Category Archives: Mortgage Rate Trends and Analysis

Commentary on mortgage rate trends

Mortgage Rate News for Friday, October 24, 2014

arrow-pointing-down-bigAfter last week’s dramatic drop, mortgage rates have continued to decline at a more sedate pace. For you, that means lows not recorded since June of 2013.

The average rate for 30-year fixed-rate mortgages fell to 3.92%, down from 3.97% last week. 15-year fixed-rate mortgages were down 10 basis points to 3.08%, and 5/1 ARMs dropped only slightly, from 2.92% to 2.91%.

Are Lenders Easing Up on Jumbo Mortgage Loan Requirements?

imagesIn today’s real estate market, lenders are hungry for borrowers who are looking to take on jumbo mortgages. As a result, some lenders have loosened their requirements when it comes to what it takes to qualify.

Underwriting is more strict than it was years ago because of new laws lenders must abide by that were passed in early 2014. But if you’re looking for a jumbo mortgage, there are some choices of lenders and options available.

What Is a Jumbo Mortgage?

A jumbo mortgage is exactly what it sounds like: a loan for larger homes that are priced at $417,000 or more in some areas. In more expensive locations, the price point for a jumbo mortgage starts at $625,500 and works up from there.

They are referred to as “jumbo” loans because they exceed the conforming limit (or max loan amount) that Fannie Mae and Freddie Mac will buy. Note that the conforming limits vary by county and market. Typically, more expensive housing markets allow for loans at $625,500 or more.

Who Is Qualifying?

It’s safe to say that several lenders are relaxing their requirements on what it takes to qualify for one of these jumbo mortgages. That said, there are still a few underwriting guidelines you should be aware of. They’re guidelines as there are no hard and fast rules across the board. The requirements can vary by lender and location when it comes to determining what a financial institution is looking for a borrower to have.

You’ll increase your chances of qualifying based on the following:

  • A debt-to-income ratio of 38-45 percent is recommended.
  • Traditionally, lenders have looked for borrowers to have a 720 credit score or better. As with any loan, the higher your credit score, the more likely you are to be approved (and with a better interest rate). Many lenders have lowered their credit requirements, so if your credit score is below 720, shop around to ensure you’re getting the best rate.
  • Lenders also like to see that you have six to 12 months of mortgage payments in reserves, which makes the loan less risky for them.
  • If you’re looking to get a jumbo mortgage for a second property, such as an investment or rental, inquire at different banks as their policies all differ on this. There are banks that will approve it.

How Lenders Are Being Lenient in Favor of Securing Jumbo Mortgages

Again, lenders are eager to start finding big borrowers as the housing market recovers. They’re willing to be more lenient if you at least meet a few of their requirements. Here are some of them, but keep in mind they change as often as the market does.

Interest rates for jumbo loans have been even lower than traditional 30-year fixed-rate mortgages for the past few months. Private mortgage insurance is also not required for many jumbo mortgages. With low interest rates, no PMI, and low down payments, it seems like now is the time to buy.

Some lenders are only requiring down payments of 10-20 percent, according to CNN Money. Lower down payments are attractive to those that can afford jumbo mortgages, as it means they will be able to invest more money elsewhere for a better return.

Even though falling property values are a big concern for lenders, the real estate markets in popular places, such as DC, New York, and San Francisco, are booming. The risk is worth it to lenders, especially since wealthier borrowers tend to default at a lower rate.

It could also be worth looking into going with a credit union for your jumbo mortgage. Credit unions are offering some of the best deals, a few going so far as to do away with down payments completely. Why? They’re in favor of building customer relationships, which means the ability to sell members on other products that they offer.

Now Is the Time to Buy

If you’re in the market for a large residential house, now might be the best time to buy. Lenders are working harder to make jumbo mortgages more attractive, and you should take advantage of it. Various lenders are in different stages of figuring out what direction they want to take with jumbo mortgages, so be diligent and shop around.

Omaha, NE Mortgage Rates and Real Estate Overview

“Put your drinks up for Nebraska,” sings Lady Gaga on her song Yoü and I. If you’ve ever been OLYMPUS DIGITAL CAMERAthere, you’ll know there’s more to America’s heartland than corn, hills and the occasional farmhouse.

Omaha has a great music scene, is one of the fastest growing cities in the country and has family friendly suburbs as welcoming as any in the Midwest. Home to five Fortune 500 companies and four Fortune 1000 companies representing the railroad, food packaging, insurance and construction industries, Omaha has a vigorous economy and is home to Warren Buffett, no less. Newsweek also listed Omaha as one of the top 10 high-tech “havens” in the nation.

Despite this, Omaha is not an especially expensive place to live. The median value of the city’s homes is currently $144,500, lower than an equivalent city such as Saint Louis. Interest rates for a 30-year fixed-rate mortgage in the area range, according to Zillow, from 4.55 percent to 4.86 percent. This results in monthly payments on an average Omaha property ranging from $586 to $603.

Whether you’re looking for a distinctive urban neighborhood like the historic Morton Meadows in midtown Omaha or a pleasant suburb like Armbrust Acres with its access to Lake Zorinsky, Omaha’s housing market has plenty of choice. Downtown Omaha has many loft units and apartment buildings, as well as proximity to the boutique shops of the Old Market Historic District.

Northwest Omaha comprises suburbs like Bennington, Irvington and Briggs, with large, affordable homes perfect for raising a family. The median sales value of Bennington homes is $235,500 and is currently increasing due to the neighborhood’s popularity. On a 30-year fixed-rate mortgage for an average Bennington property, expect to make monthly payments ranging from $941 to $969. Interest rates in the area currently stand between 4.38 percent and 4.69 percent, according to a Zillow sample.

Like any city, Omaha has rough areas. There are certainly deprived neighborhoods in the north of the city. If safety is a prime concern, stick to suburbs like Harvey Oaks to the west and Millard to the southwest of downtown Omaha. These suburbs have been popular since the 90s and are great for families. Looking for something out of town? Across the Missouri River, Council Bluffs is a small community surrounded by interesting geography with a current median home value lower than Omaha ($110,000).

Let’s hear it one more time: “Put your drinks up for Nebraska!”

 

Should you rent or buy? A new map helps answer this question

rent-vs-buyWhether it’s a challenging roommate, a long commute, or marriage (just to name a few reasons) at some point many of us decide to stop renting and take the plunge of purchasing a home. The housing market continues recovering from its 2008 crash and home prices are rising although they’re not quite back to normal. In fact, in June, the S&P/Case-Shiller Home Price Index showed that average U.S. home prices are sitting around summer 2004 levels but remain almost 20 percent off the mid-2006 peak.

Depending on where you live, prices in your area still may not have topped out and the value of your new home could increase in the next couple of years.

Is it time to pull the trigger and buy? Maybe this map could help answer this question as it depends on where you live.

Baltimore Sits at the Top for Value

Maybe you live in Baltimore. Lucky you, as it is the most valuable U.S. market for home buyers. This comes with its rent versus buying differential: a net difference of $1,160 between the two. As rents average $1,599, an average monthly mortgage payment is only $439, when based on a median $85,000 home sales price.

But it’s not the cheapest place to purchase a home. Washington County, Miss. has this distinction with its average monthly mortgage of $217 and $42,000 median home sales price.

San Francisco is Unfriendly for Buyers

If you head across the country to San Francisco, you’ll find the most expensive real estate with its average home mortgage of $4,599 and median $890,500 home value.

Maybe you just want to rent in San Francisco. This will cost you as well. The Bay Area’s six counties, which include Alameda, Contra Costa, San Francisco, Santa Clara and San Mateo, all sit in the top 10 nationally for the highest rent. This averages at more than $2,400 per month.

Good to be a renter in New York

But the City by the Bay is not the only unfriendly city. Again, across to the other coast, New York City is the least friendly for buyers as it has a rent versus buying net difference of $2,729. This bodes well for renters as the city’s average rent is $1,852 per month. This compares to an unfavorable average mortgage of $4,581per month, according to RealtyTrac data. However, there’s more to the story.

Sure, there are high real estate prices in New York (this is always the case) but some buyers actually have the advantage in the city. When looking at the four neighboring boroughs, it’s a little better for Brooklyn and the Bronx residents to buy while Queens and Staten Island are better for renters.

 

Stay Away from Hawaii

While the San Francisco Bay area causes a lot of pause for real estate, it’s not the most expensive place in the U.S.to rent. Honolulu comes in at the top with its $2,862 average monthly rent.

Living among beauty has its price.

If you’re really looking for a bargain and perhaps a less desirable venue than Hawaii, you can pay $699 per monthly rent in Montgomery County, Ark.

Now that we’ve presented you with some options, don’t fret if you find yourself living in an area that is expensive to even rent. You’re not alone. According to RealtyTrac data, in 2013 one third of Americans lived in areas with an unaffordable average rent for median income earners.

Sioux Falls, SD Mortgage Rates and Real Estate Overview

Downtown_Sioux_Falls_61Sioux Falls, South Dakota might sound familiar to many; chances are your credit card company might be based there thanks to a zero corporate income tax rate. Sioux Falls also functions as an important healthcare and retail hub for the region due to the relative remoteness and lack of comparative amenities in the surrounding areas. Four major hospitals, a mall with over 180 stores, over 70 parks and all near the Big Sioux River and the falls that give the city its titular name.

In the past decade, Sioux Falls has experienced a renaissance of arts and culture due to the plethora of new economic activity in the area. Sioux Falls’ leaders saw a need for more arts and culture in the region and hence is transforming itself hub replete with museums and art studios, cultural events and music festivals in order to appeal to a wider demographic, especially among younger residents.

It should also be noted that since South Dakota is in the middle of major food and energy producing region, the economic prospects should be relatively healthy if not steady, so for any consolation as to how other areas are relatively isolated, Sioux Falls provides many of the amenities that newcomers and natives alike will appreciate.

That being said, buyers will enjoy less expensive properties and a wider selection. The average listing price in Sioux Falls was $241,244, according to Trulia.  For a $300,000 property in Sioux Falls, payments on a thirty year mortgage will range from $900 to $1,100 each month with twenty percent down, according to Zillow. Interest rates on loans surveyed range from 4.09 percent to 4.67 percent.

Living in Sioux Falls provides various living options that will appeal to various tastes.  The best way to describe the city is a “big small town”, so plan accordingly along those lines.  As far as great options within the city limits, check out Downtown, All Saints, Riverside and the area near McKennan Hospital.   For other great options that rank among some of the most affordable real estate in the country, look at Augustana, Pettigrew Heights, North End West, West Sioux, Emerson and Whittier.

For those who want a place outside the city itself, check out Brandon, Tea, Hartford, Harrisburg and Dell Rapids.  Although the suburban areas rate around a half-hour’s drive away, the relatively sparse population in South Dakota means that traffic might be easier than other locals as well.

So even though Sioux Falls might function as its own Metropolis in one of the remote sections of the country, there is still plenty to do and enjoy here. With great neighborhoods, great activities and great opportunity to gaze at a sky full of stars, Sioux Falls is the place to be.

Mortgage Rates Ease Up

 

 

Freddie Mac announced today that fixed mortgage rates backed off this week from a two-year high.mortgage rates Lenders are now offering the 30-year home loan at an average of 4.51% compared with 4.58% just a week ago.

The 15-year fixed-rate mortgage averaged 3.54%, It is down from 3.60%. Starting interest rates for popular types of variable-rate loans were up slightly.

 

August was as good as a month has been lately for mortgage rates. With this summer proving the volatility of the mortgage rates, it now seems that they have eased off.

 

Vice President and Chief Economist of Freddie Mac, Frank Nothaft fully recognizes the fluctuation we have seen and that the housing market needs to be watched closely.

 

“The Fed is monitoring the housing market closely after the run up in mortgage rates over the past few months. The 13.4 percent drop in new home sales in July led financial markets to speculate whether the Fed might delay reducing its bond purchases and allowed long-term bond yields and fixed mortgage rates to decline over the week.”

 

While the rates have plateaued and even dropped slightly it is not likely that the drop in rate will continue but in the mean time it will give on the fence “refinancers” a few more moments to make their decision.

 

Good News! Mortgage Rates are Going up!

Good News About Rising Rates

moneygraph

You’ve probably heard all the rationalizations, but none of them satisfy. It doesn’t if rates go up because at least for a while they’ll still be pretty low, maybe even as low as when people lived in boxcars and sang hobo songs to each other during the Depression.  Moreover, even in the unlikely event that mortgage rates rise as much as one whole percentage point, it won’t cost you any more each month than a family night out at Dave & Busters.  

Government Incompetence Extending Low Rates

For all the criticism leveled at Congress over its inability to come to any kind of lasting fiscal agreement, there may in fact be a positive side to the story that goes under-reported.  Don’t get me wrong I am not a cheerleader for low mortgage rates above all else.  In fact, I would gladly cheer higher rates in exchange for a stronger economy that is producing jobs and increasing incomes. Yet, the benefit of low mortgage rates, as a tool for consumers to repair damaged financial positions is powerful and is a result of the political dysfunction in Washington above all else.

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