The Mortgage and Real Estate Markets in Massachusetts and Florida

Home Value Update for Barnstable MA 02630 Through November 2009

Tue, 15 Dec 2009 11:04:14 -0600

Home Value Update for Barnstable MA 02630 Through November 2009

According to Trulia.com, the current average listing price of homes on the market in Barnstable, MA is $695,177, while the current mean sales price of homes is $487,500. The sale prices of single family homes in Barnstable, MA have increased 15.2% in the past year through the end of November 2009, but have fallen 0.5% over the last 5 years. Below is a chart of the trend of listing prices of homes for sale in Barnstable, MA, in the past year through November 2009:

Barnstable Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Barnstable, MA, or surrounding area. If you're looking for a home or condo to purchase in Barnstable, MA, or in the surrounding area, then try this home search.

You can still buy a home with no money down with a VA Loan or with a USDA Rural Development Home Loan. With the FHA Mortgage program, you can purchase a home with as little as 3.5% down. When you're ready to buy a home, find out how much home or condo you can afford to purchase in Barnstable, MA, or in the surrounding area.

If you're 62 or older and are looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses, then consider getting a reverse mortgage. Find out how a reverse mortgage can use the equity in your home to pay you.

Lew Corcoran, Sr. Mortgage Consultant
Reverse Mortgages / FHA Loans / VA Loans
USDA Rural Development Loans
in Massachusetts and Florida
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ActiveRain Blog / Localism / New England Properties
The Mortgage Market Watch and Interest Rate Lock Advisory

The Mortgage Interest Rate Lock Advisory for Barnstable MA for December 15, 2009

Tue, 15 Dec 2009 11:02:25 -0600

The Mortgage Interest Rate Lock Advisory for Barnstable MA for December 15, 2009

Here are some of the events affecting mortgage interest rates today in Barnstable, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 98.00 this morning - down 10/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 97.97 - down 11/32 from yesterday's close. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.25% - 0.50% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

Producer Price Index (PPI) for November - producer prices surged upwards last month. The overall PPI index is up 1.8% and the core data is up 0.5% - both are up more than expected. Analysts expected the report to reveal a 1.0% increase in the overall index, and a 0.2% rise in the core data. The gain in prices was led by a 6.9% spike in energy costs, and a 0.5% gain for food. Year-to-year, the overall index is up 2.7% and the core date is up 1.2% - the largest rise since October 2008. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used: the overall reading, and the core data reading. The core data is the more important of the two because it excludes the more volatile food and energy prices. Because the PPI is stronger than expected, mortgage interest rates ticked higher this morning.
Industrial Production Data for November - Overall industrial production in November is up 0.8%, and follows 0.1% increase in October. Capacity utilization rate now stands at 71.3%, up from 70.7% in October. Analysts expected a 0.6% increase in output, and a capacity utilization rate of 71.2%. By tracking output at U.S. factories, mines and utilities, this report provides us with a measurement of manufacturing sector strength. A smaller than expected rise could have a positive impact on the mortgage market and lead to lower mortgage interest rates. If the data comes in stronger than expected, then we can expect higher mortgage interest rates.

In other news, the Empire State index showed that manufacturing growth in the New York region for December slowed substantially. The index came in at 2.55, much less than expected, and much less than the stronger growth rates of 23.51 in November and 34.57 in October. The month-to-month contraction in unfilled manufacturing orders is bad news for factory workers in the New York region - especially those who are unemployed right now.

The Board of Governors of the Federal Reserve begin their Federal Open Market Committee (FOMC) meeting this morning, and will adjourn tomorrow afternoon with a statement release at 2:15 pm.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, we can expect to see another volatile week in the financial and mortgage markets. We expect to see the biggest movements in mortgage interest rates this week with the release of the PPI today, and with the release of the CPI and the FOMC meeting press release tomorrow.

There's not much room for MBS prices to move higher or for mortgage interest rates to move lower at the moment. Mortgage interest rates are still at historic lows. If you're happy with the rate being offered to you and don't want to risk mortgage interest rates moving higher, you should apply and lock in today. While there's still some room for MBS prices to tick higher, it's better to have locked when you should have floated than it is to float when you should have locked.

If you have not yet locked in your mortgage interest rate, please proceed with caution and maintain contact with your mortgage professional. Also, give very serious consideration to applying now and locking in before mortgage interest rates get worse.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Barnstable, MA.

Home Value Update for Mashpee MA 02649 Through November 2009

Mon, 14 Dec 2009 13:10:22 -0600

Home Value Update for Mashpee MA 02649 Through November 2009

According to Trulia.com, the current average listing price of homes on the market in Mashpee, MA is $611,960, while the current mean sales price of homes is $337,950. The sale prices of single family homes in Mashpee, MA have increased 30.5% in the past year through the end of November 2009.

Below is a chart of the trend of listing prices of homes for sale in Mashpee, MA, in the past year through November 2009:

Mashpee Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Mashpee, MA, or surrounding area. If you're looking for a home or condo to purchase in Mashpee, MA, or in the surrounding area, then try this home search.

The Mortgage Interest Rate Lock Advisory for Mashpee MA for December 14, 2009

Mon, 14 Dec 2009 10:42:41 -0600

The Mortgage Interest Rate Lock Advisory for Mashpee MA for December 14, 2009

Here are some of the events affecting mortgage interest rates today in Mashpee, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 98.50 this morning - up 2/32 from Friday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 98.50 - the same as its opening, and up 2/32 from Friday's close. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be the same as Friday.

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

There are no economic reports scheduled for release today.

What's Happening With Mortgage Interest Rates Today:

Low to Moderate Volatility. Moderate to High Volatility. Overall, we can expect to see another volatile week in the financial and mortgage markets. We expect to see the biggest movements in mortgage interest rates on Tuesday with the release of the PPI, and on Wednesday with the release of the CPI and the FOMC meeting press release.

There's not much room for MBS prices to move higher or for mortgage interest rates to move lower at the moment. Mortgage interest rates are at historic lows. If you're happy with the rate being offered to you and don't want to risk mortgage interest rates moving higher, you should apply and lock in today. While there's still some room for MBS prices to tick higher, it's better to have locked when you should have floated than it is to float when you should have locked.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get the best available mortgage interest rates for your situation in Mashpee, MA!

The Mortgage Market Watch for the Week of December 14, 2009

Mon, 14 Dec 2009 06:52:57 -0600

The Mortgage Market Watch for the Week of December 14, 2009

Events Affecting the Mortgage Market This Week:

The Federal Open Market Committee (FOMC) will meet on Tuesday and Wednesday this week. The Fed is not expected to raise key short-term interest rates. However, investors will be looking for any indication of what and when the Fed may do next. Thus, the post meeting statement has the potential to significantly influence the mortgage market and mortgage interest rates.

Economic Reports to be Released This Week:

There are 5 economic reports scheduled for release this week that could have an impact on the mortgage market and mortgage interest rates.

Monday, December 14th:

There are no economic reports scheduled for release today.

Tuesday, December 15th:

Producer Price Index (PPI) for November - this index measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used: the overall reading, and the core data reading. Analysts are expecting the report to reveal a 1.0% increase in the overall index, and a 0.2% rise in the core data. The core data is the more important of the two because it excludes the more volatile food and energy prices. If the PPI reveals stronger than expected readings, we can expect higher mortgage interest rates. If we see weaker than expected reading, the mortgage interest rates should fall.
Industrial Production Data for November - by tracking output at U.S. factories, mines and utilities, this report provides us with a measurement of manufacturing sector strength. Analysts are expecting it to show a 0.6% increase in output and a capacity utilization rate of 71.2%. A smaller than expected rise could have a positive impact on the mortgage market and lead to lower mortgage interest rates. If the data comes in stronger than expected, then we can expect higher mortgage interest rates.

Wednesday, December 16th:

Consumer Price Index (CPI) for November - this is similar to the Producer Price Index (PPI), except that it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts call for an increase of 0.4% in the overall index and a 0.1% rise in the core data reading.
Housing Starts Report for November - this report provides us an indication of housing sector strength and future mortgage credit demand. Analysts are expecting the report to show am 8.7% increase in new home starts. However, this report generally has little to no impact on the mortgage market.

Thursday, December 17th:

Leading Economic Indicators (LEI) for November - released by the Conference Board, this report attempts to predict economic activity over the next three to six months. The report is expected to show a 0.7% increase in activity. This means the Conference Board is expecting the economy to expand over the next several months. This probably will not have much of an impact on bond prices or affect mortgage rates unless it varies significantly from forecasts. The lower the reading, the better the news for the mortgage market and mortgage interest rates.
Jobless Claims - New claims for unemployment are tabulated each week to show the number of individuals who filed for unemployment insurance for the first time. Analysts are predicting that 465,000 new claims for unemployment will have been filed last week. With a decreasing trend in the filing of new claims for unemployment, this suggests that the labor market is improving. However, this data is usually not considered to be very important to the mortgage market.
Fed's MBS Purchase Program - the results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $1.070 trillion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

Friday, December 18th:

There are no economic reports scheduled for release today.

How do Economic Data Releases Affect Mortgage Interest Rates?

One of the most important things for you to know when deciding when to lock in the interest rate on your mortgage is knowing what economic data is going to be released - and when - and how it may impact the mortgage market and mortgage interest rates.

While an in depth review of an economic event can help you make an informed decision, understanding the nuances of a release can't help you if you don't know when it's happening. Economic data releases are important because they provide a snapshot of what's happening in the economy. They also provide a foreshadowing of any upcoming market volatility. It's just as important to know when these data releases are happening as knowing what effect these releases can have on the mortgage market.

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 90 days:

Recent Activity in Mortgage Backed Securities:

Remember - as the prices of mortgage backed securities goes down, the yields go up - and so do mortgage interest rates. Conversely, as the prices of mortgage backed securities goes up, the yields come down - and mortgage interest rates come down with it.

Mortgage Interest Rate Outlook:

Moderate to High Volatility. Overall, we can expect to see another volatile week in the financial and mortgage markets. We expect to see the biggest movements in mortgage interest rates on Tuesday with the release of the PPI, and on Wednesday with the release of the CPI and the FOMC meeting press release.

Before You Advise Your Clients Rent Their Current Home And Buy Another One, You Need To Know This!

Sat, 12 Dec 2009 06:31:27 -0600

Here's an excellent article of the things you should be aware of before you decide to rent out your current home and buy another home.

Via Phil Caulfield Jumbo Loan California DRE #01030082 (RMC Real Estate Loans - Jumbo, Construction, Private Money):

When someone buys a home before selling their current home, they may have a problem: if they have a mortgage on the old home, that debt is included in their debt-to-income ratio.

In the old days (pre-2008), home buyers who did not sell their home first had at least a couple of ways to offset their mortgage debt.

Some lenders would accept the income reported on a rent survey prepared by a licensed appraiser. Other lenders would accept a rental agreement.

The lender would subtract 25% of the income obtained by either of these methods off the top to account for expenses and vacancy. They would then subtract out the PITI (principal, interest, taxes, and insurance). If there was a positive balance left after this calculation, it was added to the homebuyer's income. If there was a negative balance, it was added to their debts.

Most lenders still use this method to calculate the positive income or negative debt. Now, however, there is a twist. You need to be concerned with the amount of equity in the old property. In addition, more documentation is required for rental income to be included.

Fannie Mae now requires the following documentation to use rental income from a primary residence converted into a rental property:

An executed lease agreement

receipt from the tenant of a security deposit

supporting documentation of deposit of the security deposit into the homebuyer's account

These documents seem to make sense. However, what happens if the sale falls apart? Hopefully the rental agreement has a contingency for this so the homebuyer doesn't have to move out if his purchase doesn't happen.

Here is the part that has changed that really can be the deal-killer, especially in this market: the homebuyer must have 30% equity in their current home in order to use the rental income. If they do not have 30% equity, even if they have satisfied the conditions above, they must include the PITI on the old home as a debt with no rental offset!

Why, you may ask, is 30% equity required to use the rental income? Fannie Mae is worried about buying and bailing. Buying and bailing means buying a new home while your credit is good, and then walking away from the loan on the old home.

My guess is that Fannie Mae has an interest in such a large percentage of homes, this is how they keep people in the homes with a low percentage of equity. If they can't qualify, they are less likely to bail!

Fannie Mae now requires an appraisal on the current home that is no more than 60 days old at closing to determine if the homebuyer has 30% equity in the current home.

It's critically important for both loan originators and real estate agents to stay on top of current guidelines. By the way, did you know that starting on December 12th (tomorrow) Fannie Mae is reducing their maximum debt ratio from 55% to 45%?

Contact Me

Home Value Update for Falmouth MA 02540 Through November 2009

Fri, 11 Dec 2009 11:34:44 -0600

Home Value Update for Falmouth MA 02540 Through November 2009

According to Trulia.com, the current average listing price of homes on the market in Falmouth, MA is $679,433, while the current mean sales price of homes is $469,000. The sale prices of single family homes in Falmouth, MA have increased 20.3% in the past year through the end of November 2009.

Below is a chart of the trend of listing prices of homes for sale in Falmouth, MA, in the past year through November 2009:

falmouth Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Falmouth, MA, or surrounding area. If you're looking for a home or condo to purchase in Falmouth, MA, or in the surrounding area, then try this home search.

The Mortgage Interest Rate Lock Advisory for Falmouth MA for December 11, 2009

Fri, 11 Dec 2009 11:32:52 -0600

The Mortgage Interest Rate Lock Advisory for Falmouth MA for December 11, 2009

Here are some of the events affecting mortgage interest rates today in Falmouth, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 98.50 this morning - down 13/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 98.19 - down 10/32 from its opening, and down 23/32 from yesterday's close. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.250% - 0.50% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

Retail Sales Report for November - retail sales are up 1.3%, more than the 0.9% increase that was expected, and follows a 1.4% increase in October. When autos are excluded, retail sales are up 1.2%. That follows a 0.2% increase in October. Consumer spending makes up two-thirds of the U.S. economy, so this data usually has an impact on the financial markets. Because the report revealed stronger than expected sales, we should see higher mortgage interest rates today.
Preliminary Reading to the University of Michigan's Index of Consumer Sentiment for December - the reading came in at 73.4, much more than expected. Analysts expected a reading of 68.2. This index measures consumer willingness to spend, and had an additional negative impact on mortgage interest rates this morning.

There are a number of economic reports and related events scheduled for next week. It could be another week of volatility for mortgage interest rates. Look for details on next week's events on Monday.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, expect to see high volatility in mortgage market today. The release of the Retail Sales report on Friday can cause a great deal of movement in mortgage interest rates mortgage interest rates today.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Falmouth, MA.

Mortgage Guideline Changes - A Summary Of Changes Over The Last Few Years That Consumers Need To Know

Thu, 10 Dec 2009 18:11:02 -0600

Here's a good summary of the changes that have occured over the past few years in the mortgage industry, and why the changes came about.

Via John Jones (Keller Williams Elite, Dallas/Park Cities):

Since the beginning of the financial crisis, several significant changes have occured with mortgage guidelines. A summary of these mortgage guideline changes is imperative to helping consumers understand what changes that have taken place over the last few years may affect their ability to obtain a new mortgage loan.

Contrary to popular belief, the guideline changes have involved a lot more than just higher credit score requirements. In fact, one could argue that credit scores have perhaps been the least significant factor that has changed.   This assumption is perhaps my biggest reason for writing this article. Many buyers I encounter today, especially those who monitor their credit score and know they have good credit, are under the false impression that mortgage guidelines are essentially the same as they were a few years ago with the exception of higher credit score requirements. This leads them to assume that they will automatically be approved for a loan.

Perhaps they were able to obtain a mortgage quite easily a few years ago, or perhaps they simply do not understand that credit score is only one of a long list of factors that mortgage lenders consider. The main reason for their misunderstanding is because the media has oversimplified the complexity of the mortgage crisis and constantly portrays it as being caused by "banks giving loans to people with bad credit".   So it's logical to most people to conclude that credit score requirements have been the only factors that have changed.

Unfortunately this is far from the case. That doesn't mean that it's impossible to get a loan nowadays, but buyers need to be aware of the other changes that have taken place with mortgage guidelines. Simply having a good credit score no longer guarantees a loan approval like it did a few years ago.

The subprime mortgage market at one point made up more than half of the mortgage market in the US. Today, it accounts for just a small percentage. Fannie Mae, Freddie Mac and Ginnie Mae now account for over 90% of the mortgage market, with the remaining share consisting largely of jumbo loans held in bank portfolio and hard money loans, which are private mortgage loans made by a variety of different entities.

In other words, FHA, VA, USDA and Fannie/Freddie Conventional loans are about the only game in town, aside from jumbo loans and the small share of hard money lenders that make loans on their own terms. Of course, hard money lenders usually demand much higher fees and interest rates than the government agencies since they are able to provide a loan when nobody else will.

The government agencies guarantee loans made by banks, they do not loan the money themselves directly to consumers. But they purchase the loans from the banks once the loan has been made to the consumer. So banks will typically not lend outside of these guidelines since they do not wish to hold these loans on their books. They would rather transfer the risk and make loans to new customers by sellling them to Fannie Mae or Freddie Mac.

Here's a summary of changes that have taken place in mortgage guidelines over the last few years:

MOST SIGNIFICANT CHANGES:

ELIMINATION OF VIRTUALLY ALL STATED INCOME AND NO DOC LOANS

Stated income loans were originally designed as a way to simplify the mortgage approval process for self-employed borrowers who had to provide a significant amount of paperwork (tax returns, etc). Over the last several years, many lenders dropped the down payment requirement for stated income loans from 20% all the way down to 0% while at the same time eliminating the requirement to actually verify the borrower had a business in the first place.

Then came "no doc" loans, where the borrower simply had to provide their name and a social security number. At one point, a buyer with a 680 credit score could purchase a $750,000 home with no money down with no verification of employment, income or assets. Needless to say, these loans mostly resulted in foreclosure and massive losses to the investors.

WHAT'S DIFFERENT NOW?

Most states have passed laws that completely outlaw stated income loans. Furthermore, banks realize that loans made to individuals that can't document their income through traditional means (W-2's, tax returns, etc) have a much higher instance of foreclosure. Fannie Mae no longer purchases stated income loans. The only option most homebuyers have who can't document their income is to seek financing from a hard money lender who is willing to take the higher risk. The rates and fees are typically much higher than government insured loans.

MANY 100% FINANCING PROGRAMS HAVE BEEN ELIMINATED

A few years ago, subprime loans allowed buyers with credit scores as low as 560 (in some cases 500) to obtain a 100% loan. Also, there was a loophole in the FHA guidelines that allowed buyers to obtain a "gift" from the seller to circumvent the 3% down requirement. Fannie Mae also had a variety of 100% loan programs.

WHAT'S DIFFERENT NOW?

Fannie Mae now requires a minimum of 3% down. FHA down payment requirements have been increased to 3.5% and the loophole allowing sellers to pay their down payment has been eliminated. 100% subprime loans have been gone for several years now, and 100% stated income loans have been retired to the graveyard of history.

PROGRAMS THAT STILL ALLOW 100% FINANCING include the USDA loan program and the VA loan program. Some government grants also may be used for down payment, but these usually have very strict income requirements. The USDA loan has some specific loan guidelines and, more importantly, geographic restrictions. 100% VA loans are still available to qualified veterans. And surprisingly, the guidelines for VA loans have changed very little. This is likely due to the fact that VA analyzes income more closely than other types of loans, which has led to fewer losses compared to subprime and conventional loans.

GUIDELINES FOR BUYERS WHO WANT TO KEEP THEIR CURRENT HOME AS AN INVESTMENT PROPERTY, SECOND HOME OR SELL THE HOME AFTER CLOSING ON THE NEW ONE

A few years ago, most buyers who wanted to purchase a different home (move-up) or even downsize to a smaller home would simply lease their current home and provide a copy of this lease to their lender to offset their mortgage payment. Then once the foreclosure crisis picked up steam, lenders began to notice that a significant amount of foreclosures were occuring on homes where buyers had purchased another home and simply let the first home go into foreclosure. This was even happening on many buyers who had perfect credit. This tactic, known as "buy and bail", began causing a massive amount of losses to mortgage companies. Even many buyers who intended on keeping their home as an investment property or who were planning to sell the home shortly after closing on the new one began falling behind because of a slowdown in the market.

WHAT'S DIFFERENT NOW?

Homebuyers who want to keep their current home may not be able to simply show a lease to offset the payment. Fannie Mae, in most cases, requires the buyer to prove they have at least 30% equity in their current home in order to offset the current payment with a lease. They also may be required to show at least six months payment reserves for both the current and new home. FHA also requires 25% equity, unless certain conditions exist (such as moving to an area that's not within reasonable commuting distance). Proof that the first month's rent and/or security deposit has been obtained is often required as well. Homebuyers that are upside down on their current home or who do not meet these equity requirements may still be able to obtain a new loan provided they qualify with both mortgage payments.

RESERVE REQUIREMENTS

During the subprime boom, many lenders relaxed or completely eliminated requirements that borrowers have reserves in the bank after closing. Statistically, buyers are much more likely to have problems paying their mortgage without at least some cushion to fall back on in case of a financial hardship, such as job loss, etc.

WHAT'S DIFFERENT NOW?

While most loans do not have specific requirements for reserves, some lenders now require reserves for buyers with lower credit scores, as well as in certain situations where the overall risk of default may be higher. A good example is buyers that are keeping their current residence, as described above. In general, buyers who have little or no reserves will find it harder to obtain a mortgage.

DEBT TO INCOME RATIO LIMITS

The debt-to-income ratio is defined as the ratio of total monthly obligations compared to total gross monthly income. So a homebuyer who makes $5000 per month but has $2500 per month in debts, including the proposed new house payment, would have a debt ratio of 50%. Debt ratio requirements during the subprime boom were often allowed to exceed 60 or 70% and were completely ignored in many cases.

WHAT'S DIFFERENT NOW?

Fannie Mae recently changed their maximum debt-to-income ratio to 45% from 50%. Many lenders may also have an arbitrary requirement regardless of whether or not the loan program guidelines do or not. The automated underwriting systems have tightened the maximum debt-to-income requirements in many situations. While credit score may help to increase a buyer's allowable debt ratios, having a high credit score alone does not guarantee an approval.

OVERLAY (ARBITRARY) GUIDELINES

This is perhaps becoming the most significant change that is affecting many loan applicants. An overlay guideline is essentially a guideline imposed by a lender that is over and above the loan guidelines themselves. For example, FHA does not have a minimum credit score requirement per se. However, I'm not aware of any lenders that do not have some kind of minimum credit score for FHA buyers. Why do lenders do this? Because even though an agency such as FHA or Fannie Mae may guarantee a loan, that doesn't mean the lender will not incur a loss if the buyer fails to make their payments. Therefore, lenders will often analyze the loans they've originated in the past and impose certain requirements that may be over and above the requirements set by the federal agency that insures or guarantees the loans.

WHAT'S DIFFERENT NOW?

Most lenders have a minimum credit score requirement of 600-620 for FHA loans. Also, some lenders may either require a second-level signature from upper management on loans that are deemed to carry a higher risk of default, such as for buyers with high debt ratios, low reserves, a spotty employment or income history or buyers that are purchasing a home that's in an area where real estate values have declined significantly.

OTHER CHANGES:

HIGHER INTEREST RATES FOR BUYERS WITH LOWER CREDIT SCORES AND LESS MONEY DOWN

Fannie Mae began this trend a couple of years ago by instituting "loan level price adjustments" for buyers with less than 740 credit scores and who were putting down less than 40% down (yes, 40%). Although the adjustments to the rate are very minor at this level, buyers with less than a 680 credit score and less than 20% down may see a significant adjustment to either their rate or to their closing costs. And since many buyers assume the rate they see advertised is the rate everyone gets, they may budget the cost for their new home based on a rate that is not obtainable based on their situation. Furthermore, many companies are now imposing rate adjustments to buyers seeking government loans (FHA, VA and USDA).

MORTGAGE COMPANIES THAT ADVERTISE RATES ON THE INTERNET, TV AND RADIO DO NOT TAKE THESE PRICING ADJUSTMENTS INTO ACCOUNT. Most advertisements disclose somewhere in their fine print that the rates they advertise assume a credit score of 740 and a 20% down payment. So don't assume the rate you see is the rate you're going to get until a loan officer has a chance to fully qualify you by obtaining a full credit report and also an analysis of your current situation and income.

TOUGHER APPRAISAL REQUIREMENTS

Lenders require an appraisal to be conducted on virtually all home purchase transactions to ensure that the price a homebuyer is paying for a home can be justified with recent sales data. This protects lenders collateral position in case of foreclosure.  In past years, loan officers would simply call their favorite appraiser and request an appraisal.

Because of perceived conflicts of interest with this process, a new process was created called the Home Valuation Code of Contact, which restricts loan officers and production staff from communicating directly with an appraiser. The result has led to longer waiting periods to obtain appraisals and sometimes inaccurate appraisals since the management companies often select appraisers that are unfamiliar with an area. Since the appraisals are now ordered through appraisal management companies, this extra step means extra time (and money in many cases) for home buyers.

LONGER WAITING PERIODS

The Federal Reserve recently amended the Truth In Lending laws. Buyers now must wait at least seven days to close after the full terms of their proposed loan have been delivered and disclosed to them. Furthermore, if the terms of the loan change (which is sometimes not the fault of the lender and may be the result of a change outside of everyone's control), the buyer must wait another three days to close.

While this may seem like nothing to worry about, keep in mind that the sales contract in Texas calls for a certain specific closing date. If the buyer fails to close by this date, even as the result of a federally mandated waiting period, the seller has the option of terminating the contract at their sole discretion in the State of Texas. These waiting periods can often become an issue and put buyers at risk of potentially losing the contract on their home if they wait too long to select a lender. The days of five day closings are a thing of the past, and the process of the new appraisal requirements can also cause additional delays as well.   The bottom line is that homebuyers need to shop for their loan well in advance of shopping for a home to avoid any potential delays.

So in conclusion, the changes that have taken place in mortgage guidelines over the last few years have been a lot more than just higher credit score requirements. In fact, the minimum credit score of 620 that most lenders require to obtain an FHA loan is not much higher than it was a few years ago.  The most significant changes have occured in the more detailed guidelines that most buyers may not even realize exist. And while it's certainly safe to say that many changes have taken place, it's certainly not impossible to obtain a loan if these situations can be overcome.

But waiting until the last minute to consult with a lender is a mistake that will cost many homebuyers the opportunity to qualify for a home loan. If you are considering purchasing a home, please contact me today so I can evaluate your situation and put you in touch with a lender that can consult with you at no charge to evaluate your options.

John Jones, Realtor

The Kaul Group - Keller Williams Elite, Dallas / Park Cities

www.dfwhomefinder.info

www.thekaulgroup.com

8201 Preston Road Suite 265

Dallas, TX 75265

Dallas, TX Real Estate and surrounding areas of Richardson, Plano, Addison, Frisco, Carrollton, Farmers Branch, Garland, Allen and Irving.

Dallas, TX neighborhoods and subdivisions of Lake Highlands, White Rock Lake, Lochwood, Eastwood, L Streets, M Streets, Hollywood Heights, Lakewood, Coronado and Gastonwood, Forest Hills, Preston Hollow.

Copyright 2009 by John Jones, All Rights Reserved. You may reblog or republish with links back to this post.

* THIS ARTICLE WAS ORIGINALLY PUBLISHED AT http://dfwhomefinder.info *

Home Value Update for Sandwich MA 02653 Through November 2009

Thu, 10 Dec 2009 13:10:21 -0600

Home Value Update for Sandwich MA 02653 Through November 2009

According to Trulia.com, the current average listing price of homes on the market in Sandwich, MA is $474,513, while the current mean sales price of homes is $293,000. The sale prices of single family homes in Sandwich, MA fell 2.3% in the past year through the end of November 2009, and have fallen 17.8% over the last 5 years.

Below is a chart of the trend of listing prices of homes for sale in Sandwich, MA, in the past year through November 2009:

Sandwich Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Sandwich, MA, or surrounding area. If you're looking for a home or condo to purchase in Sandwich, MA, or in the surrounding area, then try this home search.

Home Value Update for Sandwich MA Through November 2009

Thu, 10 Dec 2009 10:39:26 -0600

Home Value Update for Sandwich MA Through November 2009

Below is a chart of the trend of listing prices of homes for sale in Sandwich, MA, in the past year through November 2009:

Sandwich Recently Sold Homes

The Mortgage Interest Rate Lock Advisory for Sandwich MA for December 10, 2009

Thu, 10 Dec 2009 10:34:28 -0600

The Mortgage Interest Rate Lock Advisory for Sandwich MA for December 10, 2009

Here are some of the events affecting mortgage interest rates today in Sandwich, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 99.09 this morning - the same as yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 98.78 - down 10/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.375% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

Goods and Services Trade Balance Report for October - the trade deficit narrowed to $32.9 billion in October. Analysts expected the report to show a $36.4 billion trade deficit. However, it is this week's least important report, and usually doesn't have much of an affect on the mortgage market or mortgage interest rates.
Jobless Claims - are up again. There were 474,000 new claims filed for unemployment last week, up 17,000 from the previous week. Analysts expected the report to show that 460,000 new claims for unemployment were filed. The 4-week average fell to 473,750 while continuing claims fell sharply by 303,000 to 5.157 million. However, the number of people who have exhausted their unemployment benefits is unknown. However, this data is usually not considered to be very important to the mortgage market.
Fed's MBS Purchase Program - the results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $1.054 trillion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

The Treasury Dept. will auction $13 billion in 30-Yr Bonds today. For months, the demand for US debt has been very strong as the dollar fell in value. However, it may be a little more difficult his week to auction these Notes and Bonds given uncertainty over the direction of the dollar. This could lead to higher mortgage interest rates this week.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, expect to see high volatility in mortgage market today and tomorrow. The release of the Retail Sales report on Friday can cause a great deal of movement in mortgage interest rates, but Wednesday's and Thursday's Treasury auctions may also have an impact on the mortgage market and mortgage interest rates.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Sandwich, MA.

How to Get Plastered the Easy Way!

Wed, 09 Dec 2009 19:35:45 -0600

How to Get Plastered the Easy Way!
(A True Story)

Susan* put together a little story about how she's been down in the dumps lately. A little depressed. You see, her phone stopped ringing. No one loved her anymore. (Okay, she was actually quite depressed.)

You see, some "psychiatrists" came to see her one day. They said they were doctors who can fix whatever ails you. They thought she needed some fixin' even though nuthin' was broken. "You need to get right with the world," they said. No one can find you. No one will love you until they can find you. But she protested. "Ah, ah," they said, "we're doctors, and we know what's wrong with you and how to remedy the situation." So they put her in therapy.

So, they tinkered with her mind. They twisted her words. And they waved magical wands this way and that. And they said if she spoke "this way" instead of "that way," people will love her because she will care. And they put these twisted words into frames. And they said that the words will look much prettier, and people will be awed and inspired. And they will want to call Susan* and tell her how much they loved her. And they will buy from her.

So, Susan* listened. And she took their medicine. Without asking too many questions. Because that's what they prescribed.

And guess what happened next.... That's right, people were repulsed by the change. They turned away from Susan*. They didn't love her anymore. They couldn't bear to make her phone ring. That really depressed Susan*. She didn't know what to do. Perhaps she ought to charge these "doctors" with malpractice.

Then one day, an Internet guru came to her and said, "but Susan*, you're taking the wrong medicine. You don't need to twist your words. And you don't need to put them into beautiful frames. What you really need to do is make it Rain. To make it rain, you need to drink of ‘the nectar.'"

The "nectar" asked Susan*? Yes, this guru said. You see, there's this wonderful juice. It's called Google Juice. This Google Juice will get you "plastered" all over the Internet. People will find you. They won't care if your words aren't "this way or that." They won't even care what kind of frames they're in. In fact, they don't even want to see your words in frames. But they will find you. And they will call you. And they will come to you in awe and be inspired and astonished that you can help them solve their problems.

Susan* asked, "well, where do I get this ‘Google Juice?' How much will it cost?" The guru said, "What's more important? Spending as little as possible? Or having people find you with the greatest of ease, making your phone ring and giving you their business? (Kinda like: do you want to "list your house or do you want to sell your house?" or "do you want to negotiate or do you want to buy that house?")

Susan* said, "I don't want to be depressed. I want people to call me."

The guru said, "well, it's simple then. You see, this nectar ... this ‘Google Juice" ... can be found only on ActiveRain. When you drink of this "nectar" ... this "Google Juice" ... you will be "plastered" all over the Internet. And it will make it rain! People will find you, and your phone will ring, and they will call you and give you their business.

Susan* queried, "well, how much IS this Google Juice?" The Internet guru replied, why, my little child, it's just $39/mo. You have to take it every month, but the small investment is certainly a lot less than what those "psychiatrists" were charging you, and it's a lot more effective.

So, Susan* took his advice. And now, Susan* is not depressed anymore. In less than 2 months, it began to rain. A little at first. Then more, and more, and more. Now it's raining! It's pouring! Lesley's "plastered" all over the Internet. And people are now calling her, and they are flocking to her, and they are buying from her.

The moral is, you don't need all those medicines. Drugs will cause impairment. All you need to do is drink the right juice. The natural juice. "Google Juice." And it's right here on ActiveRain!

Thanks, Susan*. Your story inspired me to write this.

(* - name changed to protect the innocent)

Home Value Update for Bourne MA 02532 Through November 2009

Wed, 09 Dec 2009 10:44:28 -0600

Home Value Update for Bourne MA 02532 Through November 2009

According to Trulia.com, the current average listing price of homes on the market in Bourne, MA is $410,668, while the current mean sales price of homes is $267,450. The sale prices of single family homes in Bourne, MA fell 2.7% in the past year through the end of November 2009, and have fallen 14.4% over the last 5 years.

Below is a chart of the trend of listing prices of homes for sale in Bourne, MA, in the past year through November 2009:

Bourne Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Bourne, MA, or surrounding area. If you're looking for a home or condo to purchase in Bourne, MA, or in the surrounding area, then try this home search.

The Mortgage Interest Rate Lock Advisory for Bourne MA for December 9, 2009

Wed, 09 Dec 2009 10:42:19 -0600

The Mortgage Interest Rate Lock Advisory for Bourne MA for December 9, 2009

Here are some of the events affecting mortgage interest rates today in Bourne, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 99.19 this morning - down 3/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 99.25 - up 2/32 from its opening. It was up as high as 99.71 this morning - up 14/32 from its opening - but have fallen ahead of the posting of the results of the 3-Yr Notes auction early this afternoon. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

There are no economic reports scheduled for release today.

In other news, the Treasury Dept. will auction $21 billion in 10-Yr Notes today. For months, the demand for US debt has been very strong as the dollar fell in value. However, it might be a little more difficult to auction Notes and Bonds this week given uncertainty over the direction of the dollar. This could potentially lead to higher mortgage interest rates.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, expect to see high volatility in mortgage market in the latter part of the week. The release of the Retail Sales report on Friday can cause a great deal of movement in mortgage interest rates, but Wednesday's and Thursday's Treasury auctions may also have an impact on the mortgage market and mortgage interest rates.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Bourne, MA.

The Mortgage Interest Rate Lock Advisory for Wareham MA for December 8, 2009

Tue, 08 Dec 2009 12:12:42 -0600

The Mortgage Interest Rate Lock Advisory for Wareham MA for December 8, 2009

Here are some of the events affecting mortgage interest rates today in Wareham, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 99.31 this morning - the same as yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 99.41 - up 3/32 from its opening. It was up as high as 99.71 this morning - up 14/32 from its opening - but have fallen ahead of the posting of the results of the 3-Yr Notes auction early this afternoon. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be 0.125% - 0.25% better in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

There are no economic reports scheduled for release today.

In other news, the Treasury Dept. will auction $40 billion in 3-Yr Notes today. For months, the demand for US debt has been very strong as the dollar fell in value. However, it might be a little more difficult to auction Notes and Bonds this week given uncertainty over the direction of the dollar. This could potentially lead to higher mortgage interest rates this afternoon.

What's Happening With Mortgage Interest Rates Today:

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Wareham, MA.

Home Value Update for Wareham MA Through November 2009

Tue, 08 Dec 2009 12:09:42 -0600

Home Value Update for Wareham MA Through November 2009

According to Trulia.com, the current average listing price of homes on the market in Wareham, MA is $440,996, while the current mean sales price of homes is $209,950. The sale prices of single family homes in Wareham, MA fell 4.1% in the past year through the end of November 2009. However, sale prices of homes have fallen 16.4% over the last 5 years.

Below is a chart of the trend of listing prices of homes for sale in Wareham, MA, in the past year through November 2009:

Wareham Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Wareham, MA, or surrounding area. If you're looking for a home or condo to purchase in Wareham, MA, or in the surrounding area, then try this home search.

Home Value Update for Plymouth MA Through October 2009

Mon, 07 Dec 2009 11:32:01 -0600

Home Value Update for Plymouth MA Through October 2009

According to Trulia.com, the current average listing price of homes on the market in Plymouth, MA is $411,177, while the current mean sales price of homes is $250,000. The sale prices of single family homes in Plymouth, MA have increased 4.4% in the past year through the end of October 2009. However, sale prices of homes have fallen 19.5% over the last 5 years.

Below is a chart of the trend of listing prices of homes for sale in Plymouth, MA, in the past year through October 2009:

Plymouth Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Plymouth, MA, or surrounding area. If you're looking for a home or condo to purchase in Plymouth, MA, or in the surrounding area, then try this home search.

The Mortgage Interest Rate Lock Advisory for Plymouth MA for December 7, 2009

Mon, 07 Dec 2009 10:29:35 -0600

The Mortgage Interest Rate Lock Advisory for Plymouth MA for December 7, 2009

Here are some of the events affecting mortgage interest rates today in Plymouth, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 98.72 this morning - down 2/32 from Friday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 99.06 - up 11/32 from its opening, and up 9/32 from Friday's close. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be 0.125% - 0.25% better in price this morning as compared to Friday.

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

There are no economic reports scheduled for release today.

In other news, the primary force behind lower interest rates, the decline of the US dollar, may be ending soon. The dollar rallied on Friday after the release of the employment situation report. The much better than expected job loss report is fueling concerns the Fed may have to begin hiking short term interest rates sooner than later. Gold fell $60.00/ounce on Friday and another $25/ounce today as the dollar climbed on one of its best days in many months.

What's Happening With Mortgage Interest Rates Today:

Low to Moderate Volatility. Overall, I suspect it will be a fairly active week for the mortgage market and mortgage interest rates, and we may see sizable movement in mortgage interest rates later this week. The most important day of the week will be Friday with the release of the Employment Situation Report. This report will probably be the key to rates moving lower or higher for the week. If it reveals stronger than expected results, we may see mortgage interest rates spike higher - possibly erasing any gains from the week.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get the best available mortgage interest rates for your situation in Plymouth, MA!

The Mortgage Market Watch for the Week of December 7, 2009

Mon, 07 Dec 2009 04:38:57 -0600

The Mortgage Market Watch for the Week of December 7, 2009

Events Affecting the Mortgage Market This Week:

The Treasury Dept. will auction a total of $74 billion in Notes and Bonds this week: $40 billion in 3-Yr Notes on Tuesday, $21 billion in 10-Yr Notes on Wednesday, and $13B in 30-Yr Bonds on Thursday. If these auctions are met with a strong demand from investors, we should see afternoon strength in mortgage backed securities and lower mortgage interest rates those days. However, if these auctions are met with lackluster demand, then we should see afternoon weakness in mortgage backed securities and higher mortgage interest rates.

Economic Reports to be Released This Week:

There are only 3 economic reports scheduled for release this week that could have an impact on the mortgage market and mortgage interest rates.

Monday, December 7th:

There are no economic reports scheduled for release today.

Tuesday, December 8th:

There are no economic reports scheduled for release today.

Wednesday, December 9th:

There are no economic reports scheduled for release today.

Thursday, December 10th:

Goods and Services Trade Balance Report for October - this report gives the size of the U.S. trade deficit. The report is expected to show a $36.4 billion trade deficit. However, it is this week's least important report. Unless it varies greatly from forecasts, I don't expect the report to affect the mortgage market or mortgage interest rates.
Jobless Claims - New claims for unemployment are tabulated each week to show the number of individuals who filed for unemployment insurance for the first time. Analysts are predicting that 460,000 new claims for unemployment will have been filed last week. With a decreasing trend in the filing of new claims for unemployment, this suggests that the labor market is improving. However, this data is usually not considered to be very important to the mortgage market.
Fed's MBS Purchase Program - the results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $1.054 trillion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

Friday, December 11th:

Retail Sales Report for November - analysts are forecasting a 0.9% increase in retail sales in November, and a 0.5% increase in sales when autos are excluded. Because consumer spending makes up two-thirds of the U.S. economy, this data is very important to the financial markets. If the report reveals weaker than expected sales, we should see lower mortgage interest rates those days. However, a stronger than expected reading could lead to higher mortgage interest rates.
Preliminary Reading to the University of Michigan's Index of Consumer Sentiment for December - the index is expected to show a reading of 68.2, which would be an increase from last month's reading of 67.4. This index measures consumer willingness to spend, and can have a slight impact on the mortgage market.

How do Economic Data Releases Affect Mortgage Interest Rates?

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Recent Activity in Mortgage Backed Securities:

Mortgage Interest Rate Outlook:

What Is A Reverse Mortgage? (Part 12)

Sat, 05 Dec 2009 11:53:19 -0600

What Is A Reverse Mortgage? (Part 12)
A 12 Part Series

Part 12 - Application Process for a Reverse Mortgage

The application process for a reverse mortgage takes about 30-45 days from start to finish, and includes a five step process:

Step 1. Initial Application

The initial reverse mortgage application begins the process. However, the lender can not incur any costs on your behalf until the applicants have completed counseling (Step 2). The application is non-binding, and can be canceled at any time during the process. The initial application will specify the reverse mortgage loan amount, interest rate, and fees and closing costs.

Step 2. Reverse Mortgage Counseling

The applicants must attend counseling and obtain a signed Home Equity Conversion Mortgage (HECM) Counseling Certificate. This is proof that the applicant has completed the mandatory counseling session with a HUD-approved counseling agency. The counseling can be completed before or after the initial application in most states.

Step 3. Appraisal

Once the initial application is started and the applicants have completed counseling, the lender can order the appraisal. The appraisal establishes the current market value of the applicant's property. The reverse mortgage appraisal must be conducted by an FHA-approved appraiser, and it must follow a specific FHA format.

Step 4. Underwriting

Once the appraisal is done, the reverse mortgage application will be submitted to underwriting for review and approval. The lender will also confirm the applicant's legal ownership of the property by conducting a title search and purchasing title insurance. They will also work with the applicant to clear up any issues with trusts, unpaid liens against the title, bankruptcies, etc. Once the lender has finished underwriting and all outstanding issues (if any) have been resolved, a settlement date will be set.

Step 5. Closing or Settlement

The lender and the applicant set a closing date when a notary or attorney meets with the applicants to sign the final closing documents. This is the applicant's opportunity to review the closing documents to make sure that the interest rate, fees, and loan amounts are the expected amounts. Once signed, the application goes into a three-day "right of rescission" period. This means that even though the closing has taken place, the applicant can still cancel the application with no penalty anytime for up to 3 business days after settlement.

If the applicant does not cancel the application, the title company or attorney will issue a check to the homeowner (typically by overnight mail). If the applicant was using a reverse mortgage to pay off an existing mortgage, the title company will also send the mortgage payoff amount to the bank.

Part 1 - Definition of a Reverse Mortgage
Part 2 - Reverse Mortgage Eligibility Requirements
Part 3 - Myths and Frequently Asked Questions of Reverse Mortgages
Part 4 - Pros and Cons of a Reverse Mortgage
Part 5 - Reverse Mortgages, Income and Taxes
Part 6 - Outliving the Reverse Mortgage
Part 7 - Loan Limits and Distribution of Money of Reverse Mortgages
Part 8 - Using Reverse Mortgage to Purchase a Home
Part 9 - Reverse Mortgage Counseling
Part 10 - Fees for a Reverse Mortgage
Part 11 - Reverse Mortgage Interest Rates

If you're 62 or older and are looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, to pay for healthcare expenses, or even to buy your retirement home, then consider getting a reverse mortgage. Find out how a reverse mortgage can use the equity in your home to pay you.

What Is A Reverse Mortgage? (Part 11)

Fri, 04 Dec 2009 11:39:31 -0600

What Is A Reverse Mortgage? (Part 11)
A 12 Part Series

Part 11 - Reverse Mortgage Interest Rates

Adjustable Rate Reverse Mortgage

Adjustable rate reverse mortgages have interest rates that increase or decrease as a market interest rate index changes. The two indexes that are used to determine the variable interest rates on reverse mortgages are the LIBOR (London Inter-bank Offering Rate) and CMT (Constant Maturity Treasury).

CMT - CMT stands for "Constant Maturity Treasury". This is more commonly known as a the "Treasury Bill" or "T-Bill" yield curve rates.
LIBOR - LIBOR stands for "London Inter-Bank Offered Rate". The LIBOR is a popular alternative to the CMT for lenders because it is an international index rate instead of being a US-focused index. The LIBOR is the most commonly used benchmark of interest rate indexes to make adjustments to adjustable rate mortgages.

Interest Rate Calculation

The total interest rate for an adjustable rate reverse mortgage is calculated by adding the interest rate index and a margin that is set by the lender. For example, a HECM CMT 300 refers to the Home Equity Conversion Mortgage (reverse mortgage) program that uses the CMT index and a margin of 300. If the CMT index is 2.10%, then the total rate is 2.10% plus the 3.00% margin set by the lender which equals an interest rate of 5.10%.

Fixed Rate Reverse Mortgage

The fixed rate programs are specific to each lender and are not indexed to published interest rates or indices. To get the currently available fixed rate, a reverse mortgage lender must prepare a good faith estimate.

Next: Part 12 - Application Process for a Reverse Mortgage

Home Value Update for Provincetown MA Through October 2009

Fri, 04 Dec 2009 11:27:29 -0600

Home Value Update for Provincetown MA Through October 2009

According to Trulia.com, the sale prices of single family homes in Provincetown, MA have depreciated 15.5% in the past year through the end of October 2009. Sale prices have depreciated 22.2% over the last 5 years.

The current mean sales price of homes on the market in Provincetown, MA, is $392,500. Below is a chart of the trend of listing prices of homes for sale in Provincetown, MA, in the past year through October 2009:

Provincetown Recently Sold Homes

The $8000 first-time homebuyer tax credit has been extended, and now expires on April 30, 2010. So, there's no better time than now to buy a home in Provincetown, MA, or surrounding area. If you're looking for a home or condo to purchase in Provincetown, MA, or in the surrounding area, then try this home search.

You can still buy a home with no money down with the USDA Rural Development Home Loan program. With the FHA Mortgage program, you can purchase a home with as little as 3.5% down. When you're ready to buy a home, find out how much home or condo you can afford to purchase in Provincetown, MA, or in the surrounding area.

The Mortgage Interest Rate Lock Advisory for Provincetown MA for December 4, 2009

Fri, 04 Dec 2009 11:23:02 -0600

The Mortgage Interest Rate Lock Advisory for Provincetown MA for December 4, 2009

Here are some of the events affecting mortgage interest rates today in Provincetown, MA.

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.0% MBS coupon opened at 98.81 this morning - down 15/32 from yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.0% coupon:

The FNMA 30-Year 4.0% MBS coupon is currently trading at 98.72 - down 3/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.25% - 0.50% worse in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.0% coupon over the past 30 days:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

Employment Situation Report for November - the unemployment rate fell to 10.0% last month - Analysts had expected the rate to remain at 10.2%. There were only 11,000 jobs lost last month, far less than the 125,000 that was expected. This follows a sharply reduced loss of 111,000 jobs in October, and a loss of 219,000 jobs in September. This indicates that unemployment is not nearly as bad as once thought and that economic recovery is now more likely. This led to higher mortgage interest rates this morning.
Factory Orders Report for October - there was a 6.0% increase in factory orders in October, substantially more than the 0.2% increase that was expected. This report indicates that the manufacturing sector is also recovering. This report is similar to the Durable Goods Orders that was released last week. The difference is this one includes orders for both durable and non-durable goods. While this report provides us with a measurement of manufacturing sector strength, it usually doesn't have a major impact on the mortgage market. However, with such large gains, this also led to higher mortgage interest rates this morning.

The Employment Situation Report came in much better than expected. Watch this video from CNBC to learn more:

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. As forecasted, we saw a sizable movement in mortgage interest rates the past 2 days. The Employment Situation Report and Factory Orders Report revealed much better than expected results, and we saw mortgage interest rates spike higher and erased all gains from the week.

There's not much room for MBS prices to move higher or for mortgage interest rates to move lower at the moment. While rising, mortgage interest rates are still at historic lows. If you're happy with the rate being offered to you and don't want to risk mortgage interest rates moving higher, you should apply and lock in today. While there's still some room for MBS prices to tick higher, it's better to have locked when you should have floated than it is to float when you should have locked.

Next week will be fairly light in terms of the number of economic reports scheduled for release. There's also a couple of key Treasury auctions scheduled for the middle of the week. Look for more details on next week's data and events in the Weekly Mortgage Market Watch on Monday.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

Lock if my closing was taking place within the next 7 days
Lock if my closing was taking place between 8 and 30 days
Float if my closing was taking place between 31 and 45 days
Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Provincetown, MA.

What Is A Reverse Mortgage? (Part 10)

Thu, 03 Dec 2009 13:42:15 -0600

What Is A Reverse Mortgage? (Part 10)
A 12 Part Series

Part 10 - Fees for a Reverse Mortgage

Closing Costs

The three largest closing costs in a reverse mortgage are the FHA upfront mortgage insurance premium, the origination fee, and title insurance. The two costs that are typically paid out of pocket are the appraisal and counseling.

FHA Mortgage Insurance

The upfront mortgage insurance premium is 2% of the maximum mortgage amount up to the HUD limit in the county the home is located in. The FHA insurance provides three guarantees:

The homeowner can not "outlive" the reverse mortgage
The homeowner and heirs will not be liable for the balance of the loan if the remaining balance exceeds the value of the home (a reverse mortgage can not become "upside-down")
The FHA will take over the loan if the lender becomes financial troubled or if the loan balance exceeds 97.75% of the value of the property

Origination Fee

The origination fee is what the reverse mortgage lender earns on the loan. The FHA uses a formula to determine what the lender can charge. The formula is:

2% of the first $200,000 of property value and 1% of the second $200,000 of property value
A minimum of $2,500
An maximum of $6,000

Title Fees

Title insurance guarantees the homeowner's legal ownership of the property, and is required for all mortgages whether reverse or conventional. The largest part of title fees is title insurance. Title fees are usually broken down into:

Title insurance (varies by state and with property value)
Title search/exam
Title settlement
Notary fee
Document preparation fee
Recording of new mortgage
Payoff (if a mortgage is being paid off)
Delivery/courier fee

Appraisal

The appraisal establishes the current market value of the home. A reverse mortgage appraisal is conducted by an FHA-approved appraiser, and follows specific FHA guidelines that require more documentation than a typical appraisal. A typical FHA appraisal could cost as much as $475-$550 depending on the state. Remote locations and properties with unique circumstances (such as having extensive damage) tend to cost more.

Other Closing Costs

HECM (Home Equity Conversion Mortgage or Reverse Mortgage) Counseling
Wire Transfer Fee
Flood Certification Fee
Credit Report Fee

Interest

A reverse mortgage accrues interest -just like a traditional mortgage. However, with a reverse mortgage, the homeowner does not make monthly mortgage payments to reduce the loan balance. As a result, the loan balance grows until such time the mortgage is paid off when the property is sold or refinanced.

About two-thirds of reverse mortgage holders have adjustable rate reverse mortgages because the rate is usually lower than a fixed rate. And because the homeowners do not make monthly mortgage payments, they are not usually as concerned about possible future changes in the interest rate.

Interest Rate and Mortgage Insurance

Over the last few years, the interest rate on a reverse mortgage has fluctuated between 3% and 5%. The real interest rate is one half of a percentage point above the quoted rate, because the total rate includes the FHA's ongoing mortgage insurance premium. For example, if the quoted rate is 4.1%, the rate with the mortgage insurance premium is 4.6%.

Next: Part 11 - Reverse Mortgage Interest Rates

Part 1 - Definition of a Reverse Mortgage
Part 2 - Reverse Mortgage Eligibility Requirements
Part 3 - Myths and Frequently Asked Questions of Reverse Mortgages
Part 4 - Pros and Cons of a Reverse Mortgage
Part 5 - Reverse Mortgages, Income and Taxes
Part 6 - Outliving the Reverse Mortgage
Part 7 - Loan Limits and Distribution of Money of Reverse Mortgages
Part 8 - Using Reverse Mortgage to Purchase a Home
Part 9 - Reverse Mortgage Counseling