Consider Locking.

Dec 3, 2010

Mortgage rates have steadily risen this week. Reasons for this include the US agreeing to help bail out Europe and consumers suffering from “recession Fatigue”

A change this morning may give home owners and buyers an opportunity to get last weeks rates as payroll data released this morning not a s strong as expected.  Those looking at refinancing in the near future should call their mortgage professional today to discuss locking.

Paul Cantor

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Last Friday mortgage prices increased a little, but not much; holiday trade generally doesn’t amount to much. This morning the bond and mortgage markets opened better with no data points today; this week however, is filled with data beginning tomorrow. The dollar is stronger again this morning, not what equity markets want to see, the stock index futures were lower as a result. The US rate markets are supported on concern the rescue for Ireland will fail to contain Europe’s sovereign-debt crisis, increasing demand for the safety of U.S. government debt. Next up are Portugal and Spain as Europe’s debt issues show little signs of being contained. The tensions between South and North Korea continue to be a concern but so far as these kinds of face offs go, it hasn’t been a major impact on the markets.

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Christmas shopping (yes, I said Christmas) was slightly stronger than last year. Consumer spending on Black Friday was up about 0.3%, with most retailers better but still remains an unfinished story. Not anyway scientific, I was out briefly on Sunday and wasn’t impressed with what I saw at the most prestigious malls in Indy, not as much traffic as one would have expected. Most analysts expect stronger Christmas sales than last year, but refrain from becoming too optimistic.

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More QE 2 Fed buying today; the Fed is scheduled today to buy $1.5B to $2.5B of Treasuries due from February 2021 to November 2027 and $6B to $8B in government debt maturing from May 2013 to November 2014. The central bank plans to focus about 86% of its purchases on notes due in 2.5 years to 10 years, leaving the 30- year bond as the security that most closely reflects market expectations for inflation. Since the Fed’s Nov. 3 announcement, the 30-year yield rose 0.28 percentage points, suggesting growing investor confidence in the central bank’s efforts to avoid deflation as the economy expands.

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Date Time (ET) Statistic For Market Expects Prior
11/30/10 09:00:00 AM Case-Shiller 20-city Index Sep 1.00% 1.70%
11/30/10 10:00:00 AM Consumer Confidence Nov 52 50.2
12/01/10 08:15:00 AM ADP Employment Report Nov 58K 43K
12/01/10 08:30:00 AM Productivity-Rev. Q3 2.40% 1.9
12/01/10 10:00:00 AM ISM Index Nov 56.5 56.9
12/01/10 10:00:00 AM Construction Spending Oct -0.50% 0.50%
12/01/10 02:00:00 PM Auto Sales Nov 3.71M 3.68M
12/01/10 02:00:00 PM Truck Sales Nov 5.35M 5.59M
12/01/10 02:00:00 PM Fed’s Beige Book Dec
12/02/10 08:30:00 AM Continuing Claims 11/20/10 4200K 4182K
12/02/10 08:30:00 AM Initial Claims 11/27/10 422K 407K
12/02/10 10:00:00 AM Pending Home Sales Oct 0.00% -1.80%
12/03/10 08:30:00 AM Nonfarm Payrolls Nov 130K 151K
12/03/10 08:30:00 AM Nonfarm Private Payrolls Nov 140K 159K
12/03/10 08:30:00 AM Unemployment Rate Nov 9.60% 9.60%
12/03/10 10:00:00 AM Factory Orders Oct -1.30% 2.10%

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Overall, the most important day of the week is Friday with the employment figures being released, but we may also see sizable movement in rates Wednesday. Friday’s employment data could cause a significant change in rates, but Wednesday’s ISM index is also one of the more important reports we see each month. If Friday’s data reveals stronger than expected results we may see rates spike higher after its release, possibly erasing any gains from the week. It will probably be the key to rates moving lower or higher for the week. I suspect it will be another fairly active week for the markets and mortgage pricing, so it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.

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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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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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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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We have some stating that inflation may be hitting sooner than expected.  This would mean higher mortgage rates.  Although nobody knows where the bottom of the rate will / have hit, their is no question that mortgage rates are at near all time lows and home owners and home buyers should take advantage of these.  Home affordability is very high.  It is better to buy than to rent.

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Inflation, not deflation, Mr. Bernanke Caixin Online

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www.paulcantor.info

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Yes many home owners who owe more on their homes than the value of their homes are able to refinance at today’s low mortgage rates.  FHA streamline refinances are available without requiring an appraisal and without documenting income (employment is verified).  Also Fannie Mae is allowing many of the loans it holds to refinance without a new appraisal through the Fannie Mae Refi Plus program.

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Go ahead check into it while rates remain low.

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www.paulcantor.info

e-mail Paul

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Freddie Mac announced the results of its quarterly Product Transition Report Thursday.  Two quotes from  Freddie Mac  Chief Economist, Frank Nothaft sum it up:

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“Average interest rates on 30-year and 15-year fixed-rate mortgage loans fell pretty consistently through the latter half of the quarter, hitting 50-year lows in June according to Freddie Mac’s Primary Mortgage Market Survey®. The ability to lock in a principal and interest payment at below 5 percent for 30-years is rare enough. The fact that a 30-year fixed-rate mortgage can be obtained for 4.5 percent or a 15-year mortgage for 4.0 percent is an amazing opportunity for borrowers.”

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“The share of borrowers shortening their amortization terms is at its highest level in six years. In the second quarter of this year, 30 percent of borrowers who originally held a 30-year fixed rate loan refinanced into a 15- or 20-year FRM. If the borrower had a 30-year fixed rate loan at a 6.5 percent interest rate and a $200,000 principal balance, they could refinance and cut their payment by about $250 a month with a new 30-year fixed-rate loan or for about the same monthly payment as their old loan they could save some $70,000 in interest over the life of the loan with the shorter 20-year term loan.”

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www.PaulCantor.info

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Low Mortgage Rates  Now Available to Those with Depreciated Home Values.


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“Making Home Affordable Program,” which is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future.

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One of the initiatives in this program is aimed at helping responsible homeowners “refinance” their loans to take advantage of historically low interest rates. Here are some common Questions and Answers about the Refinancing Initiative in the program.

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.Who is eligible?

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You may be eligible if:

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  • You own and currently occupy a one- to four-unit home.
  • Your mortgage is owned or controlled by Fannie Mae or Freddie Mac.
  • You are current on your mortgage payments.
  • The amount you owe on your first mortgage is about the same or slightly less than the current value of your house.
  • And, you have a stable income sufficient to support the new mortgage payments.

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How do I know if my loan is owned or controlled by Fannie Mae or Freddie Mac?

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Simply call or email me. I’ll help you determine if your mortgage is backed by Fannie Mae or Freddie Mac.

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I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program?

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Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.

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If I am delinquent on my mortgage, do I still qualify for the Refinance Initiative?

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No. But the good news is, you may qualify for the Modification Initiative. Contact me to discuss your situation and review your options.

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I have both a first and a second mortgage. Do I still qualify to refinance under Making Home Affordable?

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As long as the amount due on the first mortgage is less than 125% of the value of the property, borrowers with more than one mortgage may be eligible for the Refinance Initiative.

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Will refinancing lower my payments?

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That depends. If your interest rate is much higher than the current market rate, you would likely see an immediate reduction in your payment amount.

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However, if you are paying interest only on your mortgage, you may not see your payment go down. BUT… you will be able to avoid future mortgage payment increases and may save a great deal over the life of the loan.

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What are the terms of the refinance and what will the interest rate be?

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All loans refinanced under the plan will have a 30- or 15- year term with a fixed interest rate.

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The interest rate will be based on market rates at the time of the refinance. Currently, interest rates are at historical lows, which makes this a good time to examine your refinancing options.

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Will refinancing reduce the amount that I owe on my loan?

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No. Refinancing will not reduce the principal amount you owe. However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

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Can I get cash out to pay other debts?

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No. Only transaction costs, such as the cost of an appraisal or title report may be included in the refinanced amount.

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How do I apply for the Refinance Initiative?

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Call or email me today to discuss your specific situation and to examine your options. If this plan is right for you, we can begin working on your refinance immediately.

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As part of the discussion, we may need to look at the following information:

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  • Recent pay stubs to help determine your gross (before tax) household income.
  • Your most recent income tax return.
  • Information about any second mortgage on your house.
  • Account balances and minimum monthly payments due on all of your credit cards.
  • Account balances and monthly payments on all other debts.

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A similar program is Available for those with FHA mortgages (Streamline Refinance).

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Contact Paul  for more information

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www.PaulCantor.info

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