The Federal Reserve and Mortgage Rates
Understanding What Causes Interest Rate Movement
Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. Many times, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.
The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.
Stocks and bonds compete for the same investment dollar on a daily basis. There is literally only so much money to be invested. When the Federal Reserve feels that interest rates need to be decreased in an effort to stimulate the economy, this reduction in rates can often cause a stock market rally. When the market becomes bullish, the money to invest in stocks comes from the selling of mortgage-backed securities.
Unfortunately, selling mortgage-backed securities to fuel stock market rallies causes interest rates to go up, not down.
Historically, there have been many times when the Federal Reserve has increased interest rates. Stocks then sell off in fear that the increase will affect corporate profit margins, and the liquidated stock assets need a place to park until the next rally comes along. The safe haven is found in mortgage-backed securities which cause mortgage rates to drop.
The daily ebb and flow of money is what matters most when it comes to the movement of mortgage interest rates. I make it a point to continuosly monitor interest rates for my clients, and advise them of opportunities to manage their mortgage debt at a better rate. This is the foundation of my business model as a Trusted Advisor.
Let's discuss how we can better educate our clients on the largest purchase they'll ever make!
Wednesday, December 2, 2009
Saturday, November 21, 2009
Announcing 2 new assistance programs for Grand Prairie and Rockwall Counties!
City of Grand Prairie
The Foreclosed Home Purchase Assistance Grant Program (FHPAG) assists qualified low, moderate and middle-income families to purchase foreclosed homes in Grand Prairie. The Program is administered through the city of Grand Prairie Housing and Neighborhood Services Department.
The FHPAG program provides up to a $20,000 forgivable second lien to assist qualified buyers with approved closing costs, down payment assistance up to 50% and approved rehabilitation work after closing process is complete.
http://www.gptx.org/index.aspx?page=942
City of Rockwall
This is a true grant/gift program. No second lien is created for the down payment assistance. The only criteria for qualification is that the Borrower must be a resident of Rockwall.
These are on a first come, first serve basis. Only while funds are available so call me today to get started and now miss this huge chance!
The Foreclosed Home Purchase Assistance Grant Program (FHPAG) assists qualified low, moderate and middle-income families to purchase foreclosed homes in Grand Prairie. The Program is administered through the city of Grand Prairie Housing and Neighborhood Services Department.
The FHPAG program provides up to a $20,000 forgivable second lien to assist qualified buyers with approved closing costs, down payment assistance up to 50% and approved rehabilitation work after closing process is complete.
http://www.gptx.org/index.aspx?page=942
City of Rockwall
This is a true grant/gift program. No second lien is created for the down payment assistance. The only criteria for qualification is that the Borrower must be a resident of Rockwall.
These are on a first come, first serve basis. Only while funds are available so call me today to get started and now miss this huge chance!
Housing most affordable now!
Housing at Its Most Affordable in Years
One piece of good news coming out of the Great Recession is the increasing affordability of housing.
The typical U.S. family earning the nation’s median income of $64,000 a year could afford to buy 70.1 percent of all homes sold in the United States during the third quarter, according to a report from the National Association of Home Builders and Wells Fargo. The report relied on the government standard of spending no more than 28 percent on housing. In the same quarter of 2008, only 56.1 percent qualified.
One piece of good news coming out of the Great Recession is the increasing affordability of housing.
The typical U.S. family earning the nation’s median income of $64,000 a year could afford to buy 70.1 percent of all homes sold in the United States during the third quarter, according to a report from the National Association of Home Builders and Wells Fargo. The report relied on the government standard of spending no more than 28 percent on housing. In the same quarter of 2008, only 56.1 percent qualified.
Monday, November 16, 2009
Q/A about the Tax Credit!
FAQs Regarding U.S. Homebuyer Tax Credit Extension, Expansion
From the National Association of REALTORS, here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit signed into law on November 6 by President Obama.
QUESTION: Existing homeowner credit: Must the new house cost more than the old house?
ANSWER: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit.
QUESTION: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. Do I qualify for the new $6,500 tax credit?
ANSWER: Yes. The existing homeowner credit went into effect for purchases after the date of enactment (Nov. 6, 2009). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
QUESTION: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits when I go to settlement, will I be eligible for a credit?
ANSWER: Yes. The new income limitations went into effect as soon as the President signed the bill. The income limit and other eligibility rules look to your status as of the date of purchase, which is the settlement date. So when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
QUESTION: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6,500 tax credit?
ANSWER: No. The $800,000 cap on the cost of the purchased home is firm. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
QUESTION: I owned my home for 10 years, but sold it two years ago and have been renting since. If I purchase a home, will I be eligible for the $6,500 tax credit if I meet all the other eligibility tests?
ANSWER: Yes. Because you lived in the home for more than five consecutive years of the previous eight you will qualify for the $6,500 credit. For example, say John and his wife bought a home in 2000 and lived there until 2008, when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for five consecutive years out of the last eight years. The key word here is “consecutive." As long as he lived in that house for five years straight, what he did since then doesn't affect eligibility.
QUESTION: I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
ANSWER: You do not have to close before December 1. Now that the legislation has been signed, it will be as if the November 30 date had never existed. Therefore, so long as the binding contract is in place by April 30 (and you close before July 1), you will be eligible for the credit.
From the National Association of REALTORS, here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit signed into law on November 6 by President Obama.
QUESTION: Existing homeowner credit: Must the new house cost more than the old house?
ANSWER: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit.
QUESTION: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. Do I qualify for the new $6,500 tax credit?
ANSWER: Yes. The existing homeowner credit went into effect for purchases after the date of enactment (Nov. 6, 2009). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
QUESTION: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits when I go to settlement, will I be eligible for a credit?
ANSWER: Yes. The new income limitations went into effect as soon as the President signed the bill. The income limit and other eligibility rules look to your status as of the date of purchase, which is the settlement date. So when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).
QUESTION: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6,500 tax credit?
ANSWER: No. The $800,000 cap on the cost of the purchased home is firm. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
QUESTION: I owned my home for 10 years, but sold it two years ago and have been renting since. If I purchase a home, will I be eligible for the $6,500 tax credit if I meet all the other eligibility tests?
ANSWER: Yes. Because you lived in the home for more than five consecutive years of the previous eight you will qualify for the $6,500 credit. For example, say John and his wife bought a home in 2000 and lived there until 2008, when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for five consecutive years out of the last eight years. The key word here is “consecutive." As long as he lived in that house for five years straight, what he did since then doesn't affect eligibility.
QUESTION: I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
ANSWER: You do not have to close before December 1. Now that the legislation has been signed, it will be as if the November 30 date had never existed. Therefore, so long as the binding contract is in place by April 30 (and you close before July 1), you will be eligible for the credit.
Tuesday, November 10, 2009
Detailed Information on Tax Credit!
Here are details on the extension and expansion of the U.S. tax credit for homebuyers signed into law by President Obama:
Deadline Extended Into 2010
The tax credit was originally to end November 30, 2009. It has now been extended into 2010. If you have a signed purchase agreement by April 30, and close the transaction by July 1, you’re eligible for the credit.
Some Existing Homeowners Now Eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. (Married couples filing individually can receive $4,000 each.) You are considered a first-time buyer if you haven’t owned a principal home in the U.S. in the last three years.
The tax credit has also been expanded to existing homeowners who’ve lived in their principle residence for five consecutive years in the last eight. They can receive up to $6,500 – or $3,250 for couples filing as individuals.
Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.
Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return, or file an amended 2008 return to get the money sooner. There are also programs in place to enable you to use the funds to help with the down payment.
Contribution to the Economy
National Association of REALTORS® economists estimate that the tax credit has contributed more than $22 billion to the economy, and that 2 million people will take advantage of it this year.
Deadline Extended Into 2010
The tax credit was originally to end November 30, 2009. It has now been extended into 2010. If you have a signed purchase agreement by April 30, and close the transaction by July 1, you’re eligible for the credit.
Some Existing Homeowners Now Eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. (Married couples filing individually can receive $4,000 each.) You are considered a first-time buyer if you haven’t owned a principal home in the U.S. in the last three years.
The tax credit has also been expanded to existing homeowners who’ve lived in their principle residence for five consecutive years in the last eight. They can receive up to $6,500 – or $3,250 for couples filing as individuals.
Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.
Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return, or file an amended 2008 return to get the money sooner. There are also programs in place to enable you to use the funds to help with the down payment.
Contribution to the Economy
National Association of REALTORS® economists estimate that the tax credit has contributed more than $22 billion to the economy, and that 2 million people will take advantage of it this year.
Saturday, November 7, 2009
Buying Home!
Contact a REALTOR®
This is where I come in :)
A RE/MAX Sales Associate can help you through the entire process of buying a home, starting with the mortgage and continuing right through closing – and beyond. He or she can help you shop for the best interest rate and terms and, if you wish, suggest mortgage lenders.
Get Preapproved for a Loan
Obtain a copy of your credit report and your FICO score and, if necessary, do what you need to do to improve it. The higher your FICO score, the better interest rate you can command. You can get this information online; your RE/MAX agent can also help you. Contact several lenders and determine which one will give you the best deal.
Determine Your Price Range and Area(s) in Which You're Interested
By now you should have a good idea of how much home you can afford. This helps you narrow down your home search. You should also begin researching the neighborhoods in which you might want to live. Your RE/MAX agent can help.
Decide Which Amenities and Features You Must Have – and Which Ones Would Be Nice but not Necessary
How many bedrooms and bathrooms do you want? Would you prefer a newer home or an older one with established landscaping? Are hardwood floors a must? Is an updated kitchen important to you? Walk-in closets? Which features would you be willing to give up if you find the otherwise-perfect home?
Begin Testing the Market
Right here on remax.com, you can find listings that meet your criteria as well as neighborhood data. Identify properties that seem to be fits for you, take an afternoon and go on a driving tour. See what's available in your price range and explore neighborhoods.
With Your Agent, Begin Seriously Looking at Homes
Your agent can add to the list of homes you've already identified – including ones that have just come on the market. Look at homes with a critical eye – does the floor plan work for you, is the property in good condition, would it be right for your lifestyle? In short, can you imagine yourself and your family living there?
Take notes at each home you visit. What do you like and not like? Narrow down your choices; re-visit homes in which you're interested. See them at different times of the day.
Make an Offer
When you've identified the home you want to buy, be prepared to help your agent prepare a written offer quickly. Your agent will be familiar with market values and will help you arrive at a price that gives your offer the best chance of being accepted.
At this stage, try not to become emotionally attached to a home. Your offer may not be accepted for any number of reasons. Have backup homes in mind. Be prepared to negotiate through your agent with the sellers.
Once Your Offer Is Accepted:
* You'll be asked to submit an earnest money deposit that usually isn't refundable.
* Begin making moving arrangements (select a mover, obtain change-of-address cards, inform friends and relatives).
* Have the property professionally inspected.
* If necessary, request repairs.
* Obtain homeowner's insurance.
* Contact utilities (phone, water, power, etc.).
* A few days before closing, stage a walk-through.
* Obtain a cashier's check for the down payment and closing costs.
At Closing:
* Make sure the terms and conditions of the loan statement are correct.
* Carefully read everything before you sign.
ENJOY YOUR NEW HOME!
Why You Should Use a REALTOR® in Your Home Search
Buying a home is probably the largest investment you'll make in your lifetime. Having an experienced, knowledgeable RE/MAX professional representing you in this transaction just makes good sense.
Buying a home is not like buying a car, a mutual fund or other commodity. It can be a life-changing event. RE/MAX agents fully understand the real estate process – and just as important, they understand your local market.
Of course they know the right steps to take, but they can also help you avoid a misstep in your home purchase. If a new freeway is going to be built a few blocks away, they'll probably know it. If you're unsure about school districts, they'll be able to direct you to answers. If you're unsure of a builder's reputation, they'll know how you can confirm it.
Your RE/MAX Sales Associate also performs another important function: minimizing the emotion involved in a home transaction. You may be in love with a home, but your agent can point out factors that might not make it right for you.
Related Articles
* First Time Buyers
* Understand Your Credit Score
View more articles
Real Estate 101
This is where I come in :)
A RE/MAX Sales Associate can help you through the entire process of buying a home, starting with the mortgage and continuing right through closing – and beyond. He or she can help you shop for the best interest rate and terms and, if you wish, suggest mortgage lenders.
Get Preapproved for a Loan
Obtain a copy of your credit report and your FICO score and, if necessary, do what you need to do to improve it. The higher your FICO score, the better interest rate you can command. You can get this information online; your RE/MAX agent can also help you. Contact several lenders and determine which one will give you the best deal.
Determine Your Price Range and Area(s) in Which You're Interested
By now you should have a good idea of how much home you can afford. This helps you narrow down your home search. You should also begin researching the neighborhoods in which you might want to live. Your RE/MAX agent can help.
Decide Which Amenities and Features You Must Have – and Which Ones Would Be Nice but not Necessary
How many bedrooms and bathrooms do you want? Would you prefer a newer home or an older one with established landscaping? Are hardwood floors a must? Is an updated kitchen important to you? Walk-in closets? Which features would you be willing to give up if you find the otherwise-perfect home?
Begin Testing the Market
Right here on remax.com, you can find listings that meet your criteria as well as neighborhood data. Identify properties that seem to be fits for you, take an afternoon and go on a driving tour. See what's available in your price range and explore neighborhoods.
With Your Agent, Begin Seriously Looking at Homes
Your agent can add to the list of homes you've already identified – including ones that have just come on the market. Look at homes with a critical eye – does the floor plan work for you, is the property in good condition, would it be right for your lifestyle? In short, can you imagine yourself and your family living there?
Take notes at each home you visit. What do you like and not like? Narrow down your choices; re-visit homes in which you're interested. See them at different times of the day.
Make an Offer
When you've identified the home you want to buy, be prepared to help your agent prepare a written offer quickly. Your agent will be familiar with market values and will help you arrive at a price that gives your offer the best chance of being accepted.
At this stage, try not to become emotionally attached to a home. Your offer may not be accepted for any number of reasons. Have backup homes in mind. Be prepared to negotiate through your agent with the sellers.
Once Your Offer Is Accepted:
* You'll be asked to submit an earnest money deposit that usually isn't refundable.
* Begin making moving arrangements (select a mover, obtain change-of-address cards, inform friends and relatives).
* Have the property professionally inspected.
* If necessary, request repairs.
* Obtain homeowner's insurance.
* Contact utilities (phone, water, power, etc.).
* A few days before closing, stage a walk-through.
* Obtain a cashier's check for the down payment and closing costs.
At Closing:
* Make sure the terms and conditions of the loan statement are correct.
* Carefully read everything before you sign.
ENJOY YOUR NEW HOME!
Why You Should Use a REALTOR® in Your Home Search
Buying a home is probably the largest investment you'll make in your lifetime. Having an experienced, knowledgeable RE/MAX professional representing you in this transaction just makes good sense.
Buying a home is not like buying a car, a mutual fund or other commodity. It can be a life-changing event. RE/MAX agents fully understand the real estate process – and just as important, they understand your local market.
Of course they know the right steps to take, but they can also help you avoid a misstep in your home purchase. If a new freeway is going to be built a few blocks away, they'll probably know it. If you're unsure about school districts, they'll be able to direct you to answers. If you're unsure of a builder's reputation, they'll know how you can confirm it.
Your RE/MAX Sales Associate also performs another important function: minimizing the emotion involved in a home transaction. You may be in love with a home, but your agent can point out factors that might not make it right for you.
Related Articles
* First Time Buyers
* Understand Your Credit Score
View more articles
Real Estate 101
Friday, November 6, 2009
Avoiding foreclosure
Below are a few tips to help prevent foreclosure. As always, should you be in a situation where you do not see an end in sight, please do not hesitate to contact me to put your home on the market as short sale.
Short sales are continuing trend in todays economy and the "ding" on your credit is much more positive than a foreclosure. I can help you with this. Give me a call today!
Tips to Prevent Foreclosure
* Be proactive. Contact your loan servicer immediately.
o You can find the contact information on your monthly mortgage bill or coupon book.
o Lenders can work out plans to allow you to stay in your home.
o Ask about foreclosure alternatives.
o Be prepared to disclose detailed financial information.
o Provide requested information in timely manner.
o Be ready to change your spending habits and create a budget.
o Open mail and respond to calls from your loan servicer promptly. Failure to respond in a timely manner can result in more foreclosure actions and additional cost.
* Consider refinancing your loan.
o Refinancing to a fixed-rate, fully amortized lower-cost loan may help.
o The FHA offers a program that helps homeowners with good credit refinance. It's called FHA Secure.
* Talk to a housing counselor. HUD approves trained counselors to work with not‐for-profits focused on preventing foreclosure. Search for HUD counselors.
* Get in touch with your local government agencies. Your city, state or county may offer programs for people having trouble making their mortgage payments.
* Notify your other creditors. You may be able to lower interest rates on your credit cards or consolidate some of your other loans. You can put the savings toward your mortgage.
* Create a budget. You may find areas you can save and put the money toward keeping your home.
* Re‐read your mortgage agreement. Understanding the document is critical.
* Talk to a lawyer if you think you may have been a victim of predatory lending. Your local university may host a legal clinic. There also may be fair-lending counseling agencies in your area.
* Beware of anyone who says you don't need a real estate professional or title company when selling your home.
* Do not sign over the deed to your property to any organization or person if you are not working directly with your lender to get your debt forgiven.
Short sales are continuing trend in todays economy and the "ding" on your credit is much more positive than a foreclosure. I can help you with this. Give me a call today!
Tips to Prevent Foreclosure
* Be proactive. Contact your loan servicer immediately.
o You can find the contact information on your monthly mortgage bill or coupon book.
o Lenders can work out plans to allow you to stay in your home.
o Ask about foreclosure alternatives.
o Be prepared to disclose detailed financial information.
o Provide requested information in timely manner.
o Be ready to change your spending habits and create a budget.
o Open mail and respond to calls from your loan servicer promptly. Failure to respond in a timely manner can result in more foreclosure actions and additional cost.
* Consider refinancing your loan.
o Refinancing to a fixed-rate, fully amortized lower-cost loan may help.
o The FHA offers a program that helps homeowners with good credit refinance. It's called FHA Secure.
* Talk to a housing counselor. HUD approves trained counselors to work with not‐for-profits focused on preventing foreclosure. Search for HUD counselors.
* Get in touch with your local government agencies. Your city, state or county may offer programs for people having trouble making their mortgage payments.
* Notify your other creditors. You may be able to lower interest rates on your credit cards or consolidate some of your other loans. You can put the savings toward your mortgage.
* Create a budget. You may find areas you can save and put the money toward keeping your home.
* Re‐read your mortgage agreement. Understanding the document is critical.
* Talk to a lawyer if you think you may have been a victim of predatory lending. Your local university may host a legal clinic. There also may be fair-lending counseling agencies in your area.
* Beware of anyone who says you don't need a real estate professional or title company when selling your home.
* Do not sign over the deed to your property to any organization or person if you are not working directly with your lender to get your debt forgiven.
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