What may impact mortgage rates the week of September 10, 2012

September 10, 2012 by Leave a Comment

Although at first glance, this week may seem like there’s not a lot scheduled that may impact mortgage rates, what is scheduled is significant. We have the FOMC meeting winding up on Thursday following last Friday’s weaker than expected Jobs Report. Friday is packed with reports that may reveal signs of inflation, which tends to drive mortgage rates higher. 

Here are some of the economic indicators scheduled for this week:

Thursday, Sept. 13:  FOMC Meeting; Producer Price Index (PPI); Initial Jobless Claims

Friday, Sept. 14: Retail Sales; Consumer Price Index (CPI); Consumer Sentiment Index (UoM)

For your personal mortgage rate quote for your home located anywhere in Washington state, please contact me.  

You can also follow me on Twitter or Facebook where I provide live rate quotes and mortgage tid-bits throughout the day.

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Extension Fees 001
Filed Under: Economy, The Fed - FOMC Tagged With: , ,

FHA Rate-Term Refi’s may be a Great Option for Higher Loan Amounts

September 6, 2012 by 1 Comment

I have been working with a couple of Seattle area home owners who either have a jumbo mortgage or have a mortgage that used to be “high balance conforming” and were caught “in the gap” when conforming high balance loan limits were rolled back to $506,000 in King County.  A jumbo (aka non-conforming) mortgage is a loan amount over $506,000 in King, Pierce or Snohomish counties for a single family dwelling.

Jumbo mortgages typically require an 80% loan to value for a refinance. This can also cause a challenge if the home has lost equity and the values are “underwater” or above an 80% loan to value. Homeowners with an existing Jumbo mortgage do not qualify for HARP 2.0 since their existing mortgage is not securitized by Fannie Mae or Freddie Mac. Homeowners who have a High Balance Conforming mortgage from prior to to loan limit roll back may qualify for HARP 2.0 – however, their loan limit will be restricted to the current levels ($506,000 in King, Pierce and Snohomish counties) causing them to have to bring “cash in” to close.

One client, let’s call him “Mike in Magnolia”, has a jumbo mortgage at 6.500% with a balance of $640,000 and estimates the value of his Seattle area home to be around $600,000.  He’s really like to refinance and take advantage of the current low mortgage rates.  

One option would be an FHA jumbo which would allow a loan amount up to $567,500. Based on this scenario and pricing as of 1:30pm 9/6/12, his rate would be 3.500% for a 30 year fixed (apr 4.382). This would provide him a PIMI (principal, interest and mortgage insurance) payment of $3,155.46 and cash for closing would be around $78,000. His home could appraise for as low as $585,000 and still have this scenario work at an 97.75% loan to value.

If Mike is willing to bring $142,000 to closing, he could consider a conventional refinance at $506,000. His home would need to appraise for around $600,000. Based on current rates of 3.875% for a 30 year fixed (apr 4.117); his PIMI payment would be $2640.83. His home would need to appraise for at least $600,000 for an 85% loan to value.

I’m working with another client who has a condo in downtown Seattle that has lost value. They obtained their mortgage after May 31, 2009, so it does not qualify for HARP 2.0. The condo IS on HUD’s approved list for FHA financing which will allow them to take advantage of today’s lower FHA mortgage rates with a loan to value of up to 97.75%.

FHA rate-term refinances are a “full doc” loan and will require an appraisal.  FHA mortgages may be assumable to a qualified buyer should these clients decide to sell their homes in the future.

If you’re interested in an FHA mortgage or having me review your scenario for your home located anywhere in Washington state, please contact me.

Filed Under: Refinance Tagged With: , , ,

FHFA Announces Increase in G-Fees for Conforming Fannie/Freddie Mortgages

September 4, 2012 by 2 Comments

Last Friday, the FHFA announced they’re increasing the “guarantee fee” (aka “g-fee”) by an average of additional 0.10 basis points on single family mortgages.  What is a guarantee fee? From the FHFA annual report:

Fannie Mae and Freddie Mac acquire single-family mortgages from mortgage companies, commercial banks, credit unions, and other financial institutions. Lenders may exchange loans for mortgage-backed securities (MBS) backed by those mortgages or sell whole loans for cash proceeds.

When lenders receive MBS in exchange for their loans, they may hold them as an investment or sell them in the capital markets. The Enterprises also issue MBS backed by pools of loans acquired from multiple lenders.

Each Enterprise [Fannie Mae or Freddie Mac] guarantees the payment of principal and interest on its MBS and charges a fee for providing that guarantee. The guarantee fee covers projected credit losses from borrower defaults over the life of the loans, administrative costs, float income (or expense), and a return on capital.

From Housing Wire:

Lenders paid an average 28 basis points in 2011 for Fannie and Freddie to guarantee their loans in the bonds issued to investors, up from 26 bps the year before, according to a report released by the FHFA Friday.

The GSEs raised their fees by 10 basis points in April in order to pay for a tax cut passed by Congress in December. But before the enactment, the FHFA pledged to raise the fees through 2012 in order to allow private issuers room to compete.

Do not expect banks or lenders to absorb this cost. The 0.10% increase in basis points will be passed on to consumers and factored into the pricing of mortgage interest rates. This is set to happen towards the end of this year, however I wouldn’t be surprised to see lenders factoring in the fee increase much earlier.

Filed Under: Fannie, Freddie and FHFA Tagged With: ,

What May Impact Mortgage Rates the Week of September 3, 2012

September 3, 2012 by Leave a Comment

Happy Labor Day! Our office is closed today and will reopen for business as usual on tomorrow, September 4, 2012. Here are a few economic indicators scheduled to be released this week which may impact mortgage rates, including Friday’s Jobs Report.

Tuesday, Sept. 4: ISM Index

Wednesday, Sept. 5: Productivity

Thursday, Sept. 6: ADP National Employment Report, Initial Jobless Claims and ISM Services Index

Friday, Sept. 7: The Jobs Report

On Thursday, we may see mortgage rates impacted by Europe following the Central Bank meeting lead by Mario Draghi. Remember, mortgage rates are based on bonds (mortgage backed securities) and when investors seek the safety of bonds over the potential higher return with stocks, mortgage rates tend to improve and vice versa. 

If you are interested in a mortgage rate quote for a purchase or refinance for a home located anywhere in Washington state, please contact me.  You can also see live mortgage rates I’m quoting on Twitter.

Filed Under: Economy Tagged With: , ,

Get a sneak preview of the art at Bumbershoot FREE!

August 29, 2012 by Leave a Comment

This year, if you want to enjoy the art at Bumbershoot, you’ll need to buy a ticket…UNLESS you go on Friday, August 31, 2012 from 1:00 –  9:00 pm. for the free public preview.  The free preview takes place following Mayor McGinn’s Arts Awards ceremony which begins at noon at the north fountain lawn at the Seattle Center.  For more information, click here.

My black velvet painting of Elvis Presley enjoying a peanut butter bacon banana sandwich will be part of the Elvistravaganza exhibit celebrating the 50th anniversary of Elvis’s visit to the Seattle Center.

I am allowing my painting to be auctioned at the event with proceeds going to Cafe Race Love. 

Hope to see you there!

Filed Under: Charity, Just for Fun Tagged With: , ,

Answering a question regarding HARP 2.0 and PMI

August 28, 2012 by Leave a Comment

Dear Rhonda:

I currently pay PMI on my mortgage, if I refinance under HARP 2.0, after refinance, will the PMI still exists? Would the PMI premium be lower since the amount refinanced is lesser than the previous mortgage?

Dear Reader:

Yes, if you currently pay PMI on your HARP 2.0 eligible mortgage, you will also have private mortgage insurance in your new mortgage payment with your new refinanced mortgage.  It will be based on the same coverage (percentage) amount as your existing pmi. So if your mortgage balance is lower, the monthly pmi payment may be slightly lower as well.

I recommend comparing your existing payment (PIMI) to the proposed new payment, factoring in when your existing PMI may drop off.  If you’re within months from your existing pmi dropping off, it could be worth delaying refinancing, however, if t’s after December 2013 (when HARP 2.0 is currently scheduled to terminate) it’s probably in your favor to refinance now.

If your home is in Washington state, where I am licensed to originate, I’m happy to help you.

Filed Under: Dear Rhonda, HARP - Home Affordable Refi, Mortgage Insurance, Uncategorized Tagged With: ,

What may impact mortgage rates the week of August 27, 2012

August 27, 2012 by Leave a Comment

I am on a family vacation and will be returning to business as usual following Labor Day.  While I’m enjoying a few days off, here are some of the scheduled economic indicators that may impact mortgage rates this week.

Tuesday, August 28: Auto Sales and Consumer Confidence

Wednesday, August 29: GDP Chain Deflator, Gross Domestic Product (GDP), Pending Home Sales and Beige Book

Thursday, August 30: Personal Consumption Expenditures (PCE) and Initial Jobless Claims

Friday, August 31: Chicago PMI and Consumer Sentiment (UoM)

Of course unscheduled events may impact mortgage rates as well. Remember that typically if the stock market is rallying, mortgage rates tend to suffer as investors will trade the safety of bonds (like mortgage backed securities) for the potential higher return of stocks.

Mortgage Master Service Corporation will be closed on Monday, September 3, 2012 to celebrate Labor Day. 

Filed Under: Economy Tagged With:

Changing jobs during the mortgage process

August 24, 2012 by 1 Comment

Sometimes an employment opportunity may become available while you’re in the process of buying a home or refinancing. Lenders are looking at a borrowers employment and income stability so depending on the type of field you’re in, a change of employment may or may not impact your loan approval. 

As long as you’re staying in the same line of work and if you have an annual salary, it probably won’t be an issue. The lender will probably require at least one pay stub (possibly more to document your income) from your new employer as well as a verification of income. If you have an employment letter or contract from the new employer, this can be helpful to provide the lender as well. With new employment, signing bonuses are not factored into the annual income however, they may be used towards the down payment or closing cost as your seasoned funds. 

If the new employment is not related to the same line of work, this may cause an issue with the loan approval as lenders are looking for two years of employment in the same or related field. If the income structure has changed, this may cause an issue as well unless it is to an annual salary. The underwriter may require a written letter explaining your employment history.

Moving from annual salaried income to a potentially flexible type of income may derail your loan approval. Self-employed, hourly income, bonus or commissioned income requires a two year history before a lender can use it for qualifying purposes.

Sometimes a promotion can impact loan approval if pay structure changes. For example, if a borrower was paid an annual salary and then receives a promotion which reduces the annual salary in exchange for a higher bonus or commission structure, the bonus or commission income cannot be used unless the borrower has been receiving that type of income for a minimum of two years. In this case, the new lower base salary (the “guaranteed” portion of the income) can be used, but not the “flexible” bonus type income. 

If you are considering a job change during the mortgage process, it’s crucial to inform your mortgage originator as soon as possible. Your loan application needs to be updated and the lender will be doing a verification of employment prior to funding your mortgage.  

If you’re considering buying or refinancing a home anywhere in Washington, I’m happy to help you!

Filed Under: Underwriting and Qualifying Tagged With: , , ,
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