Credit scores are becoming more and more important to home buyers.  Mortgage rate pricing is based in part on credit scores.  A home loan refinance may not make sense because a score is 1 point below a 680 or 720.  Someone with a 619 FICO score will have trouble qualifying for a mortgage to buy that first home.  Fair Isaacs now has a cool new tool to estimate a FICO score without pulling a credit report.  Check out the Free FICO® Credit Score Estimator.

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Reprieve after six straight days of worsening fixed mortgage rates. Rates on 15 and 30 year fixed rate purchase and refinance loans ended yesterday, October 28th in a positive (lower rate) direction.

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www.PaulCantor.info

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New home sales rise 6.6 percent for September | Richmond Times-Dispatch.

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Mortgage rates remain at unbelievable low levels but ended higher at the end of last week.  It is time for those considering purchasing or refinancing to talk with a mortgage professional.  We are now close to Election Day, which history shows rates often hit low levels in the second half of October.

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This week brings us the release of four major economic reports for the markets to digest, but none of them are considered to be highly important to mortgage rates. However, this by no means leads me to believe we will have an uneventful week. This will be an extremely busy week for corporate earnings, which usually translates into stock volatility. The lack of important economic data on this week’s calendar makes it more likely that any significant swings in stock prices will influence bond trading and mortgage rates.

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Date Time (ET) Statistic For Market Expects Prior
10/18/10 09:15:00 AM Industrial Production Sep 0.20% 0.20%
10/18/10 09:15:00 AM Capacity Utilization Sep 74.80% 74.70%
10/18/10 10:00:00 AM NAHB Housing Market Index Oct 13 13
10/19/10 08:30:00 AM Housing Starts Sep 579K 598K
10/19/10 08:30:00 AM Building Permits Sep 565K 569K
10/20/10 07:00:00 AM MBA Mortgage Applications 10/15/10 NA 14.60%
10/20/10 02:00:00 PM Fed’s Beige Book Oct
10/21/10 08:30:00 AM Initial Claims 10/16/10 455K 462K
10/21/10 08:30:00 AM Continuing Claims 10/09/10 4400K 4399K
10/21/10 10:00:00 AM Leading Indicators Sep 0.30% 0.30%
10/21/10 10:00:00 AM Philadelphia Fed Oct 1.4 -0.7

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September’s Industrial Production will give  an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.2% increase in output from August’s level, meaning that manufacturing activity rose slightly. A larger than expected increase in output would be negative for bonds and mortgage rates as it would indicate economic strength. A decline in output would likely push mortgage rates lower tomorrow morning.
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September’s Housing Starts is the week’s second release, coming early Tuesday morning. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a decline in new home starts between August and September. I believe we need to see a significant surprise in this data for it to influence mortgage rates.
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The only report scheduled for release Wednesday will be released during afternoon trading when the Federal Reserve will post its Beige Book at 2:00 PM ET. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve when determining monetary policy at their FOMC meetings. If it reveals stronger signs of economic growth from the last release, we could see mortgage rates revise higher shortly after its release.

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The last report is September’s Leading Economic Indicators (LEI) late Thursday morning. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.3% from August’s reading. This would indicate that economic activity is likely to increase moderately over the next couple of months. That would be relatively bad news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a decline in the index.
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Overall, I don’t see a particular day that should be labeled the single most important. The week’s economic reports are all moderately important to the markets, so we can’t rely on any of them to drive rates. In fact, the biggest force behind any noticeable moves in mortgage pricing may actually come from the stock markets. There are many companies posting earning reports during the week, including some big names that include Apple and Citigroup. If the corporate earnings releases are generally weaker than forecasts, stocks may suffer, making bonds more appealing to investors. The end result would likely be an improvement in rates. The flip side though is stronger than expected earnings that drive stocks higher, pushing bond prices lower and mortgage rates upward.

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Considering whether to lock  a refinance or to buy that new home?  Now is the time consult your mortgage loan officer.

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www.PaulCantor.info

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“We applied for a refinance and have received 6 phone calls from other lenders”.

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“I went to get pre-approved for a mortgage to purchase my first home and had a message on my voice mail from some guy 800 miles away”.

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These are common complaints.  The credit bureaus are  selling information.  When someone applies for a mortgage to purchase or refinance a home and credit is pulled the credit bureaus will sell the names and contact information of those who had their credit report pulled by a mortgage company.  These names are called trigger leads and bottom fishers will often call prospects with a statement like :I am calling about the mortgage you applied for yesterday.  Direct mail is used and even email is sent by these deceptive loan officers.

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Protect yourself from becoming a trigger lead register your phone on the national do not call list and also with tell the credit repositories that you don not want your information sold.  You may do this at www.optoutprescreen.com.  Some people even claim their credit scores have increased by registering here.

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A 15-year mortgage isn’t for everyone Amy Hoak’s Home Economics – MarketWatch.

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The House and Senate both approved H.R. 3081 which included the extension of the increased conforming loan limit in high cost areas. This extension covers conforming loans limits that are backed by Fannie Mae, Freddie Mac and FHA (Federal Housing Administration) and will be in effect through the new fiscal year which ends September 30, 2011.  The maximum amount of conforming and FHA loans will remain as high as $729,750.  Here are some of the conforming loan limits in Virginia:

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Richmond City MSA $528,750
Washington DC Metro $729,750
Charlottesville MSA $425,000
Winchester MSA $475,000
VA Beach/Norfolk MSA $428,750

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It is expected that President Obama will sign the legislation.

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www.paulcantor.info

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Beginning this week, Fannie Mae and Freddie Mac are trying to sell off 150,000 foreclosed homes by offering low down payments, no requirement for mortgage insurance, and up to $30,000 added to the mortgage for renovations. In addition, the real estate practitioner selling the property gets a $1,500 bonus.
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In some neighborhoods, these properties undercut the average listing by $100,000.
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Fannie and Freddie already have repaired the biggest problems with the property including roofs, plumbing, and electrical work.
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Buyers who plan to live in the properties get a 15-day chance to view the homes before investors can purchase them. Investors with cash will likely snap up any properties remaining at the end of the grace period.

“Our goal is to recover as much as we can to offset our loss and not to be low balling properties just to move them,” says a Freddie Mac spokesperson. “We absolutely have no motivation to be leading a downward spiral in home prices.”
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Source: Smart Money, Anna Maria Andriotis (09/28/2010

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Considering an FHA loans to purchase or refinance your home.  Contact your Loan Officer prior to October 4th.  We’ve been talking about, The new hidden price on FHA loans that is equal to a rise in the mortgage interest  rate of one-third of one percent.  This may make the difference on whether someone will be able to qualify to purchase a home or not purchase a home.  It will also make the payment on FHA refinances higher:

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Upfront Premiums (Case Numbers Issued 10/04/2010 and later):

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October 4, 2010, for FHA traditional purchase and refinance products, the upfront premium, shown in basis points below, will be charged for all amortization terms.

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Mortgage Type Upfront Premium Requirement
Purchase Money Mortgages and Full-Credit

Qualifying Refinances

10013PS
Streamline Refinances (all types) 100 BPS

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Annual Premiums

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Effective for FHA loans for which the case number is assigned on or after

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October 4, 2010, FHA will increase the annual premiums collected on a monthly basis. For FHA traditional purchase and refinance products, the annual premium, shown in basis points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to-value ratio and length ol’the mortgage according to the following schedule:

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LTV Annual Premiums for Loans > 15 Years
= or < 95 percent 85 BPS
>95 percent 90 BPS

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The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected according to the following schedule.

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LTV Annual Premiums for Loans = or < 15 Years
= or < 90 percent -None
>90 percent 25 131’S

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Cancellation of FHA’s Annual Mortgage Insurance Premiums

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The cancellation policies defined in Mortgagee Letters 2000-38 and 2000-46 remain unchanged.

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