Archive for Rates
Increase Your Credit Score in 30 Days
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Author and credit scoring expert Linda Ferrari shares 5 simple things you can do to help raise your credit scores quickly.
If you can’t view the above video, click to learn the 5 things to increase your credit score
I really appreciate you coming back to look around. If you know of anyone else you think might enjoy my blog, please don't keep me a secret.
Unlock the Savings Trapped in Your Current Mortgage Loan
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“A penny saved is a penny earned”… or so the old proverb goes. Of course, the value of a penny has changed somewhat from the time when your grandfather offered his wisdom on the value of keeping what you earn. Today, you could save thousands of dollars by simply making the right mortgage decision. If you haven’t taken advantage of the historically low interest rates you are leaving huge savings in the pockets of a banker.
Your mortgage is one of your most significant financial decisions. Making the right decision regarding your mortgage can have a huge impact!
It is my primary role as a mortgage broker to find you the right product for your personal situation. A mortgage broker is a financial professional and – like your investment advisor – I want to understand your personal situation and payment preferences. I have access to many lending institutions, so you can do some valuable comparison shopping for the right combination of features, rates and mortgage options.
All these choices offer you substantial opportunities to save money over the life of your mortgage.
If you are like most homeowners, you are focused -for good reason – on finding the best possible rate for your mortgage. A mortgage broker can offer you the best range of rate options and terms. If a mortgage broker can get you a half per-cent (1/2%) off the posted rate, that could mean a savings of more than $17,000 in interest per $150,000 borrowed over a 30 year term. If, however, you believe that most mortgage rates are basically the same from one institution to the next, then consider the fact that even an eighth of a point difference in the rate can offer significant savings over the duration of your mortgage.
But it’s also important to look beyond the rate. There are other ways to find savings in your mortgage. I am up-to-date on market trends and new opportunities… as well as some of the tried-and-true ways to save money in a mortgage.
Do you get an annual bonus in your job? You may want to use that bonus to pay down the principal of your mortgage. If you pursue this strategy consistently over the life of your mortgage, you could save thousands of dollars in interest by paying your mortgage off sooner. However, sometimes, it makes more sense to save this money is a safe side account, that you could utilize to pay down your mortgage, or as an emergency cushion.
Are you paid bi-weekly or bi-monthly? Consider a change from the usual monthly mortgage payment. Set up your mortgage payment schedule to coincide with your pay period. Again, you can shave years off your mortgage, and enjoy thousands of dollars in savings. You can accomplish the same thing through just making one extra payment per year as well.
Consider the old penny proverb again. How much is your time worth? Time savings is one of the key, unexpected benefits that clients say they have enjoyed when they choose to work with a me. Above all, I’m an expert in customer service, and that means that I look after every detail of your mortgage research and negotiations on your behalf.
You can take advantage of these historically low rates even if you presently have a USDA loan. You can refinance a present USDA Guaranteed Loan and even a USDA direct loan. Call Jeremiah to find out how.
The Good Faith Guarantee – What You Need to Know as a Borrower and a Realtor
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- Flickr photo by David Reece
The Department of Housing and Urban Development (HUD) under RESPA revised the Good Faith Estimate, HUD-1, and HUD-1A through regulation adopted in 2008 which became effective January 01, 2010. The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, passed in 1974. The purpose of the act is to help consumers become better shoppers for settlement services and to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property.These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. RESPA requires borrowers to receive disclosures at various times. A Good Faith Estimate is required to be delivered within three (3) days of giving six required items:
- Name
- Social Security Number
- Monthly Income
- Property Address
- Property Value (Estimate)
- Loan Amount
Fees disclosed on the new Good Faith Estimate are grouped into three categories:
- Fees that cannot increase from the initial estimate to closing
- Fees that may vary as much as 10 percent from the initial estimate to closing
- Fees that may increase without limit, because the lender has no control over them or may be difficult to predict in advance.
Fees in the no tolerance group: lender fees, mortgage broker fees, processing, underwriting, and discount points.
Fees in the 10% variance group: appraisal, recording fees, credit report, flood certification, tax service, mortgage insurance, and guarantee fee. Title closing and title insurance are included in this group when selected from a provided list by the borrower. Any single fee could vary by more than 10%, the combined total of the fees in this group may not increase by more than 10%.
Fees in the unlimited increase group: homeowner’s insurance, per diem interest, and setting up the initial escrow account. Title closing, and title insurance are included in this group when they are not selected from a list provided by the lender.
The New Good Faith Estimate – The Positive:
As a customer you have a minimum of 10 days to shop for various settlement services. The Good Faith Estimate is now lo longer an “Estimate” but an Etched in Granite Guarantee of Fees charged by the Mortgage Broker and Lender. This very fact will eliminate any companies still that would attempt to bait and switch consumers by offering low fees, and then increasing at closing. The format of the new Good Faith Estimate may not be modified from the version prescribed by HUD, this will make it easier for consumers to compare GFE’s from one lender to another.
The New Good Faith Estimate – The Neutral Items:
The overall costs for closing a loan have not decreased, and none of the items have went away, and no new items have been added because of the new Good Faith Estimate. The borrower will be asked to provide a commitment to the loan and to moving forward prior to locking in the rate and terms. If the borrower does not provide their commitment to moving forward with the loan by the end of the shopping term, minimum 10 days, then the lender no longer has to honor the terms. If the terms do happen to change during the process then this will trigger another 10 day grace period.A very important part for the customer to pay attention to is how long the interest rate being offered is good through. Because of MDIA (Mortgage Disclosure Improvement Act of 2009) the APR at closing cannot be off by more than 1/8%, if it is it must be re-disclosed and have a 3 day waiting period. So, the interest rate will need to be locked in at least 5 days prior to closing with most investors requiring 10 days. Interest rates are very fluid so guaranteeing an interest rate for any lenght of time is very difficult, since the interest rate could change.
The New Good Faith Estimate – The Stuff that was forgotten:
The Lender and Broker are responsible for the accuracy of fees that are typically paid for by the seller, ie. Owners Title Policy. A seller’s closing cost concession is not shown on the new Good Faith Estimate. The proration of taxes is not shown. Proration of taxes is a credit given to the buyer, when taxes are paid one year after assessment, since the new buyer’s first bill would be for a time period when they were not living in the property.
The two most important pieces information everyone wants to know when purchasing a home:
- What is my total monthly payment. The Principal, Interest and Mortgage Insurance is included, but not the Taxes and Insurance. Sure everyone can just add the cost, but wouldn’t it make more sense to just include the total payment, it was on the old Good Faith Estimate. With a USDA Home Loan you don’t have to worry about the added expense of mortgage insurance.
- How much money will I need to close. If your using a USDA Home Loan this doesn’t become as much of an issue, but still something you want to know.
Because of timelines with RESPA and MDIA it is important to work with a knowledgeable mortgage broker to ensure that closing deadlines are met.
Bond Market Review and Forecast – for Week Ending 01/08/10
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There was no strong data indicating a reason to believe in an economic recovery in 2010, and mortgage rates ended a little better last week.
Construction Spending for November fell -0.6% worse than expected, continuing to support the notion that any real growth is still a long ways off.
Factory Orders came in at 1.1% increase, double the expectation, and greater than the October reading of 0.6. The durable goods portion was relatively flat, with just a slight decrease from October.
Minutes from last FOMC meeting showed an uneasy feeling of when the purchasing of Mortgage backed securities should end. The purchasing of mortgage backed securities by the Fed has been largely attributed with keeping mortgage interest rates low. The report did maintain that inflation is still tame, and the recovery will be gradual.
Initial Jobless claims showed an increase of 1,000 to 434,000, which was less than expected.
Decembers Unemployment Rate came in at 10%; however, November was revised to show a gain of 4,000. The pace of people no longer counted in the unemployment rate is growing steadily. The continued weakness in employment is giving people hope that the Fed will not increase interest rates soon.
Today is the only day this week without any economic news scheduled for release. The most important data doesn’t report until Thursday.
The U.S. trade balance reports on Tuesday with an expected deficit of $34.8 billion for November from $32.9 billion in October. Don’t expect this number to cause much fan fare.
The Federal Reserve’s Beige book, details economic conditions throughout the U.S by region, will be posted on Wednesday. The Fed puts a lot of weight on the findings during it’s FOMC meetings. Any unexpected news will have a large impact on the financial market and mortgage rates.
There is a Treasury auction scheduled for Wednesday and Thursday. If the auctions are met with strong demand we could see a slight improvement in mortgage rates. I see investors appetite for long-term US securities waning, which will lead to slightly higher rates.
December retail sales will be released on Thursday the expectation is 0.4%, versus the 1.3% gain in November. Strong retail sales growth is important to an economic recovery, thus better than expected numbers will lead to pressure on Treasuries that would probably carry over to mortgage rates. Initial jobless claims for the week of January 09 will be released on Thursday. The estimate is for a 430,000 new claims.
Consumer Price Index (CPI) from December reports on Friday, estimates are for a 0.2% increase versus 0.4% in November. The Core CPI, eliminating food and energy from CPI, is expected to rise 0.1% from 0% in November.
Determining the Right Rate Lock Period
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A rate lock is a promise to hold an interest rate and discount points for you for a specified period of time while your loan application is underwritten. Locking in your rate guarantees the rate as long as your loan closes and funds before the rate lock expires, preventing you from going through your whole process and finding out the interest rate has gone up.
A rate lock period can vary in length, and longer ones usually cost more. Typical rate lock time frames are 15, 30, 45, and 60 days. Most investors will only allow a 15 day rate lock if the loan is already approved. A lender will agree to “hold” your interest rate and discount for a longer period, say 60 days, but they’ll want a free item from your first garage sale, and pick of the litter if your dog ever has puppies, actually the rate and maybe discount (cost) is higher than with a shorter rate lock period.
There are three things you can do to get a lower interest rate:
- A larger down payment will result in a lower interest rate, because you’ll have a lower Loan to Value.
- You can pay discount points to lower your rate over the life of the loan, but that means you pay more up front. For many people, this makes sense and is a good deal.
- Increase your credit score.
With a purchase you will want to review the purchase contract to help determine the right lock length based on the estimate closing date on the purchase agreement.
The most important thing for you to do is to work with a competent and qualified mortgage broker.
