Mortgage Rate Predictions For The Next 7 Days (May 11, 2011)

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Looking for a conforming mortgage rate prediction? I participate in the weekly Bankrate.com Mortgage Rate Trend Index survey. This week's results may give you the answers you need.

The mortgage rate prediction comes with some fine print. First, predictions are for conforming mortgages in places like Nashville, Tennessee; Charleston, South Carolina; and wherever else conforming and super-conforming mortgages are available.

Second, jumbo mortgages are specifically excluded from the survey because jumbos loans are priced differently from conforming ones. The same is true for FHA Streamlines and VA loans. Furthermore, unique loan types, like those for investors with 5 or more properties financed, are excluded.

You can click here to get a real-time rate quote.

Here's the mortgage rate outlook for the upcoming week:

50% think mortgage rates will increase6% think mortgage rates will decrease44% think mortgage rates will won't change

I expect mortgage rates to decrease.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching this compilation of the greatest movie sandwiches.

What I told Bankrate.com : "Momentum is moving mortgage rates lower. For now, ride the wave."

When you look at mortgage rate patterns over a long period of time, you notice that mortgage rates move in batches. For any significant chunk of time -- weeks, months, or longer -- mortgage rates are defined the arcs they follow.

Rates don't move sideways over said chunks of time. The move up or they move down. The pattern is called "trending".

Right now, we're in a downward trend.

Since peaking in mid-April, mortgage rates eased through each of the subsequent 4 weeks. At first, the momentum was slow, but last week, the speed picked up. Mortgage rates shed another few basis points, on average, and fell to their lowest levels of the year.

There's little reason for rates to reverse, either. The forces that put rates on this trajectory are still in play:

Until there's a shock to the system, there's little reason for rates to rise for more than a few days in a row which, in the bigger picture, would be just a blip.

The near-term trend points to falling mortgage rates.

Your Next Step : Get A Rate Quote

Rates are dropping, but you don't want to wait this one out. The mortgage market can change at a moment's notice -- especially when geopolitics are at play. It's not just data that moves markets anymore -- it's governments, too. And that can be frightening.

To get an up-to-date rate quote, call my office or send me an email and I'll be happy to oblige.

Or, to cut to the chase and get a rate quote, do this:

Use my online mortgage rate quote form -- no social security number requiredI'll review your notes and send basic follow-ups via emailOnce you reply, I'll get live rates in your hand. You can lock or wait -- your choice.

Expect to have rates in your hand within about an hour, during business hours.

Dan Green is an active, multi-state loan officer with Waterstone Mortgage. Email Dan at/**/ or call 513-443-2020.

Bonus: Click to get a free, no-obligation rate quote. I love to work with my readers!

Be Quick : Mortgage Rates Change In Fewer Than 5 Hours

Welcome to my blog. I'm glad you're here. Get notified by email when I write something new on The Mortgage Reports. Click here for free email alerts or subscribe to the RSS feed in your browser.

Mortgage rates are moving targets. If you've ever shopped for one, you know that.

A rate quote from yesterday has no value to home buyers today; the same way that yesterday's price for AAPL stock has no value today. You can't buy today's securities at yesterday's prices.

It's a truth that carries into mortgage markets. When you want to lock a mortgage rate, you get today's pricing, from this very minute.

In April, mortgage rates changed every 4 hours, 42 minutes on average. That's slower than March, but still really, really fast.

When you shop for mortgage rates, your lender's price is directly tied to the Wall Street-pricing of something called a "mortgage-backed bond".

Broken down, it's a bond that's backed by a group of U.S. mortgages.

On the Difficult To Understand scale, from 1-10, this concept  probably rates as a 5. There's a lot of complexity in such a simple statement. The underlying concepts are much more basic, though.

Like everything else in finance, the price of these mortgage bonds is based on supply and demand. Bond sellers make supply. Bond buyers make demand.

At any given moment, the ratio of sellers-to-buyers is in flux. Sometimes, buyers outnumber sellers and bond prices go up.  Other times, sellers outnumber buyers and bond prices go fall.

These shifts occur all day long and when the shifts are "big" -- a relative term if there ever was one -- mortgage rates change.

In April 2011, lenders issued 1.70 rate sheets per day. This means that mortgage rates changed every 4 hours, 42 minutes on average.

Ergo, that your rate quote from last month, last week, and, possibly, earlier this morning is irrelevant now; expired and "unlockable"; a mortgage market relic.

Believe it.

When you're taking mortgage quotes in market moving this quickly, unfortunately, "sleeping on it" is not an option and while you wait to compare lenders, rates are moving under your feet.

I am an active loan officer and I watch real-time mortgage rates all day long. I post my notes to Twitter. Follow me there and you'll get my alerts for free. This is critically important because I often post advance notice before mortgage rates change.

Being "aware", though, is just part of being ready.

To move on mortgage rates, you'll need a loan application on file with a lender, and queued to locked before rates start moving. Once they're in motion, it'll be too late.

Give your application now. It's free and fast. Call my office at 513-443-2020 or with some details. We'll get started from there.

Markets move fast. Be alert. Be ready to lock.

Dan Green is an active, multi-state loan officer with Waterstone Mortgage. Email Dan at/**/ or call 513-443-2020.

Bonus: Click to get a free, no-obligation rate quote. I love to work with my readers!

How To Beat The April 18, 2011 FHA Mortgage Insurance Increase

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Going FHA on your next mortgage? Think quick!

For all FHA Case Numbers assigned on, or after, April 18, 2011, annual mortgage insurance premiums will be higher by 25 basis points per year, or 0.25%.

It’s the FHA’s third such increase in the last 12 months -- moves that have cost FHA borrowers a collective pretty penny.

Against a $200,000 loan size, the April 18 increase adds $500 to an FHA-insured borrower’s annual cost of homeownership.

Only new FHA loans are subject to the increase, and both purchases and refinances are affected. Existing FHA-insured homeowners won't face a change.

FHA : 15-Year FHA Mortgages Must Pay MIP, Too

The main reason why the FHA is increasing its annual MIP is because, as a group, the FHA now insures a much larger percentage of the total U.S. housing market.

For example, in 2006, the FHA held a 4 percent market share. By the end of 2010, that share had ballooned to 19 percent. Today, FHA may be backing 30% or more of new housing debt.

Making that many loans can take its toll.

In its official statement, the FHA says that the 0.25% increase to MIP bump will “significantly strengthen” its reserves which, by law, must remain above certain minimum levels. Reserves are low because of the last years' delinquencies and defaults.

The FHA's new mortgage insurance premium schedule is as follows:

15-year loan term, loan-to-value > 90% : 0.50% MIP per year15-year loan term, loan-to-value <= 90% : 0.25% MIP per year30-year loan term, loan-to-value > 95% : 1.15% MIP per year30-year loan term, loan-to-value <= 95% : 1.10% MIP per year

"30-year loan term" includes 30-year fixed rate mortgages and FHA 5-year ARMs.

To calculate what your FHA monthly mortgage insurance premium will look like starting April 18, 2011, multiply your starting loan size by the insurance premium in the chart above. This is your annual mortgage insurance cost.

To find the monthly number, just divide by 12.

The FHA also charges a 1 percent, up-front mortgage insurance premium at closing. That figure remains unchanged.

Remember, you don't have to be closed by April 18, 2011 -- you only need to have an FHA Case Number assigned, and to get an FHA Case Number assigned, you only need to give a mortgage application.

Beat the increase. Call me to start your application today at 513-443-2020, or click here to use my online mortgage rate quote form to see what rates I have for you. I can assure you they'll be low, and you'll get great service, too.

(This post adapted from Bring the Blog, a blogging content service for loan officers and REALTORS®)

Dan Green is an active, multi-state loan officer with Waterstone Mortgage. Email Dan at/**/ or call 513-443-2020.

Bonus: Click to get a free, no-obligation rate quote. I love to work with my readers!

How To Keep Your Credit Score High While Shopping For A Mortgage

Welcome to my blog. I'm glad you're here. Get notified by email when I write something new on The Mortgage Reports. Click here for free email alerts or subscribe to the RSS feed in your browser.

So, you're shopping for a mortgage and your lender wants to pull your credit. Only, you don't want her to pull your credit because you're worried it will damage your FICO.

30 years ago, that made sense. Today, it doesn't. It's because having a mortgage company pull your credit is much different from having Target do it.

The credit bureaus say it plainly -- your credit scores won't drop when your lender pulls your credit.

A "credit inquiry" is a formal request to review a person's credit report.

Credit inquires are grouped with other traits into a credit-scoring category called "New Credit". New Credit represents a tiny 10 percent a person's complete credit score.

On the scale of 300-850, therefore, credit inquiries represent just a portion of complete category that accounts for a maximum of 85 FICO points. Mathematically, your credit score can't drop more than that.

Credit inquiries come in many flavors, but the bureaus isolate four types as being "a search for new credit".

A credit check for a mortgage loanA credit check for an auto loanA credit check for a credit card applicationA credit check for a store credit card, or consumer loan

These four types are singled out because, in each case, the initial credit inquiry is requested for the specific purpose of taking on more debt.  Extra debt increases the probability of credit default and credit scores drop as a result.

Even then, though, the risk of default varies by credit type.

A credit card application can be more damaging to a credit score than a mortgage application.  This is because credit card debts tend to revolve higher over time versus a mortgage which eventually pays down to $0.

All things equal, credit card applications harm your credit score much more than an application for a home loan.

As compared to the other credit scoring elements, Credit Inquiries is a relative nothing.

In the official FICO scoring model, Payment History and Credit Utilization account for 65% of a score, combined, and the amount of time during which you've had credit to your name accounts for 15%.  These three areas are over-weighted because the bureaus are more concerned with what you've already done with your credit versus what you might do with more of it.

Your credit past is the best clue to your credit future.

It's one of two reasons why it's okay to give your social security number to as many lenders as you want. The impact of a credit inquiry is minuscule as compared to your history as a Model Credit Citizen.

A mortgage credit inquiry is estimated to lower a credit score by just 5 points.  Unfortunately, we'll never know for sure because the very act of examining the credit score causes it to move. In Hollywood, this is called The Ray Zalinsky Syndrome.

Put a camera on something, and it behaves differently.

The second reason you should shop around with lenders is that -- unlike applying for multiple credit cards -- applying for multiple mortgages won't ding you for multiple, consumer-initiated inquiries.

Applying common sense: You might apply for 5 credit cards and use them all. You won't be approved for 5 mortgages, though. As such, the credit bureaus have made it formal policy to permit "rate shopping".

Talk to as many lenders as you want in a 14-day time frame; have your credit checked as often as you'd like; compare rates and fees.  All of the inquiries will be lumped into a single application.

It's good for you and it's good for the bureaus. Your credit scores stay high and TransUnion, Equifax and Experian collect more fees from the banks.

To promote rate shopping and to lessen The Fear of Credit Inquiry, the people behind the FICO brand spell out for you the best way to get the best mortgage rates possible:

If you want the best rate, you should "shop around" for itLimit rate shopping to 14-day timespan to keep your credit scores highMortgage lenders need your FICO to give accurate rate quotes so give up your social security number

Metaphorically, not letting your lender see your FICO is like not letting your doctor check your blood pressure. You'll get a diagnosis when the appointment is over -- it just might not be the right one.

Your credit scores can mean the difference between a 4.25 percent and a 5.25 percent mortgage rate; a conforming mortgage and an FHA mortgage; an underwriting approval and an underwriting denial.

You can't evaluate your options without a formal credit check. Especially with loan-level pricing adjustments affecting everyone with less than 30% equity, regardless of credit score.

So, start your rate shopping now. and we'll start with your credit pull. Then, I'll show you low mortgage rates you can compare to other banks.

Dan Green is an active, multi-state loan officer with Waterstone Mortgage. Email Dan at/**/ or call 513-443-2020.

Bonus: Click to get a free, no-obligation rate quote. I love to work with my readers!

New For Spring 2011 : The Complete HARP / Making Home Affordable Eligibility Requirements

The Home Affordable Refinance Program (HARP) has been extended.  The program's new expiration date is June 30, 2012.

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance your home without paying down principal or having to pay mortgage insurance.

More people are eligible than you might otherwise think.

Since the Home Affordable Refinance Program's April 2009 inception, I've fielded a lot of questions about how the program works, and exactly whom is eligible.

HARP goes by several names. I use the blanket name HARP because that's what the government calls it. The program is also known as the Making Home Affordable plan, the Obama Refi plan, and Relief Refinance.

What follows is a collection of answers, plus other details of the program, of which you should be aware.

First: Of primary import are these two points:

Only Fannie Mae- and Freddie Mac-backed loans are HARP-eligibleYour current mortgage must have a securitization date prior to June 1, 2009

If you don't meet these two criteria, you are HARP-ineligible. Period.

Both Fannie Mae and Freddie Mac have posted "lookup" forms on their respective websites. Check Fannie Mae's first because Fannie Mae's market share is larger. If no match is found, then check Freddie Mac.

No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

Yes.

Find a recent mortgage statement and write "Fannie Mae" or "Freddie Mac"  on it -- whichever group backs your home loan. You'll need this information because the Home Affordable Refinance Program is slightly different which each entity. Next, you'll want contact a loan officer about starting your HARP refi.

If neither Fannie nor Freddie has record of your mortgage, your loan is held somewhere else and is, therefore, HARP-ineligible. You may still be eligible for a "regular" refinance to lower rates, however. Use this form to get a rate quote or use a competing bid service like  .

No. You must be current on your mortgage to refinance via HARP.

No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It's meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today's low mortgage rates.

First, your home loan must be current. You may not be delinquent or behind in your payments. Second, you can't be more than 25% underwater on your home. Officially, this is known as having a 125% loan-to-value. Third, your mortgage must have been originated and sold to Fannie or Freddie prior to June 1, 2009.

Take your the balance of your first mortgage and divide it by the value of your home. This is your loan-to-value.

No. With the Home Affordable Refinance Program, you can refinance with any participating HARP lender. Apply here online for a rate quote.

No, you won't. If your current home loan doesn't require private mortgage insurance, you won't have to start paying it on your new home loan.

No, your private mortgage insurance payments will not increase. However, the "transfer" of your mortgage insurance policy may require extra steps. Remind your lender that you're paying PMI to help the refinance process move more smoothly.

HARP refinances are limited to the lesser of 125% of the home's value, or the area's conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $729,750.  You can lookup your area's conforming loan limits by clicking here.

No, only rate-and-term refinances are allowable according to the Home Affordable Refinance Program guidelines.

Yes, you can refinance an investment/rental property with HARP, but only if the home was originally financed as an investment property. You can't HARP-refi a home that was originally a primary residence and is now considered a rental.

Yes, you can refinance an second/vacation property with HARP, but only if the home was originally financed as an second/vacation property. You can't HARP-refi a home that was originally a primary residence and is now considered a second home.

No, you cannot consolidate multiple mortgages with the HARP refinance program. It's for first liens only. All subordinate/junior liens must be resubordinated to the new first mortgage.

Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash.  In no cases may loan sizes exceed 125% of the home's value, nor may they exceed the local conforming loan limits.

No. Income verification is required in the HARP refinance program.

Yes, with HARP, applicant income is verified in the same manner as with a traditional refinance -- via a combination of W-2s, paystubs, tax returns and other, underwriter-requested documentation.

Base mortgage rates for the HARP program are the same as for a "traditional" refinance. Loan-level pricing adjustments may apply.

No, there is no minimum credit score requirement with the HARP refi program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.

In most cases, no.

"DU Refi Plus" is the brand name Fannie Mae assigned to its particular flavor of the HARP program. "DU" stands for Desktop Underwriter. It's a software program that simulates mortgage underwriting. "Refi Plus" is a gimmicky-sounding term that could have been anything. The name has been trademarked, however. As an aside, Freddie Mac is using the branded name "Relief Refinance".

Maybe. HARP guidelines specifically prohibit removing a signer from the note, but there are circumstances in which you can remove a co-signer from the mortgage and from the deed so that the former co-signer has no ownership interest in the home. If that's not possible, to remove a spouse (or co-signed) from the mortgage, a traditional refinance is required.

Lock for 45 days, at minimum. This is because the HARP program, while streamlined for simplicity, still has some grey areas that can lead to delay. It's better to have a rate lock that lasts too long than not long enough.

Use this form to get a rate quote or use a competing bid service like  .

If you're ready to apply, click here to generate an online quote. Or, if you have a specific HARP question, send me an email and I'll do my best to give a good reply.

Lastly, don't forget! The Home Affordable Refinance Program is not meant to save a home from foreclosure. It's meant to give underwater homeowners a chance to refinance without paying PMI.

If you need foreclosure help, call your current loan servicer immediately.

Don’t Pay Closing Costs When Mortgage Rates Are Falling

Welcome to my blog. I'm glad you're here. Get notified by email when I write something new on The Mortgage Reports. Click here for free email alerts or subscribe to the RSS feed in your browser.

Mortgage markets have improved through 5 of the last 6 weeks, dropping conforming and FHA mortgage rates to their lowest levels of the year, and re-fanning the flames of last year's Refi Boom.

But refinancing your mortgage is about more than just the rate. It's about the costs, too.

Quickly, high costs can negate the benefits of a refi to lower rate.

Mortgage "closing costs" are fees paid to start a new mortgage; costs that wouldn't be incurred if the mortgage never happened.

Closing costs can be grouped into two categories, labeled as:

Origination/lender chargesThird-party fees

"Origination Charges" are fees paid to the lender at closing; part of the lender's bottom-line.  Origination charges are often broken-down by line item and named things like underwriting fee, application fee and processing fee, for example.

Don't get hung up on the semantics or nomenclature, though. Treat Origination Charges as a lump-sum figure. If it's listed in the Origination Charges section on your Good Faith Estimate, it's paid to the lender and that's all that matters.

Different from Origination Charges are "Third-Party Fees". Third-Party Fees are fees paid to parties other than the lender.

Third-party fees include the costs of appraisals, credit reports, settlement fees and government taxes. In general, they should usually be ignored when comparing mortgage offers to each other. This is because third-party fees tend to be fixed-fee line items; they're 100% identical no matter which lender with which you choose to work.

Also, note that your Good Faith Estimate will include line-items such as Escrow Reserves and Per Diem Interest. These are not closing costs because they're costs that would be incurred whether you gave the new mortgage or not. Escrow and per diem are "prepaid items" and don't figure into a closing cost discussion.

Bankrate.com's annual closing cost survey shows that typical mortgage closing costs are higher by 37 percent nationwide.

That's a big (and costly) jump -- especially in high-closing cost state like Texas. The good part, though, is that closing costs can be negotiable, in some respects, and when mortgage rates are falling, it's pretty easy to beat the bank.

Instead of paying closing costs yourself, ask your lender to pay them on your behalf. It's called a "zero-cost mortgage".

Here's how a zero-cost mortgage works:

You're eligible for a certain mortgage rate. Let's say 5.000%.Your closing costs are $3,741, the national average.You willingly accept a rate of 5.250%, higher than for what you're eligibleIn exchange for you paying more mortgage interest each month, the lender agrees to pay your closing costs for you. You pay nothing.

So, a zero-cost mortgage is exactly what it sounds like -- a mortgage for which you pay nothing. Loan sizes don't increase and nothing is "rolled in" to your balance.

The downside to a zero-cost mortgage is that your monthly payment will be higher, but usually it's by a negligible amount relative to the sum of closing costs waived at the time of closing.

Here's a rough guide to how much mortgage rates increase on zero-cost loans (and depending on your state):

Less than $100,000 : Add 0.75% to the market rate for "zero-cost"$100,000-250,000 : Add 0.50% to the market rate for "zero-cost"$250,000-400,000 : Add 0.25% to the market rate for "zero-cost"More than $400,000 : Add 0.125% to the market rate for "zero-cost"

Zero-cost mortgages can be an excellent strategy in a falling interest rate environment. Zero-cost loans eliminate sunk costs and offer an immediate payback on your investment (of zero).

When the future of mortgage rates is uncertain, going zero-cost is a sure thing but not every bank offers zero-cost mortgages.

Waterstone Mortgage does.

If you'd like to see the math on a zero-cost mortgage, click here to get an online rate quote. I'm happy to show you your options.

Dan Green is an active, multi-state loan officer with Waterstone Mortgage. Email Dan at/**/ or call 513-443-2020.

Bonus: Click to get a free, no-obligation rate quote. I love to work with my readers!

Confusion Seen Over Mortgage Basics

A mortgage may be the biggest financial decision a consumer will make in his or her life, but roughly half of adult Americans lack a basic understanding of mortgage fundamentals, according to a recent Zillow survey.

Adults surveyed incorrectly answered basic questions about how mortgages work 46 percent of the time, including questions about interest rates, points and adjustable rate mortgages (ARMs). A nearly equal number said they were unsure about their own knowledge of home loans and the mortgage process."Most people wouldn't jump out of a plane if they didn't know how to use a parachute, yet each year many buyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages," said Erin Lantz, marketing director for Zillow. "By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money."Nearly half of all respondents (45 percent) said they thought it was always a good idea to pay for discount points when taking out a mortgage, when in fact buying points doesn’t make sense if you’re only going to own the home for a few years. Over one-third (37 percent) thought that pre-qualifying for a mortgage meant a guarantee of financing, rather than an initial estimate of what they may be able to borrow.Roughly one-third also thought that lenders are required by law to charge uniform rates for fees and appraisals, and did not realize such fees are negotiable and can vary from lender to lender.About two-fifths (42 percent) thought that FHA mortgages are limited to first-time buyers only, rather than being available to repeat buyers as well.Some of the biggest confusion surrounded ARMs, where a majority of potential borrowers said interest rates always increase when the loan resets, typically after five years for the most common type of ARM. In reality, ARM rates can sometimes go down when they reset, depending on what prevailing interest rates are at that time.A majority also did not understand that mortgage rates vary throughout the day, and the rate you get can depend on what time you lock it in. Fifty-five percent of survey respondents thought rates were set once a day.The survey of over 1,000 randomly selected adults was conducted in mid-April.

Home Prices Hit New Post-Crash Lows

U.S. home prices have fallen to new post-crash lows, confirming a predicted “double dip” in housing prices, according to new figures from housing data firm Clear Capital.

Nationally, home prices were down 4.9 percent compared to the previous quarter, according to Clear Capital’s report for April. That decline put prices 0.7 percent below the previous post-crash low reported in March 2009, producing the so-called “double dip.”The quarterly decline reversed all the gains recorded over the previous year, with prices down 5.0 percent compared to their April 2010 level. The decline was blamed on a rising tide of foreclosed properties, known in the industry as REOs (real-estate owned), which made up 34.5 percent of all sales in the current report.“The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide,” said Alex Villacorta, Clear Capital director of research. “With more than one-third of national home sales being REO, market prices are being weighed down as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales.”The new data comes on the heels of last month’s report suggesting that home prices were stabilizing in most of the country. In the current report, however, home prices showed quarterly declines in every single metropolitan area surveyed.The smallest decrease was posted by the Charlotte, N.C. area, where prices were down 1.4 percent compared to the previous quarter, followed by Washington, D.C., which showed a 1.6 percent decline. The biggest quarterly decline was seen in the Detroit, Mich. metro region, where prices were down 13.4 percent in a market where REOs made up nearly 56 percent of all sales.High levels of REO sales tend to pull down home prices in general, because they typically sell at a steep discount compared to conventional home sales. At the same time, a heavy saturation of REO homes on the market suppresses home prices for conventional sales as well, because of the price competition.The Clear Capital survey uses an unusual “rolling quarters” model in which data for the past three months is compared to a previous “quarter” consisting of the four months prior to that period. The model is intended to dampen out the volatility that often appears in month-to-month data while still allowing for current monthly updates on market conditions.

MBA Head Sees Coming Boom

Though the housing market continues to struggle, the new head of the Mortgage Bankers Association sees a coming boom just a few years down the road as the burgeoning Millennial Generation enters its homebuying years.

“With this generation now coming of homeownership age there is a huge potential market for new home purchases,” said David Stevens, recently appointed as MBA president and CEO. “This means that with the right effort and outreach, we will soon be faced with burgeoning demand for new mortgages and new financing.”   Speaking before an MBA conference on Monday, Stevens said that demographic trends on housing are pointing upward, despite the industry’s current doldrums. He noted that the upcoming Millennial Generation, also known as Generation Y, is expected to be two to three times larger than Generation X which preceded it.   The children of Baby Boomers, the so-called Echo Boom is expected to be even larger than their parent’s generation, with an estimated 80 million members, Stevens said. As such, it offers an opportunity to “make things right” in terms of a sustainable housing market.   Although acknowledging that “several years of pain” still lie ahead, Stevens noted a number of encouraging current trends. Early stage delinquencies, those 30-days past due, have returned to pre-recession levels, he said, while foreclosure rates are trending downward.   He conceded that the mortgage industry has a lot of work to do to regain the trust of consumers, acknowledging that many of the problems the industry has faced in recent years are of its own making. He said many consumers seem to have been scared off from home ownership, and are sitting on the sidelines wondering if owning a home makes sense for them.    “Without dismissing the roles that others played, we must admit that some within the industry gave loans to borrowers that shouldn’t have, and ignored or excused the presence of unethical people and misplaced incentives,” he said. “Acknowledging these mistakes is the first step in rebuilding trust.”   Stevens, former Assistant Secretary for Housing and Commissioner of the FHA, recently took over as MBA president/CEO from John Courson, who is leaving the organization.   Start here to compare mortgage rates from top lenders in our network

More Mortgage Articles Five Pointers to Survive the RecessionRefinance out of a Risky MortgageThe Actual Cost of Getting a Mortgage Call For Rates800-419-1494

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Rise in Home Equity Loans Reported

Most types of consumer lending have increased significantly over the past year, even as potential mortgage borrowers continue to be frustrated by extremely tight credit.

The credit reporting firm Equifax reports across-the-board increases in most types of consumer credit, with double-digit increases among auto loans and credit cards. Perhaps most surprising of all is a significant rise in home equity loans, despite depressed property values and a decline in mortgage lending in general.The biggest increase was seen among auto loans, which showed a 23 rise in outstanding balances compared to one year ago, measured from March 2010 to March 2011. Newly issued credit cards were up 14 percent over the same period.By contrast, outstanding mortgage balances were down by 3.49 percent compared to last year. Foreclosures accounted for part of the decline, but slow lending combined with consumers gradually paying down debt was also a factor, according to an Equifax spokesperson.In contrast to the overall mortgage lending, home equity lending actually increased by 9 percent over the past year, in terms of outstanding balances. The reasons for the increase, at a time when home values have remained largely stagnant and mortgage credit remains tight, are unclear. No explanation for the seemingly counter-intuitive increase was provided, although the trend is increasingly toward borrowers with high credit scores.Total available credit is currently at about half of its pre-recession levels in 2006 levels, although it appears to be steadily increasing, according to the company. New credit issues in 2011 totals $51 billion so far, compared to $45 billion at this same point in 2010, a 13 percent increase.On credit cards, the company reports that consumers are increasingly paying their bills on time and paying down existing debt, which is resulting in a general increase in credit risk scores nationally.Equifax is one of the three major credit reporting firms lenders turn to for credit scores lenders use to make decisions about consumer loans. Its monthly credit report is based on data from over 585 million consumers and 81 million businesses worldwide.

Freddie Mac, FHA Aid Tornado Victims

Homeowners who were affected by last week’s tornado outbreak across the South may be able to qualify for up to 12 months of suspended or reduced payments on Freddie Mac mortgages, along with other assistance as well.Those with FHA mortgages in affected states may qualify for more limited relief, and all victims may be able to obtain FHA assistance in rebuilding their homes.Freddie Mac announced today that it is offering a series of relief measures for borrowers whose homes were damaged or destroyed by the storms. To qualify, borrowers must have a Freddie Mac mortgage and live in one of the counties declared a major disaster area by President Obama.In addition to suspending or reducing mortgage payments for up to one year, Freddie Mac has authorized a number of other measures to provide relief to borrowers who were affected by the disaster. These include suspending foreclosure or eviction proceedings against delinquent borrowers, waiving late fees or other penalties and not reporting disaster-related delinquencies or forebearances to credit reporting agencies.All relief measures are at the discretion of the mortgage servicer handling the loan. Each case will be evaluated individually to determine what assistance may be offered.Meanwhile, the Department of Housing and Urban Development (HUD) has announced that it is instituting a 90-day moratorium on foreclosures against homes with FHA mortgages in disaster areas in Alabama, Georgia and Mississippi.In addition, disaster victims in those states who have lost their homes can qualify for up to 100 percent FHA financing to rebuild or purchase a new home through a Section 203(h) loan. FHA home equity loans are also available for homeowners to make repairs to damaged homes, through its Section 203(k) Home Rehab loan. Borrowers do not need to currently have an FHA mortgage to qualify.Similar measures were instituted last week for victims of earlier storms Oklahoma as well.Fannie Mae, the sibling agency to Freddie Mac and the nation’s largest insurer of mortgage loans, has not announced any mortgage relief initiatives for victims of the recent storms as of this writing.The lender has authorized mortgage servicers to suspend or reduce payments on mortgages backed by Freddie Mac for up to one year for borrowers

Home Improvement Trends Looking Up

Trends in home remodeling are showing their greatest improvement in over four years, although tight credit and a lack of home equity continue to restrain demand.

The National Association of Home Builders reports that its Remodeling Market Index rose a full five points in the first quarter of the year, to 46.5, suggesting that a recovery is underway in the home improvements. It’s the highest the index has been since the fourth quarter of 2006."Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments," said Bob Peterson, remodeling chairman for NAHB. "However, many home owners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans."A score below 50 in the index still represents that more remodelers report declining activity than increases, compared to the previous quarter. However, the rise in the index is considered a promising sign, particularly since some individual indicators are edging into positive territory.The index for major home additions rose to 50.3, up from 48.6 in the previous quarter, while several future indicators rose into positive territory as well. Calls for bids increased to 53.1 in the first quarter of 2011, up from 47.2, while appoints for proposals rose by more than nine points, to 52.4, up from 43.1 previously.Difficulty in obtaining financing was seen as consumer’s main obstacle to remodeling, cited by 90 percent of respondents in the survey, followed by declining home equity, cited by 81 percent. Other reasons were consumer uncertainty about their own economic situations (74 percent) and doubts about investing in a home that may not hold its value (67 percent).

Rates Hit Lowest Point of the Year

Mortgage rates continued to trend downward last week, reaching their lowest points of the year, according to new figures from the Mortgage Bankers Association.

Average interest rates on 30-year fixed-rate mortgages fell for the third week in a row, dropping to 4.76 percent, down from 4.80 percent previously. Origination fees and points also fell, to an average of 0.76 points, down from 1.00 points the week before.Average rates on 15-year fixed-rate loans also declined, to 3.96 percent, down from 4.03 percent. Origination fees and points also declined, to an average of 0.82 points, down from 0.96 points the week before. It’s the lowest either rate has been since early December.The declining rates stirred some interest in mortgage refinancing, which has been on the wane in recent months as 30-year rates flirted with the 5 percent mark. Refinance applications were up a seasonally adjusted 6.0 percent last from the week before.Applications for mortgages to purchases a home were up slightly, by 0.3 percent. Purchase applications have trended down over the past month by an average of 2.4 percent a week, while refinance applications have held steady on average during the same period.Demand for home purchase mortgages remains quite weak compared to historic norms, down 36.9 percent from the same week one year ago.The survey covers half of all residential U.S. mortgages for the week ending Friday, April 29, with all figures are based on mortgages with an 80 percent loan-to-value ratio.

10 Years Mortgage rates

Before choosing a 10 year mortgage loan, check your assets and see if you have enough income or other assets to save yourself from the threat of foreclosure. This mortgage rate is the lowest of all fixed rate programs. You can save a huge amount of money which you would have paid for interests of other types of loans. Sometimes, the interest rate could be double when your go for the adjustable loan rates.

Ten year Mortgage rates when compared to other rates.

Just like a 10 year Mortgage payment takes ten years to pay up, a 20 year fixed rate would take 20 years and a 30 year mortgage rate would take 30 years to finish off. Why opt for a 10 year fixed rate when you can choose the other types? After all, you have more time to pay the amount and complete the loan. With a ten year mortgage the main advantage is the cost. The interest rate is lower when compared to a 20 year or a 30 year note. But this is not the deciding factor. The highlight is that if you pay off your mortgage in these few years you end up saving a lot of money.

Hidden costs of a 10 year mortgage loan

There are no hidden costs when you go for this type of loan. It also depends upon the organization from which you acquire your loan. Some organizations tend to ask fees for application forms and similar things. They may not mention it earlier because they want to make their costs look cheaper when compared to other organizations offering the same service. The best way to avoid this is by becoming shrewd, by reading all the fine print and checking if there are any loopholes. You will get a detailed idea of this when you go online and check the various companies and how they have maintained their rates. By checking interest rates of different companies through their websites, the possibility of hidden costs has dropped considerably. It is the duty of the customer to make sure that there are no additional costs dampening the benefits of the low interest rates.

5 Years Mortgage Rates

A five year mortgage, sometimes called a 5/1 ARM, is designed to give you much of the stability of payment as you'd get with a 30 year fixed rate mortgage, but also allows you to qualify at and pay at a lower rate of interest for the first five years. There are also 5 year balloon mortgages, which require a full principle payment at the end of 5 years, but generally are not offered by commercial lenders in the current residential housing market.

5 year ARM mortgages, like 1 and 3 year ARMs, are based on various indices, so when the general trend is for upward rates, the teaser rates on adjustable rate mortgages will also rise. Currently rates are low, because the Fed has bought a lot of mortgage backed securities in order to stem inflation. That program is due to end at the end of March 2010. If the Fed extends the program at that time, mortgage rates will remain affordable, otherwise the rates are expected to trend upwards in the second quarter of 2010.

5 year ARM mortgages are most often tied to the 1 year Treasury or the LIBOR (London Inter Bank Rate) but it's possible that any particular ARM could be tied to a different index. These are the most common indices that banks use for mortgage indices:

Treasury Bill (T-Bill)
Constant Maturity Treasury (CMT or TCM)
12-Month Treasury Average (MAT or MTA)
11th District Cost of Funds Index (COFI)
London Inter Bank Offering Rates (LIBOR)
Certificate of Deposit Index (CODI)
Bank Prime Loan (Prime Rate)

The initial rate, called the initial indexed rate, is a fixed percentage amount above the index the loan is based upon at time of origination. This amount added to the index is called the margin. Subsequent payments at time of adjustment will be based on the indexed rate at time of adjustment plus the fixed percentage amount, same as it was calculated for the initial indexed rate, but within whatever payment rate caps are specified by the loan terms. Though you pay that initial indexed rate for the first five years of the life of the loan, the actual indexed rate of the loan can vary. It's important to know how the loan is structured, and how it's amortized during the initial 5 year period.

Payment rate caps on 5/1 ARM mortgages are usually to a maximum of a 2% interest rate increase at time of adjustment, and to a maximum of 5% interest rate increase over the initial indexed rate over the life of the loan, though there are some 5 year mortgages which vary from this standard. Some five year loans have a higher initial adjustment cap, allowing the lender to raise the rate more for the first adjustment than at subsequent adjustments. It's important to know whether the loans you are considering have a higher initial adjustment cap.

In analyzing different 5 year mortgages, you might wonder which index is better. In truth, there are no good or bad indexes, and when compared at macro levels, there aren't huge differences. Each has advantages and disadvantages. One of the things to assess when looking at adjustable rate mortgages is whether we're likely to be in a rising rate market or a declining rate market. A loan tied to a lagging index, such as COFI, is more desirable when rates are rising, since the index rate will lag behind other indicators. During periods of declining rates you're better off with a mortgage tied to a leading index. But due to the long initial period of a 5/1 ARM, this is less important than it would be with a 1 year ARM, since no one can accurately predict where interest rates will be five years from now. With a 5/1 loan, though the index used should be factored in, other factors should hold more weight in the decision of which product to choose. The index does affect the teaser rate offered.

New Foreclosures Jump 21 Percent

Foreclosure activity increased sharply in March, a sign that lenders are coming to grips with the documentation problems that led to the robo-signing scandal last fall.

Foreclosures were initiated on more than 217,000 homes in March, a 21 percent increase over February’s rate, according to information released today by the HOPE NOW alliance. Nearly 85,000 properties were forfeited through foreclosure sales during the month, a 35 percent increase over February.The increase in foreclosures occurred despite a declining trend in mortgage delinquencies. There were 2.63 million residential mortgages at least 60 days past due in March, a 6 percent decline from February’s level of 2.78 million, which in turn represented a similar decline from 2.95 million in January.Meanwhile, the number of at-risk homeowners obtaining private mortgage loan modifications from their lenders also increased significantly in March. Nearly 77,000 propriety loan modifications were completed in March, up from 61,000 the month before. Four out of five reduced borrower’s monthly mortgage payments, with just over half reducing payments by 10 percent or more.There was no updated information provided for loan modifications performed through the government’s Home Affordable Modification Program, for which March data has not yet been released. HAMP guidelines require that all modifications done under the program reduce a borrower’s mortgage payments.Private modifications have recently been outpacing HAMP modifications by about a 3-to-1 ratio.   Many major lenders cut back their foreclosure operations after it was revealed last fall that some were taking legal shortcuts in documenting foreclosure claims, a situation that became known as the robosigning scandal. Many pending foreclosure actions were deferred while mortgage servicers developed new approaches to properly handle thousands of foreclosure actions a month.The HOPE NOW alliance is a coalition of industry groups, nonprofit consumer agencies and government entities working together to address the foreclosure crisis.