I have moved my blog to a new address. Please visit me at the new link-
http://webhost.mortgagetrustinc.com/evanswanson/
Friday, July 25, 2008
Thursday, July 24, 2008
Rate Update for July 24, 2008
Mortgage rates have improved modestly today thanks to a weaker stock market and technical trading patterns.
The Dow Jones Industrial Average is currently off by over 100 points in response to weak earnings results out of Ford Motor Co. & slower than expected home sales. The weakness in stock is creating additional demand for bonds.
We can also credit the move lower to technical trading patterns. As the chart shows below, mortgage-backed bonds are “bouncing” higher off the recent low levels that they reached. This same pattern unfolded in the middle of June.
In real estate related news, I have posted a new article to my blog about key points in the housing bill expected to get signed into law in the next week. Here is a link to read it for yourself.
Wednesday, July 23, 2008
ACCESS loan for 0% down financing.
0% down financing is getting harder and harder to find these days. The most common approach of creating 0% down financing is through the FHA loophole which allows for a seller to contribute the 3% required down payment via a down payment assistance program such as Nehemiah and Ameridream. However, recent reports suggest that the Federal Government will eliminate this flexibility with the passage of the latest housing bill.
Once that is gone what will be next? I may have found the answer with the ACCESS program we offer in conjunction with National Homebuyer Fund. This program will provide a 2nd mortgage for a homebuyer who meets the qualifications up to 100% of the purchase price (the website states 105% but we can't get mortgage insurance beyond 100%). Here are a few key points of the program:
*The ACCESS 2nd mortgage cannot exceed 14.99% of the purchase price & cannot exceed 100% combined loan to value. The most common approach is to structure the 2nd mortgage as a 5% 2nd mortgage subordinated behind a 95% primary mortgage.
*The ACCESS 2nd mortgage is a 20 yr. mortgage with a fixed interest rate which will be 2.00% higher than the rate on the primary mortgage. It has principal and interest payments.
*The ACCESS 2nd mortgage can be used in combination with a variety of 1st mortgage products including 30 year fixed rates with interest-only payments.
*The ACCESS 2nd mortgage carries no prepayment penalty.
*In order to qualify for this program the applicant must have at least a 680 credit score & cannot have income which exceeds 140% of the median household income (In the Portland area the limit would be $86,800).
Give me a call today if you'd like to see is this program will work for you!
Once that is gone what will be next? I may have found the answer with the ACCESS program we offer in conjunction with National Homebuyer Fund. This program will provide a 2nd mortgage for a homebuyer who meets the qualifications up to 100% of the purchase price (the website states 105% but we can't get mortgage insurance beyond 100%). Here are a few key points of the program:
*The ACCESS 2nd mortgage cannot exceed 14.99% of the purchase price & cannot exceed 100% combined loan to value. The most common approach is to structure the 2nd mortgage as a 5% 2nd mortgage subordinated behind a 95% primary mortgage.
*The ACCESS 2nd mortgage is a 20 yr. mortgage with a fixed interest rate which will be 2.00% higher than the rate on the primary mortgage. It has principal and interest payments.
*The ACCESS 2nd mortgage can be used in combination with a variety of 1st mortgage products including 30 year fixed rates with interest-only payments.
*The ACCESS 2nd mortgage carries no prepayment penalty.
*In order to qualify for this program the applicant must have at least a 680 credit score & cannot have income which exceeds 140% of the median household income (In the Portland area the limit would be $86,800).
Give me a call today if you'd like to see is this program will work for you!
Rate Update for July 23, 2008
Mortgages backed-bond prices remain at the lowest level all year which means mortgage rates are also at the highest level. Looking ahead there is a mixed bag of news which could influence the direction of rates.
Working in favor of mortgage rates this morning are a couple items:
*Oil prices are now trading 16% lower from there highs back on July 11th. Lower energy prices should ease inflationary concerns.
*Because mortgage-backed bond prices are trading at multi-month lows there is considerable technical trading support which should help keep prices from dropping any lower.
However, there continue to be factors working against the prospect of lower mortgage rates:
*The stock market continues to rally from its low. Today the Dow Jones Industrial Average is up over 70 points. .
*Furthermore, the treasury is set to auction $31 billion in 2-year Notes today. The added supply of fixed income securities in the marketplace could push rates higher.
In real estate related news, I have posted a new article to my blog about key points in the housing bill expected to get signed into law in the next week. Here is a link to read it for yourself.
Summary of the housing bill expected to be signed into law.....
According to reports President Bush has dropped his opposition to the housing bill which is expected to be voted on today in the House of Reprsentatives. Now that the White House backs the legislation it is expected that this bill will come into law later this week or early next week.
After reviewing mutliple articles about the new law in the WSJ, NY Times, & Bloomberg I have recorded the video below which summarizes a few key points.
After reviewing mutliple articles about the new law in the WSJ, NY Times, & Bloomberg I have recorded the video below which summarizes a few key points.
Tuesday, July 22, 2008
Your Guide to Understanding Mortgage Insurance
When a home buyer takes out a new mortgage and has less than 20% down often times they will be required to provide mortgage insurance to the lender (exceptions exist when we're able to provide "combination loans" which are fairly uncommon these days).
Mortgage Insurance (also known as "mi" or "pmi') is insurance which covers the lender against a portion of their losses should the loan they make result in payment delinquency or foreclosure.
There are various forms of mortgage insurance which home buyers should be aware of. Here is a brief explanation of each:
Borrower-paid mortgage insurance (BPMI)- This is the most common form of mortgage insurance. The insurance premiums for this form are paid for by the borrower on a monthly basis and varies depending on the loan amount, loan-to-value, and credit score of the borrower. With this form of mortgage insurance the borrower can request that the mortgage insurance payment be removed from their monthly payment once they have established a 24-month clean payment record and can demonstrate that they have 20% equity in the property.
Example of monthly BPMI payment for $100,000 loan on 95% financing*: $65
Lender-paid mortgage insurance (LPMI or "No mi")- With this form of mortgage insurance the borrower accepts a modestly higher interest rate in exchange for not having to make a monthly mortgage insurance payment. Often times these plans create the lowest possible monthly payment and can be most tax efficient. However, as of late, this form of mortgage insurance is getting more and more difficult to qualify for. The other limitation with LPMI is that the increase a borrower accepts to their interest rate can never be removed even when they have achieved 20% equity in their home.
Example of additional monthly interest expense associated with LPMI for $100,000 loan on 95% financing: $33
One-time or "upfront" mortgage insurance- With this form of mortgage insurance the borrower makes a one-time mortgage insurance payment at the outset of taking the loan and then does not have to make any additional mortgage insurance payments for the duration of the loan. This option works best for a home buyer who is seeking to create the lowest possible monthly payment and has plenty of equity for down payment and settlement charges.
Example of upfront mortgage insurance for a $100,000 loan on 95% financing: $3,050
Split mortgage insurance- Split mortgage insurance combines aspects of the BPMI & the one-time mortgage insurance forms. With a split mortgage insurance structure the borrower pays an upfront or "one-time" mortgage insurance payment at closing & accepts a monthly BPMI payment as well. The most common form of this is with the FHA program. With a FHA loan the buyer finances an upfront mortgage insurance premium into the loan amount and makes a monthly mortgage insurance payment. These two amounts are less than if the borrower did the BPMI or one-time mortgage insurance exclusively.
Example of most common FHA split mortgage insurance form on a $100,000 loan on 95% financing: $1,425 upfront + $39.58 per month.
Mortgage Insurance (also known as "mi" or "pmi') is insurance which covers the lender against a portion of their losses should the loan they make result in payment delinquency or foreclosure.
There are various forms of mortgage insurance which home buyers should be aware of. Here is a brief explanation of each:
Borrower-paid mortgage insurance (BPMI)- This is the most common form of mortgage insurance. The insurance premiums for this form are paid for by the borrower on a monthly basis and varies depending on the loan amount, loan-to-value, and credit score of the borrower. With this form of mortgage insurance the borrower can request that the mortgage insurance payment be removed from their monthly payment once they have established a 24-month clean payment record and can demonstrate that they have 20% equity in the property.
Example of monthly BPMI payment for $100,000 loan on 95% financing*: $65
Lender-paid mortgage insurance (LPMI or "No mi")- With this form of mortgage insurance the borrower accepts a modestly higher interest rate in exchange for not having to make a monthly mortgage insurance payment. Often times these plans create the lowest possible monthly payment and can be most tax efficient. However, as of late, this form of mortgage insurance is getting more and more difficult to qualify for. The other limitation with LPMI is that the increase a borrower accepts to their interest rate can never be removed even when they have achieved 20% equity in their home.
Example of additional monthly interest expense associated with LPMI for $100,000 loan on 95% financing: $33
One-time or "upfront" mortgage insurance- With this form of mortgage insurance the borrower makes a one-time mortgage insurance payment at the outset of taking the loan and then does not have to make any additional mortgage insurance payments for the duration of the loan. This option works best for a home buyer who is seeking to create the lowest possible monthly payment and has plenty of equity for down payment and settlement charges.
Example of upfront mortgage insurance for a $100,000 loan on 95% financing: $3,050
Split mortgage insurance- Split mortgage insurance combines aspects of the BPMI & the one-time mortgage insurance forms. With a split mortgage insurance structure the borrower pays an upfront or "one-time" mortgage insurance payment at closing & accepts a monthly BPMI payment as well. The most common form of this is with the FHA program. With a FHA loan the buyer finances an upfront mortgage insurance premium into the loan amount and makes a monthly mortgage insurance payment. These two amounts are less than if the borrower did the BPMI or one-time mortgage insurance exclusively.
Example of most common FHA split mortgage insurance form on a $100,000 loan on 95% financing: $1,425 upfront + $39.58 per month.
More stories on Fannie Mae & Freddie Mac
Treasury Secratary Henry Paulson has been lobbying Congress & the American Public to support his plan to instill confidence back into Fannie & Freddie. Both the New York Times and Wall Street Journal carried stories this morning about his efforts.
Here is a link the the NY Times article.
Here is a link to the WSJ article.
Here is a link the the NY Times article.
Here is a link to the WSJ article.
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