This week is packed full of scheduled economic indicators that may impact mortgage rates. Mortgage rates are based on mortgage backed securities (bonds). Typically, good news for stocks means that mortgage rates may rise as investors will trade the safety of bonds for a greater return received from stocks. The reverse is also true. Signs of inflation will also impact mortgage rates for the worse. Here are some of the scheduled reports to be released this week:
This Week Could be a Doozie for Mortgage Interest Rates
April 25, 2011 by Leave a Comment
In the past, I've included the scheduled events that may impact mortgage interest rates in my rate weekly rate post. However, this week is so packed data that I thought it was worthy of a post all its own. Check this out (items that are bold tend to be the may be the most influential to rates):
Monday, April 25: New Home Sales
Tuesday, April 26: Consumer Confidence
Wednesday, April 27: FOMC Meeting and Durable Goods Orders
Thursday, April 28: Gross Domestic Product, Initial Jobless Claims, GDP Chain Deflator and Pending Home Sales.
Friday, April 29: Personal Consumption Expenditures and Core PCE, Employment Cost Index, Chicago PMI and Consumer Sentiment Index (UoM).
Wednesday, we'll learn if the Fed's interest rate decision and possibly gain clues as to their plans with QE2. Ben Bernanke is going to be having a news conference following the FOMC meeting which many will be tuned into hoping for clarity on his views of the direction of our economy. You can see the entire week offers plenty of data to be digested.
Remember, mortgage rates are based on mortgage backed securities (bonds) and are not set by the Fed. Mortgage rates may are impacted by how MBS are being traded on the bond markets. When the stock market is rallying or there are signs of inflation, mortgage rates tend to raise higher. When the stocks are tanking, investors will often seek the safety of bonds which will cause rates to move lower.
Whether or not you should lock or float (not lock) your interest rate depends on your personal risk tolerance. My general stance is that if you like the rate that is currently available – you should consider locking. Decide which scenario is worse for you: losing today's rate by not locking or locking todays rate with a rate drop tomorrow. Please discuss this with your local mortgage professional. I am a NMLS Licensed Mortgage Originator dedicated solely to Washington State. If you are interested in a mortgage for a home located anywhere in Washington State, I am happy to help you.
NOTE: I plan on posting mortgage interest rates today. Stay tuned!
Gas Buddy may be my new Best Friend!
March 29, 2011 by Leave a Comment
One of my current favorite aps for my Droid has got to be Gas Buddy. Gas Buddy allows me to find the cheapest gas by grade in any area. It confirms that when I'm filling up in my neighborhood of West Seattle, that I'm not paying more than I need to. Gas Buddy helps me when I'm trying to find a gas station that won't ping my wallet more than it needs to.
Let's face it, gas is getting very expensive! Gas Buddy's heat map shows some scorching prices in various Seattle and Bellevue neighborhoods.
Here's some good news, you don't need to have a "smart phone" to use Gas Buddy. You can also find out who has the best deals by visiting their site online at www.gasbuddy.com.
We all need to do what we can to save money! What are some of your favorite tips?
President Obama Declares April National Financial Literacy Month
April 10, 2010 by Leave a Comment
Recently President Obama declared April as National Financial Literacy Month.
In recent years, our Nation's financial system has grown increasingly complex. This has left too many Americans behind, unable to build a secure financial future for themselves and their families. During National Financial Literacy Month, we recommit to teaching ourselves and our children about the basics of financial education.
I've always felt that financial education should be taught in high school. I'm not talking home-ec, at least not the the home-ec I attended at Hazen High School where I grew up in Renton, where we made up incomes and came up with a rough budget. I'm talking about a detailed course where students would focus on the benefits and consequences of credit and debt.
I think it's great that the President is bringing attention to Financial Literacy. During the subprime era of mortgage, I met with people who wanted to buy a home because their friend or co-worker just did. They had no idea what financial responsibilities coincide with owning a home. They often wanted to buy as much as they could be qualified for based on guidelines at that time even if the mortgage payment or program was not suitable.
More from President Obama's proclamation:
The new Consumer Financial Protection Agency I have proposed will ensure ordinary Americans get clear and concise financial information…. While our Government has a critical role to play in protecting consumers and promoting financial literacy, we are each responsible for understanding basic concepts….
I wonder what is an "ordinary American" and what if you're not an "ordinary American"? In his proclamation, he also talks about how our "recent economic crisis was the result of irresponsible actions on Wall Street and everyday choices on Main Street" and includes "large banks [that] speculated recklessly". His list of who's at fault no where includes our Congress who mandated that Fannie Mae, Freddie Mac and FHA create programs or different guidelines to help more Americans buy homes.
From the Wall Street Journal:
Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained. Rep. Barney Frank (D., Mass), for example, now the chair of the House Financial Services Committee, openly described the "arrangement" with the GSEs at a committee hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing." The hint to Fannie and Freddie was obvious: Concentrate on affordable housing and, despite your problems, your congressional support is secure.
But I digress…
President Obama is promoting a website they've created for financial literacy which appears to be an assortment of various government links organized on one site. It' looks like it's well meaning advice but I'm not sure it's the best or most practical advice–very similar to HUD's book on buying and financing your home. The site also has information that is very biased, in my opinion, about financial tools such as reverse mortgages, which are not right for everyone but when used in the right situation, can make a huge difference for the better in a seniors life. I also found some information about credit repair that would potentially provide the result a consumer would be looking for.
I highly recommend that you subscribe to Get Rich Slowly. This is a fantastic blog that is packed full of common sense financial information on getting out of debt and building your savings. J.D. Roth's blog was recently named the most inspiring money blog by Money Magazine.
Washington State's Department of Financial Institutions also has a blog that you may find interesting: Money Talks. I'm a new subscriber to this blog and so far, the information seems very good. In fact, it was from DFI's blog that I learned about the Twitter hashtag for April's Financial Literacy Month: #FinLit10.
Of course I hope you're a subscriber to my blog, The Mortgage Porter. I don't only write about mortgages or post interest rates on my blog, you'll also find quite a bit of information about credit scoringwhich impacts your life every day. I cover other topics too. You can subscribe in the upper right corner by entering your email address and you can un-subscribe anytime.
During April, I'll share information in recognition of National Financial Literacy Month…actually I hope that's what I've been doing at Mortgage Porter for the last couple of years!
What’s worse than a low appraisal with a mortgage? How about losing your job.
August 4, 2009 by Leave a Comment
Appraisals coming in lower than the home owner estimated is not uncommon these days…most of time, the transaction may still work outdepending on if the mortgage has to be repriced due to higher loan to values or if the home owner wants to bring in additional cash to apply towards their home equity to lower their loan to value. They at least have options.
I have lost more transaction to clients losing their jobs or having their hours cut back. It's really sad to see people who have dedicated years of their life to a company to be dismissed and to add insult to injury, they're most likely not able to obtain a much needed lower rate through refinancing. They can try contacting their mortgage servicer to see if a loan modification is possible–results vary.
Friday the Jobs Report comes out this Friday and it's weighing heavy on my mind. How many hundreds of thousands of Americans will be join our millions and millions of unemployed workers. With an unemployment rate of 9.5%, I think it pays to ask yourself "what would I do if I were laid off tomorrow?" Nobody expects it, but in this climate, we have a 1 in 10 odds of losing our jobs (hopefully Friday's report will show improved figures).
I strongly encourage you to consider this and to make sure that you have an emergency reserve fund with at least 3 months of your living expenses set aside. Do you know how much it cost for you to live one month? Add it all up and review your budgets–how would your spending behavior change if you knew your paycheck might be ending.
I also recommend that after you have 3-6 months of living expenses put away in a safe spot that you look at your credit cards. What are your current interest rates? Has the bank recently jacked up your payment percentage? I do not recommend closing them at this time–should you wind up being unemployed, you might need to rely a bit on the cards (ugh, I hate saying that).
And remember just about everything is temporary. Should you wind up unemployed…things will get better eventually. Blemished credit will recover and jobs will come back.
I've just always been one to plan for the worse and expect the best.
NOTE (added after publishing the post): I recommend that if you are employed and have benefits (such as insurance) that you take advantage of them sooner rather than later. Schedule appointments with your dentist, doctor, etc. and get your check-ups.
To try to end this post on a light note… how about some comedy from Abbott and Costello. You can always get a job as a union loafer.
Reminder: No Closings this Friday for King and Snohomish Counties
May 18, 2009 by Leave a Comment
Due to budget restraints in King and Snohomish Counties, the recorders office will be closed this Friday and will not reopen until Tuesday (due to Memorial Day). This means that if you are buying, selling or refinancing a home; the Deed or new mortgage (Deed of Trust) cannot be recorded on these dates. Pierce County's recorders office will remain open Friday, May 22, 2009.
The Talon Group has calendars available with recording schedules for King, Pierce and Snohomish Counties–click here. Each county is doing their own thing to their respective budgets. Just last month, Snohomish County announced that they are closing early on Friday's (if they are not on furlough).
If you have a transaction scheduled to close on property located in King or Snohomish Counties this Friday, May 22, you may want to check with your real estate and mortgage professionals.
Upside down in your home with good credit? March 4, 2009 may be an important date for you.
February 23, 2009 by Leave a Comment
Just received this email, which I'm sure echos the thoughts of many home owners:
"Been meaning to contact you to get your take on the recent wholesale changes that are coming hard and fast at the mortgage bankers out there and, of course, see if there can be any benefit to a re-fi given the new lending "rules" (for lack of a better term). We're horribly upside-down on our current loan balance vs. current home value, so we don't know what can happen for us, if anything. But if there's a way to get that rate down and send out less each month. we're listening! What do you think about all this?"
Last week, President Obama announced his plans to help stimulate the economy and help provide stability with America's housing. With the Homeowner Affordibility and Stability Plan, home owners who are "credit worthy" may be able to refinance their home up to 105% loan to value.
On March 4, 2009, more details are suppose to be announced. Here's what we understand so far:
- The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.
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First mortgage may not be more than 105% of the value of the property.
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Borrowers with a second mortgage may still be able to refinance if the second mortgage lien holder is willing to remain in second lien position and if the borrower still qualifies.
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The program will offer 30 year or 15 year fixed interest rates based on market rates.
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The program only applies to the home you live in. It does not apply towards vacation or second homes or investment properties.
According the the Treasury, this program will not be available until March 4, 2009. Lenders will become even more buried with refinance business once this happens. It is to your advantage to be prepared. By gathering the following information:
- 2008 W2s (if self employed or paid commission, 2 years of complete tax returns)
- Most recent paystubs covering 30 days of income.
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Most recent mortgage statements.
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Information on current monthly debts including amount paid monthly and amount owed.
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Most recent bank statements/asset accounts (all pages).
If your home is located in Washington State, you can apply on line now by clicking the link under my photo. However, I don't anticipate having more details until March 4, 2009.
More to follow.
Auburn, Washington Homeowner Asks: Will Obama’s Plan Help Me?
February 19, 2009 by Leave a Comment
They bought their home with 10% down payment back in 2007 using two mortgages which only required interest only payments for the first 10 years. They opted for this route because they wanted to buy this home before their other property sold (buying simultaneous)…the other property never sold and is now a rental. This morning I received an email asking:
"Please advise how the stimulus package can help me. I would like to lower my monthly mortgage payments and not have interest only loans."
March 4, 2009 is when we are suppose to have the details on how President Obama's plan will work. From The White House Blog:
I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.
Will refinancing lower my payments?
The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan….
I am not an appraiser…when I look at what's recently sold in this homeowner's neighborhood, it looks like home values are down roughly 15% from when they bought two years ago. Appraised values are based on what other homes in your neighborhood have sold for in the past few months. Since they put 10% down two years ago with interest only products, they are underwater on their mortgages.
The first and second mortgage combined are around the 105% loan to value…but it sounds like this will be up to who ever the mortgage servicers are for both the first and second mortgages and if the new program will be limited to true conforming limits of $417,000 or if it will include those areas that qualify for the conforming high balance limits ($506,000 for King, Pierce and Snohomish counties). At least they have a 8 years remaining on the interest only period of the mortgage.
There are still more questions than answers at this stage. This homeowner's investment property will not be included in this plan.
I'm hopeful that the new plan to be revealed in early March will help this family. At this point, they cannot refinance without it.
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