The FHA recently announced changes to its guidelines that will make it easier for home buyers to qualify for their home loans. These changes are effective for FHA case numbers assigned on or after April 21, 2014.
Previously, lenders were afraid to approve "make-sense" loans because the FHA guidelines were not clear in calculating the buyer's maximum allowable debt. Now, the FHA has clarified these limits, which should give lenders the confidence they need to approve more loans.
What does this mean for home buyers?
With this update, FHA has made it easier for more buyers to qualify for an FHA loan, meaning sellers have an expanded pool of buyers. This is great news, as FHA remains the most flexible and affordable loan program for buyers with less than a 5 percent down payment.
If you have any questions regarding these changes or would like to discuss how I can help one of your home buyers qualify for a home loan, please feel free to call or email me.
Monday, January 27, 2014
Friday, January 24, 2014
Interest Rates... When is the Best Time to Lock?
When it comes to mortgage loans and interest rates, it's never a good idea to gamble. That's why I typically advise my clients to lock in an interest rate at the earliest opportunity. This is just one step of the standardized system we have put in place to ensure the best possible loan experience for each borrower that we work with.
While you can float until just before closing, it's usually not a good strategy due to these fluctuating factors:
Locking in a rate does not obligate the borrower to commit to the loan until the loan is actually closed. The lock is merely a security measure designed to eliminate the risk of market volatility throughout the duration of the purchase or refinance transaction. As long as the loan is approved and funded before the end of the lock period, the borrower will receive the interest rate quoted.
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When a lender permits an extended lock-in period, the borrower will likely face a higher interest rate or additional fees that could be quoted as points. In other words, the borrower pays for the lender to take on the extended risk of being exposed to potential changes in the market.
For example, let's say a 30-day rate lock commitment costs the borrower one-half point, while a 60-day rate lock commitment costs one full point. If the borrower in this scenario needed the extended lock period, but did not want to pay points, then an alternative would be to accept a slightly higher interest rate. In this case, a 60-day lock would typically have a higher interest rate than a 30-day lock.
If you'd like to learn more about the loan programs we have available, please call me!
Thursday, January 23, 2014
Uptick in Refi Activity Boosts Apps 4.7 Percent
Mortgage applications increased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Jan. 17, 2014. The Market Composite Index, a measure of mortgage loan application volume, increased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased seven percent compared with the previous week. The Refinance Index increased 10 percent from the previous week. The seasonally adjusted Purchase Index decreased four percent from one week earlier. The unadjusted Purchase Index increased two percent compared with the previous week and was 15 percent lower than the same week one year ago.
The refinance share of mortgage activity increased to 64 percent of total applications, the highest level in a month, from 62 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to seven percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.57 percent, the lowest level since November 2013, from 4.66 percent, with points increasing to 0.36 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
“The industry has seen an uptick in refinance applications due to the drop in the 10-year Treasury to start the year. However, most economists still believe the refinance market share will remain stagnant or even shrink in the long term. FGMC will maintain the business models that are able to capitalize on a growing refi market, should that happen," said Andrew Peters, CEO of Tysons Corner-based lender First Guaranty Mortgage Corporation (FGMC). "However, we’re focused on investing resources and capital into growing market share across all platforms.”
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.57 percent, the lowest level since November 2013, from 4.58 percent, with points decreasing to 0.18 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.24 percent, the lowest level since November 2013, from 4.29 percent, with points increasing to 0.23 from 0.17 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.68 percent, the lowest level since December 2013, from 3.72 percent, with points decreasing to 0.29 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.23 percent, the lowest level since December 2013, from 3.28 percent, with points decreasing to 0.37 from 0.47 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The refinance share of mortgage activity increased to 64 percent of total applications, the highest level in a month, from 62 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to seven percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.57 percent, the lowest level since November 2013, from 4.66 percent, with points increasing to 0.36 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
“The industry has seen an uptick in refinance applications due to the drop in the 10-year Treasury to start the year. However, most economists still believe the refinance market share will remain stagnant or even shrink in the long term. FGMC will maintain the business models that are able to capitalize on a growing refi market, should that happen," said Andrew Peters, CEO of Tysons Corner-based lender First Guaranty Mortgage Corporation (FGMC). "However, we’re focused on investing resources and capital into growing market share across all platforms.”
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.57 percent, the lowest level since November 2013, from 4.58 percent, with points decreasing to 0.18 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.24 percent, the lowest level since November 2013, from 4.29 percent, with points increasing to 0.23 from 0.17 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.68 percent, the lowest level since December 2013, from 3.72 percent, with points decreasing to 0.29 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.23 percent, the lowest level since December 2013, from 3.28 percent, with points decreasing to 0.37 from 0.47 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
Friday, January 17, 2014
Are We There Yet? Freddie Mac Says Recovery Has Ways to Go
The housing market turned the corner in 2012 Freddie Mac's economists said today, and the recovery was fully underway in 2013. But despite the positive trends in home price indexes, housing starts, and home sales, when can we say that housing has fully recovered? Chief Economist Frank E. Nothaft and Deputy Chief Economist Leonard Kiefer attempt to answer that question in the January edition of Freddie Mac's U.S. Economic and Housing Outlook.
The two say that for the economy and housing market to be functioning normally we need to see four positive indicators; a healthy jobs market with low and stable unemployment, mortgage delinquencies back near historical averages, home prices that are consistent with an affordable mortgage payment-to-income ratio, and home sales in line with historical norms.
Since the recession the labor market recovery has been modest with a December unemployment rate of 6.7 percent, high by historical standards but moving down. Most economists agree that the rate should be between 5 and 6 percent for an economy at its long-run potential. Nothaft and Kiefer say it may be another two years before that is achieved.
Monday, January 13, 2014
New Qualified Mortgage Rule Now in Effect... What Does This Mean to You?
You may have heard about a new rule that may impact people looking to purchase or refinance a home.
What is This Rule?
As of January 10, 2014, lenders are required to more thoroughly assess a borrower's "ability to repay" a loan, so that he or she can receive a "Qualified Mortgage" (QM).
Why was it Enacted?
The rule is part of the Dodd-Frank Consumer Protection Act, which made banks and mortgage lenders legally liable for determining borrowers' abilities to repay their mortgages. It was enacted to help ensure borrowers get a home loan they can afford to repay, and to help prevent people from going into foreclosure and losing their homes.
What is the Bottom Line?
While new guidelines are now in effect related to loan limits, a borrower's debt-to-income ratio, fees and other items, the good news is that the Consumer Financial Protection Bureau (CFPB) estimates that 95 percent of all mortgages made in 2013 already met the new rule. So there's a good chance the new rule won't impact the majority of borrowers.
If you're thinking of purchasing or refinancing a home this year, or if you know someone who is, I'm here to help. Give me a call or send me an email, and I'm happy to answer any questions you may have.
What is This Rule?
As of January 10, 2014, lenders are required to more thoroughly assess a borrower's "ability to repay" a loan, so that he or she can receive a "Qualified Mortgage" (QM).
Why was it Enacted?
The rule is part of the Dodd-Frank Consumer Protection Act, which made banks and mortgage lenders legally liable for determining borrowers' abilities to repay their mortgages. It was enacted to help ensure borrowers get a home loan they can afford to repay, and to help prevent people from going into foreclosure and losing their homes.
What is the Bottom Line?
While new guidelines are now in effect related to loan limits, a borrower's debt-to-income ratio, fees and other items, the good news is that the Consumer Financial Protection Bureau (CFPB) estimates that 95 percent of all mortgages made in 2013 already met the new rule. So there's a good chance the new rule won't impact the majority of borrowers.
If you're thinking of purchasing or refinancing a home this year, or if you know someone who is, I'm here to help. Give me a call or send me an email, and I'm happy to answer any questions you may have.
Friday, January 3, 2014
3 Secrets to Growing an Einstein Brain
Relativity and quantum physics weren't the only things on Albert Einstein's mind—he also had a few tricks up his sleeve for making sure his brain was both working at peak efficiency and harnessing as much of its power as possible.
There are three parts to the brain—the stem, the limbic system, and the frontal cortex—and according to Dr. Rudolph E. Tanzi of Massachusetts General Hospital in Boston and co-author with Deepak Chopra of the book Super Brain, we get the most out of our brains when all parts in the system are working together.
Here are three exercises that when practiced regularly, can help you get the most out of your brain:
Become a possibility processor. Einstein's genius was in part due to keeping his frontal cortex (the logic center) in its place. Letting your imagination run free—allowing nonsensical, even outlandish, ideas to form without criticism or fear—can cause new neural connections to form, helping develop highly creative and refreshing ideas. The trick is not to judge these ideas too quickly; there's plenty of time to let logic sort them out later.
Look for loops. Our limbic system automatically looks for patterns and creates associations or "loops" as memory and response shortcuts. When you react to things in a way you can't quite explain, you might be stuck in a loop. Examining the source of your feelings and how your responses may have been shaped can go a long way toward rewiring unhealthy or unwanted reactions, patterns, behaviors, and more.
Reactivate all brain centers with a "S-T-O-P." Just remember the acronym STOP—STOP what you're doing; take THREE deep breaths and feel them through your whole body; OBSERVE how you feel (this activates the limbic circuit and frontal cortex); within a few seconds you can then PROCEED with full awareness of yourself and those around you.
You may not develop a new theory of relativity, but with a little practice, you'll be well on your way to discovering new mental power!
There are three parts to the brain—the stem, the limbic system, and the frontal cortex—and according to Dr. Rudolph E. Tanzi of Massachusetts General Hospital in Boston and co-author with Deepak Chopra of the book Super Brain, we get the most out of our brains when all parts in the system are working together.
Here are three exercises that when practiced regularly, can help you get the most out of your brain:
Become a possibility processor. Einstein's genius was in part due to keeping his frontal cortex (the logic center) in its place. Letting your imagination run free—allowing nonsensical, even outlandish, ideas to form without criticism or fear—can cause new neural connections to form, helping develop highly creative and refreshing ideas. The trick is not to judge these ideas too quickly; there's plenty of time to let logic sort them out later.
Look for loops. Our limbic system automatically looks for patterns and creates associations or "loops" as memory and response shortcuts. When you react to things in a way you can't quite explain, you might be stuck in a loop. Examining the source of your feelings and how your responses may have been shaped can go a long way toward rewiring unhealthy or unwanted reactions, patterns, behaviors, and more.
Reactivate all brain centers with a "S-T-O-P." Just remember the acronym STOP—STOP what you're doing; take THREE deep breaths and feel them through your whole body; OBSERVE how you feel (this activates the limbic circuit and frontal cortex); within a few seconds you can then PROCEED with full awareness of yourself and those around you.
You may not develop a new theory of relativity, but with a little practice, you'll be well on your way to discovering new mental power!
Friday, December 20, 2013
Lenders Hungry for Jumbo Loans
Homebuyers and refinancers in pricier areas are finding attractive interest rates and less stringent requirements to qualify for jumbo mortgages, thanks to lenders' growing appetite for large loans.
As the housing market rebounds and more investors turn their eyes to the jumbo mortgage market, lenders are easing their terms and credit score requirements on jumbos. Loan origination and approval rates on these loans also are on the rise.
''Six months to a year ago, if you weren't at a 720 credit score or a 740, you couldn't get a (jumbo) loan," says Jason Auerbach, divisional manager for First Choice Loan Services in New York. "Now, there are opportunities to get jumbo financing with credit scores as low as 700. And there may be lenders out there that will go below that."
That's not to say jumbo loans have become easy to get. To qualify for a jumbo loan, borrowers must have better credit, more savings and higher down payments than borrowers seeking loans that fall within the conforming loan limits. Jumbo loans are generally loans bigger than $417,000 in most parts of the country, but in high-cost areas, they may start above $625,500.
Jumbo loans generally require at least 20 percent down payment or equity from the borrower, says Mathew Carson, a mortgage broker for First Capital Group Inc. in San Francisco. That's an improvement from much higher down payments that lenders required on jumbo loans after the financial crisis, especially in areas that were hit hard by foreclosures.
There are exceptions to the standard 20 percent down. Wells Fargo, the nation's top jumbo mortgage originator, recently began offering jumbo financing to buyers and refinancers of primary residences with 15 percent down payment or equity. The loan does not require mortgage insurance. Most loans with less than 20 percent down do.
Some of the terms for jumbo loans that are used to buy second homes also have eased, Auerbach says.
''We have seen an expansion in those guidelines as well in the recent months," he says. "Whereas before we could do 70 to 75 (percent) loan-to-value, now we can do 80 (percent) on up to $2 million on second homes."
Only 16 percent of the borrowers who applied for a jumbo mortgage in 2012 were denied a loan, according to the LendingPatterns.com Home Mortgage Disclosure Act database. The denial rate on jumbo mortgage applications has fallen consistently since 2008, when about 3 in 10 jumbo loan applications were denied.
Part of the reason lenders have loosened up and are more eager to do jumbo loans is that they have grown more confident about home prices, especially upper-end homes, says Tom Wind, executive vice president of residential and consumer lending for EverBank.
''Stability in the real estate market is driving people's desire to buy move-up homes, to invest in real estate," Wind says. "And it means lenders are more comfortable lending against it."
Lenders see jumbo loans as an attractive market because jumbo borrowers tend to be "high-quality" customers with sterling credit and often have significant assets.
For borrowers that means more competitive rates. The average interest rate for a 30-year fixed jumbo mortgage is now comparable to the rate on a conventional loan.
''This is an unusual event that runs counter to the historical industry trend of nonconforming rates being higher than conforming ones," says Brad Blackwell, executive vice president and portfolio business manager for Wells Fargo Home Mortgage.
About a year ago, the fixed rate on jumbo mortgages was more than a half of a percentage point higher than on a conforming loan, according Bankrate's weekly rate survey.
''That gap between the jumbo and the conforming has definitely narrowed," Carson says. "And some lenders are doing some really aggressive pricing."
Wells is one of those lenders, he says. Wells jumbo lending activity for the second quarter of 2013 rose 15 percent from a year previously, Blackwell says.
''Demand for nonconforming loans continues to grow," he says. "In fact, we are at our highest funding levels since 2007."
The nation's largest jumbo lenders by volume of loans, according to LendingPatterns.com HMDA database are: Wells Fargo, JPMorgan Chase, Bank of America, Quicken loans and Citibank.
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Mortgage rates inched up this week as the Federal Reserve announced it will reduce the pace of the bond-purchasing program that has long helped to keep rates low.
The 30-year fixed-rate mortgage rose 3 basis points to 4.58 percent. A basis point is one-hundredth of 1 percentage point.
The 15-year fixed-rate mortgage also rose 3 basis points to 3.63 percent.
The average rate for 30-year jumbo mortgages, or generally for those of more than $417,000, rose 5 basis points to 4.6 percent.
The 5/1 adjustable-rate mortgage fell 1 basis point to 3.33 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.
Read more: http://www.kitsapsun.com/news/2013/dec/19/lenders-hungry-for-jumbo-loans/#ixzz2o37E7snJ
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