Mortgage Rates Rise

The average 30 year mortgage rate rose to a six month high. The average 30 year mortgage rate climbed to 4.84 from 4.66% Many experts predict mortgage rates will continue to sharply rise in the near term. Rates have continued their upward trend despite the Fed announcing to continue their treasury purchasing policy.

The Feds treasury purchasing program has been a major component in rates hitting all time lows. Many experts are surprised that rates continued to climb even after the Fed's announcement.  

Mortgage Rates Continue to Climb

Mortgage rates continue to climb to their 5 month high as investors sell treasuries. This past week rates increased .15% to 4.61% on the average 30 year mortgage. The previous 30 year average was 4.46%. Many borrowers that haven't taken advantage of these records low rates are still scrambling to qualify for a mortgage. Borrowers should speak with their mortgage professional to see if they can qualify and whether they are able to save money refinancing their present mortgage.

Mortgage Applications are Down

Mortgage applications fell last week .09%. While purchase applications increases 1.8%, refinance applications, which are a greater portion of the mortgage application universe, decreased 1.4%.

The increase in the purchase applications is a good sign but it may only be a one time occurrence. It may not be a sign of a strengthening real estate marketing. We will have to wait for more numbers to see if purchase applications continue to trend upwards. Expect refinance applications to fall if mortgage rates continue to rise.

New Mortgage Applications Up

New mortgage applications are up. Spurred on by record low mortgage rates new mortgage applications were up 3.4%. Refinance applications were also up 9% last week and about 30% over the past month.

Rates Drop Even More

30 year mortgage rates drop to a new low of 4.57%.  This may spark the housing market and an increase in refinance applications. Homeowners and home buyers may have the ability to receive some of the lowest rates in history.

Low Mortgate Rates but Few Borrowers

Mortgage rates are close to an all time low yet borrowers are reluctant to take advantage of these historic rates. Even with rates averaging 4.8% for a 30 yr mortgage, refinance applications dropped for the first time in this month.

There are a variety or reasons affecting this mortgage market. Many homeowners are may be just tired of this refinance roller coaster. Homeowners have already refinanced recently and although these rates are attractive and could potentially save them money over the long term don't want to concede that they may have spent money for no reason if they refinance again. Some homeowners are underwater and unable to refinance or have damaged credit due to the downturn in the economy. Whatever the reason, borrower should consider numbers before making a decision to refinance. If they are able to save money by refinancing they should contact their mortgage professional to review their options. It's unlikely that these rates will be this low for long and its probably just as unlikely that we'll be seeing these rates again any time in the near future.

Current Mortgage Rates

Current mortgage rates are close to all time lows. This is a great opportunity for borrowers and potential home owners to refinance or purchase a new home. Low financing rates can save borrowers thousands of dollars over the life of the loan. The average 30 year mortgage rates were 4.78% this week. Thats just a tad above the all time low 30 year mortgage rate of 4.71%.

You should contact a mortgage professional to see what rate you qualify for:

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Low Rates Have Changed the Paradigm

The recent low mortgage rates have changed the point at which many mortgage professionals fell that it is advantageous for borrowers to refinance. In the past, many mortgage professionals believed that borrowers should refinance if they were able to reduce their present mortgage rate at least 1 point, however with the recent low rates many people believe this has changed. Since rates are so low, the small change is a greater percent of the original rate.

In the past a 1 point reduction on a rate of  8% was 12.5% decrease of the original interest rate. Now with rates a lot lower a .75 point reduction on a rate of 5.25% is a 14.3% decease of the original interest rate. If points continue to decline borrowers may find it more advantageous to refinance with less of a reduction from the original rate. Borrowers should be aware of this new paradigm as rates continue to decrease.

Rates Drop

Rates have dropped to near lows for the year. Many people predicited rates to continue to rise however this may be a great opportunity to refinance. Contact your mortgage professional to see if there is an opportunity for you to save money. Let them share the numbers with you so you can determine if the cost of refinancing make sense for you. Typically, after refinancing there is a specific point in time where a borrower begins to save money subtracting the cost of the transaction.

Good luck and don't forget to take advantage of these great rates!

The Tax Credit Has Ended.

We'll update you shortly on how this has affected mortgage applications and the purchase market.

Home Buyer Tax Credit Ends Tomorrow

The home buyer tax credit ends tomorrow. Many thought that the tax credit would be extended. Unfortunately, it was not. Home buyers have been rushing to beat the dead line in hopes of receiving a $8,000 tax credit. Some experts believe that home prices will drop without the tax credit. Additionally, rising mortgage rates may also negatively affect the housing market as well. In all, home prices are still relatively low compared to the last 5 years and mortgage rats are still at all times lows.

No Closing Cost Mortgage

Beware of the no closing cost mortgage. Mortgage companies are in business to make money. Mortgage professionals are not going to give something away for nothing. Keep an eye on your interest rate and points when opting for a no closing cost mortgage. Borrowers can expect to pay higher interest rates or points and potentially can pay more over time with this type of option. Compare other mortgage options to see which is the best scenario for your particular situation.

Mortgage Applications Rise

Mortgage applications rose by the most in the past seven weeks as the home buyer tax credit helped spark the biggest rise in purchases since January. Expect mortgage applications to fall once the tax credit ends.

Tax Credit Almost Over

Potential home buyers, keep in mind that the tax credit ends April 30th. If you plan on purchasing a home the tax credit is a nice benefit. Receive $8,000 tax credit for a first time home buyer and $6,500 tax credit for repeat home purchases. Speak with your mortgage professional and realtor about specifics to the program. You can also contact me through the contact form on my blog.

Mortgage Rates Starting To Rise

Looks like mortgage rates are starting to rise. If you we're waiting to refinance you may want to think about move foward sooner rather than later. I'll start posting rates on a regular basis to help borrowers looking for quick rate information.

Existing Home Sales Fall while Supply Rises

Existing home sales dropped .06% in Feburary to 5.02 million annual rate. This is the third straight month that purchase market has fallen. It is also the largest decrease in 8 months signifying a slower than expected recovery. Adding to the issue, houses for sale increased 312,000 to 3.59 million from January. The increase marked the greatest increase in homes for sale since April 2008.

The increasing home inventory is having an adverse affect for borrowers attempting to refinance. Typically, the more inventory on the market the lower home values will go. As home values depreciate homeowners' equity will decrease. As a borrowers loan to value (loan amount/home value) increases, their refinancing options decrease.

Although, it may become exceedingly difficult for homeowners with high ltv's to refinance, it doesn't mean that it's impossible. There are still options available for homeowners with high ltv's such as FHA loans. Some borrowers can obtain financing up to 97% through the FHA loan program. Depending upon a borrowers specific situation there may be other options as well. 

Feel free to contact me about different options available to you.

Obama Foreclosure Ban - Refinance News Update!

The Obama Administration has recently been discussing placing a moratorium on foreclosures. Obama's plan would place restrictions on banks foreclosing on homeowners unless they have been considered for the Housing Affordable Modification Program (HAMP).

Banks would be required to contact borrowers that over 60 days or more late on mortgage payments to discuss qualifications for HAMP. This legislation is Obama's Administration's attempt to push the banks into providing more assistance to homeowners in trouble. Many banks have been circumventing Obama's request to provide more assistance to borrowers even though they previously received TARP money. Banks are also concerned that this legislation could potentially create additional costs by delaying the forecolusore process by 2 more months.


"I'm sorry Obama but don't you think you should of put this type of legisliation in place when you gave banks tax payer money. Its a little late to be trying to force them to help borrowers now - but I guess its still better late than never."

Page 3 of the GFE

    Page 3 of the GFE contains important instructions and information that will help you shop for the best loan for you.

Understanding which charges can change at settlement

    There are three different categories of charges that you will pay at closing: charges that cannot increase at settlement; charges that cannot increase in total more than 10%; and charges that can increase at settlement.  You can use this as a guide to understand which charges can or cannot change.  Compare your GFE to the actual charges listed on the HUD-1 Settlement Statement to ensure that your lender is not charging you more than permitted.

     Written list of settlement service providers

    A written list will be given to you with your GFE that includes all settlement services that you are required to have, and that you are allowed to shop for. You may select a provider from this list or you can choose your own qualified provider.  If you choose a name from the written list provided, that charge is within the 10% tolerance category.  If you select your own service provider, the 10% tolerance will not apply.

    Even though you may find a better deal by selecting your own provider, you should choose the provider carefully as those charges could increase at settlement.  If your loan originator fails to provide a list of settlement service providers, the 10% tolerance automatically applies.



Using the tradeoff table

The “tradeoff table” on page 3 will help you understand how your loan payments can change if you pay more settlement charges and receive a lower interest rate or if you pay lower settlement charges and receive a higher interest rate.

    The loan originator must complete the first column with information contained in the GFE.  If the loan originator has the same loan product available with a higher or lower interest rate, the loan originator may choose to complete the remaining columns. If the second and third columns are not filled in, ask your loan originator if they have the same loan product with different interest rates.

Using the shopping chart

    You can use this chart to compare similar loans offered by different loan originators.  Fill in each column with the information shown in the “Summary of your loan” section from the first page of all the GFEs you receive.  Compare each offer and select the best loan for you.

Page 2 of the GFE

    The price of a home mortgage loan is stated in terms of an interest rate and settlement costs. Often, you can pay lower total settlement costs in exchange for a higher interest rate and vice versa.  Ask your loan originator about different interest rates and settlement costs options.




Your Adjusted Origination Charges, Block A

   

    Block 1, “Our origination charge” contains the lender’s and the mortgage broker’s charges and point(s) for originating your loan. 

    Block 2, “Your credit or charge point(s) for the specific interest rate chosen.”

o    If box 1 is checked, the credit or charge for the interest rate is part of the origination charge shown in Block 1.
o    If box 2 is checked, you will pay a higher interest rate and receive a credit to reduce your adjusted origination charge and other settlement charges.
o    If box 3 is checked, you will be paying point(s) to reduce your interest rate and, therefore, will pay higher adjusted origination charges.

Note: A point is equal to one percent of your loan amount.

    After adding or subtracting Block 2 from Block 1, “Your Adjusted Origination Charge” is shown in Block A.

    In the example shown, the origination charge is $6,750.  No points were paid to reduce the interest rate. Instead, because of the interest rate chosen, the offer contains a $3,000 credit that reduces the adjusted origination charge to $3,750. 


Your Charges for All Other Settlement Services, Blocks 3 through 11

    In addition to the charges to originate your loan, there are other charges for services that will be required to get your mortgage.  For some of the services, the loan originator will choose the company that performs the service (Block 3). The loan originator usually permits you to select the settlement service provider for “Title services and lender’s title insurance” (Block 4).  “Owner’s title insurance” is also disclosed (Block 5).  Other required services that you may shop for are included in “Required services that you can shop for” (Block 6).



    Block 3 contains charges for required services for which the loan originator selects the settlement service provider. These are not “shoppable” services and often include items such as the property appraisal, credit report, flood certification, tax service and any required mortgage insurance.

    Block 4 contains the charge for title services, the Lender’s title insurance policy and the services of a title, settlement or escrow agent to conduct your settlement.
 
    Block 5 contains the charge for an Owner’s title insurance policy that protects your interests.   
        
NOTE:  Under RESPA, the seller may not require you, as a condition of the sale, to purchase title insurance from any particular title company. 

    Block 6 contains charges for required services for which you may shop for the provider.  Some of these items may include a survey or pest inspection.

    Block 7 contains charges by governmental entities to record the deed and documents related to the loan.
  
    Block 8 contains charges by state and local governments for taxes related to the mortgage and transferring title to the property.
 
    Block 9 contains the initial amount you will pay at settlement to start the escrow account, if required by the lender. 

    Block 10 contains the charge for the daily interest on the loan from the day of settlement to the first day of the following month. 

     Block 11 contains the annual charge for any insurance the lender requires to protect the property such as homeowner’s insurance and flood insurance. 

Total Estimated Settlement Charges

       
     “Your charges for All Other Settlement Services”, Blocks 3 through 11, are totaled in Block B.  Blocks A and B are added together resulting in the total estimated settlement charges associated with getting the loan. These Blocks are carried forward to the bottom of page 1 of the GFE.

New Good Faith Estimate

The new RESPA rules have created many changes to the industry including a additional information added to the Good Faith Estimate (GFE). A GFE is a form provided to a potential borrower by a mortgage professional to help the borrower better understand the terms of the loan and settlement charges associated with the mortgage.

The new changes to the good faith estimate were designed to help borrowers better compare different options and lenders. There is a debate on whether these changes were necessary. This is a decision for each individual and I'm sure both sides hold merit.