INTEREST RATES SHOW IMPROVEMENT – FHA LOWERS WAITING PERIOD AFTER FORECLOSURE, BK, AND SHORT SALE
August 26th, 2013
After starting last week rising quickly, interest rates rebounded near the end of the week. The Mortgage Backed Security market closed the week trading up + 28 bps, and also closed Monday up + 30 bps.
This market is very interesting because negative economic reports are taken as possibilities that the FED will take longer to slow the stimulus. Everything is related to the FED and will be until a taper actually happens.
The last few economic reports came in weaker than expected, causing some to believe that the FED will take longer to taper the stimulus because the economic growth targets are not there yet. One of the most notable reports came out on Friday – showing new home sales down over 13% from June – showing in very real terms that the higher rates are starting to affect the economy.
Can the economy hit projected growth goals with interest rates over 1.25% higher than the end of April? We are starting to see that this is could really be an issue, with the higher rates lowering potential home owner’s buying power, and making it hard for potential borrowers to lower their payment on a refinance. I think we may see some short term rate improvement as most of the economic reports have been lower than expectations. Even with rate improvement, there is only so much rates can go down unless the FED decides not to taper.
FHA LOWERS SEASONING REQUIREMENT TO 12 MONTHS ON FORECLOSURES, BANKRUPTCIES, AND SHORT SALES
Huge news from FHA last week, with FHA releasing new guidelines allowing potential borrowers to qualify for a FHA loan only 12 months after a foreclosure, bankruptcy, or a short sale.
This is welcome news in the lending community, with many capable borrowers having to wait out periods after economic events such as these. Foreclosures and short sales are especially common in areas hit the hardest by home values dropping far below the amount of the mortgages borrowers financed on the properties.
These new guidelines should bring more homeowner’s into the buying pool again, instead of waiting on the sidelines. Hopefully Fannie Mae/Freddie Mac will follow suit.
Make it a great week!!
BEST VALUE OF THE WEEK:
10 Year Fixed at 3.625% with $0 costs
30 year fixed: 4.5% – .51 points, 4.625% – 0 points, 4.75% – $0 costs
20 year fixed: 4.25% – .6 points, 4.5% – 0 points, 4.625% – $0 costs
15 year fixed: 3.5% – .65 points, 3.75% – 0 points, 3.875% – $0 costs
10 year fixed: 3.375% – .53 points, 3.5% – 0 points, 3.625% – $0 costs
5/1 ARM: 3.125% – .99 points, 3.75% – 0 points
7/1 ARM: 3.875% – .88 points, 4.625% – 0 points
30 year fixed FHA: 4% – .84 points, 4.25% – $0 costs
15 year fixed FHA: 3.25% – .87 points, 3.75% – $0 costs
30 year fixed VA: 4.25% – $0 costs
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