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Rising home prices, especially in cities located in the West, are helping to boost origination levels for home-equity lines of credit. A shift from refinances to purchase financing is a good sign for the housing market.
HELOC originations during the second quarter of this year soared compared to the prior three-month period, with volume up 30 percent from the first quarter. The story was the same for year-over-year HELOC production, which was also up 30 percent compared to the second-quarter 2012. Applications for U.S. home loans rose in the latest week as demand for refinancing outpaced purchases, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.3 percent in the week ended Oct. 4. That follows a dip of 0.4 percent in the week ended Sept. 27. The figures come as a U.S. federal government shutdown has cast a spotlight on fiscal policy, with some economists worrying that the stalemate in Congress could drag on the economy. MBA data showed 30-year mortgage rates slipped 7 basis points to 4.42 percent, after in September matching the 4.8 percent high for 2013. The refinancing index gained 2.5 percent after recently hitting the lowest level since June 2009. The index is now at its highest since early August. The mortgage survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA. Source: http://www.cnbc.com/id/101098130 Follow me: A reverse mortgage is a special kind of home equity loan that allows seniors to take advantage of equity they have built up in their home. The home needs to be owned free and clear at the time of the loan closing, but small balances can be paid off with the proceeds of the reverse mortgage.
One of the main differences between a reverse mortgage and a regular home equity loan is that there is no income requirement. There are no loan payments, but you do have to keep paying property taxes and insurance. The loan is paid off when the home is sold, usually after the borrower dies. In a perfect world, homeowners would borrow all the equity from the home, in small amounts, over a long period of time, having exactly what was needed to live on for the remainder of their life, and using up the equity just as they passed away. But it rarely works that way, and even if it does, reverse mortgages are a very costly option. Often, seniors take the cash out in a lump sum, using it up long before the end of their lives, and even defaulting on the tax and insurance payments, forcing the home into foreclosure. Reverse mortgages are marketed aggressively to seniors. Lenders take advantage of the fact that seniors may have lots of equity in their home, but little or no income. Reverse mortgage lenders offer their products as the perfect answer, but fail to point out the numerous drawbacks, such as large up front fees in the form of mortgage insurance. While there are some newer, less expensive products, one should expect to pay 2% of the value of one’s home, no matter how much one borrows. Elderly homeowners, often with their backs to the wall financially, are routinely taken advantage of. Because one still owns one’s home with a reverse mortgage, one can technically leave it to the heirs. But since the loan will have to be paid off by selling the home, reverse mortgages are not appropriate for people who want to pass the home to their heirs. Rather than encumbering the home with any kind of mortgage, it may make much more sense to sell it outright, downsize to an apartment, and invest the proceeds to create a stream of fixed income. Borrowing with a reverse mortgage can be one of the biggest financial decisions of one’s life. It’s important not to make it based on what could be only a short-term cash crunch. Other options, including other sources of income, should be explored first, and one should seek advice from a professional — a CPA, a lawyer, or a trusted financial advisor who doesn’t stand to benefit from the reverse mortgage transaction. Source: http://bayviewcompass.com/archives/14719#sthash.UoEt4bAS.dpuf Government shutdown impact on mortgage market depends on timing, real estate officials say10/1/2013 As the hours before a midnight deadline ticked away Monday (Sept. 30), the possibility of a federal government shutdown was creating uncertainty in the recovering U.S. home mortgage market.
The extent to which home buyers could feel the pain, real estate professionals said, depends largely on how long the budget impasse on Capitol Hill goes on. New Orleans area real estate and mortgage professionals said the potential impact will be minimal as long as the hiatus doesn't drag on for weeks, but buyers could see delays in getting their loans processed. Mike Anderson, president of Essential Mortgage, a company of real estate firm Latter and Blum, said his staff was working furiously Monday to request income and Social Security number verifications from the IRS and Social Security Administration, which will cease issuing the records in the event of a shutdown. Anderson said loans can't close without the income tax transcripts, a requirement put in place after the mortgage crisis in an effort to fight fraud. "I think if we go two weeks or longer, I think it's going to have an impact," Anderson said. The Federal Housing Administration, part of the U.S. Department of Housing and Urban Development, insures home loans for low- and middle-income and first-time home buyers. HUD said in a contingency plan this week that the agency would continue to endorse new home loans in the event of a hiatus, although with a drastically reduced staff of 68 on-duty employees in the housing office. Anderson said loan officers can use FHA's computer-automated system to get a case number, the first step in the agency's process. But with a limited staff, FHA won't be available to answer questions as the loan moves forward, he said. Borrowers seeking loans guaranteed by Fannie Mae and Freddie Mac, which together own or guarantee nearly half of all U.S. mortgages, will see business as usual. The U.S. Department of Veterans Affairs said it would continue to administer its loan guarantee program. FHA-backed and VA-backed loans accounted for more than a third of new home loan lending last year, according to the Federal Reserve. The Department of Agriculture's Rural Development will put on hold on its loan program, Anderson said. Much depends on where buyers are in the timeline of buying a house and when sales are scheduled to close, said Ross Miller of Miller Home Mortgage in Metairie. Miller said he hopes sellers "understand that it's not a buyer or mortgage company's fault that this is happening and that they would be accommodating in doing extensions appropriately." The picture painted by local real estate agents, though, wasn't dire in the short-term. Claudette Reuther, president of the New Orleans Metropolitan Association of Realtors, agreed. She said she believed lawmakers would reach a last-minute resolution before the industry feels any impact. "It's just one of these things; we just sit back and wait and see what happens," Reuther said. Terry Roff, a Gardner Realtors managing broker in New Orleans, said he has more long-term concerns that political wrangling in Washington could indicate a protracted freeze. That would hurt not only borrowers and real estate agents, but also title attorneys, moving companies and others in the industry, he said. "It has quite a ripple effect," Roff said. "Hopefully, whatever happens will be a non-event or short-lived and we'll get on with business." Source: http://www.nola.com/business/index.ssf/2013/09/federal_goverment_shut_down_lo.html check out Jim Clooney online The plunge in mortgage applications has slowed as consumers faced oscillating rates, according to data released Wednesday morning.
Gauges of mortgage applications to buy and refinance a home have fluctuated in recent weeks, following several months of fairly steady drops, according to the Mortgage Bankers Association. Separate data show that the average rate for a 30-year fixed-rate mortgage was about 4.4% in mid-August. The following week the rate jumped to 4.58%, and then declined to 4.51% by the end of the month, according to federally controlled mortgage buyer Freddie Mac FMCC . The recent interest- rate gyration illustrates a point of frustration for borrowers: it’s tough to time the market. Spurred by uncertainty and rising rates, there’s evidence that some buyers are rushing into the market for fear that their dream home will become even pricier if they wait to buy. Markets have been trying to figure out when the Federal Reserve could start tapering its massive bond-buying program that has supported low rates, and economists say an announcement could come as early as this month. But central bankers are looking at both positive and negative reports, making it tough to figure out whether the Fed will see conditions as healthy enough to start contracting its program. While a trend in layoffs is near the lowest level in almost six years, sales of new homes recently slumped to the slowest pace since 2012. The country’s key jobs report for August will be released Friday, and economists polled by MarketWatch expect the U.S. Department of Labor to report that employers added 170,000 to nonfarm payrolls, slightly up from 162,000 in July. While housing is expected to continue to add to economic growth this year, officials are carefully watching for any indications that rising mortgage rates are taking an unexpectedly large toll on the market. Although mortgage applications haven’t moved much in recent weeks, they are still far below levels in early May, when rates started rising. Since early May, the average rate for a 30-year fixed-rate mortgage has increased almost 1.2 points. Over that period, applications to refinance a home dropped 63%, while mortgage applications for a home purchase declined 15%. source: http://blogs.marketwatch.com/capitolreport/2013/09/04/plunge-in-mortgage-applications-slows/?mod=MW_latest_news More articles at Jim Clooney The delinquency rates for multifamily dwelling have shown a significant drop, which could be a positive sign for the overall economic situation of the country. A report from the Mortgage Bankers Association indicates that the quarterly decline for the delinquency rate of loans held in commercial mortgage-backed securities is currently the largest on recent record.
Delinquency rates held for loans held by life companies and the GSEs have also seen a significant decline as well. Delinquency rates continued to fall lower throughout the second quarter. Commercial loans saw an overall decline in delinquencies as well. According to the analysis by the Mortgage Bankers Association, research considered the statistics and data regarding the commercial/multifamily delinquency rates for the five largest investor groups. Those groups include thrifts and commercial banks, Fannie Mae and Freddie Mac, and CMBs as well as life insurance companies. Across the board there has been a significant drop in delinquencies as far as multifamily dwellings go. Those five largest investor groups hold more than 80 percent of the commercial/multifamily mortgage outstanding debt totals when they are combined and those significant improvements in delinquencies. As an example, the report shows that for multifamily loans held by Freddie Mac, the delinquency rate had fallen 6.72 percent points since its series high of 6.81 percent during 1992′s fourth quarter. As far as Fannie Mae goes, the delinquency rate for multifamily loans was 3.34 percentage points lower than in 1991′s fourth quarter where it was at 3.62 percent. During this year’s second quarter, the 60-day and longer delinquency rate for commercial and multifamily mortgages that were held in life company portfolios inched down 0.01 percentage point to 0.08 percent. The 60-plus day delinquency rate for multifamily loans held or insured by Freddie Mac dropped 0.07 percentage points to 0.09 percent during that same time frame. For multifamily loans held or insured by Fannie Mae, the 60-plus day delinquency rate dropped 0.11 percentage points to 0.28 percent. During the same time period, the 90-plus day delinquency rate for loans held by FDIC-insured banks and thrifts dropped 0.26 percentage points to 2.16 percent. Also during the same time period, the 30-plus day delinquency rate for loans that are held by CMBS dropped 0.74 percentage points to 7.81 percent. Figures that are based solely on the unpaid principal balance of loans at the end of this year’s second quarter show that delinquency rates for 60-plus day loans for Freddie Mac set at 0.09 percent, while Fannie Mae loans had a delinquency rate at 0.28 percent. Source: http://usfinancepost.com/decline-in-delinquency-rate-for-multi-family-housing-6593.html Jim Clooney Mortgage rates in the U.S. jumped to a two-year high, increasing borrowing costs for homebuyers as sales accelerate.
The average rate for a 30-year fixed mortgage rose to 4.58 percent last week from 4.4 percent, Freddie Mac said in a statement. The average 15-year rate climbed to 3.6 percent from 3.44 percent, the mortgage-finance company said. Both were the highest since July 2011. Homebuyers are rushing to take advantage of historically low borrowing costs before they increase even more. Existing-home sales in July jumped 6.5 percent to the second-highest level in six years, the National Association of Realtors reported on Aug. 21. Those transactions largely reflect closings of contracts signed a month or two earlier, when mortgage rates were just beginning to edge up. “If you were considering buying, rates aren’t going to get much better any time soon,” said Erin Lantz, director of mortgages at Seattle-based Zillow. “So buying sooner rather than later makes sense.” The 30-year fixed mortgage rate has climbed from 3.35 percent in early May as the Federal Reserve signaled it may begin scaling back its bond-buying program aimed at lowering borrowing costs. Policy makers were “broadly comfortable” with Chairman Ben Bernanke’s plan to start reducing purchases later this year if the economy improves, according to the minutes of the Federal Open Market Committee’s (FOMC) July meeting, released last week. The FOMC will probably reduce its $85 billion in monthly purchases at its Sept. 17-18 meeting, according to 65 percent of 48 economists in a Bloomberg survey. The median estimate called for a cut to $75 billion each month. Rising mortgage rates have had the biggest effect on refinancing. The Mortgage Bankers Association’s index of applications to lower monthly payments fell 7.7 percent in the week ended Aug. 16, the 10th straight decline. A measure of purchases rose 1.2 percent, the trade group said. The 30-year fixed mortgage rate is well below its average of about 6.3 percent for the past 20 years, according to data compiled by Bloomberg. The 20-year average for a 15-year loan is about 5.83 percent. Lowe’s, the second-largest U.S. home improvement retailer, isn’t “overly concerned” about the rise in rates as long as the 30-year average stays below 6 percent, chief executive Robert Niblock said on a conference call Aug. 21. The company and larger competitor Home Depot last week reported earnings that beat analysts’ estimates and raised their profit forecasts for 2013, buoyed by the housing recovery. “The rate increases will likely take some steam out of the recent housing market rebound but shouldn’t derail it as long as job gains persist, homes continue to appreciate and rates rise more gradually going forward,” Niblock said. source: http://kpbj.com/business_daily/2013-08-26/mortgage_rates_jump_to_two_year_high_refinancing_hit To say mortgage rates are volatile right now is an understatement. Every few days for the past two months, there have been heavy swings in mortgage pricing, translating to strong gyration in mortgage rates. Nothing can be more frustrating for a pre-approved potential homebuyer than knowing their ability to qualify and their subsequent proposed payment could change in an instant. But there are other options that can help take the volatility out of your house hunting.
Should You Lock In a Mortgage Rate?: Most lenders will not lock in your interest rate until you have a ratified purchase contract or a bona fide legitimate purchase agreement. Mortgage lenders offer interest rate locks for 30 days, 45 days, 60 days and some even as long as 90 days, with the majority of buyers doing 30-day rate locks to match the traditional 30 days for close of escrow. Locking in an interest rate means you've committed to an interest rate that will be used for the term of the loan, e.g. 360 months for a 30-year fixed-rate mortgage. Pros: • Payment clarity upfront. • More time to budget and plan your finances during the escrow process. • More time for the lender to get your loan package through the underwriting process. • More allowance to focus on other aspects of your purchase offer, i.e. contractual obligations. Cons: • Missed opportunity for a reduction in the interest rate, which means a lower monthly payment. Should You Float?: Floating your rate is defined as simply not locking in your interest rate. Floating essentially allows your interest rate and payment to move on a daily basis until you fully commit to your lender on an interest rate. Pros: • The opportunity for a lower interest rates and costs. • Depending on your individual lender's policies/procedures, the opportunity to switch loan programs during the loan process, such as going from a 30-year fixed-rate mortgage to a 15-year fixed-rate mortgage. Cons: • This can be a risky position to be in during a volatile interest rate environment. • You risk rates rising while you float, which could reduce your ability to qualify for a mortgage and could impact your earnest money deposit on your purchase transaction. Which Is Right for You?: It depends on your personal threshold for how much risk you're willing to take on by floating for interest rate opportunity. If you can qualify for the mortgage loan even if rates were to rise during your loan process, you would have the luxury of being able to take advantage of a favorable market reaction the next time the bond market rallies. On the flipside, you'd be entering into a purchase contract with thousands of dollars on the line in exchange for what may or may not come to fruition with rates. This is why it solely depends on your appetite for risk and how much you're willing to gamble in the market. If you have a 30-day close of escrow, that's not much time for floating in an attempt to seize something better. Other Timing Considerations: Don't forget interest rates aren't the only consideration to take during the home-buying process. Some other factors include: • Ordering an appraisal, or making sure value comes in at purchase price. • Inspections. • Releasing any inspection contingencies. • Providing updated financial documentation in a timely manner to the lender. (This is a big one!) • Releasing any loan contingencies. While these steps in the purchase process seem relatively small, they can very quickly become task-heavy, which otherwise can change your focus from interest rates to making sure everything else is in order. Granted, your loan officer and real estate agent will be handling a lot of these steps in conjunction with you, but these are things to be mindful of in addition to trying to time the market. Strategy for Locking In a Mortgage Rate: In a perfect situation, locking ahead of major economic news is generally the most conservative approach. It is expected that before large economic market mover information comes out, an idea of how the market will react is typically released beforehand. For example, whenever the Federal Reserve makes a statement about the financial markets, usually there is information and analysis leading up to the speech before the news actually hits the markets. This gives you and your lender an opportunity to examine the market and discuss whether not it makes sense to float or lock the interest rate prior to the official announcement. Keep in mind that the speculation beforehand is just that -- speculation -- and you will need to make your own call based on the information. |