As many consumers face the question of which bill to pay off first, it appears that more consumers are deciding to pay off their credit cards before focusing their efforts on their mortgage.  According to the credit bureau TransUnion, the number of consumers who default on their mortgages but continue to pay their credit cards on time has remained well above normal.  This trending statistic has seen consumers that pay off their credit cards before their mortgage move from 37% before the recession hit to just over 50% currently.  These figures have led some financial experts to wonder if consumers have started to change the way that they handle their personal finances.

For some consumers, paying their credit card on time means they will have the opportunity to continue to use it in order to buy essential items such as groceries, gas and pay their utility bills.  Also, the fact that the foreclosure process can take several months is leading some consumers to focus on their short term debt while trying to get the funds to get their mortgage bills back on track.

Financial advisors are cautioning consumers that are taking this route, stating that a mortgage is the most important debt to pay off.  The negative ramifications of losing a home to foreclosure can hurt a consumer for many years.  While being late on a few credit card payments is not good for your credit score, it does not have nearly as much of an adverse affect on one’s credit rating.  This is why financial experts would still advise consumers to pay off their mortgage loans before making payments on their credit cards.

Last week U.S. mortgage applications increased at their fastest pace in the previous two months thanks in large part to another drop in interest rates.  According to the Mortgage Bankers Association, its seasonally adjusted index of mortgage applications, which includes both refinancing and home purchase mortgages, rose by 8.2% for the week ending May 6^th.

According to Michael Fratantoni, MBA’s vice president of research, the interest rates dropped again last week because the Federal Reserve continued its asset purchase program.  The reduction in interest rates led many current and prospective homeowners to apply for a home mortgage, trying to take advantage of these lower interest rates.  Over the last four weeks the Mortgage Bankers Association has seen its refinance index increase by about 18%.  However, even though this index has been steadily increasing the past month or so, refinance application volumes remain 50% below what they were at this time last year.

Looking at all of MBA’s recent index numbers, the refinance figures dominated the large increases seen in mortgage applications.  Refinancing application requests climbed 9% this past week, while the figure for home purchase loan requests only rose by 6.7%.  Also, the refinancing figures accounted for 63.1% of total loan applications, up from 62.7% in the week before.  These index numbers are at their highest levels since late March.

According to the real estate data collection company, RealtyTrack, the state of Michigan current has more than 95,000 in foreclosure.  Going through a foreclosure can be quite stressful and unsettling for any person, which is why a new program has been established to help these homeowners avoid the foreclosure process.  The new program is called Step Forward Michigan and aims to bring relief to families that qualify.

The Step Forward Michigan program was established by the Michigan Homeowner Assistance Non-Profit Housing organization with the help of some federal funding.  The Step Forward Michigan program hopes to help about 50,000 homeowners over the duration of the program, but so far only 4,000 homeowners have applied.  Program leaders are hoping to get the word out about this foreclosure program so that more homeowners across the state can benefit.

While programs such as the Step Forward Michigan program are out there for homeowners struggling to make their mortgage payments, it can be frustrating trying to work with the lenders and secure a loan modification.  Even though it may be tempting to just walk away from a home that you can no longer afford, credit counselors warn that doing this is the worst possible thing you can do.  The negative impact walking away from a home mortgage loan would have on your credit score would be very difficult to overcome and would take years to fully recover.  Rather than walking away from your current mortgage, credit counselors recommend trying to secure a loan modification or applying to all of the foreclosure assistance programs available to you.  This way you increase your chances of changing the terms on your home mortgage loan and saving your house from the foreclosure process.

To learn more about the Step Forward Michigan program click here.

JPMorgan, one of the lenders that were sued for wrongfully foreclosing on military members’ homes, recently agreed to pay a $56 million to settle claims that it overcharged military personnel on their mortgages.  According to the settlement, JPMorgan will pay more than $27 million to roughly 6,000 service members who were overcharged on their mortgages, lower interest rates on military members’ home loans, and return the homes that were wrongfully foreclosed upon.

The lawsuit was brought forth on the basis that one of JPMorgan’s bank units made repetitive errors with the way they handled the mortgages of military personnel.  Under the Servicemembers Civil Relief Act that was passed in 1942, active-duty military personnel are given different terms on their home loans to help reduce the amount of financial stress these men and women feel while on active duty.  JPMorgan broke several of the protocols associated with the Servicemembers Civil Relief Act, which led to the recent lawsuit.

These home mortgage errors were brought to the attention of JPMorgan but Marine Captain Jonathon Rowles, who sued the bank in federal court last year over how the mortgage unit handled his $255,000 loan.  Rowles stated that Chase Home Finance LLC failed to honor his request to lower his interest rate to the mandatory 6% for active-duty servicemembers.  After he was finally granted his request, the mortgage banker forced him to reapply for the protection four times in one year.

This lawsuit serves as a reminder for homeowners to pay close attention to their home mortgage loan details, especially if they are having difficulties making their monthly payments.  It is possible that these large lenders could be making a mistake servicing your loan, which you will want to bring to their attention as soon as you spot an error.

As a direct result of mortgage rates dropping last week for the first time in seven weeks, the amount of new mortgage applications increased by 2.3%.  This 2.3% increase comes on the heels of a 3.9% decrease from the week before, which lowered the number of mortgage applications to an all time low since December of 2009.  Even though many Americans suffer from negative equity, 71% of all of the loan applications for the week ending December 31^st were for refinancing existing mortgages.  This figure is a slight increase over the 70.3% seen in the previous week.

President of Massachusetts-based Mortgage Master, Paul Anastos, has an interesting take of the current mortgage market.  Anastos believes that the current mortgage rates are unlikely to continue to rise, but also will not return to the record low levels we were recent seeing.  He believes that the struggling housing market is falling victim to buyer’s confidence.  With so many Americans either unemployed or underemployed they are having a hard time paying all of their bills each month.  Add in the fact that many people are not sure that they will continue to have a job in the coming months buying a new house does not seem like a wise idea for most consumers.

Even though most consumers realize that this is a great time to buy a new house with the low mortgage rates and reducing housing costs, the fact that most people are not confident about their financial stability is really hurting the housing market.  As soon as people are able to confidently make big purchases such as buying a larger home the housing market will surely start to pick back up and climb towards the level it was at before the current recession hit.

If you ever plan on purchasing a home of your own you will need to qualify for a home purchase loan.  Home purchase loans are also commonly referred to as mortgages or home mortgage loans.  These particular loans will provide you with the money to purchase a home of your own and start to build your own line of equity in that house.  Because a home purchase loan usually involves a large amount of money they require exceptional credit scores to qualify.  While it may be possible to receive a home purchase loan with poor credit these types of loans usually come with higher interest rates and require larger cash reserves in order to receive the loan.

When applying for a home purchase loan you will be required to put your home up as collateral for the loan.  This fact makes staying current on your mortgage payments extremely important.  If you ever fall behind on your home purchase loan payments and are in jeopardy of defaulting on your loan the bank has the right to foreclose on your house and sell it on the open market to recoup the amount of the home purchase loan.  It is recommended that you do not spend more than 30% of your monthly income on your monthly home purchase loan payments.  Spending this amount of money will allow you the financial room to afford your other monthly expenses while comfortably paying your mortgage as well.

While having good credit is essential when applying for a home mortgage loan there are some other tips that you can follow to help ensure that you are approved for a new mortgage.  Saving a large sum of money for a down payment will show good faith to a lender and will also reduce the costs of your home long term.  By reducing the long term costs of your home you will reduce the total amount you require in a home purchase loan making it easier to qualify.  Another tip to follow is to get pre-approved for a home purchase loan.  Getting pre-approved will allow you to get a feel for how much a lender is willing to loan you so that you can house hunt within the appropriate price range.

A home purchase loan can be one of the most exciting loans you ever apply for.  These loans are necessary when purchasing your own home.  While these particular loans may be exciting they are also quite difficult to obtain.  With most home purchase loans being for a large sum of money lenders will require the loan applicant to have an exceptional credit history.  Along with this good credit score requirement there may be other stringent requirements set forth by the lender.  These rules are in place to help protect the lender and loan applicant so that no one enters into a loan agreement that they can not afford and risk losing their home.