July 7th, 2015
A lot of people are operating under the mistaken impression that getting a home loan has become impossibly strict, and that people with good credit scores are being denied loans. They mistakenly think you have to have 20 percent down, or that you have to have absolutely perfect credit, or that having student loans means you won’t qualify. That’s just not the case. The fact is that it has definitely gotten easier to qualify for a loan than it was right after the financial meltdown in 2008; standards are now relaxed back to where they were in the 1990s. You can’t get a loan just because you say you’re a nice person who makes a lot of money. But you most definitely do not have to have a 20 percent down payment saved. With FHA financing you only need 3.5 percent. Fannie Mae and Freddie Mac both offer 3 percent down loans but with some requirements, while the VA has zero percent down.
When you apply for a loan, you’re going to have to jump through a fair number of required hoops by providing pay stubs, tax returns and bank statements. What can you do as a borrower to make the process smoother? Provide whatever documentation they’re asking for, as soon as they ask for it. The mortgage industry isn’t setting people up for failure. They’re in the business of making loans. They want to make loans. It’s important to remember that if you’re going to get to the finish line you just have to cooperate fully. As a borrower, you are an active participant in the process. If you do your part as best as you can, you’ll have the smoothest transaction possible. And it’s useful to familiarize yourself with the standards that loan processors follow. When a loan processor says they need two months of bank statements, if you don’t give them every single page of the statement, even the seemingly meaningless ones with boilerplate language on them, they can’t check off that they have received your bank statements.
Source: The Washington Post
June 30th, 2015
A new survey finds that house hunters who know their credit scores feel significantly more prepared to buy a home. Yet, just half of recent buyers say they have checked their credit as soon as they considered purchasing a home, according to the survey, commissioned by Experian, of 250 recent and 250 future home buyers. A survey shows that when people interact with their credit by tracking it and learning more about the factors that affect it, they are more confident when considering a new home purchase.
However, more than two in five future home buyers are concerned that they will not qualify for the best home loan rate and have even delayed purchasing to improve their credit, the survey found. Fifty-eight percent of buyers surveyed say they are working to improve their credit to qualify for a better home loan rate, but 35 percent of future buyers say they are not sure what steps to take to qualify for a larger loan. For those who are working to improve their credit, the top actions respondents said they’ve taken are paying off their debt, paying bills on time, keeping balances low on credit cards, protecting credit card information from fraud or identity theft, and not applying for or opening new credit accounts. ABBA First Mortgage has a program to assist buyers that are seeking to improve their credit scores and will walk alongside you each and every step of the way. Give us a call today to find out how you too can own a home whether your credit is in need of repair or not.
June 29th, 2015
Mortgage rates were already hovering near 2015 highs as of Thursday last week. Friday’s spike sent them easily above the previous annual high set on June 10th. Normally, day to day market movement isn’t big enough to cause a change in the actual contract rates being quoted. In other words, it’s usually the upfront costs (or rebate) that’s changing for any given rate. Today’s movement was enough to make a new contract rate more prevalent when it comes to conventional 30yr fixed loans for top tier scenarios. While there still are plenty of quotes going out for lower rates, 4.25% now takes over as the most common.
However, didn’t Freddie Mac just Thursday announce it’s weekly rate survey showing 4.02%?! Indeed they did, and there’s no reason to doubt the long term accuracy of those numbers, but there are a few major caveats. First of all, quoted rates often include points. There’s nothing wrong or deceptive about that and Freddie clearly conveys associated points in its report. But it’s important to understand that the presence of points can make comparisons between two sources of info much more difficult to make accurate assessments.
If we assumed that 0.7 points were charged in the Freddie survey, today’s most prevalent rate would easily be 4.125%, and the average effective rate would be around 4.09%. If Freddie had the luxury of instantly re-conducting its survey this afternoon, the 4.02% reported yesterday would likely be very close to 4.09% today. Herein lies the other caveat: Freddie’s data is from survey responses that come in from Monday through Wednesday. That’s not a problem when markets are flat, but rates went higher all week. All of Freddie’s survey responses from Monday were in a completely different reality compared to today.
The bottom line is that rates are not as low as they were earlier last week. And for the average mortgage applicant with flawless credit, rates are never as low as most reports indicate. The bigger question always is: are they going higher? Definitely a strong possibility and maybe sooner rather than later! If you’ve been following along for any length of time, you know we’ve been in heavy ‘defense’ mode since early May, and even as early as late April. Nothing about that has changed. There continues to be more risk than reward when it comes to holding off on locking, and next week brings tremendously increased volatility. In fact, much of today’s weakness was a defensive preparation on the part of financial markets for that potential volatility.
June 26th, 2015
The Federal Reserve will likely begin inching up interest rates in the early fall as anticipated, despite sending mixed signals about the timing at its June meeting, the Mortgage Bankers Association (MBA) predicted in its latest monthly report on the economy.
In a news conference with reporters last week, Fed Chair Janet Yellen said the specific date action on rates would be taken is undetermined and will be data-dependent. Some analyst took that as a signal that the move to raise the key federal funds rate would come later than expected.
MBA, however, said it was still expecting “a September 2015 lift off.”
“Rates are likely to be quite volatile through the remainder of the year given the uncertainty regarding the Fed’s path going forward,” MBA said in its June commentary.
The trade group also predicted that the economy would grow this year, despite a disappointing first quarter in which gross domestic product contracted by 0.7 percent.
“These are likely temporary hurdles to growth that will dissipate over the course of 2015,” MBA said. “While weak retail sales did provide some cause for concern from December through February, the data indicated encouraging increases in both March and May.”
This past week we have seen rates go up due to the predicament that Greece is experiencing overseas. Until their economic issues are resolved, we will continue to feel the uneasiness as reflected in the US bond market and mortgage backed securities. Consider the rates that are being published soon, for the chances are that they will continue to rise.
June 25th, 2015
According to a recently released study by credit agency TransUnion, 1.5 million Americans who were forced out of the housing market by the housing crash will be back in the housing market in the next two years.
The study found that 1.2 million borrowers that were hurt by losses and suffered a credit hit had sufficiently recovered by the end of 2014 to the point that they met Fannie Mae’s underwriting guidelines – all had at least a 620 FICO score, had no unpaid judgments or pending liens, and had passed the required loan waiting period.
Further, TransUnion predicts 700,000 more will join that group this year, 300,000 in 2016, and 500,000 in 2017.
And with this many Americans becoming credit-worthy, we can all expect weekly mortgage applications to continue to increase. Applications have increased 1.6 percent from one week earlier and 18 percent year-over-year.
This is great news for the mortgage industry which translates to higher loan volumes but also may possibly lead to higher rates.
June 23rd, 2015
With interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today’s market have become very steep, according to the inaugural Opportunity Cost Report released by realtor.com. The report examines a wide range of factors, including the long-term financial impact of owning versus renting a home, the likely monetary gain renters forego in waiting to buy and the financial benefits of homeownership by market.
“Current market conditions give buyers the opportunity to build substantial wealth in the long-term, compared with renters and later buyers, in advance of the projected increase in interest rates and continuing price appreciation,” said Jonathan Smoke, chief economist for realtor.com. “The problem is inventory is low, which has many would-be home buyers –especially first timers – standing on the sidelines and missing out on potentially material financial gains.”
Nationally, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. Although some markets are more buyer-friendly than others, national data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of MSAs, buying a home produces a financial benefit of at least $100,000 over 30 years.
June 19th, 2015
The Consumer Financial Protection Bureau (CFPB) has proposed a two-month delay in implementing new consumer-disclosure rules under The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), known as TILA-RESPA Integrated Disclosure, or TRID.
CFPB Director Richard Cordray said that the Bureau is now proposing an Oct. 1 start date for TRID, also known as the “Know Before You Owe” mortgage disclosure rules.
TRID mandates that the mortgage industry produce two rounds of streamlined forms for consumers that reveal mortgage costs within three days after the application and three days before the closing, making those costs easier for consumers to understand. Another major change is a mandatory waiting period of at least three days before closing. Changes to the loan within this window could also trigger another three-day waiting period.
Because of the complexity of the ruling changes which affect ALL residential mortgage transactions, this delay will allow the CFPB to iron out the details before rolling out the new rules and regulations
June 16th, 2015
Big doesn’t necessarily mean better.
Do you want to pay for the fancy, opulent office of your mortgage company?
Do you want to pay the salary of allot of unnecessary, unproductive “support staff”?
I know I would not.
I do want a low, discounted rate with low fees and with this
I would pay for knowledge, skill, and experience.
I would pay for professional, personal customer service.
That is what you get at ABBA First Mortgage, Inc.
Just because we can discount the price…never means we discount the commitment of the level of service to you, our most valued asset.
June 15th, 2015
For a period of time which was unprecedented, the meetings of the Federal Open Market Committee of the Federal Reserve Board meant nothing to the average American and the markets. After the financial crisis hit, the Fed moved rates down to historic lows. And when the economy was slow to recover, the Fed kept fiscal stimulus going by purchasing the mortgage backed securities and Treasuries. Yet, after this was accomplished there was not much to do until the economic recovery started moving.
The economy is producing over two millions jobs per year and now that the economic recovery is much more solid, the Fed is back in the news. Last year, they stopped the aggressive purchase of securities. And now it is inevitable that they will start raising short-term interest rates as the recovery continues to get stronger. Chairperson Yellen as much as guaranteed it in a speech last month. Thus, all eyes will be on the FOMC meeting as it convenes today.
In general, we are not looking for the Fed to raise rates this week. But we are looking for a better indication as to when they might make a move at a later meeting, now most likely in September, after the second quarter economic data is released. The markets are already speculating as to how quickly the second move may come. In other words, when rates start up again, how fast will they move? Keep in mind that the Fed directly controls short term rates but only indirectly affects long-term rates through their actions. And long term rates have already started their move upward in anticipation of the Fed’s moves.