Reuters Money

What new jumbo mortgage rules mean for expensive zip codes

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On Oct. 1, the size of mortgages eligible for purchase by Fannie Mae and Freddie Mac will shrink. That isn’t necessarily a big deal in most parts of the country; the new lower limit of $625,500 — down from today’s $729,750 — still is big enough to cover most homes in almost all markets in the United States.

Furthermore, mortgage bankers are stepping up with new money to cover those bigger loans, reports Mortgage Daily. “Programs here and there are popping up,” says publisher Sam Garcia. He reports that some new lenders, including TMS Funding and New Penn Financial LLC, are launching programs that will make mortgages as big as $2 million available to lenders with good credit scores and enough cash to keep up with the payments. And many existing mortgage lenders currently will make those so-called “jumbo” loans and just keep them in their portfolios instead of selling them.

But those loans will cost more. Currently the difference between rates on so-called conforming loans and private-made loans is about 0.64 percent. Over the last two years that spread has been as low as 0.48 percent and higher than one percent, says Garcia.

So in some pricey places, the new limits will really pinch borrowers. Those limits vary from market to market and are determined in part by local housing prices. In expensive housing markets where prices have fallen, the limits will drop the most. Hardest to be hit, according to a new analysis by Move.com, will be San Diego, where loans up until $697,500 qualify for Fannie and Freddie until Sept. 30. On Oct. 1, that limit drops to $546,250, a $151,250 difference.

Just got a mortgage? Beware of the junk mail

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Buying a new home (or refinancing your old one) comes with a typically unwelcome peril: a deluge of junk mail.

While some of the attempts will be obvious scams to separate you from your money, there will be some offers that might a bit less obvious. They can take the form of something very official-looking or contain language that makes it appear as though your mortgage-holder is the sender.

Time to refinance? How low can mortgage rates go?

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Mark Sass and his wife Jan decided to refinance the mortgage on their Cincinnati, Ohio, home on Friday, just days before the Federal Reserve pledged to keep rates near historic lows through the first half of 2013.

“I knew the Fed statement was coming out and rates had dropped to historically low levels, and it just seemed like an opportune time. I hadn’t even thought about it until then,” says Sass, who owns his own marketing research company.

What will happen to you if home mortgage tax break ends?

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Aside from getting a piece of the American dream, one of the reasons people ostensibly buy homes in the U.S. is for a nice tax break. About 35 million households claimed the mortgage interest deduction in 2009, according to a recent report from the Joint Committee on Taxation.

In fact, the mortgage interest deduction is the largest subsidy for homeowners and the nation’s third-largest tax break, according to the Center for American Progress, a liberal policy research group.

CORRECTED: Who benefits from student loans and educational tax benefits?

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On Wednesday, we looked at mortgage debt and the home mortgage interest deduction, based on new data released in a Joint Committee on Taxation report. Today, we’ll look at student loans and their corresponding interest deduction.

The numbers here are far, far smaller, and therefore less likely to be a meaningful target in the ongoing budget discussions in Washington: The amount of student loans out, $33 billion $330 billion, represents a sliver of total household debt of $13.4 trillion, and is dwarfed by the $10.2 trillion in home mortgage debt. While the ever-rising cost of higher education is an enormous issue for anyone who’s facing those college costs, as a country we’re more indebted for our cars.

Mortgage Poll: Are strategic defaults ethical?

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I know a guy — let’s call him Fred — who has a plan for walking away from his home and the $400,000 mortgage on it.

Fred lives in Phoenix, one of those particularly hard hit real estate markets in a state that prohibits banks from coming after borrowers for additional money once a home has gone into foreclosure. The home he bought for more than $400,000 is now worth about $225,000, by his estimates. He’s saved up quite a bit of money and can keep making the payments. But he’s nearing retirement, and figures that, the way he’s going, he’ll never have home equity.

After the housing bust, what’s next?

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Beyond the double-dip U.S. housing recession, is there a future for the American home market? What I see emerging as growth magnets are established city enclaves and “new urbanist” communities that resemble old-style neighborhoods without the sprawl. They are close to public transportation, walkable and loaded with culture and amenities. They personify the new American dream.

Unfortunately, I also see the slow death of the “spurb,” a word I needed to coin for my book The Cul-de-Sac Syndrome to describe sprawling, car-addicted ex-urban areas far from central cities. While I think many inner suburbs will do fine and prosper, the next wave of real-estate growth favors vibrant cities and energy-efficient communities.

Coming soon: A shorter, clearer mortgage form

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How much are you borrowing and how much will it cost to pay it back? Those are the key questions that a mortgage disclosure form should answer, and the Consumer Financial Protection Bureau is trying to develop one that will will give it to consumers straight.

The agency is circulating two different versions of a proposed form on a new “Know Before You Owe” website and asking consumers to vote on which one they like better. The agency intends to propose a new federally required form shortly after it officially launches on July 21, 2011.

House-hunting? Don’t buy until you read this

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By Jennifer Merritt

Spring is home buying season, so the common wisdom says. In the winter, fewer homes go on the market and fewer buyers trudge out in chilly temperatures to look. Summer is filled with vacations, keeping would-be buyers away. And the fall, well for families, is the start of school and not the time to make a big move. That makes spring the sweet spot for finding a home and closing on it before summer vacation or the new school year.

Hampered by two-plus years of falling home prices and ultra-tight mortgage lending, spring has begun to live up to its reputation as prime home buying season. While still in the shadow of pending foreclosure and short sales, home prices are still depressed, and, in some areas, have begun to stabilize. Mortgage rates remain near record lows. Altogether, these factors contributed to a rise in homes in-contract to be sold; the National Association of Realtor’s pending home sales index rising two percent in February and 5.1 percent in March.

AARP lawsuit: Reverse mortgages cause foreclosures

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Realtor Mac McCollum stands in front of a foreclosed home in Bullhead City, Arizona, November 4, 2009.  REUTERS/Lucy NicholsonReverse mortgage ads often portray contented silver-haired couples enjoying the comfort of home, confident that their decision to tap home equity will bring lifelong financial security.

But the AARP Foundation painted a different picture when it filed a lawsuit this week challenging federal rules said to be forcing borrowers into foreclosure.