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We get many emails from consumers seeking guidance in how to qualify for a handful of high risk mortgages that seem to have obstacles around them. I list 3 common questions below for mortgage loans that appear to be in high demand this year. The only problem is that all three of the home loans is not regarded highly with most conventional prime lenders in 2013.

  1. How do I get approved with bad credit mortgage lenders?  We see thousands of borrowers that need a mortgage but happen to have credit scores below the threshold that today’s conventional lenders are seeking. With that being said, many people with low fico scores are migrating towards government loans, because they have more flexible guidelines with respect to credit. FHA still accepts borrowers with credit scores as low as 500 and VA still has no minimum credit scores in their guidelines for buying or refinancing. That doesn’t mean that government lenders are looking to approve people with poor credit, but underwriters can and do make exceptions when borrowers have compensating factors.
  2. Can I get a home loan with no down payment?  Yes 100% home loans that require zero down-payment are available to people who meet the criteria of USDA and VA mortgage programs. The USDA is a loan reserved primarily for people that are buying or refinancing in a rural region of the country. The VA mortgage is a program designed for military borrowers and retired veterans. Both loan programs require nothing down and the interest rates are competitive.
  3. Do stated Income mortgage loans exist? Yes and No. Hard money and subprime lenders still offer “stated income loans.” In wake of the recent housing crisis, conventional and government lenders state that they do not allow stated or no income documentation loans. They require full documentation with their purchase and refinance programs. However, the “streamline” program which is endorsed by FHA and VA does not require pay-stubs, W2’s or verification of income from the borrower’s employer. They do in fact do a verification of employment in an effort to verify that the borrower still has a job.  So in a sense, the government programs still allow stated income mortgages to borrowers that already have an existing mortgage with either FHA or VA. No cash out is allowed with the streamline either.
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Needless to say my phone has been ringing off the hook from friends and past clients wondering what to do as home mortgage rates begin to climb. Over the last few years, American consumers have grown accustomed to interest rates breaking records with the lowest interest of a generation. Unfortunately, the reality is the at some point mortgage rates won’t recover and the trend of rising rates will be set in motion, if it hasn’t already.

What Causes Mortgage Rates to Fall?

Bond Market: When the bond market gets battered in most cases home loan rates will rise. Specifically, when the 10-year bond worsens usually the pricing on the 30-year mortgage rates worsens as well. Home loan refinancing becomes more active when the bond market improves.

Economy: Typically bad news in the U.S economy is good news for the mortgage market. When the unemployment ticks up, rates often tick down. When the GDP comes in lower than expected, rates on home loans may decline as well.

Federal Reserve: When the Fed commits to increasing the purchasing of mortgage bonds then rates tend to improve. When the Federal Reserve instructs Congress to bail out Fannie Mae and Freddie Mac then the mortgage market rallies favorably. When the U.S government pushes quantitative easing, ie. QE3, the bond market reacts and home loan rates drop to the benefits of consumers.

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The Mortgage Bankers Association reported last week that applications for home loans surged the first week of January by almost 50%. The weekly mortgage rate survey of MBA indicated that consumers were done with the Holidays and ready to take advantage of record low rates. The only problem for many of these borrowers was that interest rates on refinance and purchase mortgages had inched up from the previous weeks.

Many Borrowers Are Scrambling to Lock their Mortgage Rate

Purchase loan inquiries have accounted for nearly 20% of total applications. The report also revealed that HARP loans may be driving 25% of total volume of home refinancing applications.  Nationwide mortgage lenders have confirmed that rates have been higher and pricing had worsened. Most loan officers are locking loans and not taking chances on the market recovering.

The rates on 30-year mortgages averaged 3.4% paying a little more than half a percent for origination and the rates on the 15-year averaged 2.625% paying .7% for lending costs. We noticed a spike in inquiries for people looking to refinance with one of the hybrid ARMs like the 5/1 and 7/1 loans because they provided affordability and security for 5 or 7 years. We anticipate rates to stay steady for the next few weeks. If the debt ceiling deal goes sour than we may see another dip in rates but do not count on it.

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The poor economic news has contributed to falling interest rates on home mortgages once again. In most cases, when the unemployment rate rises, consumers benefit from improved pricing on purchase loans and refinancing. Several lenders in San Diego, Los Angeles and Orange County have indicated the mortgage rates for refinancing have decreased in the last few days. As reported by the Mortgage Bankers Association on Monday, home loan rates inched a bit up last week and loan application requests had fallen.

Certainly Hurricane Sandy has slowed down the volume as millions of borrowers on the East Coast have been without power. The next few weeks could prove to be very difficult for residents in New York, New Jersey and Pennsylvania. Fannie Mae (FNMA) and Freddie Mac (FMMC) announced expanded help with their disaster relief programs available for distressed homeowners that may have a mortgage owned by one of these government sponsored enterprises. The Home Affordable Refinance Program saw a substantial rise in applications from underwater homeowners last quarter with an 11% increase compared to the previous quarter. There are still millions of homeowners across the country who have been burdened with underwater mortgages that have prevented them from refinancing into a loan with record low rates. HARP refinance rates are available today at 3.5% with no points. The “No fee refinance” has become a popular choice with homeowners this year.

  • No Equity Refinancing Options
  • No Closing Cost Mortgage Programs
  • Low Down-Payments for First Time Home Buyers
  • Record Low Rates for VA, FHA and HARP

According to the Department of Housing and Urban Development applications for FHA loan programs were up last quarter almost 6%. Refinance application led the way for FHA, but HUD reported another surge in first time home buyer loans being submitted into process. The Federal Housing Administration indicated that the increased application volumes was mostly in response to low FHA rates and low down-payment requirements that have help renters become homeowners without breaking their bank.

Today’s rates on a fixed 30-year FHA mortgage were available at 3.25% (APR 3.25%) without any lender fees for loans up to $417,000. With home prices rising in regions like Arizona, California, Nevada, North Carolina and Virginia, many lenders are excited about the new lending opportunities in the year to come.

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Just when you though mortgage rates had hit the “rock-bottom”, the Federal Reserve makes a move that caused interest rates to fall to a new record low. In an effort to stimulate the economy and jump-start the ailing housing markets, the Fed announced a new plan centered on buying mortgage securities.

The Outlook for Record Low Mortgage Rates Has Been Extended by the Fed

St. Louis Federal Reserve President James Bullard down-played the effectiveness of the first two rounds in an interview recently. The Fed hopes that keeping pressure on short and long-term rates will have a positive effect on the economy. It’s no secret that lower interest rates could motivate businesses investment in the economy if borrowing is cheap and easy.

According to the SF Gate, the mortgage bond yields fell to a new ridiculous low. Mortgage News Daily reported better pricing and lower rates for buying and home mortgage refinancing. The gap with an average of 5 and 10-year Treasury rates dipped 16 basis points to 98 basis points which is the lowest recorded since 1992.

According to the latest Freddie Mac survey, the average interest rate for a thirty-year mortgage was 3.55% but the news about the Federal Reserve extending another stimulus with QE3 caused rates to tumble today.

The fifteen-year rates were lower by one basis point at 2.85%. The Freddie Mac report also revealed that average borrowers paid on 0.6 of a point for home mortgages on the 15 and 30-year terms. The 10-year rates and hybrid ARMs remained the same as the previous week but the emerging news from the Federal Reserve certainly could force rates lower in the coming week. We also anticipate that conforming and jumbo pricing may improve this week which cause another surge in refinance applications.

Check the today’s rates now:

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Jan
04

5 Tips for Home Loan Financing

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If you are thinking of financing a new home, 2012 may be the year to pull the trigger. There are many home loan factors to consider when financing a house. Nationwide understands the obstacles that come with financing for first time home buyers and we offer the best home loans available in the marketplace today.  Here are five tips to maximize your home loan financing experience in the New Year.

1. Low Mortgage Rates Ensure Affordability

It’s no secret that home loan rates have been hovering at the lowest levels of all time.  Most economists have forecasted the trend for low interest rates to continue in 2012 mostly because the Federal Reserve has made a strong commitment to back mortgages aggressively until the housing market rebounds. Many loan companies believe that interest rates will remain at record lows to make home buying more attractive. The other driving factor for low mortgage rates has been a sluggish economy. Typically the interest rates stay low when the U.S.economy struggles.

2. Home Prices Have Fallen

In many areas across the country, house values have reverted back to 2002 and 2003 levels. This presents a significant opportunity for first time home buyers to get into a real estate investment at a bargain price. Most realtors have predicted that 2012 will continue to see some great home buying opportunities because foreclosures, short sales and timid buyers have driven the home prices to an extremely attractive levelin most regions of the United States.

Fox News recommended buying a home because of the opportunities that our economic uncertainty have dictated. The reality is that many potential home buyers have been waiting in the wings for the dust to settle with the housing crisis. According to the Mortgage Bankers Association, purchase loan applications declined to the lowest point in 15 years back in August. The lack of home loan applications signals the uncertainty of the housing market but that doesn’t mean that it’s not a great time to purchase a home. If you have the ability to make the proposed mortgage payment without it breaking the bank then it makes sense.  According to B of A loan analysts, Jeff Moran, “Many first time home buyers actually reduce their housing expenses because house prices and interest rates are so low.”

3. Tax Deductibility from Mortgage Interest

One of the driving factors for many Americans to become homeowners has been to reap the benefits of deducting the interest on your home loan payment each month. Most homeowners save thousaands of dollars a year by deducting the mortgage interest for their primary residence.

4. Buying a Home with a Small Down-Payment

Many first time home buyers are attracted to FHA home loans because they only require a 3.5% down-payment.  This allows new home buyers to save their money for important things like moving, buying furniture and saving for a “rainy day.”

5. Flexible Home Loan Guidelines for New Home Buyers

John Giangardella, loan officer at VIP Mortgage in Southern California, said, “FHA is a great asset for the path to home ownership in America.” According to a recent Freddie Mac survey, “FHA interest rates have fallen below 4% on fixed terms for 30-years. There are mortgage insurance premiums that are charged to the borrower but it usually pencils out to make sense.  Giangardella continued, “Low FHA rates and flexible guidelines also help new home buyers get there foot in door.” FHA allows low credit scores and that makes them one of the last bad credit mortgage options this year.”

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Buying a house can be a wonderful experience if you are prepared with a pre-approved home loan and have hired a good local realtor that understand the market and your needs. Obviously signing a hundred legal documents that commit you to a thirty-year mortgage and a house that requires 360 monthly payments will make you think. Home ownership certainly brings new opportunities and tax deductions that are appealing financial, but you want to make sure you are ready before making this major commitment.

With that being said, most people want to own a home in their lifetime so I am asking you this question – – – What are you waiting for? If you have the financial means to come up with the required down-payment and demonstrate enough saving for 3-6 months of housing expenses, then you should pull the trigger on buying a home.  Here’s why: Home prices have dropped drastically to 2003 levels and home mortgage rates have declined to an all-time low. Therefore it is unlikely that you will ever see home financing loans more affordable in our lifetime.


Get Organized and Layout a Strategy to Finance a Home in 2012

The reality is that as soon as banks can recover from the foreclosure crisis and property values shift towards positive territory, interest rates will climb significantly. According to a Mortgage Bankers Association spokesman, “Having the ability to get approved for a fixed rate 30-year mortgage below 4% with only a 3.5% down-payment is a beautiful thing.” This type of low down-payment home loans will disappear and likely not return in our lifetime.  Therefore, the sense of urgency to get approved for home purchase loan today is very real and if we recommend striking while the iron is hot. Nobody knows when interest rates will start to climb, but when you consider history it is very possible that rates double in three or four years.

Choose from the Following Home Financing Programs:

  • Loans for First Time Home Buyers
  • Mortgage Bad Credit Insured by the FHA
  • No Credit Home Loans
  • Conventional Home Mortgages
  • Military Financing with a VA Loan
  • USDA Mortgage up 100% LTV
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