Archive for Mortgage


Tax Credit Closing Date Extension Approved

0 Comments By Elizabeth Nunan on July 1st, 2010
Tags: ,      Categories: Buying, Credit, Mortgage, Relocation

U.S. CapitalThere has been much confusion and misinformation lately regarding the extension of the Homebuyer Tax Credit closing deadline.

On Tuesday, the United States House of Representatives passed  HR 5623, the Homebuyer Assistance and Improvement Act of 2010, by a vote of 409-5.  But the bill still needed to pass the Senate, and it didn’t seem like such a sure thing.

Well, now it’s official.  Last night, on the eve of the deadline, Congress passed the extension of the Homebuyer Tax Credit closing deadline. The bill is now awaiting signature by President Obama. It’s important to note that the extension applies ONLY to transactions that had ratified contracts in place as of April 30, 2010 and have not yet closed.  This legislation is designed to create a seamless extension with the new closing deadline for eligible transactions now being September 30, 2010.  There will be no gap between June 30th and the date the President signs the bill into law.

The National Association of Realtors worked closely with Congressional leaders on both sides of the aisle to enact this legislation. They believe extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the Country. This extension will likely benefit thousands of homebuyers who, for whatever reasons, were unable to close by the initial deadline of June 30th.

For additional information on the extension visit www.realtor.org/government_affairs

Mortgage Rates on the Move

0 Comments By Mark Logue on April 14th, 2010
Tags: , , ,      Categories: Buying, Credit, Mortgage, Selling

As we all know, interest rates have plummeted to historical lows in recent months. Average long-term interest rates remained below 5% throughout March 2010. That is well below the 6% average that we were seeing in 2008, not to mention the lowest rates seen in decades. All good things must come to an end (clearly not said by anyone from the optimistic Emerald Isle) and we have already seen rates climb over 5% to an 8 month high of 5.25%.

So what does the future hold for interest rates? As I am NOT clairvoyant with a crystal ball I can only look to the past to try and get an indication of what the future holds. History shows that periods of significantly low interest rates are generally followed by sky-high rates.  Case in point: From 1970 to 1972, 30 year fixed mortgage rates hovered around 7.25% before leaping to 10% by the end of 1973. Murphy’s law applies here (Murphy was a well known pessimist in Ireland ), when rates move downwards, it is typically a slow creep to the downside.  However, when rates rise, it is typically violently quick to the upside.

So why are rates rising?

  • Good economic news is one reason that rates are rising: Government debt, a safe bet during the recession is losing its appeal as stocks and corporate bonds are becoming the investments of choice by investors.
  • The Federal Reserve has ended its program of buying Mortgage Backed Securities. When the Fed was buying, rates were in the mid 4% range for most of last year. Today, according to the Mortgage Bankers Association, the national average for a 30-year fixed rate mortgage is 5.31%.

For people putting their home on the market this spring, rising rates may actually be a good thing. Buyers are racing to complete their transaction for two main reasons

  • Buyers want to lock in their interest rate before they go higher.
  • Buyers want to have a signed Purchase Agreement in place before April 30th in order to qualify for the (up to) $8,000 Tax Credit offered by the U.S. Government.

I am expecting a frenzied last two weeks in April as there will be a near panic (in some cases) to meet the April 30th deadline. As a seller, price your home right as you will not have time to “test the waters”. As a buyer, get pre-approved and lock in your interest rate before it is too late.

Homebuyer Tax Credit Extended

0 Comments By Mark Logue on November 10th, 2009
Tags: ,      Categories: Buying, Credit, Mortgage

Good news for homebuyers! On November 6, President Obama signed a bill to extend the Tax Credit for first-time homebuyers through June 30, 2010.

The program also gives current homeowners a tax credit as long as they have owned and occupied a primary residence for 5 of the last 8 years.

For further details and qualifications, contact our mortgage team or view our Thoroughbred Mortgage Newsletter.

 

Looking For the Bottom Of The Market?

1 Comment By Mark Logue on September 28th, 2009
Tags: , ,      Categories: Buying, Market Conditions, Mortgage

Today, everyone  looks for the “bottom of the market” when they are in the market for a home. But it’s not just the price that determines the real cost of buying a home. Interest rates and financing options also have a huge impact on monthly costs.

Should you buy now or does it make sense to wait? While  there’s no doubt that property values have declined vs. a year ago, the rate of decline has slowed significantly in the past few months. And while there are endless predictions, the exact timing on when prices will stabilize is unknown. But waiting for the lowest possible  purchase price could ultimately end up costing you more if the rates and financing opportunities are not as favorable as they are today.  Here are a few important factors to consider before you make a decision.

Interest Rates – The Good News

The Federal Reserve initiated a program to buy mortgage-backed securities, which control the rates that people pay for their home loans. Over the last 7 months, rates have been bouncing between 4.625% and 5.25% for 30-year fixed rate loans.

Interest Rates – The Bad News

Rates are artificially low. The Federal Reserve will not continue to buy mortgage-backed securities indefinitely. Economists are predicting that rates will increase significantly in the first quarter of 2010. Historically, interest rates have been above 6%. The opportunity to obtain a home with an interest rate in the low 5’s will not be available for much longer.

Mortgage Financing

Fannie Mae and Freddie Mac have set temporary loan limits in “high balance” areas of many metropolitan areas at $729,750.  This limit is probably going to be reduced on December 31, 2009.  Although not confirmed, the new limit could be as low as $417,000.

The Clock is Ticking on Free Money

From now until November 30, 2009, first time home buyers are able to take advantage of an $8,000 Tax Credit. The transaction must close and fund by November 30th in order to take advantage of the credit.

Mortgages Made Easy

0 Comments By Mark Logue on September 18th, 2009
Tags: , ,      Categories: Buying, Credit, Mortgage

With the expiration of the First Time Home Buyer Tax Credit getting close, the most common question that I am asked is “what are the all the steps in the process of buying a house?” Having been in the mortgage business for close to 20 years now, I have a great deal of experience making this process as painless as possible.

Here’s a quick walk-through on how purchase loans are made.

  1. Loan Search – Seek the advice of an experienced mortgage professional to better understand which financing options suit your needs now and in the future.
  2. Loan Application- Supply the lender with as much information as possible, as accurately as possible.
  3. Documentation- Submit paperwork supporting application. Commonly required items include pay stubs, two years of tax returns, two months of bank statements verifying the source of down payment, funds to close and reserves.
  4. Pre-Approval – This allows you to know how much you can afford to spend on a home and gives you greater negotiating power.
  5. The Search – Now is the time to begin your search. Once the right house is found, the terms of the sale will be negotiated, including the potential terms of the loan being sought.
  6. Inspection – You will need to hire licensed professionals to inspect the property for defects, termites and water damage.
  7. Appraisal – Your lender will require an appraisal of the home you wish to buy. An appraisal determines the marketability of the property relative to the rest of the market.
  8. Title Search – This process reveals any liens against the property. All liens must be cleared before a transaction can be completed.
  9. Processor’s Review – The mortgage processor reviews all the information and sends it to underwriting. (Always be nice to your processor)
  10. Underwriting Review – Underwriters make the final decision as to whether or not a loan is approved.
  11. Decision – The lender issues a letter stating an approval, denial or counter offer.
  12. Clear to Close- Assuming the loan is approved, all terms and conditions of the approval need to be accepted and satisfied by the applicant. The loan is clear to close once underwriting receives the acceptance from the buyer.
  13. Closing – During this step, the final loan and closing documents are signed.
  14. Funding- At this point, the lender sends a wire or check for the amount of the loan to the closing company.
  15. Close of transaction – Documents transferring title will now be recorded with the county.
  16. Congratulations! You now own your new home.  Now begins the most important step of all.  Enjoy your new home.

The Importance of Your Credit Score

0 Comments By Mark Logue on August 21st, 2009
Tags: , ,      Categories: Buying, Credit, Mortgage

What does it mean to you as a prospective buyer?

In the world of real estate, the three most important words are “location, location, location.”  In today’s post sub-prime mortgage world, the three most important words are “credit, credit, credit.”  Today’s home buyer needs to understand the importance and significance of their credit score from a lender’s perspective.

The credit score is an indicator of the likelihood that a consumer will pay off debt without being more than 90 days late.  Credit scores range from a low score of 300 to a high score of 850.  In order to (a) qualify for mortgage financing and (b) get the most competitive interest rate in today’s mortgage world, I recommend that you have a credit score of 700 or above. 

A high credit score means a low interest rate, which can save you tens of thousands of dollars in interest over a 30-year mortgage.

Credit scores should be checked at least once a year.  The three main credit reporting agencies (CRA’s); Equifax, Experian and Trans Union have created a central website Annualcreditreport.com, to allow you to get a copy of your credit report. Many people ask me, “What are the factors that affect my credit score”?  The answer is simple but not well known. To view my full article and to download the full list of credit score factors, click here.

Unemployment Impacts Mortgage Rates

0 Comments By Mark Logue on August 7th, 2009
Tags: , , , ,      Categories: Buying, Dutchess, Market Conditions, Mortgage, Putnam, Selling, Westchester

Today is the day every bond trader either hates or loves. It is the first Friday of the month. The day that the unemployment numbers are released for the prior month.

Historically, we have seen some of the largest swings occur in the bond market on first Fridays. It’s the day when traders have itchy fingers to either buy or sell their products.

Unemployment numbers have a huge impact on both the stock and bond market. The bond market is particularly sensitive to the unemployment data.

Why does this have such a big impact? Unemployment is one of the most basic indicators of either strength or weakness in any economy.

High unemployment is a sign of a weak economy, little or no growth, weak exports, weak currency value and little or no inflation. High inflation is the nemesis that the bond market fears most as it erodes the value of a fixed income security. Rates are typically low in a weak economy. Why? To help stimulate economic activity.

Low unemployment is a sign of a robust economy but the challenge is always to keep inflation in check. Interest rates are typically higher in boom times as a check/balance to keep inflation manageable.

This week, mortgage interest rates have inched up slightly but still remain in the 5’s.

Mortgage blog chart august 8 2009

Stability Returns to Mortgage World

0 Comments By Mark Logue on July 28th, 2009
Tags: , , ,      Categories: Buying, Dutchess, Market Area, Market Conditions, Mortgage, Putnam, Westchester

After a year of turbulence in the mortgage world, a degree of stability has returned. In 2008, many mortgage applicants felt that the mortgage world was governed by the whim of some ephemeral, capricious entity. Today, we have returned to the basics – Lenders are looking at Income, Credit and Equity (Assets) from the borrower.

In lending today, it’s all about credit. Credit scores need to be 680 and above if a borrower is going to get a competitive interest rate.

Income will be verified (very few lenders offer “No Income Verification” anymore) by submitting recent pay stubs and W2’s and Tax returns if Self employed or Commissioned.

Assets will be verified by submitting all pages of bank statements for the most recent two months. TIP – Do Not move assets from one account to another as underwriting will drag your application along very slowly !!!!

The Interest rate chart below shows the history for the last 6 months. I will discuss what affects interest rates in next week’s installment.

Mortgage Rate Chart