Could You Benefit From A 15 Year Mortgage?

On Aug. 11, 2011 Real Estate Information Systems reported “Mortgage Rates Reach Record Lows as Stock Market Losses Mount”. Last week the stock market experienced some of the biggest loss in recent years with 500 points on 8/4/11.

Typically when the stock market drops so do mortgage rates and on 8/4/11 we saw 15 year loan rates drop as low as 3.250% were posted (APR: 3.387%). On the same day we saw the average 30 year fixed rates priced as low as 4.39% (0.8% points) from 4.55% (0.8% points) from the previous week.

Rate Alert reported today that we should “Expect to hear more about the possibility of another Fed easing (QE 3); whether or not the Fed goes back to purchasing treasuries or MBSs or anything else, it won’t likely have any impact on improving the economy or job growth. This week expect another week of interday market volatility.”

Everyday tends to be volatile when it comes to mortgage rates but tools like “Rate Alert” when have our hands on the pulse of the market which allows us to service our clients with a clear understanding of what they can expect. Could you benefit from a 15 year mortgage?

Will S&P US Rating Downgrade Increase Mortgage Rates?

Late Friday afternoon (08/05/11) S&P downgraded the US credit rating to AA+ from AAA. On Monday morning, treasuries and mortgages markets opened better and with a little volatility in the afternoon. Also, Tim Geithner had strong words against S&P for their decision on the US credit downgrading.
Some in the mortgage industry believe that the downgrade isn’t going to matter much. In the long run, markets understand exactly where the US stand financially and long term rates will remain steady. The US is globally recognized as the economic engine for the world, and compared to most other countries the US is still the strongest and safest place to invest.
The S&P agency has little credibility in the mortgage sector especially after being primarily responsible for the subprime disaster that triggered the global financial meltdown. If they couldn’t understand junk mortgages then, why should we expect them to know about mortgages now? Mortgages interest rates are still attractive today and that’s good news. So if you need information about a mortgage, contact the team at First Priority Financial, Stockton Branch to learn more.

Will the US Default?

“The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default,” Obama said in an appearance in the White House briefing room last night.
On May 16, 2011 the US government hit their debt ceiling. What is a debt ceiling? Congress sets a cap on the amount that can be borrowed by the federal government. This includes debt to Social Security, Medicare and US Bonds.
Lawmakers need to come to an agreement buy the August 2nd deadline regarding spending cuts and tax increases or the US will not be able to pay their debt. The US will have to pick and choose who to pay. US Treasury Secretary Timothy Geithner said that it would be akin to a homeowner who pays his mortgage but puts off his car loan, credit cards, insurance premiums and utilities. The mortgage is taken care of, but the homeowner’s credit could still be damaged.
Some analyst believe even if the country avoids default, a downgrade from at least one of the big three credit ratings agencies is increasingly likely.
Small businesses and consumers may find it harder to access credit. Those who can get short term loans likely pay more for them. Creating new jobs would be challenging for companies if funding costs increase.
If it costs General Motors or General Electric more to borrow in short-term markets, “they will pass that on to the consumer” looking for a car or appliance loan, said Roseanne Briggen, analyst at IFR, a unit of Thomson Reuters.

Have you hit your debt ceiling? Could you be in a home or refinance to a lower monthly payment in 2011? Contact us today to find out!

Do You Have Carbon Monoxide Detectors?

As of July 1, 2011, California law requires residential homes must have carbon monoxide detectors. Although the bill was signed into law in 2010, this currently applies only to all residential units which include SFR, Condo, PUD, Manuf., 2-4 Units that have appliances that burn fossil fuels and/or homes that have attached garages or fireplaces.

Carbon monoxide detectors must be powered by a battery, or if it is a plug-in it must have a battery backup. The detector must also be certified by a national testing lab. These detectors are to be installed in the following locations:

1. Outside of each separate dwelling unit/sleeping area in the immediate vicinity of the bedroom(s).
2. On every level of a dwelling unit including basements.

So if you are selling, buying or refinancing a residential unit, the appraiser as of July 1, 2011 is required to knowledge if the property has an operating carbon monoxide detector on their appraisal report. So to avoid an extra appraisal re-inspection expense, make sure to invest an average $20 and install a carbon monooxide dectector. This will save time and money (not to mention an unnecessary headaches) for everyone involved in the real estate transaction.

Can the US Debt & Budget August 2 Deadline Hurt Mortgage Rates?

Will our leaders agree to increase the debt limit or not? The August 2 deadline is almost here and former Treasury Secretary Larry Summers told CNN on July 17, 2011 that a default could cause more panic than the collapse of Lehman Brothers Holdings Inc. in 2008. Really?

With Europe’s economic problems and the debates in Washington over the debt ceiling and budget cuts, US interest rates remain bullish. Typically, a bear stock market creates bullish interest rates. We can’t stay too optimistic, but be prepared to take advantage of the low rates.

Some experts say it’s unlikely the US will lose its AAA credit rating by rating agencies, and they believe the US will not default on our debt. Regardless the markets are jumping all over as the deadline approaches. All we can do is take it day-to-day. Interest rates are at all-time lows now and it will take a lot of surprising bad news to drive rates lower.

Are you ready to commit to your next home loan and take advantage of the market’s low interest rates? Please contact our team at First Priority Financial Stockton branch to learn if this is a good time for you to move forward with a mortgage.

Do You Qualify Not to Pay Your Mortgage for 12 Months?

According to HUD on July 7, 2011, the umployment special forbearance temporarily changed. It allows servicing companies to offer forbearance to unemployed homeowners that have good payment history and stable employment history.

This current FHA Special Forbearance Program will require servicers to extend the forbearance period for FHA borrowers who qualify from 4 months to 12 months. HUD Secretary Shaun Donovan said “Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six. Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home.”

FHA stressed that servicers provide a review at the end of the forbearance period to evaluate the borrower for any applicable foreclosure assistance programs and to notify them in writing whether or not they qualify for any other available option. If they do not for other foreclosure options, the servicer must provide the borrower with the reason for denial and allow them a minimum of 7 calendar days to submit additional information that may impact the servicer’s evaluation.

The unemployment spcial forbearance applies to W2 employees and is not available for 1099 or self-employed homeowners.

National Home Values – What About Stockton?

The housing market still faces many challenges. High unemployment, foreclosures and other distress sales are keeping negative pressure on prices. This of course is good news if you are looking to buy as low rates and lower prices have brought affordability to record levels.

How Affordable? – Since 1963, it has cost an average of approximately 43% of ‘per capita’ or individual income to finance the cost of a median priced home (20% down payment and prevailing 30 year fixed rate mortgage). Right now, it’s only about half of that cost at approximately 22%.

Are you holding off on a purchase for fear that prices might fall further? – Chances are that some sellers might be thinking the same thing. If you’re smart about it, you can use that as an advantage to strike the best possible deal on a home today for once a seller believes that prices have bottomed or are going back up, your advantage will be gone.

Don’t confuse Price with Payments – Gambling on the expectation of a lower price tomorrow at the risk of higher rates can cost much more in the long run than locking in a sure thing today. Ex. $200,000 30 Yr. fixed loan @ 4.625% = $1028/mo. today vs. $180,000 @ 6.5% = $1137 per month later. In other words, paying less can still cost you more.

Own, Rent, or Borrow – One way or another, a home is something we all need every day. The numbers here tell the story and it’s no secret that values have fallen, yet over time, that’s not the case. As you can see by the chart, values over the last 10 years in most states show very healthy appreciation. And over the long haul (map), all states have positive appreciation.

We don’t get a history lesson in the news because the news is about the moment and the more dramatic the better. That’s what sells advertising and that’s how they get paid. For the rest of us, taking a rational, longer term view of things makes more sense. This is particularly true when it comes to a home, for this is something we are likely to own for many years rather than just moments.

Don’t Be A Trigger Lead

Did you know that the credit bureaus sell your information when you apply for a mortagage and a credit report is pulled? Did you know there is no legislation to prevent them from profiting at your expense? Your name and certain specifics about your credit report, including your address, phone number, mortgage history, and even your FICO score range, are sold by the credit bureaus to mortgage companies.

We suggest prior to applying for any home loan that you visit www.optoutprescreen.com and opt-out of future credit bureau solicitations. This will avoid the hassle of telemarketers. All telemarketing companies have their own internal Do Not Call list that they must abide by. Be sure to take down the name of both the company and the individual who made the call, and to let the solicitor know that you’ve “opted out”.

Visit www.optoutprescreen.com to opt-out of future credit bureau solicitations and avoid this problem altogether. This is your helpful mortgage tip from the Stockton team at First Priority Financial.

Buy and Bail? Think again…

Many lenders now have a general policy that they will not lend on a new purchase loan when the departing residence is upside down even though the owner has a true intent to keep that property as a rental and not “bail” from that property once the new purchase is done.  Those who actually do “buy and bail” are considered to be committing loan fraud.

For those who truly intent to rent out their existing residence, it is very had to get approved but there are a few things that may be “considered” to get an exception: 

1. Borrower has an addition to their family and needs a larger home.
2. Moving closer to work
3. Buying a home closer to better schools

In addition, the new borrower must be able to qualify using both mortgage payments (including taxes and insurance) along with having savings after close of escrow that would equal six months of payment for both mortgages. 

Click the “Apply Now” button to your right to get pre-approved for a home purchase or take advantage of a great rate for refinancing.

According to Rate Rate, “MBA weekly mortgage applications out early this morning. Home loan applications rose to the highest level in three months during the week ended June 10, due to pumped-up refinancing demand as the 30-year fixed mortgage rate fell to 4.51%. The Mortgage Bankers Association’s index of loan applications rose 13%, with refis jumping 16.5% and purchase-loan requests advancing 4.5%. Refis accounted for 70% of mortgage applications”.

Are you purchasing a home this summer or want to know if refinancing is in your best interest? Contact the Team at First Priority Financial in Stockton to find out what are your options and what will work best for YOU.