Today's market for home lending is one full of opportunities and obstacles. Mortgage interest rates are not far off from all-time lows (mostly around 5% or below at time of this post). Home prices are attractive and arguably at their low point. HOWEVER....
Lenders and mortgage insurance companies have been tightening their guidelines, making it harder for consumers to take advantage of these low rates and prices. It seems every week a new restriction or extra cost is announced.
Here is what we know is coming around the bend:
- a .25% increase in the FHA Annual M.I. Premium. This increase in your mortgage insurance will increase your payment and reduce your buying power. FHA Case numbers assigned 4/18, or after, will be subjected to this higher premium. Payments would increase by over $41 on a $200,000 loan.
- changes to loan officer compensation. There is still, with just a couple of weeks to go before this rule takes effect, much debate on how this will impact "pricing" for the consumer. What we do know is that it will reduce the consumer's choices and that lenders will be increasing their margins to cover the potential costs that they've not been able to measure under these new compensation rules.
- higher rates. OK. I don't own a crystal ball or know how to use one but all the forecasts are for higher rates. As the economy shows a sign of recovery, the Fed will be forced to raise their rates. Money will flow toward the stock market and out of the bond market requiring lower bond prices and thus higher mortgage rates. The question is only "when and how high"?
So we know about those changes. Here are some changes that are rumored to happen in the months ahead:
- FHA to increase down payment requirements from 3.5% to five or even ten percent.
- Conventional loans to restrict Loan-to-Values on refinances and purchases (even more than they already have)
- higher credit score requirements (does anyone remember when you didn't even need a credit score for a FHA loan?)
- Fannie Mae and Freddie Mac to be disolved. The uncertainty of how the market will function with these insuring agencies is ominous. It could foster competition from private investors but will likely suggest more risk which translates into higher rates or even more restrictive underwriting.
But here is the thing. In spite of all this doom and gloom, people will still buy houses and they will obtain mortgages to pay for them. And there will be loan officers to guide them through the process. Now, more than ever, consumers need a knowledgeable and trustworthy loan officer to help them navigate their way through this crazy world of mortgage lending.
My message today is one of urgency. If you, or someone you know, is in the market for a home or considering a change to your current mortgage, then please contact me today as I strongly believe you'll have more attractive options now than you will later.
Wednesday, March 16, 2011
Wednesday, January 19, 2011
FHA Extends Suspension of Anti-Flipping Rule
FHA announced that the suspension of the Anti-Flipping Rule has been extended through January 2012.
This means that homebuyers using FHA financing to purchase a home will be allowed to use this financing on homes that are being flipped (technically speaking: bought, renovated and sold within 90 days).
This is great news as it allows that excess inventory of homes on the market that need some TLC (some more than others) can be renovated and sold to a larger pool of buyers.
All sides win:
- seller wins because investors are more willing to buy
- buyer wins because they have newly renovated homes to choose from, which they can use the popular FHA financing toward (only 3.5% down payment required)
- community wins because delapitated homes are being fixed up
- homeowners in the area win because it gets the extra supply of homes off the market, which will help home values
- FHA and mortgage lenders win because these loans are performing well
- Realtors win because they have better products for their clients and they continue to have access to the loan program that allows the buyers to close on these homes
It is refreshing to have good news come from HUD and FHA.
Should you or someone you know be considering purchasing a home for renovation or if you are looking for one of these renovated homes, please contact me for more information.
And read this article from the LA Times for more insight into this rule.
http://articles.latimes.com/2011/jan/16/business/la-fi-harney-20110116
This means that homebuyers using FHA financing to purchase a home will be allowed to use this financing on homes that are being flipped (technically speaking: bought, renovated and sold within 90 days).
This is great news as it allows that excess inventory of homes on the market that need some TLC (some more than others) can be renovated and sold to a larger pool of buyers.
All sides win:
- seller wins because investors are more willing to buy
- buyer wins because they have newly renovated homes to choose from, which they can use the popular FHA financing toward (only 3.5% down payment required)
- community wins because delapitated homes are being fixed up
- homeowners in the area win because it gets the extra supply of homes off the market, which will help home values
- FHA and mortgage lenders win because these loans are performing well
- Realtors win because they have better products for their clients and they continue to have access to the loan program that allows the buyers to close on these homes
It is refreshing to have good news come from HUD and FHA.
Should you or someone you know be considering purchasing a home for renovation or if you are looking for one of these renovated homes, please contact me for more information.
And read this article from the LA Times for more insight into this rule.
http://articles.latimes.com/2011/jan/16/business/la-fi-harney-20110116
Wednesday, January 12, 2011
Why Can't I Get That Rate?
"Why can't I get that rate?"
Unfortunately, we may hear this question more frequently in the coming months. Fannie Mae and Freddie Mac have recently announced changes to their "Loan-Level Price Adjustments". This risk-based pricing model has been around for awhile but the GSEs are about to take it to another level.
Lenders publish rate sheets daily (often multiple times a day). When a loan officer is pricing a loan for a client they have to take into consideration other factors such as credit score, Loan-to-Value, loan purpose, property type, etc. Each of these factors can effect the pricing, and usually in a negative way.
For example, someone with a 700 credit score wishes to refinance their primary residence at a loan amount that leaves them with 20% equity. Not only are they paying off their current mortgage, but they are also accessing another $20,000 for some home improvements (thus making this a "cash-out" refinance).
Let's add up the pricing adjustments on this 30 year fixed mortgage: First, there is a hit to the price of 1.000% for having a score of 700 (which isn't all that bad, by the way) and because it is a cash-out refinance there is another hit of .75%. Now, if the home happens to be in an "adverse market" there is another hit of .25% to the price.
Now thankfully these adjustments are not to the "rate", however this 2% in price adjustments can easily increase the available rate by .375%. On a $200,000 loan that extra .375% costs the homeowner an extra $44.57 per month. Over thirty years that is an extra $16,045!!!
Even a borrower with an 800 score and 20% equity gets hit with a .25% price adjustment. That is just plain unfair.
Unfortunately Fannie and Freddie have taken a model that is supposed to reward quality (low-risk) borrowers and made it one that punishes ALL borrowers but only punishes the best borrowers a little.
Homeowners and prospective homebuyers must make sure that a qualified loan officer provides an accurate rate quote based on all of the qualifying criteria BEFORE committing to the borrowing process. I always review several options to insure that the best financing is made available.
At Home Lending Source, we've not yet imposed these new pricing adjustments but they certainly will be in effect by April 1. Rates are still very attractive so I recommend calling NOW to research your best options tailored specifically to your situation.
You can read more about LLPAs here:
http://themortgagebuzz.com/2011/01/06/
Unfortunately, we may hear this question more frequently in the coming months. Fannie Mae and Freddie Mac have recently announced changes to their "Loan-Level Price Adjustments". This risk-based pricing model has been around for awhile but the GSEs are about to take it to another level.
Lenders publish rate sheets daily (often multiple times a day). When a loan officer is pricing a loan for a client they have to take into consideration other factors such as credit score, Loan-to-Value, loan purpose, property type, etc. Each of these factors can effect the pricing, and usually in a negative way.
For example, someone with a 700 credit score wishes to refinance their primary residence at a loan amount that leaves them with 20% equity. Not only are they paying off their current mortgage, but they are also accessing another $20,000 for some home improvements (thus making this a "cash-out" refinance).
Let's add up the pricing adjustments on this 30 year fixed mortgage: First, there is a hit to the price of 1.000% for having a score of 700 (which isn't all that bad, by the way) and because it is a cash-out refinance there is another hit of .75%. Now, if the home happens to be in an "adverse market" there is another hit of .25% to the price.
Now thankfully these adjustments are not to the "rate", however this 2% in price adjustments can easily increase the available rate by .375%. On a $200,000 loan that extra .375% costs the homeowner an extra $44.57 per month. Over thirty years that is an extra $16,045!!!
Even a borrower with an 800 score and 20% equity gets hit with a .25% price adjustment. That is just plain unfair.
Unfortunately Fannie and Freddie have taken a model that is supposed to reward quality (low-risk) borrowers and made it one that punishes ALL borrowers but only punishes the best borrowers a little.
Homeowners and prospective homebuyers must make sure that a qualified loan officer provides an accurate rate quote based on all of the qualifying criteria BEFORE committing to the borrowing process. I always review several options to insure that the best financing is made available.
At Home Lending Source, we've not yet imposed these new pricing adjustments but they certainly will be in effect by April 1. Rates are still very attractive so I recommend calling NOW to research your best options tailored specifically to your situation.
You can read more about LLPAs here:
http://themortgagebuzz.com/2011/01/06/
Monday, August 30, 2010
1% = 10%
For those trying to predict the "bottom" of the real estate market for maximum savings, please keep this in mind.
Every 1% increase in home loan rates decreases the buying power of an indiviual by 10% in home price. Ths means that if you qualify for a home priced at $200,000 today and interest rates increase 1%, the amount you qualify for would be reduced to approximately $180,000 to maintain the same payment.
This is a good example of how important it is to take advantage of today's opportunities before there's even a slight change higher in rates.
There has been a lot of "Fed talk" recently that exposes the wide range of opinions on which direction the Fed will take and how volatile our mortgage rate environment is. We've been spoiled with Fed intervention and a series of international events that have kept us at record lows. While I can't predict the "when", I can tell you that it is only a matter of time before rates return to more traditional levels.
Prospective buyers: get pre-approved and go see what is out there for you.
Realtors: please share this tid-bit of info with your clients. This may get them off that proverbial fence.
Homeowners: I'm amazed to find so many who have yet to refinance into better terms. Let's talk. If we can't get you qualified, we'll formulate a plan to get you there.
Every 1% increase in home loan rates decreases the buying power of an indiviual by 10% in home price. Ths means that if you qualify for a home priced at $200,000 today and interest rates increase 1%, the amount you qualify for would be reduced to approximately $180,000 to maintain the same payment.
This is a good example of how important it is to take advantage of today's opportunities before there's even a slight change higher in rates.
There has been a lot of "Fed talk" recently that exposes the wide range of opinions on which direction the Fed will take and how volatile our mortgage rate environment is. We've been spoiled with Fed intervention and a series of international events that have kept us at record lows. While I can't predict the "when", I can tell you that it is only a matter of time before rates return to more traditional levels.
Prospective buyers: get pre-approved and go see what is out there for you.
Realtors: please share this tid-bit of info with your clients. This may get them off that proverbial fence.
Homeowners: I'm amazed to find so many who have yet to refinance into better terms. Let's talk. If we can't get you qualified, we'll formulate a plan to get you there.
Thursday, July 22, 2010
Making Sense of the Housing Numbers
Mortgage Market Guide Chairman and CEO, Barry Habib, recently spoke on Fox Business News about the state of the housing market. Barry offered some valuable insight that I believe is worth sharing.
Click here to view:
http://video.foxbusiness.com/v/4210331/making-sense-of-the-housing-numbers
Barry tells us that this is a "market of opportunity". Due to a variety of economic factors across the globe, our mortgage rates continue to bounce off of all-time lows. Couple that with aggressive home prices and the incentives to buy are hard to resist.
Of course, you have to qualify for the loan and lenders have tightened up their guidelines so some will be left out. Some would say this is an "over-correction" but others would argue that reasonable lending standards are being employed. Personally, I'd like to see programs offered again for the borrower with excellent credit and equity in the home without having to fully document their income. The self-employed are a segment of our borrowing population that have been left out in the cold since the Mortgage Meltdown and I believe there are ways to include them.
Barry reminds us that real estate markets are highly localized and that factors such as the local economy and housing inventory will play a part in the "deal" you can get on a new home and how quickly you can expect it to appreciate. This may not be the time to expect big returns on a six month flip but if you are looking to stay in a home for several years the returns could be quite healthy.
Eventually the Fed will have to take their foot of the gas and when they do we can expect these rates to climb back up. So, if you are in position to buy or if you think you'll be in your current home for a few more years and wish to improve your terms, now is the time to seek advice.
Opportunity is knocking. Make sure you answer the door.
Please share this with anyone you know and care about who may be considering a purchase or refinance of their own. They will thank you.
Click here to view:
http://video.foxbusiness.com/v/4210331/making-sense-of-the-housing-numbers
Barry tells us that this is a "market of opportunity". Due to a variety of economic factors across the globe, our mortgage rates continue to bounce off of all-time lows. Couple that with aggressive home prices and the incentives to buy are hard to resist.
Of course, you have to qualify for the loan and lenders have tightened up their guidelines so some will be left out. Some would say this is an "over-correction" but others would argue that reasonable lending standards are being employed. Personally, I'd like to see programs offered again for the borrower with excellent credit and equity in the home without having to fully document their income. The self-employed are a segment of our borrowing population that have been left out in the cold since the Mortgage Meltdown and I believe there are ways to include them.
Barry reminds us that real estate markets are highly localized and that factors such as the local economy and housing inventory will play a part in the "deal" you can get on a new home and how quickly you can expect it to appreciate. This may not be the time to expect big returns on a six month flip but if you are looking to stay in a home for several years the returns could be quite healthy.
Eventually the Fed will have to take their foot of the gas and when they do we can expect these rates to climb back up. So, if you are in position to buy or if you think you'll be in your current home for a few more years and wish to improve your terms, now is the time to seek advice.
Opportunity is knocking. Make sure you answer the door.
Please share this with anyone you know and care about who may be considering a purchase or refinance of their own. They will thank you.
Tuesday, May 18, 2010
I Keep Holdin' On
We are pleasantly surprised by the fact that our mortgage rates are still so low. As you'll note in my previous posts, we've been expecting rates to rise since the Fed's purchasing of Mortgage Backed Securities ended in March, however we're now seeing rates as low as they've ever been, thanks in large part to the economic turmoil in Greece, Portugal and other countries, which are having a negative impact on the Euro. Once again this has driven investors toward our safe haven U. S. bond market, driving up the bond price and lowering our mortgage rates.
The homebuyer tax credit is gone, but there are still lots of homes for sale and those sellers don't have the tax credit to use as an incentive any longer. Those who are able to are more likely to incent buyers with lower prices.
Super-low interest rates and lower prices = great opportunity. No strings attached. No government intervention. Just the market working to let you know that now could be a great time to buy (or to refinance if you've still not done so).
While these rates have been holding on, they won't forever. Inflationary pressures and a rebounding economy are both around the corner and will both be bringing these rates up to more traditional levels soon.
Please share this message with anyone you know and care about who is considering that home purchase or who has not yet refinanced and I'll answer any and all of their questions.
I can be reached at 615-627-4869 or at twiggins@affsmortgage.com. Thank you.
The homebuyer tax credit is gone, but there are still lots of homes for sale and those sellers don't have the tax credit to use as an incentive any longer. Those who are able to are more likely to incent buyers with lower prices.
Super-low interest rates and lower prices = great opportunity. No strings attached. No government intervention. Just the market working to let you know that now could be a great time to buy (or to refinance if you've still not done so).
While these rates have been holding on, they won't forever. Inflationary pressures and a rebounding economy are both around the corner and will both be bringing these rates up to more traditional levels soon.
Please share this message with anyone you know and care about who is considering that home purchase or who has not yet refinanced and I'll answer any and all of their questions.
I can be reached at 615-627-4869 or at twiggins@affsmortgage.com. Thank you.
Wednesday, March 31, 2010
Thank You, Fed. Now what?
On behalf of the American homeowner, I'd like to say, "Thank You" to our Federal Reserve for buying $1.25 Trillion in Mortgage Backed Securities over the last year and a half. Their intervention has helped keep mortgage interest rates at all-time lows, allowing homeowners to refinance into more affordable mortgages and allowing homebuyers to achieve the dream of homeownership with less strain on their budget in an economy that requires a more discriminating look at how we spend.
The Fed's program of purchasing has ended. Now the big question is about to be answered. What will rates do now that the Fed isn't buying these bonds? My research tells me that most experts agree that rates will go up. With less demand for these bonds, prices will be forced down and mortgage rates will be forced up. We expect to see an initial spike in rates, which may be tempered as less mortgages get written. At the very least we expect an increase in volatility.
So, what does this mean to you? That depends on your situation:
- the homeowner: if you haven't refinanced out of your Adustable or High-Rate loan, this could be your last chance. Qualifying is still a challenge for many, but if you qualify, it is worth one last look.
- the prospective home buyer: with rates still hovering near all-time lows, homebuyer tax incentives and low home prices this is the perfect opportunity to buy whether you are a first timer or even if you are looking to trade up (or down).
- the real estate professional: while we know that people will continue to buy homes at higher rates and without tax incentives, it is our responsibility to let the people know that TIME IS OF THE ESSENCE if they want to take advantage of these opportunities. All good things must come to an end and unfortunately we may very well see the end staring us in the face. Think of how grateful your buyers will be when they see how you encouraged them to act and others are accepting higher rates, paying higher prices and NOT receiving tax credits.
Now that rates are subject to increased volatility, I'll be posting more regularly, commenting on how the market will react without the Fed's support. Stay tuned and hold on to your hat!
The Fed's program of purchasing has ended. Now the big question is about to be answered. What will rates do now that the Fed isn't buying these bonds? My research tells me that most experts agree that rates will go up. With less demand for these bonds, prices will be forced down and mortgage rates will be forced up. We expect to see an initial spike in rates, which may be tempered as less mortgages get written. At the very least we expect an increase in volatility.
So, what does this mean to you? That depends on your situation:
- the homeowner: if you haven't refinanced out of your Adustable or High-Rate loan, this could be your last chance. Qualifying is still a challenge for many, but if you qualify, it is worth one last look.
- the prospective home buyer: with rates still hovering near all-time lows, homebuyer tax incentives and low home prices this is the perfect opportunity to buy whether you are a first timer or even if you are looking to trade up (or down).
- the real estate professional: while we know that people will continue to buy homes at higher rates and without tax incentives, it is our responsibility to let the people know that TIME IS OF THE ESSENCE if they want to take advantage of these opportunities. All good things must come to an end and unfortunately we may very well see the end staring us in the face. Think of how grateful your buyers will be when they see how you encouraged them to act and others are accepting higher rates, paying higher prices and NOT receiving tax credits.
Now that rates are subject to increased volatility, I'll be posting more regularly, commenting on how the market will react without the Fed's support. Stay tuned and hold on to your hat!
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