mortgage rates

CBS This Morning: Spring Housing Market

Last week, the Federal Reserve decided not to raise interest rates. The more dovish Fed outlook pushed down interest rates, which led mortgage rates to 14-month lows. The current 30-year fixed rate loan stands at just under 4.3 percent, just in time for the spring home buying season. I joined CBS This Morning to discuss.

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Will Dovish Federal Reserve Boost Housing?

Will Dovish Federal Reserve Boost Housing?

Last week, the Federal Reserve decided not to raise interest rates. The more dovish Fed outlook pushed down interest rates, which led mortgage rates to 14-month lows. The current 30-year fixed rate loan stands at just under 4.3 percent, just in time for the spring home buying season.

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Fed in Focus

Fed in Focus

After stock markets powered forward (NASDAQ and Russell 2000 hit new all-time highs) and contentious trade talk continued, this week, the focus turns to the Federal Reserve. For the second time this year, policy makers are expected to raise short-term interest rates by a quarter of a percent to a new range of 1.75 to 2 percent. If so, it would be the sixth quarter-point bump since the current rate tightening cycle started in December 2015.

The Upside and Downside of Rising House Prices

The Upside and Downside of Rising House Prices

A couple of months ago, I noted that the housing market had a problem: there were too few homes for sale. Persistently low inventory means that there are a lot of frustrated would-be buyers out there, spending weekends at open houses. It also has led to home prices continuing to rise at a more than six percent clip from a year ago.

Half Time for the Economy 2017

Half Time for the Economy 2017

The better than expected June jobs report and Federal Reserve Chair Janet Yellen’s upcoming Congressional testimony is a good opportunity to review where the U.S. economy stands at the mid point of 2017. Economic Growth: The broadest measure of economic growth is Gross Domestic Product (GDP). Over the past fifty years or so, the economy has grown by 3 percent annually. In the past decade, that rate has dropped to about 2 percent, with 2015 being the best year (+2.6 percent) and 2009 the worst year (-2.8 percent).

Hot Housing

Hot Housing

Bidding wars, no contingencies and frustrated buyers...the housing market is heating up! Existing home sales have jumped to their highest level since early 2007 and new home sale activity has been equally as brisk. Additionally, nearly a decade after the housing market peaked, foreclosure filings, which includes default notices, scheduled auctions and bank repossessions, dropped to the lowest level since November 2005, according to ATTOM Data Solutions.

Strong Feb Jobs Means Fed Rate Hike

Strong Feb Jobs Means Fed Rate Hike

Get ready for a Fed interest rate hike this week. The February jobs report showed that the US economy added a larger than expected 235,000 jobs, the unemployment rate edged down to 4.7 percent and annual wage growth bounced back from a revised 2.6 percent in January to 2.8 percent, ahead of the 2.7 percent average seen in the second half of last year. The increase in wages demonstrates that the labor market is tightening and that state-level minimum wage hikes are filtering through the economy.

Bond Yield Plunge is a Boon for Mortgage Borrowers

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Post-Brexit uncertainty has meant that global investors are pouring money into so-called safe haven investments, like US government bonds. As prices rise, benchmark 10-year Treasury yields touched an all-time low of 1.344 percent – think about that…if you lend the US government money for ten years, you will only receive just over 1.3 percent interest—and if you lend for 30 years, you will only get about 2.1 percent! That’s terrible news for savers, especially risk-averse ones -- as well as pension funds, which try to provide stable income for retirees. But it's great news for mortgage borrowers. The average contract interest rate for 30-year fixed-rate mortgages for conforming loans ($417,000 or less) has dropped to near all-time lows for those with good credit. There are some lenders going as low as 3.25 percent, the lowest level since May 2013. 15-year loan rates are running at about 2.75 percent. Adding to the good news is that at the same time, home prices have mostly increased and credit scores have improved, which means many people who couldn’t refinance a few years ago, can do so now.

According to Mike Raimi of Luxury Mortgage Corp, “Closing a loan is still labor intensive. Borrowers need patience and perseverance” according to Mike. Mortgages for new home purchases can take about three weeks to close, while refinancing can take longer – “anywhere from 30 to 45 days.”

If you are looking for a 30-year conventional mortgage with 20 percent down, the best rates are available for those with credit scores above 740. For every 20-point drop in score, the mortgage rate jumps by a quarter of a percent. If your credit score is below 620, it’s tough to get a loan closed. (Credit scores do not have nearly as much impact on loans of 15 years and shorter.)

If you are preparing for the mortgage process, here’s what you will need:

  • W-2 (2 years)
  • Tax Returns (2 years)
  • Pay Stubs (2 months)
  • Bank statements – all pages (2 months): You may also need to provide the lender with an explanation for any large deposits that have been made into bank accounts. This has more to do with beefed up anti-money laundering efforts than the mortgage process itself.
  • 6 months of mortgage payments in cash reserves (sometimes less, but this is a good rule of thumb)
  • Investment accounts: If bank accounts do not show adequate assets, lenders may ask for investment account statements.
  • Donor letter: If a family member or friend is helping you with your down payment or providing cash for the re-fi, he or she may be required to provide a letter and may also have to present his or her account statements.
  • Self-employed applicants: Must have 2 years of proof of self-employment and 2 years of tax returns. Gone are the days when self-employed borrowers can “add-back” tax preference items. While you may have used the tax code to your advantage, the bank will not cut you any slack – the numbers on the return are set in stone.

Mortgage Market: What you Need to Know to Close a Loan in 2015

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Fears over a global slowdown may have stock investors wishing for the merry go-round instead of the roller coaster, but bond investors have been thrilled. In fact, the recent unrest has meant that investors are pouring money into the US government bond market, which drives prices higher and yields lower. As of this writing, the yield on the 10-year treasury has fallen to 1.85 percent, a far cry from the 3 percent seen just over a year ago. As a result of the bond market rally, the average contract interest rate for 30-year fixed-rate mortgages for conforming loans ($417,000 or less) has dropped to 3.8 percent, the lowest level since May 2013, according to the Mortgage Banker’s Association. A jumbo loan will cost slightly more—3.86 percent and the average rate for a 15-year loan has decreased to 3.1 percent.

Additionally, there is new pricing on FHA loans, which could bring more first time homebuyers into the market this year. With an FHA loan, borrowers need a 3.5 percent down payment and the agency is more flexible when it comes to underwriting, especially for those with credit scores all the way down to 620 and for those carrying student loan debt. This year, FHA loans are cheaper, because the government reduced premiums for FHA mortgage insurance by 0.5 percent – its now 0.85 percent, down from 1.35 percent of a loan's value. The move is expected to save a typical first-time homebuyer about $900 in her annual mortgage payments.

With all of this news, I thought it was time to check in with Mortgage Mike (aka Mike Raimi of PMAC Lending Services) for an update on the 2015 mortgage market.

What do you need to know about attaining a mortgage now? “The process continues to improve, but it is still labor intensive. Borrowers need patience and perseverance” according to Mike. Mortgages for new home purchases can take about three weeks to close, while refinancing can take longer – “anywhere from 30 to 45 days.”

If you are looking for a 30-year conventional mortgage with 20 percent down, the best rates are available for those with credit scores above 740. For every 20-point drop in score, the mortgage rate jumps by a quarter of a percent. If your credit score is below 620, it’s tough to get a loan closed. (Credit scores do not have nearly as much impact on loans of 15 years and shorter.)

If you are preparing for the mortgage process, here’s what you will need:

  • W-2 (2 years)
  • Tax Returns (2 years)
  • Pay Stubs (2 months)
  • Bank statements – all pages (2 months): You may also need to provide the lender with an explanation for any large deposits that have been made into bank accounts. This has more to do with beefed up anti-money laundering efforts than the mortgage process itself.
  • 6 months of mortgage payments in cash reserves (sometimes less, but this is a good rule of thumb)
  • Investment accounts: If bank accounts do not show adequate assets, lenders may ask for investment account statements.
  • Donor letter: If a family member or friend is helping you with your down payment or providing cash for the re-fi, he or she may be required to provide a letter and may also have to present his or her account statements.
  • Self-employed applicants: Must have 2 years of proof of self-employment and 2 years of tax returns. Gone are the days when self-employed borrowers can “add-back” tax preference items. While you may have used the tax code to your advantage, the bank will not cut you any slack – the numbers on the return are set in stone.