What is Happening to Mortgage Brokers?

What a difference a burst bubble can make. Only two years ago, mortgage brokers originated more than two-thirds of new loans, according to Wholesale Access, a mortgage research firm. Now their share of the mortgage pie has dropped to 45%.

That's a shocking loss of market share when you consider that brokers were supposedly a boon to borrowers. Because they don't work for any one bank, they can (supposedly) shop dozens of lenders on your behalf to get the best loan at the lowest price.

But they seldom did. Instead, many of these mortgage brokers pocketed kickbacks from banks in return for selling borrowers unnecessarily costly loans.

An April study by the Center for Responsible Lending, a nonprofit organization working to eliminate abusive lending practices, found that among borrowers with credit scores of 640 or less, those who used brokers paid an average of $5,222 more in the first four years of their mortgage than those who borrowed directly from a bank. Borrowers with credit scores of 640 to 720 paid $1,316 more.

If shopping for a mortgage, and you want to use a mortgage broker instead of going directly to a bank, demand that your lending middleman set his fee in advance - not just what you will pay but also what he will get from the bank, which affects your rate. His or her total fees should not exceed 2% of the loan.

Have you used a mortgage broker before? Do you feel you were treated fairly? We'd love to hear your experiences, or if you have never used a mortgage broker before but know of someone who has, leave us your comment or thought on this matter below by clicking on the "commment link". We'd love to hear from you on this subject.

Home Loans Without the Big Down Payment

Many people give up on the dream of home ownership before they even get started because they just don’t believe they will ever be able to afford the down payment and closing costs.

A down payment can be as much as 20 percent or more of the purchase price of the house and if you are looking at homes that cost as little as $150,000 you will need to come up with as much as $30,000 just to be approved for the mortgage. Most people don’t have this sort of money sitting in their bank account.

For those thinking these fees would hold them back from home ownership, there is an alternative. There are home loans out there that will help you to get into a home for very little in the way of a down payment and very little in the way of closing costs. Not everyone will qualify for these loan programs, but many people will and many people have been able to buy a home because of them. Why not find out if you qualify?

One of the best home loans for people without a large down payment is an FHA loan. FHA loans are loans provided by a lender but insured by the Federal Housing Administration. These loans allow a lender to provide funding to those who may have less than perfect credit because they are insured against default. These loans are a great option when you don’t have a lot of cash on hand because the down payment can be as little as three percent. When you are buying that same $150,000 home you would be looking at a down payment of $4,500 instead of $30,000. That's a much better deal, and while it still make take some time and effort to come up with the funds, it is much more doable for most people.

In addition to having lower down payment requirements, these loans also have limits as to what can be charged when it comes to closing costs. Many people are not prepared for the cost of closing a loan and they are handed a bill for thousands of dollars and their jaw sort of drops open. It’s hard to come up with these funds and a down payment. When you look at FHA home loans you will find they make closing costs much more affordable. There are also programs out there for you to take advantage of that will help you pay for the closing costs as well as the down payment.

Do your homework when it comes to financing the home of your dreams. You may just find that you can get into that new home for a lot less than you thought.

Consumer Confidence Continues to Be Low

"Consumer confidence is at its weakest level in 17 years," according to Lynn Franco, director of The Conference Board's Consumer Research Center, producer of the Consumer Confidence Index, which surveys 5,000 households every month for their economic views. Franco says, "it looks troubling for current conditions and in terms of where the economy is headed." Another survey that tracks consumer confidence — the Reuters/University of Michigan Surveys of Consumers — had similar findings.

When consumers are satisfied or optimistic about their economic situations, they are more likely to buy a home. But with consumer confidence at its lowest level in nearly two decades, some economists think the real estate market is unlikely to rebound until at least 2009.

Early in 2007, both those surveys reported an uptick in consumer confidence, leading some economists to predict that 2007 would mark a real estate industry turnaround. Instead, consumer confidence dropped sharply last summer.

Though no one doubts the economy eventually will turn around, the consensus is that it will be a gradual process and consumers should not expect to see a market turnaround over night. However, consumer confidence surveys typically give economists a preview of what the market is going to do.

So what does that mean for the housing market?

Homebuyers and home sellers are largely sitting on the sidelines, but for different reasons. Homebuyers aren't so much concerned about interest rates since rates are still the low side. Instead, many prospective buyers seem more concerned about their creditworthiness.

What about you? We'd love to hear your opinion. Just leave a comment by clicking on the "comment" link below. Your email address will never be published here, although it is required in order to leave a comment. We respect your privacy, and only want your comment, not your identity. Go ahead, tell us what you think about consumer confidence in general. We'd love to hear from you.

Homeowner Mortgage Bailout Poll

Americans remain split on whether homeowners about to default on their mortgages should receive special treatment to help them keep their houses, according to a new research poll.

The poll finds 49% of Americans believe such homeowners should receive special treatment, while 48% feel homeowners should not get assistance. Three percent of those polled had no opinion.

Congress also appears split on the issue. The House is debating Democrat-sponsored legislation that would let the government back loans for homeowners facing foreclosure and would reduce the principal owed on those mortgages. Many Republicans oppose the bill, and President Bush has threatened to veto it.

What's your opinion? Do you think homeowners in danger of losing their homes should get government assistance to keep them from losing that home? Use the comment link below to give us your thoughts on this touchy subject. Your email address, although required to post a comment, will not be published here for your privacy and protection from unwanted email. We'd love to hear how you feel about the home bailout issue.

Los Angeles County Real Estate Investing: The Time May be Right

Listen to all the bad news reports. It's the worst time since the Great Depression to buy real estate, right?

Not so, according to some individual investors, who think the market slump has made selected areas more desirable than they've been in years.

While many buyers, whether potential residents or investors, are staying on the sidelines, largely from fear that prices will continue to plummet, some private investors think there's no time like the present to take advantage of a market in freefall.

Overall, homes sales have plunged to record lows. However, the percentage of investors in the market is edging up, according to DataQuick Information Systems, a real estate information service.

Real estate investors should not expect a return to the no-money-down days, which means they already have cash on the line as soon as they buy. But remember what Warren Buffett says, "the fact that a market is not turning around in the next year isn't significant. If you wait long enough, the market has always gone up since the days of the caveman."

What do you think? Is now the right time to invest in real estate? We'd love to get your opinion on that. Go ahead and click the "comment" link below and sound off.