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Mortgage Rates Up… No Wait Down…

Tuesday, May 25th, 2010

Article from TIME.com by Stephen Gandel

Once again, the wisdom of crowds doesn’t look so smart. A few months ago the prevailing wisdom was that mortgage rates were headed up. Why? Well, for so many reasons. Government borrowing was going to push up interest rates. The economy was recovering. And of course, we were soon going to be hit by massive inflation (even though the consumer price index recently fell, but whatever no need to look at the real numbers). The New York Times ran an article a month ago on mortgage rates with the title, No Where to Go but Up. Here’s the article’s conclusion:

No one expects rates to return to anything resembling 1981 levels. Still, for much of Wall Street, the question is not whether rates will go up, but rather by how much.
Some firms, like Morgan Stanley, are predicting that rates could rise by a percentage point and a half by the end of the year. Others, like JPMorgan Chase are forecasting a more modest half-point jump.
But the consensus is clear, according to Terrence M. Belton, global head of fixed-income strategy for J. P. Morgan Securities. “Everyone knows that rates will eventually go higher,” he said.

Wrong. Mortgage rates did have somewhere else to go but up: Down.

The Europe debt crisis is causing investors to buy US Treasuries and that in turn is driving down mortgage rates. In fact, mortgage rates are likely to continue to fall throughout the summer. Here’s what the WSJ had to say on the matter this morning:

The housing industry had been bracing for months for a period of rising mortgage rates, triggered by the end of the Federal Reserve’s $1.25 trillion mortgage-securities purchase program. Conventional wisdom held that mortgage rates would rise as the Fed pulled back from propping up the market.
Instead, many in the industry now say rates could drift as low as 4.5% this summer from 4.86% now, instead of rising to 6% as some economists projected, making for significantly lower payments for Americans buying homes or refinancing their mortgages.

So are mortgage rates headed up or down? Considering that unemployment is still near 10% I would guess that mortgage rates and interest rates in general (and for that matter inflation) will continue to fall. But the bigger lesson is this: I don’t know, and neither do you.

-David Baker

http://sayhalo.com

Tags: David Baker, Economy, Europe, Government Borrowing, Inflation, Interest Rates, JPMorgan Chase, Mortgage Rates, Mortgage-Securities Purchase Program, New York Times, Say Halo, Stephen Gandel, TIME, Time.com, US Treasuries, WSJ
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Guidelines to Qualify For the Obama Stimulus Mortgage Refinance Program

Thursday, May 20th, 2010

I thought this was a really important article to pass on to you guys. Hope you are having a great week.

-David Baker
http://SayHalo.com

Struggling homeowners are seldom aware of the subtle requirements of the Obama Stimulus Mortgage Refinance Plan. In order to qualify for a home loan modification, it is pertinent for applicants to know certain guidelines that could be helpful in determining the eligibility criteria as well as in understanding whether the mortgage refinance loans under the Obama home refinance plan are potentially worth it to suit their financial needs.

The Making Home Affordable plan or the Obama stimulus program by President Obama is a highly streamlined scheme and struggling homeowners could save a lot of money on monthly mortgage payments in the long run by availing it. However, to get the benefits of the Obama stimulus plan one is required to be eligible for it. And the process is one that involves a lot of milestones to cross before finally being approved for a loan modification under the plan. In order to qualify for the Obama stimulus mortgage refinance, here are some guidelines that could be useful to you in determining your eligibility for a federal loan modification process and if yes, whether it actually suits your financial needs;

Your existing home mortgage loan has to be backed by either Fannie Mae or Freddie Mac. To save a lot of time you could verify this with either Fannie Mae or Freddie Mac by submitting your home address and any additional information demanded. Another important requirement for getting mortgage refinance loans under the Making Home Affordable refinance program is that your home must be from one to four units.

Further, to qualify for loan modification under this program is that the value of your current home loan should not exceed 125% in comparison to the actual value of your home. So even if you owe more than your house is worth, you could still qualify since a property reassessment is not required under the tenets of the plan.

Furthermore, you should be regular on your existing monthly mortgage payments for the last one year and any default during the period of scrutiny should not be later than 30 days. Once you pass through these barriers, it is imperative for you to verify if your new home refinance loan lender asks for any additional requirements from your second mortgage or lien holder to refinance your home. For getting permission from your existing lien holder, you should apply for a process of subordination. In the next step you should determine whether the refinance program is potentially worth it for you. The most significant factor here is the mortgage refinancing rates. The lower the interest rates, the lower could be the monthly payments and that means saving more money.

Additionally, it could be desirable for you to check your credit ratings- as credit scores are of prime importance when considering applying for refinance home loans. To wipe out any discrepancies or inaccuracies on your credit report it is better pay off your credit card accumulations through a consolidation loan and boost your credit scores to get the best deal on a home refinance. Moreover if the ratio of the amount you owe on your home to its value is more than 95%, both Freddie Mac and Fannie Mae could impose additional interest rate increases to the extent of 0.5%. This is a tacit “add-on” requirement which is not much known to applicants. Thus, by following the above procedure you are in a better position to negotiate with your new lender for a loan modification to be secured under the Obama stimulus mortgage refinance plan. This could also help you to save a lot of time as well.

Tags: Credit Card, Credit Rating, Credit Score, David Baker, Fannie Mae, Freddie Mac, Home Loan Modification, Homeowners, Interest Rate, Loan Lender, Making Home Affordable, Mortgage, Mortgage Loan, Mortgage Payment, Mortgage Refinance Loan, Mortgage Refinancing Rate, Obama, Obama Stimulus Mortgage Refinance Plan, Refinance Home Loan, Say Halo
Posted in des moines ia mortgage, ia mortgage | 2 Comments »

Is This The End of the Mortgage Interest Tax Deduction?

Tuesday, May 18th, 2010

Blog sourced from TIME Blog; article written by Barbara Kiviat

Last week Shaun Donovan, who runs the Department of Housing and Urban Development, said that it might make sense to modify the mortgage interest tax deduction. Sacrilege! Giving people a tax break for buying a house is one of the great middle class subsidies. Donovan knew he was on shaky ground when he said it, and did plenty to hedge. According to the WSJ:

He also made clear that the Obama administration isn’t actively considering, much less endorsing, such a step, which could affect millions of homeowners… Pressed for more details, Donovan again made clear that this wasn’t an active conversation inside the administration. “We’re not actively looking at this. It’s not something that we have a policy group on or anything at this point,” he said. “I don’t want to get into the details of discussions that aren’t happening.”

Too bad. Because we shouldn’t only look at getting rid of the mortgage interest deduction—we should actually do it.

Each year, about 40 million tax payers claim the mortgage interest deduction. Congress’s Joint Committee on Taxation estimates that between 2009 and 2013, the federal government will miss out on about $600 billion in revenue as a result. In 2009, the tax break cost the government $80 billion—which could have paid for more than 2% of all federal spending.

Drumming up revenue is all well and good, but a bigger reason to get rid of the tax break is that it makes buying a house artificially cheap, and it encourages people to take on more debt, since the tax break comes from the loan and not, say, the amount of equity held in the house.

In a recent op-ed in the Boston Globe, Harvard economist Edward Glaeser made a few other compelling arguments. First, that the mortgage deduction isn’t an evenly distributed tax break:

The mortgage interest deduction is also extremely regressive. Economists James Poterba and Todd Sinai estimate that the deduction typically saves $523 per year in taxes for home-owning families earning between $40,000 and $75,000, and $5,459 per year for families earning more than $250,000.

Indeed, Donovan pointed out that many lower income home owners don’t take the deduction at all because they don’t itemize their taxes since the standard deduction is worth more to them.

Also, as Glaeser points out in his Globe piece, the tax break has contributed to the proclivity to buy larger houses, since you get a bigger tax break if you take out a bigger loan:

Americans, even poor Americans, have almost twice as much living space as the average resident of France or Germany. According to the Residential Energy Consumption Survey, homes with between 2,500 and 3,000 square feet of heated living space use 41 percent more electricity than homes with between 1,500 and 2,000 square feet of space. In an age of global warming, why should we subsidize the greater energy use inherent in larger homes?

On the other side of the argument, we have the nation’s real estate agents, mortgage brokers and home builders. A nice little lobbying block they’ve got going. Not to mention those 40 million tax payers (i.e., voters) who currently receive the deduction. It would be a fantastic political feat to get rid of a tax break with such a following—especially at a time when the housing industry is limping along.

At this point, I’m happy that we’re even talking about it.

——————-

Do you think the tax break should be done away with? Do you think the break does more harm right now? Or more good? Let me know your thoughts on the matter. I’d be geninuely interested to hear.

-David Baker
Say Halo Mortgage
http://www.sayhalo.com

Tags: Artifically Cheap, Barbara Kiviat, Boston Globe, David Baker, Debt, Department of Housing and Urban Development, Economist, Edward Glaeser, Federal Government, Harvard, Home Builders, Homeowners, Housing Industry, James Poterba, Joint Committee on Taxation, Large Houses, Middle Class, Middle Class Subsidies, Mortgage Brokers, Mortgage Interest Tax Deduction, Obama, Obama Administration, Real Estate, Real Estate Agents, Residential Energy Consumption Survey, Say Halo Mortgage, Shaun Donovan, Subsidies, TIME Blog, Todd Sinai
Posted in des moines ia mortgage, ia mortgage | 1 Comment »

Americans Pay Off Other Debt Before Their Mortgage Loan

Wednesday, May 12th, 2010

Another great post from Lending Tree and Bryan Doyle. Check out their site if you haven’t already, there is some great stuff on there.

An increasing amount of optimism is building regarding the U.S. economy. Despite the growing number of mortgage loan defaults and the seemingly endless amount of properties going into foreclosure, the stock market is rising and so is consumer spending. While many predicted the severity of this recession might have a lasting impact on how Americans go about saving and spending, a growing body of evidence suggests that this may not be the case.

Studies have shown that many Americans put paying off consumer debt, such as credit cards, ahead of paying off their mortgage loan. The market research firm, Decitica, recently reported that almost 50 percent of consumers do not change their spending habits because of a recession.

Twenty percent of Americans become more frugal and remain so following a recession and 30 percent may become more frugal during a recession, but return to their old spending habits after a recession. The research indicates the majority of American consumers do not change their long term spending habits as a result of a recession and this downturn will most likely be no different.

The latest recession has wiped out many homeowners’ equity and destroyed their credit scores as they struggled to pay their debt. Many economists hoped the recession would change how Americans saved and used credit. Initially, Americanâ€™s were saving more as a result of the recession, but it appears as the economy is starting to recover consumer spending is rearing up again.

Credit May be Hard to Obtain
With home prices down, consumers will not be able to tap into their home equity like they were able to during the first half of the decade. Credit companies are also showing signs that they are tightening their lending policies and many potential borrowers will be exiting the recession with much lower credit scores.

As a result, Americans may find that even if they want to take on debt to fuel consumption, credit may be much harder to come by.

-David Baker
http://SayHalo.com

Tags: America, Americans, Bryan Doyle, Consumer Debt, Credit Cards, Credit Scores, David Baker, Frugal, Home Equity, Iowa Mortgages, Lending Tree, Mortgage Loan, Say Halo
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Mortgage Loan Defaults Decline, Hopefully Foreclosures Next

Wednesday, May 5th, 2010

Article from Lending Tree by Bryan Doyle

The California real estate market has been getting some good news lately. According to the San Diego based MDA DataQuick, lending institutions started fewer formal foreclosures last quarter. Mortgage loan default notices were down 4.2 percent from the fourth quarter of last year. Between January and March of this year, 81,054 notice of defaults were recorded compared to 84,568 in the final quarter of 2009.

Mortgage Rates Remain Stable
Lenders are warming up to the idea of mortgage loan workouts and the Obama administration has introduced plans to promote short sales and loan modification as foreclosure alternatives.

Furthermore the market received some good news last week when mortgage rates remained low despite the Federal Reserve ending its 1.25 trillion dollar mortgage loan purchasing program.

Foreclosures May Be Spreading to High Priced Neighborhoods
Although the declining number of default notices provides a reason to be optimistic, many experts are still hesitant to say the market is on its way to a full recovery.

The President of MDA DataQuick, John Walsh, warned the latest numbers were not a clear sign of a recovery stating, “We are seeing signs that the worst may be over in the hard-hit entry-level markets, while problems are slowly spreading to more expensive neighborhoods.”

The numbers supported Walshâ€™s comments as zip codes with a median home price below 500,000 dollars experienced a 5.8 percent decline in the notice of defaults from the prior quarter while default notices in zip codes with home prices above 500,000 dollars rose 1.5 percent.

Mortgage Loan Modification and Refinance Is Key
Congress recently called some of the largest banks to testify about their efforts to help troubled borrowers with their mortgage loan. Many of the banks boasted about the large number of employees they have dedicated to working with borrowers on home loan modifications.

If the banks continue to increase their efforts to help troubled borrowers refinance or modify their loan, further declines in defaults and foreclosures should result.

-David Baker
http://SayHalo.com

Tags: Bryan Doyle, David Baker, Federal Reserve, Foreclosure, Iowa Mortgage, Lending Tree, Loan Modification, Mortgage Loan, Mortgage Rates, Refinance, Say Halo Mortgage
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Des Moines, IA mortgage – debt ratios out of whack?

Friday, September 11th, 2009

If you have looked into an Iowa mortgage lately, I’m sure you have found that your debt to income ratio (DTI) is an important facet of the loan process, particularly with the number of defaults across the country right now – lenders are becoming stingy with who they lend to.

There are quite a few things that can affect your debt ratio, as well as about as many solutions! First, be sure that the Des Moines, IA mortgage professional that you choose has got the correct information. Make sure that your employer(s) are listed correctly along with any and all of your income. Secondly, check the interest rate, loan amount, and the amount of your new payment as well – these all play a crucial part in calculating the correct ratio to qualify. On the other hand, there are a couple of different ways to avoid DTI problems with your Iowa mortgage. These might include reducing the purchase price, selecting different loan programs (FHA, looking into owner financing, and there may also be the option of a co-signer.

Banks are quickly exiting many mortgage lending channels, if not pulling out altogether. There are too many changes being made too quickly and it is easy to get out of compliance. This is a primary reason to work with a locally educated mortgage broker for your next Des Moines, IA mortgage.

Posted in des moines ia mortgage, ia mortgage | 3 Comments »

Des Moines, IA mortgage – Obama 125% Refinance Now Available

Wednesday, August 26th, 2009

Many people in the Des Moines, IA mortgage area – and statewide – have been unable to refinance their home because they owe on their mortgage than it is worth. For the first few months of the Making Home Affordable (aka the Obama refinance) program, the maximum loan-to-value that was allowed was 105%. Then in July, it was announced that the new maximum loan-to-value under the Obama refinance program was 125%. Then many people called in and asked about the Obama 125% Refinance being available — only to find out that lenders weren’t actually set up to do it yet.

But they are now!

Today we got our first lender announcement that you can now refinance up to 125% of your property value under the Obama 125% refinance / Making Home Affordable plan.

So if you are one of the people who has not been able to take advantage of low rates in the Des Moines, IA mortgage area, now is your time… and as luck would have it, rates are scraping the bottom of the range they have been in for months!

Posted in des moines ia mortgage, ia mortgage | 2 Comments »

Des Moines, IA mortgage – Manufactured and FHA obsolete?

Tuesday, August 25th, 2009

With the downfall of Taylor, Bean and Whitaker recently, many Des Moines, IA mortgage officers have been scrambling for lenders who will underwrite FHA loans on manufactured homes.

The good news is that there are still lenders underwriting these loans, so if you are in a manufactured home and need to refinance or purchase a home, there are still FHA loan programs available that lenders will lend money on. There aren’t many lenders still lending money on manufactured homes, but there are a few… and lucky for all of us, we have more than one that is still lending money for FHA loans on manufactured home properties.

Of course, the same FHA guidelines still apply and just as a reminder. You should always check with a local lender to get specific answers about a Des Moines, IA mortgage. Here are the general FHA rules for manufactured homes to be considered eligible for FHA financing:

have a floor area of not less than 400 square feet;
be constructed after June 15, 1976, in conformance with the Federal manufactured home construction and safety standards, as evidenced by an affixed certification label in accordance with 24 CFR Section 3280.8; (manufactured homes produced prior to that date are ineligible for insured financing);
be classified and subject to taxation as real estate;
the mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins;
built and remains on a permanent chassis;
designed to be used as a dwelling with a permanent foundation built to FHA criteria; and
the finished grade elevation beneath the manufactured home or, if a basement is used, the lowest finished exterior grade adjacent to the perimeter enclosure, shall be at or above the 100-year return frequency flood elevation.

Will manufactured home loans that are insured by FHA go away completely? Maybe.

But they are still available in the Des Moines, IA mortgage arena as of today.

Posted in des moines ia mortgage, ia mortgage | 1 Comment »

Des Moines, IA mortgage – suprised to see rates jump?

Tuesday, August 11th, 2009

Okay, I apologize for getting this up late, but this week’s schedule is a little chaotic. So what happened in the Iowa mortgage market lately? Well, if you were paying attention you could have been the one saying “I told you so” all the way to the bank.

The bond market and the mortgage market got hammered last week. Not just beat up a little, but seriously hammered. And the beating that it took was frankly more than the economics of the situation justified.
Mortgage rates go “up on an elevator and down on the stairs.” That means that they go up a lot more quickly than they go down.
So we saw a bit of a reversal in the markets eventually. The stock market has been doing better, so rates are now going up as a result.

How long will this continue? Hard to say! My recommendation remains to lock all loans. I believe that the risks remain significantly to the upside on rates and while there is downside potential, it’s not nearly as prevalent as the upside risk. Keep coming back for Des Moines, IA mortgage news and updates!

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Des Moines, IA mortgage – and the winner is…?

Thursday, July 30th, 2009

The Des Moines, IA mortgage market – and the entire state – is starting to see some reeling changes.

Exciting news! Or is it? Consumers are gobbling up homes – partially inspired by the tax credit – and since home prices in general are still falling. Or, at least they are stable at the lowest point this decade. What does that mean to us in the Des Moines, IA mortgage market? A trend reversal may be upon us! Home sales and foreclosures are still increasing, and there are more buyers than homes on the market – for now! So if you are looking to buy, get yourself pre-approved and get in the ring because the tax credit will be gone very soon – and that house that you finally decide on probably will be gone.

If you are looking to purchase in the Des Moines, IA mortgage market – or anywhere in Iowa – its time to take action or sit back and watch the parade go by.

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