increadingratesMortgage rates are continuing to rise as investors’ appetite for mortgaged backed bonds is decreasing. We have seen a rapid rise in mortgage interest rates over the last 2 weeks. 30 year fixed rates under 4% may be a thing of the past. The payment on a typical $200,000 30 Year fixed rate mortgage today has increased about $72 per month compared to a mortgage closed earlier this spring..

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The increase in rate means some home buyer will only qualify for a less expensive home than they would have been able to purchase in May. The increase in rates has not yet put a damper on the hot housing market, homes priced under $350,000 in the Richmond Metro Market.

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closedfamilyHUD Reduces the Cost of FHA Loans.

 

Like the cost of oil the cost of FHA loans is falling. In its first mortgagee letter of 2015, HUD announced that the monthly premium on 30 year fixed rate loans will go down by ½ of a percent (50 bps), starting n loans with FHA case numbers issued after January 26, 2015.

 

 

New monthly MIP premiums:

 

Term > 15 Years
Base Loan Amt. LTV Previous MIP New MIP
≤ $625,500 ≤ 95.00% 130 bps 80 bps
≤ $625,500 > 95.00% 135 bps 85 bps
> $625,500 ≤ 95.00% 150 bps 100 bps
> $625,500 > 95.00% 155 bps 105 bps
Term ≤ 15 Years
≤ $625,500 ≤ 90.00% 45 bps 45 bps
≤ $625,500 > 90.00% 70 bps 70 bps
> $625,500 ≤ 90.00% 70 bps 70 bps
> $625,500 > 90.00% 95 bps 95 bps

 
The reduction in premium translates to a monthly payment reduction of over $83 per month on a $200,000 loan. Home buyers can qualify to purchase larger homes.

 

Combine the MIP reduction with the recent interest rate drop, many folks will save thousands by refinancing, especially those with 30 year FHA loans closed after the spring of 2009. (click here to request information for an FHA Streamline Refinance).

 

www.PaulCantor.info

 

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Home Prices Increase at Fastest Annual Pace Since May 2006- Case Shiller

2013_2D00_04_2D00_30-case-1

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soldsignPending Home Sales Soar Despite Rough Winter

Rough winter weather across much of the nation at the start of this year apparently did not keep home buyers away. Contracts to buy existing homes in January rose to the highest reading since April 2010.  Read Article.

 

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newhomecosts

FHA loans are going to be more expensive.  Starting in April a lot of first time home buyers will be hit with changes to FHA loans that will cost tens of thousands of dollars.  A recent HUD Motgagee letter (2013-04) outlines changes to both an increase in monthly payments amount and the elimination of the ability to cancel monthly mortgage insurance premium (MIP) payments.  The results translate into over $20,000 of additional payment amounts over the course of one $300,000 FHA loan or over $10,000 over the life of a $150,000 FHA loan.

Tables of the FHA MIP changes:

 Effective for case numbers assigned on or after April 1, 2013. MIPchart2012a

 Effective annual MIP rates for loans  or after June 3, 2013

MIPchart2012b

 

Sometime in the near future HUD is also expected to increase the required minimum investment to 5% from 5.5% on some larger FHA loans and cap debt to income ratios to 43%.

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According o Reuters now is the time to buy:  Term Life Insurance, TVs, Apps, Used Cars and Real Estate.  Prices are set to rise and money is cheap:

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Prior to 8:30 mortgage prices traded down 6/32 (.18 bp) and the 10 yr -8/32 to 2.20%. At 8:30 Sept CPI increased 0.3% overall and when food and energy are removed up 0.1%; yr/yr CPI +3.9%, the core yr/yr up 2.0%. Yesterday’s PPI was stronger than expected increasing concerns that inflation may be increasing, today the CPI takes a little worry away but not totally. Also at 8:30 Sept housing starts and permits; starts were expected up 4.0% as reported starts increased 15.0%; permits were expected down 1.5% but declined 5.0%. Starts are a surprise, so much so that we question the data. Starts totaled 658K annually frm 572K in August; permits at 594K down from 625K in August. Single family starts were up 1.7% the rest was in multi-family starts (+50%). The initial reaction the the 8:30 data took the 10 yr down in price a little, mortgage prices at 8:45 -5/32 (.15 bp).

 

In Europe this morning, riots in Greece; protestors being gassed as it escalates. Yesterday’s maniacal reaction to a headline in a British newspaper that a deal was in the offing to increase the EFSF to re-capitalize the banks in the region sent markets into another round of excessive volatility. One hour after the news it became apparent that the news was woefully lacking in fact and substance. There is no plan that has been resolved. Markets, as noted yesterday, don’t wait for facts these days; it is all about headlines and in turn creates huge volatile swings.

 

Europe continues to drive global markets, every word out of the region is taken as the last word. There is still nothing of substance after over a year of discussions; Europe’s banks do not want to take the haircut that will likely be necessary. Most of the sovereign debt has to be taken as losses at least by 50% or more, banks will continue to fight it. Politicians here and there remain convinced a plan will be worked out that will stabilize Italy, Spain and Portugal as well as keeping Greece from default. The problem with that is, so far after all this time there is nothing. On Oct 23rd finance ministers from the G-20 countries will meet in a summit, at the moment its in the hands of Germany and France, the only two EU countries that are not in some way impaired. German Finance Minister Schaeuble hasn’t specified how much additional strength the European bailout fund may have and negotiators are still in “intensive discussions.” What’s new about that?

 

Early this morning the weekly MBA mortgage applications; the composite index declined 14.9%, purchase applications down 8.8% while re-finances declined 16.6%. Higher interest rates dropped the re-finance markets, purchases remain soft. There is an anomaly though, the week included Columbus Day, the few that are optimistic about the housing sector are making a lot out of the holiday, we don’t hold much to that. Any even small increase in mortgage rates shuts of the flow, mortgage rates and treasuries were higher last week.

 

At 9:30 this morning the DJIA opened -22, NASDAQ-12, S&P -3; the 10 yr note -6/32 to 2.19% +2 bp and mortgages unchanged. Until 9:30 mtg prices were generally off 4/32 (.12 bp).

 

The only other scheduled information today is at 2:00 when the Fed releases its Beige Book, the Fed’s detailed report on the economy in the 12 Fed districts. Always some meat in it but generally nothing shocking and new markets are not already thinking about—–that of course is if anyone is actually thinking these days rather than reacting.

 

Treasury and mortgage markets remain bearish; until the 10 yr can decline below 2.0% the bearish technicals will continue. That said, we remain confident that the 10 yr will find support at 2.30%, the recent high was 2.27% five sessions ago. The Fed’s Operation Twist is still out there and the Fed has increased MBS purchases. Interday and intraday volatility will continue following the paranoid equity markets. Already this morning 30 yr MBSs have traded in a .34 basis point range. The treasury market is being stretched between better equity markets and the need for safety as Europe is still in play; equity markets a little weaker early today keeping rate markets generally unchanged so far.

Apply for a Purchase or Refinance Mortgage

 

 

 

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The S&P / Case Shiller Report released today for April indicates increasing home values.:

 

Data through April 2011 … show a monthly increase in prices for the 10- and 20-City Composites for the first time in eight months. The 10- and 20-City Composites were up 0.8% and 0.7%, respectively, in April versus March. Both indices are lower than a year ago; the 10-City Composite fell 3.1% and the 20-City Composite is down 4.0% from April 2010 levels.

Six of the 20 MSAs showed new index lows in April – Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa. Thirteen of the cities and both composites posted positive monthly changes. With index levels of 152.51 and 138.84, respectively, both the 10- and 20-City Composites are above their March 2011 levels, which had been a new crisis low for the 20-City Composite.

 

This may be a sign that we have seen or are close to the bottom of the housing market.  Now is a good time to look at buying a home as a primary residence or investment property.  Apply Now to pre-qualify for a purchase.

www.PaulCantor.info

(804) 433-1510

 

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Yes seniors may purchase a home and have no monthly mortgage payment.  This is possible with a reverse mortgage (also known as a Home Equity Conversation Mortgage (HECM))

Here is an example for a 69 year old buying a home.

 

Purchase Price = 200,000

Amount of FHA reverse mortgage  =  $132,600

Funds needed a closing = $68,000

Monthly Mortgage Payment =   $0.00

 

Assumes the seller will pay all closing costs on a fixed rate reverse mortgage.

For more information on a reverse mortgage call (804) 433-1510 or click here.

 

 

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HPI delta from peakHome values dropped for the sixth straight month in March 2011, according to the Federal Home Finance Agency’s Home Price Index. The Home Price Index is a government-sponsored home value tracker.

The HPI report is the latest in a string of “falling home values” stories — a trend that’s troubling home sellers across Midlothian and nationwide.

However, although the Home Price Index says home values are falling, that doesn’t necessarily mean that they are. Like most statistics in the housing sector, the Home Price Index is plagued by poor methodologies and a lack of timeliness.

In short, the Home Price Index is flawed. In three ways.

The first big flaw in the Home Price Index is that it only measures the values of homes with mortgages backed by Fannie Mae or Freddie Mac. Homes financed via FHA, or via other means are specifically excluded from the calculation. For today’s purchase market, that leaves more than 1 in 4 homes “uncounted” — a big percentage of the market.

Second, the Home Price Index determines home values by measuring price change from sale to subsequent sale. This eliminates new homes — a major market segment.

And, lastly, the Home Price Index reports on a 60-day delay; we’re only now seeing data from March. This two-month lag renders the HPI a trailing indicator for the housing market instead of a forward-looking one. If you’re a home buyer looking for market insight, the HPI can’t give it — it’s out-dated and out of season.

Despite its shortcomings, though, we can’t ignore the Home Price Index completely. It’s among the most thorough home valuation models available, and it’s used in public policy discussions. When the HPI says prices are down, Wall Street and Capitol Hill take notice, and that trickles down to everyday life on Main Street.

Since peaking in April 2007, the Home Price Index is off 19.1 percent.

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