APR was created by our government to help consumers select a mortgage rate. It was intended to be a tool that would allow someone to simply compare various mortgage scenarios and shop mortgage lenders for the “best rate” at the lowest cost. Unfortunately, APR is probably not providing an accurate view of what the true cost of the mortgage, whether it’s for a home purchase or refinance, is. [Read more…]
APR is not the best tool for shopping mortgage rates
October 3, 2012 by 1 Comment
Mortgage rate update for the week of October 1, 2012
October 1, 2012 by Leave a Comment
I cannot believe it’s October, can you? Perhaps it’s our extended summery weather we are experiencing in Seattle. This being the first week of a month means that we have the Jobs Report being released this Friday. The Jobs Report tends to impact mortgage rates as it indicates how the economy is doing and the potential for wage inflation. It is anticipated that 120k jobs were added last month – we’ll see how the numbers pencil out on Friday when September’s Jobs Report is released. Wednesday is loaded with both the ADP National Employment Report and the release of the FOMC minutes.
Is it time for you to refi?
September 28, 2012 by Leave a Comment
Mortgage rates have been at historic lows for quite some time largely due to the Fed’s purchase of mortgage backed securities. Although the Fed is involved with keep rates at artificial lows, mortgage rates are also influenced by other actions. For example, yesterday we saw some volatility partially caused by bond traders taking profit. The Fed has indicated they will continue the purchase of mortgage backed securities for an extended period of time. So when is it the right time for you to refinance and lock in a rate?
Locking in a mortgage rate means that you have secured a certain rate at a certain cost (or credit) for a specific amount of days. It’s a “rate lock commitment” for the mortgage originator to deliver that loan to the lender. When you have locked in a mortgage rate, assuming the transaction closes in time, you are assured that you have that rate for that time period. If you wind up needing additional time, you may be able to extend the rate lock commitment for a specific period. Although locking at the begin of a transaction provides you peace of mind that you have that low rate; the risk is that rates may improve.
You can also start the refinance process and “float”. This means that you start your loan application and the entire process until you decide to lock in your interest rate. You don’t have to lock in your rate until about 10 days before you closing. With floating your rate, you’re risking rates may deteriorate before you’re able to lock.
In my opinion, rates are at such low levels, it makes sense to lock now. However, if you’re someone who will be disappointed if rates improve by 0.125% and you don’t mind the risk of a higher rate, floating may be better for you.
Should you refinance? You may want to consider refinancing if:
- Your current mortgage rate is in the mid-4s or higher and if you have a conforming loan amount, which in the Seattle area is a loan amount of $506,000 or lower. NOTE: some of my clients are doing “cash in” refinances to bring their loan amount down to $506,000.
- If your loan amount is over $506,000 and under $567,500 in King, Pierce or Snohomish county and your loan to value is around 95%, you may want to consider an FHA jumbo mortgage.
- If you are eligible for a HARP 2.0 refinance. Click here to learn more.
- If you currently have an FHA insured mortgage, you may be eligible for an FHA streamlined refinance. No appraisal is required with an FHA streamlined refi.
- If you are considering shortening your mortgage term.
- If you currently have an adjustable rate mortgage and wish to have a fixed rate mortgage.
- Create more cash flow for your investment property by reducing the rate. NOTE: Investment property may qualify for HARP 2 or FHA streamlined refi’s
If your home is located anywhere in Washington state, I’m happy to review your scenario for you to see if it makes sense to refinance now. Click here if you would like me to provide you with a rate quote for your home located in Washington.
A compromise for waiving your escrow reserve account
September 26, 2012 by 3 Comments
An escrow reserve account is used to collect and “reserve” the real estate taxes and home owners insurance portion of your monthly mortgage payment for when your taxes and insurance bills are due. In Washington state, property taxes are paid twice a year and home owners insurance is paid annually.
Mortgage Rate update the week of September 24, 2012
September 24, 2012 by 1 Comment
We don’t have economic indicators set to be released today however mortgage rates are being influenced once again by the Eurozone. There are more potential issues with Greece that may be revealed by the Troika report after our elections.
Here are some of the economic indicators scheduled to be released this week that may impact mortgage rates:
Tuesday, Sept. 25: S&P/Case-Shiller Home Price Index and Consumer Confidence
Wednesday, Sept. 26: New Home Sales
Thursday, Sept 27: Initial Jobless Claims; Durable Goods Orders; GDP (Gross Domestic Product); Pending Home Sales
TGI Friday, Sept 28: PCE (Personal Consumption Expenditures); Chicago PMI and Consumer Sentiment (UoM)
Mortgage rates continue to be at very low levels, even if you have refinanced a year ago, it may be worth considering a refinance. Today’s home buyers may qualify for “more home” thanks to how low today’s mortgage rates are. If you’re considering buying your first or move up home, an investment property or a vacation home, contact your local mortgage professional to get preapproved.
This morning, for a purchase with a sales price of $500,000 with 20% down payment with 740+ credit scores and taxes and insurance included in the mortgage payment, I’m quoting for 30 year fixed: 3.375% (apr 3.440) with a slight rebate credit towards closing cost or 3.250% (apr 3.340) priced with a small discount.
If you are interested in a mortgage for a home located in Redmond, Renton, Redondo or anywhere in Washington, I’m happy to help you!
Back to School!
September 20, 2012 by Leave a Comment
Today I’m doing something that mortgage originators who work for banks and credit unions don’t have to do: continuing education with an NMLS certified instructor.
As a Licensed Mortgage Originator, every year I’m required to take 8 hours of continuing education – non-licensed (aka registered) mortgage originators are currently not required to. I hope this changes and I expect it will.
Why there are different standards for mortgage originators who take residential loan applications is due to the SAFE Act. My suspicion is that powerful banks and credit unions lobbied their Congressmen to have softer rules for their mortgage originators…which they have. (Whenever a mortgage originator at a bank tries to say they are already regulated, I like to point to Washington Mutual). My personal opinion is that banks want to hire less experienced mortgage originators so they can pay them less since they are “bank fed” leads.
Any how, I always look forward to my “class” as my instructor is Jillayne Schlicke and her classes are always informative and very interesting.
I will be back to work tomorrow, Thursday, September 21, 2012.
Fannie Mae and Freddie Mac improve HARP 2.0 Underwriting Guidelines
September 18, 2012 by 2 Comments
On Friday, Fannie Mae and Freddie Mac announced much needed updates to underwriting guidelines for HARP 2.0. The Home Affordable Refinance Program (HARP 2.0) has helped many Washington state homeowners with conforming mortgages (securitized by Fannie Mae or Freddie Mac prior to June 1, 2009) take advantage of historically low mortgage rates regardless of their home’s current equity (or lack thereof). You can learn more about the HARP 2.0 program by clicking here.
The recent updates to HARP 2.0 will allow more home owners to have access to this program by reducing documentation requirements for some borrowers. Here are some of the improvements:
- Reduced documentation for income and assets. NOTE: Form 4506 and verification of employment will still be required. Lenders will not be required to verify large deposits.
- Allowing borrowers with assets to not have to document income. This is available when a home owner has at least 12 months of their proposed new mortgage payment (PITI) in savings. The assets may come from checking or savings, stocks or vested retirement accounts.
- Improvements to when a borrower is removed from the mortgage. Previously if a borrower was being removed with the HARP 2.0 refinance, guidelines required proof that the remaining borrower made the mortgage payments for the last year with their own separate funds (except in the case of death). Now with HARP 2.0, in the remaining borrower can qualify on their own (debt to income at 45% or lower and credit scores of 620 or higher) they may qualify for a HARP 2.0 refinance.
Remember, banks and lenders may layer their own underwriting guidelines to Fannie Mae and Freddie Mac’s HARP 2.0 program.
If you have been turned down for a HARP 2.0 refinance before, it may be worth checking with your local, licensed mortgage originator to see if you are now eligible. HARP 2.0 is available for owner occupied, vacation homes and investment properties. I can help you if your home is located anywhere in Washington State – click here for your HARP 2.0 rate quote.
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