The widely respected Case-Shiller index reported a price fall of 2.5% in Q4 2009, as compared with the same period for 2008. Moreover, prices fell only 1.1% from the third to the fourth quarters last year. While still a decline, the number was a marked improvement from previous quarters. The Case-Shiller index tracks housing prices in 20 cities and nine census divisions across the United States.

Housing analysts say that the recent numbers could indicate that housing prices will continue small declines or will be flat for the next one to five years. However, several unknowns make it especially difficult to forecast house price movements. Primary among the unknowns is the Federal Reserve’s plan to stop buying mortgage-backed securities on March 31.

In addition, mortgage rates could rise as the Fed tightens the money supply in response to economic growth and possible inflation. To top off the uncertainties, the federal home-buyers tax credit is scheduled to expire on April 30th.

How all these factors will impact the housing market over both the short and long term remains to be seen. While some analysts fear a return to rapidly falling home prices, others say an improving economy and job situation could bolster the market as federal support is pulled away.

The research looked at homeowner’s income and expenses, their credit record, as well as the loan-to-value ratio of the mortgage. Using a complex formula, the NRDC study found that mortgage foreclosures increased with the number of cars owned by a household. In others words, the neighborhood where more households owned cars were also the same locations that had the highest default rates.

One theory about why these two items correlate is that transportation costs, which include gas, are about 17 percent of the average household’s income in the U.S. That comes out to about $8,750 per year. The farther you have to travel for work, the higher your transportation costs are likely to be, which cuts into a consumer’s free cash to pay the mortgage. A spike in gas prices can put an especially strong pressure on homeowner’s ability to pay the monthly note, leading to an increase in foreclosures.

The NRDC is urging banks to factor in travel time and transportation costs when evaluating borrowers for a home loan. Mortgage lenders agree that transportation costs can have a big impact on household’s disposable income, but argue that other factors like unemployment have a much more direct impact.

So the next time you apply for a mortgage will the loan officer ask how far you travel for work and how many cars you own? While that’s an unlikely possibility in the short term, if the NRDC report catches on it could be a future reality.

Option ARMs are typically 30-year adjustable rate mortgages that initially offer the borrower four monthly payment options: a specified minimum payment, an interest-only payment, a 15-year fully amortizing payment, and a 30-year fully amortizing payment. Option ARMs are also known as “pick-a-payment” or “pay-option” ARMs. Option ARMs are often offered with a very low teaser rate (often as low as 1%) which translates into very low minimum payments for the first year of the ARM.

The Fed has been trying to prevent a crisis in Option ARMs by keeping key interest rates at historic lows, thereby lessening the impact on borrowers when the interest rate on the Option ARM recasts. The most common rate that Option ARMs are pegged to is the Monthly Treasury Average (MTA) which takes the Monthly Yield on 1 Year Treasury Notes and averages them out over a year.

Under the terms of the typical Option ARM, the interest rate does not recast for a maximum of 5 years after the loan was originated if the MTA does not vary much. So by keeping the MTA low, the Fed’s actions only served to postpone the Option ARM crisis. The bulk of existing Option ARM loans were originated in 2005 and 2006 which means a huge number of loans will be recast over the next couple of years.

The result is an increasing amount of foreclosure activity on Option ARM loans that are being recast. How bad will it get? That depends a lot on the willingness of lenders to modify the loans, but it could get very bad.

While home prices have not yet reached overinflated levels, the enthusiasm (some would call it mania) and the speculation of the earlier housing boom have returned. Markets like Las Vegas which were once the epicenter of the foreclosure crisis are now bustling once again.

While home prices in Vegas are down a whopping 50% off their peak reached in 2006, the inventory of houses on the market is now down to a 3-month supply. Compare this to the national average of 8.5 months of supply on the market and it becomes clear that something is going on in Las Vegas and other foreclosure centers. In addition, 40% of all transactions in Vegas are all cash, indicating that deep pocketed speculators are entering the market.

All cash deals? Speculators? Dwindling supply and transactions completed in the blink of an eye? Sounds like mania has returned to Vegas. The only question is when and if this craziness moves on to other hard-hit housing markets.

These low home loan rates, combined with the federal tax credit for first time homebuyers drove up the number of signed home sales contracts for the seventh straight month, the National Association of Realtors reported. The association said that its index of sales agreements rose 6.4 percent from July to 103.8, beating forecasts. The index was 12 percent higher than a year ago, matching similar reporting on home sales from the Case-Shiller home sales index.

The decline in mortgage rates is significant in that the economy appears to be picking up steam, leading many analysts to predict interest rates would start to rise. This clearly hasn’t happened yet, as last week’s rates were the lowest since May when it was 4.91 percent. Mortgage rates hit their record lowest point of 4.78 percent in the spring.

Given how quickly cars depreciate, it’s not difficult to get upside down in a variety of situations. Many consumers get to this point and don’t even realize it until they try to sell or trade in their car and discover that their loan balance far exceeds the value of the car.

Owing more than your car is worth is not necessarily a problem if you plan to keep the car throughout the period of your loan. But if you need to sell or trade it in, you’ll need to deal with the loan. Here are few options for what to do if you are upside down on a car loan:

Roll your old loan into a new car purchase. Some car dealers will allow you add the unpaid principal of your old car loan into the loan for a new car. You would, in effect, be paying off two loans. As you can imagine, this gets expensive and is not recommended, but if you have no other options then it may be worth exploring.

Refinance your car loan. While many people refinance home loans, not as many know that you can do the same for car loans. If you bought your car a few years ago you might find that interest rates now are much lower and you can save on your monthly payments. Just be sure that your current auto lender allows prepayment of your loan.

Make extra payments. You can pay down your car loan fairly quickly by making larger payments each month, but be sure that your lender has agreed that extra payments will go to pay down the principal owed.

Use a home equity loan to pay off your car loan. If you have access to a home equity line of credit, you can probably pay off your entire car loan at once. The advantage is that you immediately get yourself out from being upside down on your car loan and have 100% ownership. Repaying a home equity loan can also have tax benefits, so check with your accountant.

If you purchased your house several years ago you have probably been paying down the principal and (hopefully!) your house has appreciated in value. The difference between how much your house is worth and the amount of principal you still owe on your mortgage represents the equity you can tap into. A bank will also look at your ability to repay the loan when determining how much to lend.

Home equity debt comes in two flavors. A home equity loan is generally one lump sum with a fixed interest rate and repayment schedule. A home equity line of credit (called a HELOC) acts more like a credit card account – you are only charged for the money you draw down from the account.

Either home equity loan type can be appropriate for funding a college education. The biggest advantage to using home equity loans is that, in general, the interest you pay on this debt is tax deductible.

If you find yourself in debt, here’s a handy calculator to figure out how to reduce your debt burden through consolidation:

Home equity loans should not be your first choice when paying for college, as there are more suitable programs like student loans and various federal program available to help you with the cost. But if these other sources are not providing enough, think about tapping into your home’s equity.

Many analysts say fears of inflation are overblown. While the Fed is printing money rapidly, this doesn’t cause inflation until it is borrowed. However, most consumers don’t have the financial ability or inclination to take on more debt.

“If you missed out on the low rates of earlier this year, get ready, because this fall we may approach the lows in mortgage rates reached earlier this year,” Michael Becker, mortgage consultant, Green Pastures Mortgage & Finance, Lutherville, Md is quoted as saying.

Current mortgages rates are only 0.05 percent away from the record low of 5.19 percent. While the economy does look to be on the mend, you can expect rates to stay fairly low for the duration of the year.

In the new format, people who earn income from abroad are excluded from funding. Starting with this month, are changed some conditions of the mortgage. Restrictions arise both in the cost of borrowing and in terms of eligibility requirements. They will apply to future applicants, and those who have already submitted a file for analysis, but have not received a final decision.

The main changes are:

• Removal of promotional interest rates on the first 6 months. All credits will be granted from the beginning with variable interest.
• The variable interest rate related variable will increase by 2 percentage points compared to the standard used until now.

Thus, after only a month, for a mortgage loan with a 25 % advance, the applicants received an interest rate of 6.4% in first 6 months. Subsequently, its value reached in this way to 9.3%. In the new conditions, interest rate for the loan will rise, since the beginning, at 11.32%.

Secured loans are those loans that are protected by an asset, in other words the loans where you will be required to use your property or other collateral as a guarantee that you’ll pay the loan back, so the lender could balance the risk of lending to you. And if you fall into arrears, you risk losing your home.

Secured loans are usually the cheapest, due to the fact that the annual percentage rate is a little bit less than other loans, the repayment periods are longer and you can borrow a bigger amount of money. Secured loans are usually the best way to obtain large amounts of money quickly. Other items such as stocks, bonds, or personal property can be put up to secure a loan as well.

The amount that can be borrowed differs from lender to lender and your individual circumstances.
The amount that you can borrow, the repayment period and the annual percentage rate will depend on: the value of your property; your ability to repay the loan and your individual circumstances.

So when you take out secured loans, it’s very important to take out payment protection insurance as well, that way if you suffer an accident that prevents you working or you’re made redundant, you don’t need to worry about losing your home.

It’s very important to think very carefully about how to manage your secured loans.