My Street...Your Marketplace Update

Mortgage Shopping? Look Locally

2011-01-02T17:39:00.004-05:00

When it comes to getting the best possible interest rate for your home mortgage, apparently big is not better. So don't overlook the smaller banks.

Everyone knows that getting a lower interest rate on your mortgage can save you thousands of dollars over time, but what you may not know is that the best rates are not necessarily offered by the big volume players or the bank where you currently do your checking. Instead, they can often be found at smaller banks and credit unions.

"Neglecting to include smaller community banks and credit unions could prove to be a costly admission," says Greg McBride, senior financial analyst with Bankrate.com of the loan-hunting process.
"In this market, in particular with jumbo large or jumbo confirming loans, smaller community banks and credit unions are very competitive," says McBride.

Compared to large banks, which are more depended on the secondary market, small banks have more flexibility to offer lower rate loans because "they are not dependent on an investor in the second market to eventually buy it," he said.
Smaller banks also have an incentive to offer better rates.
The consumer is looking for a mortgage but also has financial assets [that they can transfer] and may be a small business owner," he says. The proof is in the numbers based on a recent data from Bankrate.com.

Keep in mind, though, when you hear about low interest rates, it is essential to compare deals on an apples-to-apples basis, as the advertised interest rate is only one part of the puzzle. There are a number of fees included in mortgage loans that could have a significant impact on your total costs including closing costs, pay down points, document preparation fees, underwriting costs and more.

Please contact us today @ 404-798-5109 and we will be happy to assist you with all your home financing questions.
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The NEW Perspective

2010-07-19T08:15:00.001-04:00

Loans guaranteed by the Federal Housing Administration, the U.S.-owned mortgage insurer, may be involved in more home-purchase transactions than borrowing financed by Fannie Mae and Freddie.

FHA lending last quarter may have topped the combined volume of government-supported Fannie Mae and Freddie Mac in a home-lending market that's still essentially a government-financed market.

To get some perspective of what's going on consider these figures from Freddie Mac:

2006 - Loans worth $2.858 trillion were originated. The value of VA and FHA loan originations dropped to $80 billion (2.80 percent).

2008 - Loans worth $1.490 trillion were originated - less than half the 2006 total. As to FHA and VA loans, they rose to $291 billion (19.53 percent - almost seven times the 2005 percentage. That number has since grown to almost 50 percent.)

Issuance of so-called non-agency home-loan securities will eventually revive because "the government can't continue to be 95-plus percent of the market," says John Herbert, a director at Credit Suisse Group.

The Good News:
Home prices today are much more in line with personal incomes and mortgage rates are back to all-time lows. As a result, more than half of all Fannie Mae loans for home purchases have been to low-to-moderate income families. Affordability is a good thing and another step towards a real housing recovery.

Facts on the Energy-Efficiency Tax Credit

2010-03-17T18:40:00.001-04:00

The Existing Home Retrofit Tax Credit (Tax Code Section 25C): Tax credits are available at 30% of the cost, up to a $1,500 lifetime limit, for installation in 2009 & 2010 (for existing homes only) of these products:
Building envelope components: (Installation costs not included)
o Insulation material or system
o Exterior window, skylight, door, storm window or storm door
o Metal or asphalt roofs

Qualified energy products: (Installation costs may be included)
o Electric heat pump water heaters
o Electric heat pumps and central air conditioners
o Natural gas, propane or oil water heaters
o Biomass burning stoves
o Natural gas and propane furnaces
o Natural gas, propane, or oil water boilers and oil furnaces
o Advanced main air conditioning fans
The Wind, Solar, Geothermal and Fuel Cell Tax Credit (Tax Code Section 25D): Tax credits are available at 30% of the cost, with no cap through 2016 (for existing homes and new construction) for:
Geothermal Heat Pumps
Solar Panels
Solar Water Heaters
Small Wind Energy Systems
Fuel Cells

The energy-efficiency home products must be "placed in service" between Jan. 1, 2009 and Dec. 31, 2010. The credits are only valid for improvements made to the taxpayer's principal residence, except for qualified geothermal, solar, wind property, which can be installed on any home used as a residence by the taxpayer.

Home owners can claim the 25C and 25D credits on
Form 5695 when they file their income tax returns. Check with your tax professional to ensure correct application of the energy-efficiency tax credit. Retain all receipts as well as records that include:

• Name and address of manufacturer
• Identification of the class of eligible building envelope component
• Make, model number and any other property identifiers
• A statement that the component is eligible for the credit

For more information, visit www.nahb.org/efficiencytaxcredit.

'First Look' gives home buyers REO edge

2010-02-03T08:18:00.003-05:00

Buyers of Fannie Mae properties can use any financing, and often have already been preapproved by their lender. "But the best way to finance a Fannie Mae REO is with HomePath financing."
Foreclosure buyers should make sure they are completely preapproved for a loan and have submitted all the necessary paperwork before making an offer.

Shoppers are urged to look into HomePath financing as part of the loan preapproval process so "they are in a position to make an immediate offer if they find a Fannie Mae foreclosure."

Fannie Mae spokeswoman Amy Bonitatibus says that since Fannie Mae appraises each foreclosed property to determine the value, borrowers financing with HomePath Mortgage will not have to pay for an appraisal. They also will not have to pay for mortgage insurance. In addition, the down payment requirement is only 3 percent.

Help with closing costs
Fannie Mae typically pays between 3 percent and 6 percent of a buyer's closing costs, regardless of how the property is financed. Buyers may choose any title company.
The HomePath Renovation Mortgage allows buyers to borrow an additional 20 percent of the "as repaired" property value, up to $30,000. The "as repaired" value is the appraised value based on the completion of specified renovations, such as new appliances, cabinets or flooring.

"Buyers with good credit and debt-to-income ratios, might prefer conventional financing or an FHA loan. "But it's important that the lender has the knowledge of all these programs to see which one is a good fit."

Buyers interested in obtaining funding from their state or local government or charities should apply directly to their local offices to see if they qualify for assistance.

Sellers Cut Fewer US Home Prices

2010-01-12T17:41:00.000-05:00

NEW YORK, Jan 12 (Reuters) - Fewer U.S. home sellers cut listing prices on their homes for a second straight month in December as buyers rush to beat rising interest rates and an expiring tax credit, real estate website Trulia.com said on Tuesday.

Prices on 21 percent of homes on the market as of Jan. 1 were sliced at least once, down from 25.6 percent two months earlier.

The share of sellers reducing their asking prices has fallen to the lowest level since San Francisco-based Trulia started tracking reductions in April 2009.

The average discount for price-reduced homes was unchanged from the prior month at 11 percent off the original price.

Average 30-year mortgage rates jumped from a record low 4.71 percent early in December to end the year at 5.14 percent, according to home funding company Freddie Mac (FRE.N). The rate slipped in the first week of this year but is seen nearing 6 percent later in 2010.

"I expect reductions to rise again as the tax credit extension deadline approaches but I also expect mortgage rates to rise, so they may cancel out the savings" from list price reductions, Flint said.

"On a national level, I expect the industry to be on a roller coaster for 2010 and hopefully see some stability in 2011," he added.

Price cuts were fairly evenly disbursed regionally in the latest month.

Twenty percent of listings in the South had price cuts, while reductions were 22 percent in the West, Midwest and the Northeast.

The luxury market continues to pay a heavy price. Homes listed at $2 million or more cut prices by an average of 15 percent from the original price, the most since Trulia started tracking this last April. These houses represent less than 2 percent of all current listings on Trulia, but account for 24 percent of the $21.2 billion in home price reductions. (Editing by Dan Grebler)

Here is a list of cities with the MOST price reductions:
(Percent of listings with price reductions/Average reduction %)

1. Mesa, AZ 29%/14%
2. Indianapolis, IN 29%/9%
3. Baltimore, MD 29%/12%
4. Charlotte, NC 30%/10%
5. Tucson, AZ 30%/10%
6. Omaha, NE 32%/7%
7. Seattle, WA 32%/10%
8. Portland, OR 33%/9%
9. Milwaukee. WI 33%/10%
10. Jacksonville, FL 36%/10%

Appraisals Center Stage in Recovery

2009-12-04T07:55:00.000-05:00

The home buyer tax credit was extended and expanded, and mortgage interest rates have actually been trending even lower, but housing's recovery is still being hampered by new appraisal rules. At least that's what the builders and the mortgage bankers continue to say.
In the monthly sentiment survey from the National Association of Home Builders recently found, "fully one-third of respondents indicated that they have recently lost sales due to low appraisal values. This is up from a quarter of respondents who indicated as much in a survey taken in July."

The trouble is that appraisers are often using foreclosed or distressed properties as comps. The bigger problem, according to the mortgage bankers, is that the new Home Valuation Code of Conduct, instituted by Fannie Mae and Freddie Mac in conjunction with the New York State Attorney General, Andrew Cuomo, is putting inexperienced, poorly paid appraisers in the driver's seat on the road to housing recovery. The whole idea was to put a fire wall between lenders and appraisers.
There is currently a bill in the House of Representatives (H.R. 3044) sponsored by Rep. Travis Childers, D - MS, to institute a moratorium on the HVCC, but it's currently stalled. Members of the House Financial Services Committee did get it tacked on to the Consumer Financial Protection Act (H.R. 3126) which passed out of committee in late October.

The National Association of Mortgage Brokers, led by past president Mark Savitt, delivered 117,000 signed petitions from mortgage brokers all over the country to Attorney General Cuomo's Manhattan office. The petitions, which supposedly fill 50 boxes, seek the repeal of the HVCC.
"We're doing this to draw attention to the fact that the home valuation code of conduct is doing nothing to reduce or to prevent valuation fraud in fact it has increased valuation fraud by 46% since it went into effect," says Savitt. "It is harming consumers, harming the housing market, and harming the recovery of the economy as well."

A Program that REALLY offers a NO COST Solution?

2009-10-29T08:18:00.000-04:00

Remember the old adage "There is no such thing as a free lunch?" It turns out several programs can do this, including the Home Affordability Refinance Program, also called HARP, and FHA/VA Streamline. Here are some answers:

How can there be no closing costs?
The lender charges a slightly higher interest rate so it can absorb the upfront closing cost. The higher rate averages a half percentage point, depending on the loan amount. If you pay the closing costs instead, on average you have to stay in your home at least three to five years to come out ahead.

Will credit scores affect the interest rate?
FHA/VA Streamline programs do not have interest-rate adjustments (stepped increases) if your credit score is between 620 and 850. However, HARP loans do have interest-rate adjusters, which start at credit scores below 740. The lower your score the higher your rate. If your credit score is below 680, the adjusters might take the interest rate too high to justify refinancing with HARP.

How is the value of a home determined?
Typically with a computer-generated model, which uses recent sales data and tax estimates for quick valuation without a full appraisal. If not enough data is available for the quick valuation, a full appraisal would be needed. If the value comes in less than your first mortgage, HARP allows some flexibility as long as your mortgage does not exceed 125 percent of the current market value.

Do you have to pay private mortgage insurance again?
It depends. If your current loan does not have PMI, you won't be charged it on a HARP refinance, even if your new loan-to-value ratio is over 80 percent.

Can you drop a spouse from the new loan?
If you ended up with the house from a divorce or death, and you have made payments on your own for the last 12 months, you can still take advantage of refinancing -- and drop the spouse -- but you have to qualify on your own.

Are there any reasons not to refinance? Any risks?
The goal of HARP is to improve affordability and stability of your mortgage. There are no balloon payments or prepayment penalties to worry about. So if you can make your new mortgage payment, the only reason not to refinance is if the refinance doesn't reduce your payment.
If your goal is to pay it off quicker, you can do that in two ways. First, if you can afford your previous higher payment after the refinance, consider continuing to make it. By applying the extra amount to the principal balance, the loan will pay off sooner. You still will have a safety net of making only the regular payment, without the extra, if the need ever arises. Second, if you have been paying for seven years or more, consider a 15- or 20-year loan rather than one amortized over 30 years.
With either option, as long as you feel comfortable making the larger payment, refinancing could make sense.

How about a duplex or investment property?
Income properties have substantial interest-rate adjusters, so you need to take that into account.

Anything else you should know?
Documentation & income verification is needed. You must be current on existing mortgage payments. You cannot use this refinance to extract equity to pay off other debts. The HARP program will expire June 10, 2010. We hope you will be able to take maximum advantage of the savings before interest rates rise again.

Mortgage Shopping? Look Locally

2009-10-14T09:01:00.002-04:00

When it comes to getting the best possible interest rate for your home mortgage, apparently big is not better. So don't overlook the smaller banks.

Everyone knows that getting a lower interest rate on your mortgage can save you thousands of dollars over time, but what you may not know is that the best rates are not necessarily offered by the big volume players or the bank where you currently do your checking. Instead, they can often be found at smaller banks and credit unions.
"Neglecting to include smaller community banks and credit unions could prove to be a costly admission," says Greg McBride, senior financial analyst with Bankrate.com of the loan-hunting process.
"In this market, in particular with jumbo large or jumbo confirming loans, smaller community banks and credit unions are very competitive," says McBride.
Compared to large banks, which are more depended on the secondary market, small banks have more flexibility to offer lower rate loans because "they are not dependent on an investor in the second market to eventually buy it," he said.
Smaller banks also have an incentive to offer better rates.
According to Darren Beck, chief marketing officer at LendingTree, smaller banks often have a harder time attracting customers than large banks as they are not as convenient, with fewer branches and ATMs.
"The holy grail is that the consumer is looking for a mortgage but also has financial assets [that they can transfer] and may be a small business owner," he says. The proof is in the numbers based on a recent data from Bankrate.com.

Keep in mind, though, when you hear about low interest rates, it is essential to compare deals on an apples-to-apples basis, as the advertised interest rate is only one part of the puzzle. There are a number of fees included in mortgage loans that could have a significant impact on your total costs including closing costs, pay down points, document preparation fees, underwriting costs and more.

First Century Bank, N.A. is a local Georgia bank. Please contact us today @ 404-798-5109.

An Odd Wrinkle In Mortgage Rates

2009-10-06T07:17:00.002-04:00

Conventional wisdom suggests that the bigger the down payment you make on a mortgage, the better the mortgage rate you'll get. After all, a bigger down payment means more equity in the home upfront, which gives the bank more of a cushion between the value of their collateral and the amount of your loan. However, an interesting anomaly has made some interest rates higher for home buyers with larger down payments.
The reason is a function of Fannie Mae and Freddie Mac underwriting guidelines. The logic behind this particular aspect of the guidelines is fuzzy even by bureaucratic standards, but that's not the point. For now, this rule creates a scenario where you could pay a higher interest rate with a 20% down payment than with a 5% down payment.

The takeaway here is don't assume anything about mortgage rates. You not only have to compare different loan options but when doing so, you should be very specific about the mortgage terms you have in mind. You also may want to run a couple different scenarios by your lender - you might be surprised at which results in the best terms.

2009-09-23T21:09:00.001-04:00

The Housing Recovery and Targeted Government Stimulus

For anyone who argues the relevance of government stimulus on housing recovery, I submit the following.
One third of all home buyers in the past several months have taken advantage of the $8000 home buyer tax credit.

In addition to the tax credit, the housing market has arguably been juiced by government induced low mortgage rates. By buying up Fannie Mae and Freddie Mac mortgage-backed securities, the government has pushed the 30-year fixed to near record lows, recently at 5.02 percent and now around 5.08 percent (national average). That has pushed the refinance share of activity to 61 percent of all mortgage application volume, according to today's Mortgage Bankers Association weekly mortgage survey.

So it begs the question, what happens when the gravy train runs out?

The tax credit is set to expire Nov. 30th and the government is only set to keep buying Fannie and Freddie securities through the end of this year. Some experts say with all the government stimulus and deficit spending interest rates are sure to eventually rise. Only time will tell. One thing is for sure; It's a buyers market and the government is playing Santa Claus. So if there is anything on your wish list this year it may be time to act.