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  1. Mortgage Rates: Obama to “Friend” Millions?

    By on February 1, 2012

    Today is the day that Facebook will file its initial public offering.  There are also rumors that today is the day that President Obama will announce his plan to enable millions of homeowners to refinance at current historically low interest rates.  In some ways, it’s as if he is sending a huge “friend request” to American homeowners.  Is this good economic policy or simply politics as usual and what effect will it have on mortgage rates?

    It appears from early trading in mortgage-backed securities (MBS) today that the markets are focused on the Facebook IPO and stocks are set to rise.  This will put pressure on MBS pricing today and could keep rates from falling any further.  Unless the stock market surges more than appears likely, mortgage rates will likely remain close to current levels throughout the day.

    Several economic reports are also in the mix today.  The ADP Employment Change report came in about at the point of expectations though newly created jobs were down significantly from December.  Analysts were encouraged however by the surge in new service sector jobs, explaining that a broad-based improvement in employment across all sectors is necessary for sustainable economic growth.

    At 10 AM both the Construction Spending report and the ISM Manufacturing Index will be released.  The ISM Index is a gauge of manufacturing industry activity and is a very important report.  If this report is at or above expected levels, mortgage pricing may feel more upward pressure.  If, however, we see a surprise to the downside, then mortgage pricing may improve.

    Let’s get back to the President’s refinance plan.  According to reports the plan will call for a tax on large banks to pay for the cost of allowing homeowners to refinance into Federal Housing Administration loans.  Having failed to get the conservator of the other two government-sponsored housing agencies to go along with a similar plan, the president has turned to the one agency he has direct control over.  That being said, the plan has virtually no chance to pass Congress as it has failed to even be acted on twice before.

    As to its public policy and economic implications my belief is that it is poor policy to allow refinancing into government (taxpayer) backed mortgages by homeowners that would not otherwise qualify for the loans.  Economically, it would provide substantial stimulus initially but it might also have the unintended consequence of causing mortgage rates to rise.  Banks unable to handle the onslaught of borrowers, and fearing repurchase risks from loans that go bad, may raise their interest rates to discourage borrowers.

    Category: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Purchase, Refinance

  2. Low FHA Rates an Excellent Opportunity for First Time Homebuyers

    By on January 27, 2012

    Last week mortgage rates increased marginally, per Freddie Mac’s Primary Mortgage Market Survey.  There was no particularly significant positive news last week that would cause rates to increase, so the rise can likely be attributed to normal market fluctuations.

    Despite the increase, rates are still very close to record lows.  If you’ve been considering purchasing a home, now is an excellent time to lock in some of the lowest rates we’ve ever seen. Are you a long-time renter considering purchasing a home?  Is the need for a sizable down payment the only thing that is keeping you from buying a home?  You may want to consider an FHA loan.

    While many traditional sources of financing require large down payments, the FHA only requires a minimum down payment of 3.5% of the purchase price of the home.  This low down payment requirement opens up the world of homeownership to many people that otherwise would be unable to purchase a house.

    If you have a good credit history and a desire to own a home, Total Mortgage may be able to help you with an FHA mortgage.  Today we are able to offer a 30-year fixed rate FHA mortgage at a rate of 3.625% with an APR of 4.975% to qualified borrowers*.

    Do you already have an FHA loan, but have an above-market interest rate?  The FHA has a streamline refinancing program that might allow you to refinance without a new appraisal, making the process quick and simple.

    Call us today at 877-868-2503 to speak with one of our licensed mortgage professionals about the benefits of an FHA mortgage.  

    *All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 1 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, one points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

  3. HUD Advocates Lower Credit Score Requirements for FHA Loans

    By on January 11, 2012

    According to an article in the National Mortgage News by Brian Collins, the Department of Housing and Urban Development (HUD), would like to see FHA lenders lower their credit score requirements.  From the article:

    “Federal Housing Administration loans once served a broad spectrum of borrowers until the subprime mortgage meltdown came along and pushed lenders to tighten underwriting standards and credit score requirements.  Today the average score on an FHA-insured mortgage is 700.”

    In order for FHA lenders to loosen their underwriting standards, changes to the FHA’s Neighborhood Watch program may be necessary.  Neighborhood Watch is a HUD program that monitors lenders to make sure that they aren’t issuing a lot of loans that end up defaulting.  It does this by comparing the default rate from a given lender to the average default rate for all FHA loans, regardless of credit score or other risk factors.  Default rates above the norm could set off audits or monetary penalties for potential losses.  This makes FHA lenders reticent to lend to people with lower credit scores or higher risk factors.

    In order to encourage lenders to loosen credit score requirements, some would like to see the Neighborhood Watch program altered so that default rates are not compared to the general FHA default rate, but are adjusted to account for risk factors such as lower credit scores.  The FHA is looking at changing Neighborhood Watch policies, but does not want the pendulum to swing too far in the other direction, leading to increased losses through elevated default rates.

    According to a USA Today article from 2010, more than 25% of Americans had credit scores of less than 600.  This type of credit score would preclude a quarter of the population from receiving a mortgage given current underwriting standards.  A more recent article from the Boston Herald showed that between 2008-2009, 50 million people saw their FICO scores drop by 20 points, and 21 million of these people lost more than 50 points.  Delinquent payments, unemployment, and medical bills are among the many reasons so many Americans saw their credit scores decline during the recession.

    HUD and the FHA have to walk a fine line here.  One could definitely make the argument that underwriting standards have become too restrictive in the wake of the credit bubble, and that too many Americans are precluded from refinancing or getting a new mortgage.  However, we must remember that lax underwriting standards were among the causes of the housing bubble in the first place.  We need to find some sort of middle ground between underwriting standards that are too lax and too restrictive in order to help heal the housing market.

    Category: Mortgage Rates

  4. New Tax Agreement Could Prompt Rise in Mortgage Costs

    By on December 19, 2011

    Late last week, a piece of legislation passed the House of Representatives that could cause some mortgage fees to increase.  The bill is H.R. 3630, The Middle Class Tax Relief and Job Creation Act.  In essence, it is an extension of the payroll tax cut, and the continued cuts would be paid for by raising guarantee fees (g-fees) on Fannie Mae, Freddie Mac, and FHA loans.

    If the new legislation becomes law, Fannie, Freddie, and the FHA would have to increase g-fees by at least 10 basis points over the next two years.  This would translate to around $300 per year on a $300,000 mortgage.  Not a crippling increase, but significant nonetheless.

    Predictably, housing and mortgage lobbying groups oppose the increase in fees, while others claim that this will help encourage more private-sector lending. I thought the best take on this legislation was from Georgetown Law Professor Adam Levitin, who says that the whole deal is foolish because any stimulating effect from the payroll tax cut is negated by the increase in g-fees.

    In a normal economy, this proposal might make sense.  Of course we are not in a normal economy, and anything that hampers the housing market, even marginally, is probably not a good idea since the housing sector is dragging down the economy as a whole.

    In any case, the bill has yet to be finalized and will likely be revised before the Senate votes on it. It does seem that the increase in g-fees garnered some bipartisan support, and will likely be in the final law.

     

    Category: Mortgage Rates

  5. Congress Looks to Restore FHA Loan Limits to $729,750, Freddie, Fannie Limits to Remain Unchanged

    By on November 15, 2011

    Late yesterday, Reuters reported that a bipartisan congressional committee agreed on a measure that would restore FHA loan limits to $729,750 in certain “high cost” areas.  While the measure is not yet law, the article says that “agreement by a bipartisan panel of lawmakers from both chambers indicates a strong likelihood of final approval”.

    The conforming loan limit is the maximum size loan that is eligible for purchase by Fannie Mae, Freddie Mac, or the FHA.  Loans above this amount are considered “jumbo loans” and typically have higher mortgage rates because they are not subsidized. The maximum conforming loan limit was increased in 2008 in order to provide stimulus to the housing market.  The temporary limits were reinstated twice, and were allowed to expire on October 1st, when they fell from $729,750 to $625,500.

    This measure, if it becomes law, will keep the maximum FHA loan size at $729,750 through 2013.  Although the Senate approved measures that would restore high balance loan limits for Fannie Mae and Freddie Mac to $729,750, this measure was rejected by the House, and it is expected that upper-end limits for the GSEs will remain at $625,500.

    Many in Congress (especially those on the right wing) want to reduce government involvement in housing finance.  While this is probably a good idea, generally speaking, it really isn’t practical at this time.  The housing market is pretty much on life support, and there are not a lot of private investors rushing to invest in housing.  Without the government to fill the vacuum, credit would probably contract even further, making it even more difficult to get a mortgage.  This would hurt home sales and home prices, which would further destabilize the housing market.

     

    Category: Mortgage Rates

  6. Senate Votes To Restore Higher FHA, Fannie, Freddie Jumbo Loan Limits

    2 By on October 21, 2011

    Yesterday the Senate voted to approve a measure that would restore the high-balance conforming loan limit to $729,750 in high cost areas.  The limit was temporarily increased in 2008 in response to the housing crisis.  After being extended several times, the temporary limits expired on October 1, 2011.  For now, the largest loan that can be purchased or guaranteed by Fannie Mae, Freddie Mac, or the FHA is $625,500.

    The measure was added to a spending bill by Senator Robert Menendez, a democrat from New Jersey.  The measure approved 60-31.  If the larger spending bill is approved, the bill would move to the House of Representatives.  If enacted, it would then need to be approved by the president.  The extension would last through 2013. The risk of funding these larger loans would be hedged by charging a 15 basis point fee on the principal balance of the mortgage.

    I see this as a common sense measure to help around the margins of the housing market.  This is by no means a panacea for what ails the housing market, but would provide a marginal boost to the housing market in certain areas.

    That said, I bet this is unlikely to pass.  It flies in the face of the sentiment among many republican lawmakers that the government should be curtailing, rather than expanding its role in the housing market.  It seems that our elected officials would have difficulty coming to a consensus on what to order for lunch, let alone issues of spending and housing policy.  I’m not holding my breath on this one.

     

    Category: Mortgage Rates

  7. FHA Refinancing Made Easy, Rates From 3.750%

    By on October 11, 2011

    Did you take out an FHA mortgage over the past couple of years?  Have you refinanced your mortgage?  If you have yet to refinance, there is a good chance that you are paying too much for your mortgage.

    Mortgage rates on FHA loans have dropped significantly over the past few years, and hit record lows over the past couple of weeks.  Although rates have ticked up slightly since that time, they are still very close to all-time lows.

    If you are paying a mortgage rate of 5, 6, 7 percent or more, you could save a significant amount of money refinancing your FHA mortgage.  Some people avoid refinancing because the mortgage process can be long and involved, but the FHA has made it significantly easier to refinance with the FHA streamline refinance program.

    The FHA allows borrowers to do rate and term refinances with no cash-out without a new appraisal, which makes refinancing quicker and easier than ever before.  Depending upon your situation, a credit report and new debt-to-income analysis may not be required.

    Today Total Mortgage is offering qualified borrowers 30 year fixed rate FHA mortgages at a rate of 3.750% with an APR of 5.092%.  If you are paying a higher rate, this program could allow you to save a lot of money on your monthly home payments.

    Call one of our licensed mortgage officers today at 877-868-2503 to find out more about refinancing your FHA loan.  You could be saving a tremendous amount of money with a new home loan.  

    Mortgage rates are always changing. All rates were quoted at 10:20 P.M., on September 29, 2011.

    *All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 1 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, one points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

  8. FHA Mortgages for First Time Homeowners Starting at 3.750%

    By on October 10, 2011

    Home prices have dropped considerably over the past three years, and mortgage rates are at their all-time lows, yet for many people, it is difficult to imagine a home because of the need for a large down payment.  Traditionally, lenders have required down payments equivalent to 20% of the purchase price of the home, and it can take a decade or more for many people to save this much money.

    Thankfully, there is another avenue to homeownership for prospective first time buyers: the FHA mortgage.  One of the things that makes FHA mortgages great for first-time buyers is that they only require a minimum down payment of 3.5% of the purchase price of the home.  If you have a good job and good credit, you may be able to qualify for an FHA insured mortgage.

    Since FHA loans only require a minimal down payment, the borrower is required to pay through mortgage insurance through the FHA which increases the cost of the loan over time (you’ll note the difference between the interest rate and the APR).  This insurance helps protect the FHA and the taxpayers against the risk of default.  Despite this cost, FHA loans can be an excellent deal for many borrowers.

    Today we are offering qualified borrowers FHA loans at a rate of 3.750% with an APR of 5.092*%.  This is a record low rate at Total Mortgage, and you could benefit for years to come by locking it in today.

    If you already have an FHA mortgage at a rate of 5, 6, or 7%, you may be able to save a ton of money by refinancing it with the FHA streamline refinancing program.  This program frequently doesn’t require a new home appraisal, which saves both time and money.

    If you want to find out more about our FHA mortgage products, call one of our licensed loan officers today at 877-868-2503. Our mortgage pre-approval process only takes moments over the phone.  Start down the path to homeownership today.

    Mortgage rates are always changing. All rates were quoted at 10:45 A.M., on October 10, 2011.

    *All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 1 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, one points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

  9. Fixed FHA Loans Starting at 3.750%

    By on October 4, 2011

    Are you a long-time renter who is looking to become a homeowner?  Do you need more room for a growing family?  Do you have a good credit history and a solid income? Don’t let a lack of money for a down payment stop you from owning your own home.  With an FHA-insured mortgage you too can start building equity in a house.

    While many banks require down payments of 20% of the purchase price of a home, the FHA only requires a down payment equal to 3.5% of the price of the home you are looking at.  In exchange for lower payments, an FHA borrower pays for mortgage insurance, which helps protect taxpayers against potential defaults.

    As of this morning, we are offering qualified borrowers FHA mortgage rates starting at 3.750% with an APR of 5.092*%.  This is one of the lowest rates on an FHA loan that we have ever been able to offer thanks to today’s ultra-low rates environment.

    Do you have an existing FHA mortgage?  Are you paying a rate significantly higher than the current rate?  You may be able to refinance easily with the FHA streamline program.  This program enables those who have FHA home loans to refinance, often without needing a new appraisal.

    If you want to find out more about our FHA mortgage products, call one of our licensed loan officers today at 877-868-2503.Our mortgage pre-approval process only takes moments over the phone.  Start down the path to homeownership today.

    Mortgage rates are always changing. All rates were quoted at 10:30 A.M., on October 4, 2011.

    *All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 1 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, one points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

  10. First Time Home Buyers Save With Record Low FHA Mortgage Rates

    By on September 21, 2011

     

    One of the biggest obstacles between many prospective first-time home buyers and homeownership is the need for a down payment.  Even though home prices have declined over the last three years, they are still relatively high from a historical perspective.  Most lenders require down payments of twenty percent of the purchase price of a home, and it can take years to save this much money.

    If you’re a long time renter with a good credit history, there are alternate options that could allow you to become a homeowner.  The FHA offers mortgages to people with strong FICO scores while only requiring a minimum down payment of 3.5%.  Although FHA mortgage insurance premiums can cause FHA mortgages to be more expensive in the long run than traditional mortgages, the FHA provides an avenue to homeownership that might otherwise be closed to many people.

    Mortgage rates have been at record lows for the past two weeks, but there is no telling how long they will stay there.  Today we are offering 30 year fixed FHA mortgages to qualified borrowers at a rate of 3.750% with an APR of 5.092%*.  

    If you already have an FHA mortgage but are paying a higher rate than what is currently offered, you may be able to easily refinance your mortgage through the FHA streamline refinance program.  Often this process does not require a new appraisal, which makes the refinancing process considerably easier.

    If you are interested in a new FHA mortgage or refinancing your current FHA mortgage, call us today at 877-868-2503 to speak with one of our licensed loan officers.  Start your homeowning future today.

    Mortgage rates are always changing. All rates were quoted at 11:56 A.M., on September 21, 2011.

    *All rates shown are for 30 day rate locks. Longer locks available. The APR for conventional loan amounts is calculated using a loan amount of $417,000, 1 points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for jumbo loan amounts is calculated using a loan amount of $500,000, one points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. The APR for FHA loan amounts is calculated using a loan amount of $295,000, two points, a $495 application fee, $500 loan processing fee, $715 underwriting fee and a $16 flood certification fee. Some rates and fees may vary by state. All interest rates listed are for qualified applicants and are subject to mortgage approval. All rates are subject to change without notice.

    Category: Mortgage Rates

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