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Bank of America’s Newest Mortgage: 3% Down and No FHA

Bank of America Corp. is rolling out a new mortgage product that would allow borrowers to make down payments of as little as 3%, in a move that would represent an end run around a government agency that punished the bank for making errors on similar loans. The new mortgage program, which the Charlotte, NC-based lender plans to unveil on Monday, will let borrowers avoid private mortgage insurance, a product to protect mortgage lenders and investors that is usually required for low-down-payment loans. That could make the new loans cheaper than those offered through the Federal Housing Administration, the government agency that has won big settlements from banks in recent years for what the lenders describe as minor errors. The FHA does not make loans ...

Just How High Might Mortgage Rates Go?

We’ve ridden the absurdly low interest rates train for more than seven years now; is that money-saving journey coming to an end? Not sure you noticed, but from January to June, 30-year fixed mortgage rates actually crept up from 3.7% to 4.2%; they are now hovering around 4%. Image provided by Yuqin Pan. According to our chief economist, Jonathan Smoke, a 6% interest rate is “normal.” But Smoke doesn’t see us hitting that in the next two years: “We will likely see less than a 100 basis point increase over the next two years, which would bring us to around 5.5% in 2017.” Still below normal! If that increase does in fact happen, it would translate into a 12% increase in monthly payments over current rates. This affects mortgage shoppers, of course, ...

Is It Really Easier to Get a Mortgage These Days? Well…

anzlyldrm/Getty Images This was supposed to be the year that getting a mortgage would become easier. Now that we’re halfway through, we’ve seen home sales and closings substantially improve over last year, including by first-time buyers. This must mean that access to credit is getting better, right? Well, it doesn’t look that way. After mortgage backers Fannie Mae and Freddie Mac clarified their credit qualification standards last fall to encourage lenders to ease their requirements, it seems like credit access would improve. And then the Federal Housing Administration lowered its insurance premiums, and Fannie and Freddie introduced new low-down-payment programs for qualified buyers. Looking at the year’s data through June, closings of existing homes are up 8% over last year. And a greater proportion of ...

Don’t Lose Faith, Would-Be Home Buyers: It Will Get Better

“The Shawshank Redemption,” Castle Rock Entertainment It’s been a seller’s market in residential real estate for more than a year now. That’s fantastic for homeowners, and for the U.S. economy overall, but let’s get real: It creates a challenging environment for people who are trying to buy their first home. Fear not, first-time home buyers! Things are going to get better—soon. The main reason we’ve seen above-average price appreciation is limited inventory. And that leads to bidding wars. Thankfully, higher prices ultimately help solve this problem by encouraging more owners to put their homes up for sale. So the market is clearly shifting toward more of a balance in the second half of the year. Combined with a temporary reprieve from rising mortgage rates and slightly ...