Tag: taxes

MORTGAGE RATES BACK TO LOWEST LEVELS OF THE YEAR – 6/27/11

MORTGAGE RATES BACK TO LOWEST LEVELS OF THE YEAR:  The bond market closed the week 56 bps higher – pushing rates back to the lowest levels of the year.  This ended 2.5 weeks of the bond market going down, pressuring rates higher.

30 year fixed rates are now back to 4.375% with a portion of a point.  20 year fixed loans are back to 4.25%.  5/1 ARMS are down to 2.875%.

We are now in the last week of the FED purchasing mortgage backed securities program – QEII.  The market will now determine interest rates without the FED manipulating demand.

6/20/11 – Mortgage Rates Rise for 2nd straight week / The Foreclosure Statistics

MORTGAGE RATES RISE FOR 2nd STRAIGHT WEEK:  The Bond market finished slightly down on the week – ending 6 bps lower.  This pushed rates slightly higher on the week.  You can still get a 4.375% on a 30 year fixed rate, but it will cost over a point.  4.49% is the par rate paying less than one point.

Overall, there is some pressure on mortgage rates right now.  The Feds Quantitative Easing measures are about to end, which could push rates a bit higher.  Overall, I don’t see rates going much higher or much lower from where they are right now for the foreseeable future. 

 

THE FORECLOSURE NUMBERS:   According to the US Foreclosure Market Report, foreclosure activity has decreased for the 8th straight month.

There are 3 foreclosure activities they consider in their report.  Notice of Default is when the mortgage company notifies the customer that they are in violation of their contract and they plan on foreclosing unless payments are brought back up to speed.  This can be given out after 3 months of late payments.  Foreclosures scheduled is when a home is scheduled to be taken back by the bank.  REO is when the bank takes back the home and it becomes part of the banks inventory.

From April to May:

Notice of Default rates went down by 7%

Foreclosures Scheduled went up by 3%

REOs went down by 4% 

Although the foreclosure activity has decreased, the results can be misleading.  Many lenders are delaying foreclosure proceedings for various reasons associated with their own process and procedures as well as market considerations in the area where the homes are being foreclosed in.  If they keep pumping more REOs into the market when their current inventory is high, it will push down the values of their existing inventory.

Also, even though the inventory of homes in the foreclosure process has decreased steadily over the past 6 months, the inventory of REOs is increasing.  This is because the amount of REOs being added to the market is outpacing the amount of REOs sold.  This points to a still struggling housing market where the demand is not on par with the supply. 

The states with the highest foreclosure rates in order are Nevada, Arizona, California, Michigan and Georgia. 

6/13/2011 – MORTGAGE RATE RALLY STALLS / 22.7% OF AMERICAN HOMEOWNERS ARE UNDERWATER ON THEIR MORTGAGE

MORTGAGE RATE RALLY STALLS:  Mortgage rates rose slightly as the bond market closed lower for the 2nd time in 8 weeks.  The bond market finished down 34 bps on the week.

This affected interest rates by raising the cost to get each rate by about .25%.  Par rates have remained steady for a number of weeks – right now they are just a bit more expensive.  A 30 year fixed rate is still at 4.375%.  15 year fixed rate is at 3.75%.  5/1 ARM rate is at 2.875%.

Interest rates have seemed to hit their bottom.  Rates will be tested this week with a lot of economic reports and information due out.

THE HOUSING NUMBERS:  According to a new report from CORE LOGIC, 22.7% of all homeowners in the United States owe more on their mortgage than their home is worth.  That translates to 10.9 million homeowners.

Another 2.5 million homeowners are very close to being underwater – having less than 5% equity in their home. 

The state with the highest percentage is Nevada, with a staggering 63% of their homeowners being upside down.  Arizona follows closely behind with 50% of their homeowners being upside down. 

Remember that after 2012, you will be taxed on losses associated with a short sale or a foreclosure.  If you are going to do it, you might as well get started.

6/6/2011 – MORTGAGE PRICING CONTINUES TO DROP

MORTGAGE PRICING CONTINUES TO DROP:  Mortgage rates / pricing went down for the 6th time in 7 weeks.  The bond market closed 50 points up last week, lowering pricing on most loan options by approximately .4 pts in cost to get the loan.

Though pricing is down, most of the par rates are still the same, just a bit cheaper to get in closing costs. 

Be cautious in waiting too long right now.  The Fed is discontinuing their mortgage backed securities program this month.  By the FED not pumping money into keeping interest rates low, we could see a rise in rates at the end of June.  I would lock in pricing if you are satisfied with a rate.

5/31 – MORTGAGE RATES DROP TO 4.375% – DOUBLE DIP IN HOME VALUES

MORTGAGE RATES DROP, BUT BE CAUTIOUS:   For the 5th time in 6 weeks, mortgage rates and pricing have dropped.  The bond market ended the week 47 bps higher – pushing rates lower.  The 30 year fixed par rate has dropped to 4.375%.  5/1 ARMs have dropped to 2.875%!!

But beware, there are signs that rates could have trouble this week.  There is optimism that a deal working to help Greece with their debt issues will go through.  This could mean trouble with the bond market, pushing rates higher. 

THE DREADED DOUBLE DIP IN HOME VALUES:  According the March S & P / Case Shiller Home Price Index, much of the nation is in the midst of a double dip in home values.  After being down for a number of years, price levels rose recently driven by the Federal Tax credit for new home buyers. 

Since the tax credit ended, prices have steadily dropped in most areas.  Across the country, home values are down 4.2% over the 1st quarter of 2011, and 5.1% down since March of 2010.  The average price of a home is now down to 2009 levels and if adjusted for inflation, down to 1999 levels. 

I personally think this is a great market to buy a new home.  Prices are low, rates are great.  If you are looking to purchase a long term home, you can get on a 30 year fixed rate and ride out the fluctuations in the market.  Is this the best market to have owned a home for a number of years? – I don’t think it could be much worse.  Good news is many people can still refinance at up to 105% of what their home is worth and still get a great rate. 

5/23 – RATES HOLD STEADY ; NEW WAYS TO PROVE INCOME

MORTGAGE RATES HOLD STEADY:  For the first week in 4 weeks, rates have not improved.  The bond market finished with no change on the week.  30 year fixed par rates are still available at 7 month lows.  30 year fixed par rates are at 4.5% paying around a half a point.  You can go down to 4.375% by paying a little over a point, and 4.625% is 0 points. 

FHA rates are great right now.  For most customers I can do a 0 cost loan for less than 4.5%!!

LOTS OF ASSETS ; BUT NO PROOF OF INCOME:  I talk to frustrated borrowers almost every week who have a lot of assets but prove little to no income.  There is now a way to help these borrowers.

An example of this borrower would be one who has 1 million in the bank that they live off of, but do not currently hold a job.  We can now help these borrowers by having them set up a monthly withdrawal every month for the next 3 years from their asset accounts.

Here is how it works:  Customer calls the representative from their account.  They set up a certain amount of money to be deposited to them every month (I would tell you the amount needed to qualify for the loan).  I must get a letter from the account rep saying they have set up a monthly withdrawal for 3 years with such and such amount.  I would then need a most recent statement from this account showing there is enough in the account for it to last for 3 years.

It is that easy, and we can now use this monthly installment as qualifying income – call me if you would like to see if I can make this work for your scenario.

REPUBLICANS INTRODUCING NEW FHA LEGISLATION:  Republicans are about to introduce new legislation to change FHA guidelines.  The changes would include:

95% max loan to values (currently 96.5%)

Lower FHA loan limits in most counties

The biggest problem with our economy continues to be the housing market.  We need homes to continue selling so we can eventually get past the foreclosure and short sale mess.  The 3.5% down payment program allows many home owners to purchase a new home without having to have a significant down payment.  By taking this away, we would be hampering the very industry we need to strive.

I think eventually this could be a good idea, just not right now.  To learn more about FHA loans – visit my page on WHAT YOU NEED TO KNOW ABOUT FHA LOANS: http://mortgagenewsandrates.com/what-you-need-to-know-fha-loans/

5/16 – 30 YEAR FIXED DOWN TO 4.5% , IS NOW A GOOD TIME TO BUY A NEW HOME?

MORTGAGE RATES LOWER FOR THE FOURTH STRAIGHT WEEK:  Rates are smoking right now.  30 Year fixed rates have dropped to 4.5% – typically costing approximately 1 point to get.  20 year fixed rates dropped to 4.25%.  15 year fixed rates dropped to 3.75%.  You can get a low closing cost 10 year fixed loan at 3.375% right now!!

Rates have improved for 4 straight weeks.  Be cautious in floating a rate.  Rates won’t go one way or the other for too long, and typically when they reverse we get some pretty substantial pull back.  Rates have now improved for 4 straight weeks – they will get some pull back soon. 

IS NOW THE TIME TO BUY A NEW HOME?:  In most markets, we are seeing that it is cheaper to own than to rent.  Rates are low and home values are low.  Freddie Mac reported this week that home prices nationally are down 2.8% in 2011 and they expect an increase in new home sales of 5% for 2011.

There are two reasons that most people are not buying a new home that have the ability and want to buy a new home.

1.)  Buyers don’t know that they can qualify for a new loan.  These potential customers probably have had some credit issues in the past and are unsure about their qualification prospects.  Keep in mind that qualifying for a new loan is relatively easy right now.  You can do a new purchase loan with a 580 Fico score and only put down 3.5% of the purchase value.  Just because you have had a foreclosure or short sale does not mean you can not qualify for a new loan – you only have to wait 2 to 3 years before you can buy again. 

Call me or call a loan officer you trust.  Check it out – you may be able to qualify and having one person pull your credit does not dramatically lower your scores like some people think. 

2.)  Buyers are afraid to buy because they don’t think the market has hit the bottom.  This is a legitimate concern.  Some markets are probably not at the bottom, but I think most can agree that we are past the rapidly depreciating phase.  One thing to keep in mind is that rates are still very low.  If they go up (which they eventually will – and already have from last year), you could see a higher payment on a cheaper home.

For example – You buy a 250,000 home, put 20% down and do a new loan at a 4.5% 30 year fixed rate.   Your PI payment would be $1,013.37.

Now let’s say you decided to wait and that same house a year later is now only 230,000.  You get a better deal, but rates have risen to 5.5%.  You put 20% down, do a new loan for 184,000 at a 5.5% 30 year fixed rate.  Your new PI payment is $1,044.73. 

So even though you have bought a cheaper home, you will pay 11,422 more over 30 years because rates are higher. 

This is really a big deal because some people think rates this low will last forever and they won’t.  And when they do go up, they can go up quickly.  In November 2010, rates went up by .75% is less than 4 weeks. 

Values are low, rates are great.  Right now is a great time to buy a new home!!

RATES IMPROVE / IRS TO BEGIN TAXING ON SHORT SALES / FORECLOSURES.

MORTGAGE RATES FALL:  The bond market dropped 66 bps last week – marking a good week for lowering interest rates.  A lot of this is spurred by bad news in the economy / Japan.  It’s unfortunate, but when these things happen – the stock market typically goes down and mortgage rates get better.  The par rate on a 30 year fixed loan dropped to 4.875%.  5/1 ARMs back down to 3.25%.  15 year fixed loans down to 4.25%.

MORTGAGE RATE ADVERTISEMENTS:  I get asked this all the time – why are the rates you quote higher than other advertisements I see.  First, I quote par rates – the lowest rate you can get without paying discount fees to get the rate.  A lot of companies/individuals quote low on the rate so you will call them – they forget to mention that the rate they quote will involve a ton of closing costs.

Keep in mind when getting a quote – I can get you any rate that you want.  Lower rates are more expensive.  I try to quote rates with reasonable closing costs as that is what most customers want. 

IRS ENDING TAX BREAKS FOR SHORT SALES / FORECLOSURES IN 2012:  Congress enacted the Mortgage Forgiveness Debt Relief Act in 2007 that says the IRS will not tax foreclosure/short sale losses on primary residence homes until 2012.  For example if you owed $300,000 on your home and you short sold it for $200,000 – you would be sent a 1099 for the $100,000 that you would have to pay income taxes on.  This was temporarily suspended until 2012. 

The end is coming soon and you will be paying taxes on these losses.  I would never recommend foreclosure/short sale unless it is absolutely necessary, but if you are planning on doing one of these – I would do it now. 

Here is a good CNN article on when the IRS can tax you: http://money.cnn.com/2011/04/15/real_estate/taxes_mortgage_debt/index.htm

4 DAYS UNTIL NEW REGULATION Z GOES INTO EFFECT / RATES RISE!!

4 DAYS UNTIL NEW REGULATION Z GOES INTO EFFECT:  If you want to start a new loan and not be affected by the new regulations, you must have  your credit pulled and your loan registered with a lender before April 1st.  The new rule states that a loan officer can not be compensated by the terms of the loan – this means less options and fixed revenue for every loan regardless of the borrower situation. 

RATES RISE:  Right after the Japan tragedy, rates went down a lot.  Since then, we have seen a rebound in the stock market and rates have worsened 7 days straight.  You could get a 4.75% 10 days ago with 0 points, now you have to pay discount fees and origination fees to get that rate.  4.875% is the new par rate on 30 year fixed.  Below is some informatiom from www.tbwsratealert.com that explains the situation:

More selling in the rate markets this morning; as we have noted recently interest rates are headed higher after all the safety moves triggered by Japan’s problems. The stock market took a heavy hit on panic selling over Japan but is now trading better than prior to the earthquakes and tsunami. Interest rates also higher than prior to the issues.

ARMS:  I still suggest people trying to lower their payment with good existing 30 year fixed rates look at ARM loans.  There are 5/1 ARMs , 7/1 ARMS and 10/1 ARMS – all with substantially lower rates than a 30 year fixed.  Even if you plan on staying in your home for the long haul, you can save 15-20,000 over a 5-10 year span with these type of loans.  7 to 10 years is a long time – if you are still in your home you can always refinance to a 15 or 20 year fixed.