| After the Money’s Gone
If everyone, believing that the bank is about to go bust, demands their money out at the same time, the bank would have to raise cash by selling off assets at fire-sale prices - and it may indeed go bust even though it didn't really make that bum loan. And because loss of confidence can be a self-fulfilling prophecy, even depositors who don't believe the rumor would join in the bank run, trying to get their money out while they can. But the Fed can come to the rescue. If the rumor is false, the bank has enough assets to cover its debts; all it lacks is liquidity - the ability to raise cash on short notice. And the Fed can solve that problem by giving the bank a temporary loan, tiding it over until things calm down. Matters are very different, however, if the rumor is true: the bank really did make a big bad loan.
Borrowers receive hands-on assistance
A: CHFA's current delinquency rate is 4.96 percent, and our default rate is 1.1 percent. CHFA requires and pays for all of our borrowers to attend homebuyer education. There are very few local servicers left in Colorado. At CHFA, we service all the loans we make. Our servicing operation is a very high-touch business. CHFA offers 30- and 40-year fixed-rate loans. We have never done (adjustable-rate mortgages) or exotic mortgages. When others went to 100 percent financing, CHFA still required our borrowers to invest some cash in the deal. Even if they can only bring $500 or $1,000 to the table, we believe their dollars help to establish a personal commitment to the property. CHFA offers down-payment assistance in the form of a second mortgage to protect the second lien position from predatory lenders.
Refinancing: Don't Waste Time Wondering, Just Do It
If you're not changing the term of your loan ... even dropping your rate by an eighth makes sense because you did not have to change anything to get a loan," says Bob Walters, chief economist for Quicken Loans. "It always pays to get a lower rate." Say the current balance of your 6.5%, 30-year fixed mortgage is $250,000 and you are making monthly payments of $1,580. If you refinance into a loan of the same size that's one percentage point lower, 5.5%, you've dropped your monthly payments by about $160 to $1,420. But let's say you want to take out extra cash to pay off $20,000 in credit card debt: You'll need a new loan of $270,000. And even with that higher amount, your monthly payments are still reduced about $50 from your current payments to $1,533 a month. To determine how your monthly mortgage payments will differ under a new loan, use a mortgage-refinance calculator to determine the savings you might receive.
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