ARM's Worries Affect Stock Market

It has been a bit of concern to everybody including the Fed, but until yesterday it had not really showed in a way that would get the working man’s attention. Yesterday it did. What was it: the concern over sub-prime loan defaults, i.e, foreclosures.
Investors withdrew from the sub-prime mortgage sector yesterday and caused a drop in Dow Jones Industrials of more that 240 points. In fact, all the US stock indexes were down about two percent.
Granted there were other contributing factors like retail sale profit figures being relatively small (0.1 percent) and the Mortgage Bankers Association saying that foreclosures increased 28 basis points from the third quarter which is up 25 basis points from last year.
While there forecast for sub-prime loans continues to look dour the number of houses on the market continues to increase. Prime mortgages continues to rise and buyers have plenty of variety from which to choose their future home.

Read the MBAA press release
Read The Times of Trenton article

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Technorati: NJ Real Estate News, Real Estate, NJ Real Estate Blogs, NJ Housing, New Jersey, Mortgages, Home loans, Foreclosure

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Following the Mortgage Dollar

Ever wondered what really happens to your house payment?

It seems logical that it would go to the lending company that made the loan to buy the home -- and it does, but it takes a longish trip along the way.

If your mortgage stayed in your lending company's portfolio, the lender would probably have to wait many years before the loan was paid up. And the relatively small monthly mortgage payments wouldn't provide enough money to enable the lender to continue making home loans.

But most mortgage loans don't stay with the lenders who made them. To obtain more money to lend, most lenders sell their mortgages on the secondary market -- a large network of investment companies and quasi-government agencies, including the industry giants Fannie Mae and Freddie Mac.

If your mortgage is sold to one of these organizations, you may never know it, because the mortgage's new owner will often use your original lender to service the account.

But you money doesn't stop its journey at that point either. The purchasing organization must also replenish their money supply, so they can keep on buying mortgages. They pool you loan with thousands of others and sell shares in the pool to individual investors and big financial institutions. Countless people obtain income by investing in these mortgages.

Because of this, when you buy a home, you're not only helping yourself, you're also helping our economy.

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Technorati: NJ Real Estate News, Real Estate, NJ Real Estate Blogs, NJ Housing, New Jersey, Mortgage, Home buying

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For more information on Real Estate in New Jersey visit here.