recovering dramatically and at a rapid pace, lock in a mortgage rate as quickly as you can.

Moneydance

Moneydance is an application for personal finance that was developed by Reilly Technologies. The user interface is geared towards non-accountants although it is a double entry bookkeeping system. Moneydance can be run on multiple operating systems such as: Linux, Mac OS, OS/2, Unix, and Windows.

Online Banking: You can synchronize transactions with your records with the support of OFX, QFX, and QIF files.  You can also pay your bills instantly using its online bill pay option.

Schedule: Be on time with your payments, bills, and paychecks.  Moneydance tracks all of your overdue bills and calculates interest for your loans.

Budgeting: Budget your monthly expenses to your actual income.  Moneydance will show you where you are over or under budget.

Portfolio: Track your investments and keep your portfolio up to date.  You can view the total value of your investment accounts such as stocks, bonds, mutual funds, and CDs.

Import: Any program that exports data using the QIF format will be imported by Moneydance.

Compatibility: Moneydance can run on almost any operating system.  This gives you maximum flexibility.

International: Moneydance is used in over 75 countries and offers support in eight languages.  It makes it easy for tax reporting by tracking and calculating VAT and GST.

Privacy: You will be able to encrypt and password protect your data for increased security and privacy.

Quicken

Intuit Inc. developed Quicken as a personal finance management tool.  There are various versions of Quicken available such as: New user, Basic, Deluxe, Rental Property Manager, Premier and Home & Business. Most versions of Quicken are specialized for United States and Canada.  Although it can be used more widely no matter what country it is.  Quicken operates on Macintosh and Windows.  As you can see Quicken offers more options than Moneydance depending on what version fits your needs.

Quicken is a better choice for business’ or anyone that needs more options.  Moneydance is an alternative for individual needs.  It also depends on what operating system you are using.  Try to keep all this in mind when choosing your product.

JPMorgan Chase & Co. is one of the top four “big” banks of the United States.

• Chase is a leading global financial services firm with assets of $2 trillion.
• They operate in more than 60 countries.
• They have more than 200,000 employees.
• They are a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity.
• They are a component of the Dow Jones Industrial Average.

They also offer some of the lowest mortgage rates available.

I believe now is the time to buy or refinance.  Why stay in a high interest mortgage?  By refinancing you could save thousands.  However Chase is stepping up their game.  They are offering a 1% cash back exclusive offer.  This offer is for new mortgages or refinances.  1% on one month’s principal and interest payment will be calculated for a 12 month period.  This calculation does not apply to additional payments made by the borrower.  The sum will be awarded via direct deposit into a Chase checking account or applied to the principal balance of the loan on the anniversary date of the loan.  You can calculate your savings here https://www.chase.com/chf/mortgage/mortgage-cash-back.

You must attain a Chase checking account with enrollment of their automatic mortgage payment service to be eligible for the 1% cash back offer.  The offer is limited to one per borrower.  There is also a $500 calendar year cap on the cash back, and principal reduction.  This program can discontinue anytime without notice.

The  1% Mortgage Cash Back program is available in AZ, CA, CO, CT, FL, GA, ID, IL, IN, KY, LA, MI, NJ, NV, NY, OH, OK, OR, TX, UT, WA, WI, and WV.  Although you may not be eligible for the cash back program, you could be eligible to purchase a home or refinance your existing home with a new low rate.  Begin your application today at http://mortgage.chase.com/pages/shared/gateway.jsp.

Wells Fargo is one of the big four banks of the United States of America.  They have been around for over 150 years.  They have over $1.2 trillion in assets and their market stock value is around $140 billion.  After buying out Wachovia they have over 10,000 stores and 70 million customers.  If you’re shopping for a good lender Wells Fargo seems to be on solid ground.

This is where I wish I would have listened as a teenager.  I wish I would have saved that nest egg for the rainy day, no, the monsoon that was coming.  Now that the market has dropped and rates are at an all time low, the right/savvy person can be cleaning up.  Wells Fargo is offering most home loans and refinances for less than 5% interest.  The Federal Reserve may change the rates daily if desired.  The rates as of April 29, 2010 are:

Wells Fargo offers various loan products.  They offer anything from a 30 Year-Fixed to a 5-Year Adjustable Rate mortgage.  They also offer jumbo loans and FHA loans.  Wells Fargo even offers refinances for consumers with less than perfect credit.  This enables you to access the equity built into your home to pay off other debts.  I highly recommend this for those that have high payment credit cards.

You can begin an application online at www.wellsfargo.com or call 1-877-937-9357.  Be sure to have your entire documentation ready such as: drivers license, recent paystub, existing assets, and collateral.  To ensure you have everything before you begin you can call a representative and ask in order to prepare yourself before you apply.

It looks as though Wells Fargo is merging into success with their competitive mortgage rates and over 150 years of experience.

The lack of readily available information isn’t just a byproduct of the numerous complaints about the lender.  It’s primarily due to the events of 2008.  That’s when the United States Office of Thrift Supervision seized control of Washington Mutual, Inc., putting it under the control of the Federal Deposit Insurance Corporation, or FDIC.

Washington Mutual, Inc. was victimized by a bank run that lasted over a week during the height of the banking crisis.  The failure is even more amazing when you consider just how big and popular WaMu was.  As the sixth largest bank in the country, it was remarkably well-known and many people in search of loans made a point of investigating Washington Mutual mortgage rates, which were often some of the most competitive on the market.

The run on WaMu and the fallout that followed after was an unmistakable sign of a finance sector in trouble.  This wasn’t a problem with a tiny corner bank that failed to remain properly capitalized.  The Washington Mutual implosion was headline news.

The FDIC jumped in quickly and sold the institution to JP Morgan Chase for nearly two billion dollars.  When Washington Mutual Bank was shut down, it represented the largest single bank failure in US history.

Today, as a wholly owned subsidiary of JP Morgan Chase, WaMu still offers mortgage loans, in a sense.  They’re receiving some positive reviews, too:

If you are thinking about making an application for a second mortgage, there’s probably no better lender than Washington Mutual. They provide various refinance mortgage options along with excellent client service and support to make your liabilities less burdensome.

In all honesty, it’s tough to know how much stock to put into these reviews, which seem outdated and based on the pre-failure incarnation of Washington Mutual.  It’s highly possible that entries like these are little more than republications of older material.

That seems likely because the bank now does business exclusively under the Chase flag.  Even a trip to the site’s home page in hopes of checking Washington Mutual mortgage rates will immediately redirect you to Chase’s website.  WaMu undoubtedly exists on paper in some shape or form, but one doubts many people are writing new memos on its letterhead, so to speak.

Trying to find the current rates for new loans and refinance opportunities produces very few results and many of them are of questionable accuracy.  A search for Washington Mutual mortgage rates will often turn up sites like this one, which actually show rates from a variety of institutions, but fail to provide any information for WaMu itself.  You’ll notice that most of these resources do, however, provide timely information regarding the interest rates at Chase.

Basically, WaMu has been a casualty of the nation’s financial meltdown.  The once massive bank was right in the middle of the sub prime lending catastrophe and when the bubble burst, it ceased to exist as its own functioning entity.  The future of Washington Mutual now sits n the hands of Chase.  You may no longer be able to readily find actual Washington Mutual mortgage rates.  Instead, you’ll be dealing with JP Morgan Chase, its purchaser.  One can only hope that Chase avoids WaMu’s fates–and by all indications it is a sturdy institution that should survive as the problems in our financial sector are, hopefully, resolved. 

In my most recent post, we compared the merits of pursuing a short sale against suffering a foreclosure.  After establishing the guiding principle that foreclosures should be avoided whenever possible, we discussed a few of the advantages of a short sale.  But how does a deed-in-lieu of foreclosure fit in with all of this?  Obviously, a deed-in-lieu is better than a foreclosure from the mortgagee’s perspective, but how does it stack up against a short sale?

No Clear-Cut Answer

It was easy to resolve the foreclosure vs. short sale question because foreclosures are, generally speaking, a worst case scenario.  As such, a blanket conclusion supporting short sales was easy to reach.  That’s not the case when looking at the short sale vs. deed-in-lieu issue.  There are strong arguments for both and the right answer can be very context-specific.

Differences of Opinion

Let’s look at what various folks are saying about the two options and how they compare with one another.  These perspectives may provide you with an idea of whether one should prefer a short sale or a deed-in-lieu for a specific set of circumstances.  None of these sources or their statements should be considered a definitive source, as the wide ranging differences of opinion will undoubtedly demonstrate the lack of a certain answer suitable for everyone.

DebtKid.com compares the two options and sees them as near-equals.  The site recognizes that deeds-in-lieu are  the faster option, but reminds us of the risk of a deficiency judgment.

Lending Tree provides a similar assessment.  A deed-in-lieu offers more convenience, buy may involve greater risk.  Additionally, the site reminds us that lender cooperation is necessary for either option to work.

Upside Down Real Estate doesn’t reach a definitive conclusion on the matter, but it does remind us to carefully consider the tax ramifications.  It also cautions anyone who uses a deed-in-lieu to read the fine print–some lenders may try to reserve the right to foreclose in order to “clean up” title.  That’s something you don’t want to sign off on!

Bills.com observes that some lenders will be more likely to accept short sales than deeds-in-lieu because short sales don’t require them to ever take title to the property.  Many lenders don’t want these properties to show up on their books, which can make it hard to successfully pull off a deed-in-lieu.

Richard Geller considers short sales to be the winner of the short sale vs. deed-in-liue contest.  He describes the short sale as a way of “fixing the problem for yourself and for the mortgage company.”  However, Geller’s assessment of one’s ability to secure financing for another home in the wake of a short sales appears to be overly optimistic.

MortgageReliefFormula also comes down on the side of short sales.  The site argues that lenders are less likely to accept deeds-in-lieu due to clean title concerns and that there’s no appreciable credit score benefit to either approach.

Conclusions

Overall, the deed-in-lieu approach wins in terms of speed and ease.  However, it looks as though short sales ahve a greater likelihood of approval and that the provide greater protection to the buyer.  There’s an ongoing debate about the impact of either option on one’s credit score, with no clear consensus readily apparent.

The bottom line in the short sale vs. deed-in-lieu debate is that the mortgagee really needs to consider all relevant factors specific to his or her individual situation in order to make the best possible decision. One’s surrounding circumstances can play a huge role in making the right choice.