Bank of America has launched a new mortgage product which allows homebuyers to make a downpayment of just 3 per cent with no requirement for mortgage insurance. It is seen as a swipe at the FHA which requires insurance for downpayments of as little as 3.5 per cent and has punished big banks recently for errors. BoA has partnered with Freddie Mac and the Self-Help Ventures Fund who will back the new loans. The Wall Street Journal quotes BoA managing director D. Steve Boland: “We need an alternative in the marketplace that helps creditworthy borrowers with a track record of paying debts on time.” The loans will only be available to those on incomes lower than the area median and with credit scores of at least 660.
Google to close online mortgage site
Google-parent Alphabet could have posed a threat to mortgage brokers with its online offering, after all the internet giant is well placed to dominate online searches for mortgage products. However, it has announced that it is pulling out of the business after just a year.
The Google Compare service was launched in the US and UK last year offering comparisons between mortgage lenders, insurers and credit card companies with Google picking up commission from the referrals. The firm has now said that the service will end on March 23, writing in an email to its partners that the service “hasn’t driven the success we hoped for.”
While Google may have dropped out of the industry for now, some experts predict that it will still want a slice of the market and may return once it has sorted out some issues with its first try, not least the lack of some major mortgage lenders on the site.
Homeowners are expecting home equity gains this year
Eight-five percent of homeowners are expecting the equity in their homes to increase by up to 10 per cent. That’s according to a survey by mortgage lender LoanDepot which found that 46 per cent of those with a mortgage expect some increase, a quarter expect 6 to 10 per cent and 58 per cent expecting 1 to 5 per cent.
The poll also found that most homeowners underestimate the amount of equity increase in their home since the start of the housing recovery with more than a quarter believing their home is worth between 1 and 5 per cent since 2013 while the actual figure may be double.
Three out of five homeowners say they now have enough equity to take out a home equity loan, while 16 per cent do not know how much equity they would need to qualify for a loan. Only 16 percent of all owners with a mortgage say they do not yet have enough equity to take out a home equity loan. Home remodeling, paying down debts and retirement savings are among the top reasons that a home equity loan would be used for according to the survey.