The latest final home prices data, reported for October, show a dramatic 18% drop. Indeed, this is a record drop for home prices, bringing them down to 2004 levels.

Current home prices data, and the current situation with the mortgage market and the housing market should make it rather clear that real estate doesn't always appreciate. Indeed, it is fairly evident that the housing market runs in cycles.

Real estate does, in general, go up over time, but one cannot expect quick appreciation to last forever. This was one of the (many) mistakes made in the run-up to the current financial crisis. Too many people, from mortgage lenders to borrowers, assumed that real estate would always go up in price, and figured that appreciating home values and prices would cover the costs of outrageous home mortgage loans.

Long-term mortgage rates are falling again: the 30-year fixed is down to 5.14% and the 15-year fixed rate is down to 4.91%. If you are looking to refinance, you are likely in good company. Mortgage applications are likely to continue to increase as borrowers look to get a better deal on their home mortgage loans. National Mortgage News reports on the new mortgage rates:

Even though I've only been in my home for a little over a year, I'm already considering refinancing. We're going to the credit union after the new year to find out our options — including whether or not we could swing a 15-year mortgage (to build our equity faster).

I decided that this classic would be a perfect holiday Friday Fun Video.

Happy Firday!

Wishing you a Merry Christmas!

FICO is overhauling its credit scoring formula starting in 2009. The new formula will likely affect whether or not you get a variety of loans — including a home mortgage loan. FICO plans to offer finer shades when reporting consumer habits, with the idea that one late payment in 36 months is less serious — should affect your credit score less — than four or five late payments.

Another issue that FICO is working out is piggybacking. Sometimes a child uses his or her parents' credit, or a spouse uses his or her partner's credit, to help build a credit profile. This is accepted. However, abuses have been detected by services that pay those with good credit to allow an "authorized user" to piggyback just to get a bump in score. FICO insists that it has figured out how to distinguish between these practices.

Watch your credit score very carefully in 2009. You could see some big changes.

Today marked the release of some rather interesting economic data: home prices and sales. And the data is showing that the median price of homes has dropped — along with new homes sales in the U.S. However, despite this (or maybe in part because of it), mortgage loan applications are on the rise.

With lower home prices, people are beginning to think that maybe now is a good time to buy after all. Well, the low interest rates are helping as well. Prices are low and the number of homes selling is down (leading to motivated sellers — including builders). This could be a good thing.

Now, if only those mortgage applications are approved.

Right now, foreclosures are at their lowest level since June. Of course, they are still higher than they were at this time last year. But at least they are taking a break — for now. Real Estate Pro Articles reports on foreclosures:

However, these numbers, though encouraging at first glance, may not be a great as advertised. It is likely that the drop in foreclosures is coming as a result of a foreclosure moratorium that some mortgage lenders and loan servicers (notably Fannie Mae) instituted for the holiday season.

What happens in the New Year when the foreclosure moratorium is lifted and the respite is over?

The countdown to a new presidency is on. So for today’s Friday Fun Video, I offer you Letterman’s Top 10 Bush moments.

Happy Friday!

Mortgage rates are falling rather dramatically right now. After the Fed slashed the Funds rate on Tuesday, mortgage interest rates have followed suit. They are now at a 37-year low of 5.19% for a 30-year fixed. It’s enough to make me want to refinance. Seriously.

And it is no surprise that refinancing is suddenly very popular right now. People are trying to take advantage of these great rates. However, if you want to refinance to a lower 30-year fixed rate, there are some things that you need to consider:

• Equity in your home.
• Whether you qualify to refinance.

One of the problems that some are running into is that these lower rates are useless because banks are not lending. My problem is that I’ve only been in my home for a year, and I may not have sufficient equity for a refinance. Maybe I’ll check with my credit union. It never hurts to ask.

If you do refinance, aware that now may not be the best time for a cash out refinance. Instead, just refinance what you owe, and enjoy the equity in your home and the lower mortgage payments.

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