(especially in the ultra-hot Roseville and Rocklin real estate markets)
This is a GREAT tip for buyers out there right now…
If you are out there looking at homes and making offers in this market, especially in the Roseville, Rocklin, Lincoln, Granite Bay, or Folsom areas, you know we’re seeing home sellers having a large number of offers to choose from. Likewise they are choosing the best offer they have and the odds of getting a seller credit towards closing costs aren’t as high as they have been from 2008-early 2013. Especially on the hottest, multi-offer properties…
Unfortunately, the reality is many buyers simply can’t pay their own closing costs. Or can they?
With a little bit of creative financing you can have the winning offer AND also have your closing costs paid for!
On a $349,000 purchase you can simply bump up the rate a little and have us (or any lender really) give you a rebate towards closing costs. If today’s 30 year FHA rate is 4.0% (this is not a rate quote, rates change every day) it would be as easy as taking a 4.25% rate and getting as much as 1% of a lender rebate to pay for all your closing costs.
In this scenario the buyer’s payment only went up by $48 but they got a $3,490 lender credit to cover closing costs and their offer was accepted! In all reality who can argue with a 4.25% rate anyways, especially if it saved $3,500 up front which, if you didn’t have saved for closing, you may not have been able to have your offer accepted anyways.
The same idea can work with pretty much any loan. Putting down 10% and going conventional? It may be possible to make this work too, rather than asking for a seller credit on a property you know will have multiple offers.
This is how we do it… Get you financed but also get you the home you want instead of someone else having their offer accepted. If you have more than enough for down payment and closing costs this is not really necessary, or advisable, but for those that don’t this is another tool to get your offer noticed and increase the likelihood of being accepted.
Sincerely (your outside the box lender),
Rates have been going up, but why is that and what will happen next?
Many of you have noticed the stock market has been on a tear. As investments are drawn from the Bond market to chase gains in the hot stock environment, pressure is being put on bonds. The Fed has been buying bonds, which has kept rates from going up more than they otherwise would have, which has helped but rates are still on the way up.
However I don’t see this stock trend continuing for too long, there is a technical correction to the stock market that is more than overdue. The level of bullish sentiment now stands at 57% – a dangerously high number for stocks. When a large majority of traders are bullish they are already in the market. This scenario leaves few investors to come into the market with new buying to push prices even higher.
With the DJI at over 14,000 stocks are within striking distance of their all-time highs, it’s important to see why these levels can be dangerous.
See how the past two times stocks have approached these levels, it has been followed by sharp moves lower. Also notice that these occurred after long, extended moves higher. Stocks are now in the third extended run up to these levels. Going even further: the current 500+ day period without a 10% correction is one of the longest in the Stock market’s history.
While history may not repeat itself it usually does and I feel the chance of a long overdue correction is about to happen any day (it may have already by the time you are reading this), all of these factors tell us that a major drop in the stock market is near..
And (of course) I’m not the only one to recognize this. This means that some investors will be heading to the exits before the grand finale. Once the selling starts it will accelerate, quickly!
If (when) this happens where will all that capital go from the sale of these stocks? Yep, it almost certainly will flow back to the bond market, improving interest rates. Now there is no guaranty this will happen, and rates may get worse before they get better, but the writing is on the wall. This would essentially be the first time all of these factors presented themselves and a different result came to be from them if the stock market doesn’t have a major correction soon.
Mortgage Planner – 16 Years Experience
Last week, in the midst of writing about whether interest rates could fall any further – pontificating on how bad economic news generally results in lower interest rates and why – I was inclined to say that we’d probably reached the bottom for this cycle…and perhaps for all recorded time.
Then the June employment data was released….
The headline, of course, was the meager gain of 80,000 payroll jobs over the course of the month, and the fact that unemployment remained at 8.2%, unchanged from the prior month. And that’s about as far as most people read.
Such a superficial reading hit the stock markets hard, inspiring further headlines, such as this from The New York Times: “Job Growth Falters Badly, Clouding Hope for Recovery.” In other words, it’s possible to wrench from a very complex set of figures the simple conclusion that we’re on the precipice, once again, of overall economic decline. Take a shallow breath, and the pundits add a few words about the political significance of all this. (Bad for Obama, good for Romney, apparently.)
All of this, however, pays no attention at all to the portions of the report that aren’t quite as eye-catching. For me, the most significant are the group of figures that suggest the manufacturing sector isn’t doing as poorly as analysts were beginning to think they are. Bloomberg.com detailed the mild but still meaningful bits of growth as follows: “Relative strength in the goods-producing sector. Employment in this sector rebounded 13,000 after a 21,000 decline in May. Manufacturing increased 11,000 after a 9,000 rise in May. Construction posted a modest 2,000 gain after dropping 35,000 the month before. Mining edged up 1,000, following a 3,000 advance in May.”
A close reading of these improvements suggests that we may be on the verge of a gradual sea change – one that pushes the core of the economy in the direction of growth, not toward another recessionary decline. Along with better manufacturing data and slightly better construction figures – and we should anticipate that the construction employment figure will continue to grow, especially after last month’s surge for new home sales – we can also find some solace in the fact that employment gains really weren’t very far from the consensus of economists.
There are two reasonable conclusions here:
First, the psychology in the big world of investors is operating under the assumption that we’re in big trouble if the markets aren’t making significant gains. They’re not – though the gains in real-estate-related indicators have very recently been surprisingly good.
In general, the jobs report suggests very little forward movement last month. But the mild recovery in manufacturing, the fact that the unemployment rate didn’t worsen, and the upward revisions in many recent employment numbers (again, think construction) all suggest that we may expect better data soon. When, we don’t know. But the point remains: There is less likelihood that “Hope for Recovery” has been clouded than there is that our economic feet are simply stuck in the mud. Especially in the Roseville/Rocklin and greater Sacramento market, where real estate data is on fire!
The second reasonable conclusion is that we may see the super-low interest rates of today for longer than many of us have anticipated. Indeed, they may even go lower on more bad economic news in the near-term future. Unfortunately, low rates are now the embodiment of an economy that refuses to pick up. But the economy refuses to pick up because of all the reasons for concern and uncertainty, and they are – fittingly – utterly unpredictable.
Nonetheless, it is easy to imagine investors finding solace and inspiration in some future news, and finally allowing interest rates to start rising toward the levels that they should occupy. I mean, who knows? My point this week isn’t that there’s much to rejoice about in the employment data. It’s that there is equal or better reason to be patient and find slow growth and improvement in the report.
The government just made refinancing your FHA mortgage more affordable, and more importantly possible, at least for a few hundred thousand homeowners that couldn’t take advantage of today’s rates before (June 11th).
The Federal Housing Administration has reduced MI (mortgage insurance) fees significantly for SOME homeowners who qualify for the FHA’s streamline refinance program. The lower fees are currently in effect and are available to those refinancing FHA loans originated before June 1st of 2009.
FHA’s Streamline Refinance program requires limited documentation and, in most cases, no appraisal. This allows any FHA borrower to refinance regardless of if they are underwater on their loan or if they have equity.
Since the “implosion” of 2008 and 2009 almost 800,000 homeowners have been able to refinance their mortgage into a lower rate/payment through FHA’s streamline refinance program. However of late the cost of an FHA loan has increased, by quite a bit depending on when you originally got your loan. This made refinancing tough, if not impossible, once you calculated in the higher MI rates. Even though the interest rate and the mortgage payment itself went down the mortgage insurance ended up eating the difference in savings.
With the new lower FHA Streamline refinance MI rates those that qualify no longer have to worry about current FHA MI rates for everyone else, those that qualify for these new rates (FHA mortgage originated before June 1st 2009) can take advantage of today’s historically low interest rates, saving hundreds on their mortgage payment itself, they can also take advantage of drastically reduced MI rates. Lowering the payment even further (and making it possible for some homeowners that it was impossible for before).
Under the new guidelines a homeowner refinancing a $250,000 mortgage will pay $25, compared to $4,375, for their upfront MI (UFMIP). A pretty big difference! This number is usually financed into the loan so it doesn’t require anything out of pocket anyways, but it is REAL MONEY in the long run.
The same homeowner will also only pay $114 a month, compared to $260 in monthly MI (FHA’s annual MIP). Which is where the real savings is…
The reason is because under the new plan FHA MI premiums have been reduced to 0.01% of the total loan for the UFMIP and the annual premium down to 0.55%. Other FHA borrowers, those not eligible, will still be paying 1.75% for their UFMIP and 1.25% for the monthly MI. Refinancing at the higher rates might still be a great decision for some, but those that qualify for the lower MI premiums have a no-brainer on their hands!
To qualify for the reduced fees on an FHA Streamline refinance you must:
- Have a mortgage already insured by HUD (FHA).
- Be current on the mortgage and have no more than one late payment in the last 12 months
- Have a mortgage that was endorsed by HUD before June of 2009.
Something to think about is you may have had your loan since May 30th, 2009, but this DOES NOT mean your loan was endorsed by HUD before June 1st of 2008. Lenders generally try to get their HUD endorsement in no more than 10 days but in some cases it can take a month, maybe even longer… The best way to make sure your current loan was endorsed before the cutoff would be to call/e-mail me and let me look it up for you.
Let’s talk about gasoline for a few moments. Surprisingly, doing so may afford some insight into other subjects, maybe even the level of interest rates.
The place to start, I suspect, is here: We have heard a lot of whoppers about how the current high price of gasoline at the pump either was engineered by Obama or was the result of Obama’s lack of obvious oil-price-easing activities. In short, it’s because of what Obama did (or, as the case may be, it resulted from all Obama didn’t do).
Most economists look at this argument and respond with a very obvious point. Obama couldn’t cause gas prices to rise if he wanted to. Sadly, he isn’t much more proficient at making gas prices fall, either.
There is a belief, however (“Drill, Baby, Drill”) that Obama could bring prices down if he found ways to encourage greater gas production in America. An obvious problem here is that we have not only already increased our production – largely because of technology that unlocks the oil heretofore bound up in shale deposits in a vast number of locations beneath the American soil (note for example, North Dakota) – but we even graduated to the status of net oil exporter (that’s right, we export more oil than we import) this past year.
It was assumed that the price of oil would decline if we seemed to have enough of it. But no. The price of oil is determined by “the international market,” and thus it depends on the level of demand for oil across the world, and the key there is whether OPEC wants to boost the price of oil or to bring it down.
A grocery store, after all, can lower the price at which it sells hot dogs. But when an international chain of supermarkets sets the price higher, the grocery story may gain several new fans, but the price of its hot dogs will eventually move to the price established in the international markets.
This has raised the question of why OPEC countries are so “greedy” – why they don’t just accept a lower price when the profits they are making by producing it for a few bucks a barrel and selling it for over $100 are outrageous (the same, of course, can be asked of American oil companies. The Saudis, among others, have no lock of greediness)?
In any case, there is an obvious answer… If you are the Crown Prince of Saudi Arabia, for example, and the only things your country has for its people – like food, like the essentials of living, as well as the luxuries – are imported, not grown or manufactured at home and those imports are paid for with oil money, you want to manage your national resource with great (and greedy) care. Otherwise, you will end up thrown out of office and into the same dustheap of history where Mubarak and Gaddafi and others find themselves.
As Bibal Qabalan noted in NPR’s Planet Money, every gallon of gas we buy has an unspecified but costly tax within it. “Like it or not, the bill for keeping the Persian Gulf monarchies in power is now being footed by every American. Every time we fuel our car we send an extra 35 cents per gallon, or roughly $6 per fill up, to the Save the King Foundation. Since oil goes into everything we buy from food to plastics, this adds about $1,500 annually to the expenditures of the average American family.”
Is it a political issue, therefore? Absolutely. But neither Obama nor any other American politician can do much about it – except throw his and her support behind our own energy program, and get us into electric cars, still a somewhat dubious proposition, especially in the short term.
The Saudis don’t want to make us overly angry. So they also work to keep oil prices from rising too high – whatever that might prove to be. Studies have shown that, even as oil prices rise still further, “Americans may protest loudly, but their economic behavior indicates a remarkable indifference to the price of oil.”
And what might this have to do with interest rates? It just fits into a similar category. Interest rates, particularly today, are established in world markets. They depend on how well the euro happens to be faring, the psychology of certain fiscal and political problems – from Greece to Spain to Iran to Brazil – and other matters. To gain some understanding of why rates are going where they’re going, we have to dig very, very deep. And we’re still likely to come up with little to no gain – either in understanding or in profit… And so it is at this moment.
“I understand that on April 1, 2012 the FHA Interest rate will increase?”
No one can tell for sure what interest rates on any loan, FHA included, will be on any day. Interest rates for pretty much every type of loan fluctuates daily (sometimes more than once a day).
You may be referring to the FHA Mortgage Insurance premium… This is changing on April 9th and is going to increase; a.) The Up Front portion of FHA’s mortgage insurance premium by 0.75%. The Up Front MIP is generally financed into the loan, spread out over the entire term of the loan, and doesn’t have much of an effect on one’s payment, but it will increase most people’s loans by a least a few bucks. b.) the Annual or Monthly MIP is also going to increase by 0.10-0.15% depending on their loan scenario, and by another 0.25% for those with loan amounts that exceed $625,500.
This is going to increase every FHA borrower, that has their FHA case number pulled after April 9th, monthly payment by a bit. Quite a bit in some cases. But FHA is doing this to keep the fund solvent and ensure that FHA loans are always available for those that need them. They are still the best loan for many people and will be the only loan for many people for quite a while.
Interest rates on homes continue their downward trend. GSE Freddie Mac reported that the average 30-year fixed-mortgage rate sank to 3.91% last week, setting an all-time record low. 15-year fixed rates settled in at a historic low at 3.21%.
To put the declines into perspective, today’s homebuyers are paying over $1,200 less per year on a $200,000, 30-year fixed-rate loan than they would have just a year ago today!
The gov recently announced some great changes to the Home Affordable Refinancing Program (HARP). The updates to the program are aimed at those who have spent the years since the recession began keeping up with their mortgage payments as others walked away (read why “walking away” is a misnomer here and here) from their houses even though they can make the payments. The idea here is to help millions more homeowners save some money on their house payments by helping them take advantage of today’s historically low interest rates, even if they don’t have any equity to qualify for a standard conventional mortgage.
1. Your loan must be guaranteed by Fannie Mae or Freddie Mac.
Follow these links to find out…
2. Your loan must have been acquired by Fannie or Freddie before April 1, 2009.
3. You haven’t already refinanced under HARP (or if you have it was between March and May of 2009).
4. Your Loan-To-Value ratio must be higher than 80%. This just means you have less than 20% equity. If you have 20% equity or more a standard conventional refinance is what you need.
5. You haven’t been late with a mortgage payment in the last six months. In the last year, you haven’t been 30 days late more than once. Because the program will last through Dec. 31, 2013, there’s still time for borrowers to get on track.
6. There must be a tangible benefit. You must end up with a lower payment or trade in an ARM (adjustable) for a fixed rate mortgage.
What about my home’s appraised value?
The biggest challenge to getting a HARP loan up until this point was, even though appraisal guidelines were relaxed, you still had to be close to having some equity. You could be underwater but not that much. The good news is some mortgage holders will be eligible no matter how much they owe or how much the house is worth when Fannie and Freddie rolls out the Property Inspection Waiver. For others, there is still a Loan-To-Value ceiling.
If you have a fixed-rate mortgage with a term of up to 30 years, there’s no maximum LTV ratio, meaning there’s no maximum amount you can owe on your home if you qualify for the Property Inspection Waiver.
If you have a fixed-rate loan but the term is over 30 years (very rare), you can only owe 105% of what the house is worth.
Do you have an adjustable rate loan? As long as you didn’t sign up to pay on it for more than 40 years, or fewer than 5, you can owe 105% of what your house is worth.
Have a recent bankruptcy or foreclosure?
The standard waiting period has been removed for folks who have those blemishes on their credit histories. You still have to qualify for the loan but a recent foreclosure or BK won’t automatically disqualify you for a refinance.
When can I apply?
The program begins on December 1st however many of the changes that will help a lot of people won’t roll out until next year. Of course I’ll keep everyone updated on the program as it rolls out, this is about to help A LOT of people save thousands on their mortgage payments and also give a little boost to Sacramento area real estate values as it saves some people from losing their home.
The administration is now considering a new refinance program that would provide millions of homeowners with new, lower interest, lower payment mortgages…
The initiative would reportedly allow borrowers with loans backed by Fannie Mae and Freddie Mac to refinance at today’s rates, even if they are in negative equity or have bad marks on their credit. Two Columbia business professors say such a move would save homeowners an average of $350 a month and pump an extra $118 billion into the economy, the report stated.
This would be wonderful for Sacramento area homeowners that can’t currently qualify a refinance at today’s low rates, and in turn have a positive effect on the local economy as people have more money to spend every month. There really is no negative. Since this would apply to mortgages already backed by Fannie Mae and Freddie Mac there is no additional risk to the government. In fact it will reduce risk to Fannie Mae and Freddie Mac by making it so homeowners can more easily make their monthly mortgage payment. Let’s see how this all plays out in today’s Washington…
I like to focus on the positive things in this world as much as possible. I know, that makes me a little abnormal these days, but it’s what I see we need in the world today. Luckily, there is a lot to be positive about in our area, this is just one story…
Roseville students spruce up seniors’ homes as part of R.O.S.E.
Program connects teens with senior citizens in community