1527286697063

mortgage

Average mortgage rates rise again: 30-year at 4.6%

Long-term U.S. mortgage rates rose for the second straight week, continuing to dampen prospects for potential homebuyers.

Mortgage buyer Freddie Mac said Thursday the average rate on 30-year, fixed-rate mortgages jumped to 4.60 percent this week from 4.54 percent last week. Long-term loan rates have been running at their highest levels in seven years. The average benchmark 30-year rate reached a high this year of 4.66 percent on May 24. By contrast, the rate stood at 3.93 percent a year ago.

The average rate on 15-year, fixed-rate loans increased to 4.08 percent this week from 4.02 percent last week.

Higher mortgage rates combined with steadily rising home prices have restrained home sales this summer despite the robust economy and job market.

The Federal Reserve on Wednesday left its key interest rate unchanged but signaled further gradual rate hikes in the months ahead as long as the economy stays healthy.

As prices for U.S. Treasury bonds have dropped, the yield on the benchmark 10-year note rose to 3 percent this week for the first time since mid-June. The rate was at 2.99 percent Thursday morning. Higher yields on Treasurys tend to push interest rates higher on mortgages and other loans.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages declined to 0.4 point from 0.5 point last week. The fee on 15-year mortgages was unchanged at 0.4 point.

The average rate for five-year adjustable-rate mortgages rose to 3.93 percent from 3.87 percent last week. The fee dropped to 0.2 point from 0.4 point

source: AP

Is The Zero-Down Mortgage Loan Making A Comeback?

Buyers may soon be able to bring less to closing. They were blamed for precipitating the housing crisis years ago, but major lenders are giving no- and low-downpayment loans another shot.

Several major lenders are reportedly offering loans with just 1 percent down. Navy Federal, the nation's largest credit union, offers its members zero-down mortgages in amounts up to $1 million. NASA Federal Credit Union markets zero-down mortgages as well.

Quicken Loans, the third highest volume lender, offers 1 percent downpayment options, as does United Wholesale Mortgage. And the Department of Veterans Affairs has offered zero-down loans to eligible borrowers for many years.

Also, Movement Mortgage, a large national lender, has introduced a financing option that provides eligible first-time buyers with a non-repayable grant of up to 3 percent. As such, applicants can qualify for a 97 percent loan-to-value ratio conventional mortgage, which is basically zero from the buyers and 3 percent from Movement. For example, on a $300,000 home purchase, a borrower could invest zero personal funds with Movement providing $9,000 down. The loan also allows sellers to contribute toward the buyer's closing costs.

So far, the delinquency rates on these low- to zero-down payment loans have been minimal, according to lenders. Quicken Loans says its 1 percent down loans have a delinquency rate of less than one-quarter of 1 percent. United Wholesale Mortgages told The Washington Post that it has had zero delinquencies from the borrowers on its 1-percent down loan since debuting it last summer.

For Movement's new loan product, the lender will originate the loans and then sell them to Fannie Mae, which remains under federal conservatorship. Fannie officials released the following a statement:

"(We're) committed to working with our customers to increase affordable, sustainable lending to creditworthy borrowers. We continue to work with a number of lenders to launch (test programs) that require 97 percent loan-to-value ratios for all loans we acquire." They add that there "is no commitment beyond the pilots," which are "focused on reaching more low- to-moderate income borrowers through responsible yet creative solutions."

During the housing crisis, zero-down loans were among the biggest losses for lenders, investors and borrowers. However, housing experts say the latest versions are different from years ago. Applicants must now demonstrate an ability to repay what's owed. They also must have stellar credit histories and scores, and lenders require a lot more documentation to prove borrowers are in good standing.

Also, many of the programs are charging higher interest rates. For example, Movement's rate for its zero-down payment option in mid-June was 4.5 percent to 4.625 percent, compared with 4 percent for its standard fixed-rate mortgages.

Some critics say that the borrowers who really could benefit from such options aren't able to qualify for them. Paul Skeens, president of Colonial Mortgage Corp. in Waldorf, Md., told The Washington Post that "it seems like people without excellent credit scores and three months of [bank] reserves don't qualify."

Source: "No Down Payment? No Problem, Say Lenders Eager to Finance Home Purchases," The Washington Post (June 14, 2017)

If you have any additional questions or queries contact us at (954).944.2799 or emailinfo@DSALegalGroup.com

 

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact an attorney.

The Single Most Important Thing to Know About the New Florida Contract for Sale

Feb. 20, 2017 – The real estate industry changes, and when it does, the Florida Realtors/Florida Bar contract gets updated. The latest version of the Florida Realtors/FloridaBar Residential Contract and its As Is companion debuted April 4.

Some changes are housekeeping tasks. Some require a bit more study, and a future article will focus on those. For now, however, the new version of Paragraph "8(b) Financing" clause deserves your focus. You need to understand what will change.

Changes prompted by lending industry

There are several reasons for the financing change, in part because the lending industry itself has changed. The contract no longer mentions "Loan Commitment," for example, because the lending industry has largely dropped the term. It's being replaced by the term "Loan Approval," and the term "Loan Commitment Period" has become "Loan Approval Period."

In addition, the default time for "Loan Approval Period" will also change back to 30 days from 45 days. This change was made because loan approvals are no longer being slowed down by TRID (TILA/RESPA Integrated Disclosure Rule), the financial regulations that went into effect in the fall of 2015.

Finally, a requirement in the current version of the contract – "this contract is contingent upon buyer obtaining a written loan commitment,"– has been changed, and the "written" component has been deleted.

Change in philosophy regarding buyer's right to cancel

In general, many members feel parts of the current financing clause are confusing. In particular, Florida Realtors has received many questions about either party's right to cancel the contract up to seven days prior to closing when a buyer didn't timely obtain a loan. The new version of the contract scraps this concept in favor of a new approach. As always, the devil is in the details.

The new financing clause requires a buyer to promptly notify a seller, in writing, when a Loan Approval is obtained. If a buyer does not obtain Loan Approval within the Loan Approval Period, then the buyer may notify the seller – again, in writing – and elect to either terminate the contract or waive Loan Approval. However, the buyer no longer has a unilateral contractual right to terminate the contract for failure to obtain Loan Approval after the Loan Approval Period.

Further details: If a buyer doesn't give the seller any kind of written notification during the Loan Approval Period, new language specifies Loan Approval will be considered obtained. This results in the buyer's deposit being at risk if he fails to close unless the buyer's failure is caused by items set out in Paragraph 8 (b)(vii).

There is an exception to the contract going forward if a seller has received no written notification at all – either that a loan has been obtained or the buyer cannot get one. The seller may unilaterally cancel the contract by giving buyer written notice within a three-day period after the buyer's Loan Approval Period has expired. But if the seller does nothing during the three-day period following the Loan Commitment Period, the seller has no further unilateral opportunity to terminate the contract based on the buyer's failure to obtain Loan Approval or failure to provide the seller a written notice.

Other highlights of 8(b) Financing clause changes

  1. If the lender requires that a buyer sell an existing property, this will not be considered Loan Approval.
  2. When applying for a loan, what is a "diligent effort" on the buyer's part? New language now specifies this requires the buyer to "timely" provide documents, information, payment of fees and charges per lender requirements.
  3. An additional clause authorizes the closing agent to share the settlement statement and Closing Disclosure with the seller and real estate brokers. Note, however, that this doesn't obligate the closing agent to share the documents and it might violate the lender's closing instructions.
  4. What if the buyer finds that he can't secure Loan Approval before the Loan Approval Period expires? This caused some confusion in the past, but no longer. A buyer who has used due diligence but is unable to obtain Loan Approval can notify the seller in writing at any time before the Loan Approval Period ends.
  5. One clause, 8(b)(vii), about returning deposits when a deal doesn't close because of a lender's "financial failure" was removed from the new version.

by Marcia Tabak © 2017 Florida Realtors

US 30-Year Mortgage Rate Falls to 4.1%

WASHINGTON (AP) – Jan. 12, 2017 – Long-term US mortgage rates fell this week, the second week of declines after snapping a nine-week run of increases.

Mortgage buyer Freddie Mac said Thursday the rate on 30-year fixed-rate loans eased to an average 4.12 percent from 4.20 percent last week. That was still sharply higher than a 30-year rate that averaged 3.65 percent for all of 2016, the lowest level recorded from records going back to 1971. A year ago, the benchmark rate stood at 3.92 percent.

The average for a 15-year mortgage declined to 3.37 percent from 3.44 percent last week.

Mortgage rates surged in the weeks since the election of Donald Trump in early November. Investors in Treasury bonds bid yield rates higher because they believe the president-elect's plans for tax cuts and higher spending on roads, bridges and airports will drive up economic growth and inflation.

That would depress prices of long-term Treasury bonds because inflation would erode their value over time, a prospect that caused investors to demand higher yields.

In the latest week, a report from the government on employment in December pushed the price of the 10-year Treasury bond higher, dampening its yield. The Labor Department report issued last Friday showed that U.S. employers added 156,000 jobs last month, capping a year of slower but solid hiring.

Though the unemployment rate rose to 4.7 percent from a nine-year low of 4.6 percent, it did so for an encouraging reason: More people began looking for work. Because not all of them found jobs immediately, more people were counted as unemployed in December.

Bond yields move opposite to prices and influence long-term mortgage rates. The yield on the 10-year Treasury bond fell to 2.37 percent Wednesday from 2.44 percent a week earlier. That compares with 1.87 percent on Election Day Nov. 8. The yield declined further to 2.33 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged this week at 0.5 point. The fee on 15-year loans also remained at 0.5 point.

Rates on adjustable five-year loans fell to 3.23 percent from 3.33 percent. The fee increased to 0.5 point from 0.4 point.

Owners may qualify for mortgage principal reduction

 

MIAMI– The Federal Housing Finance Agency (FHFA) says lenders will be contacting more than 1,400 South Florida homeowners at risk of foreclosure with offers to reduce their unpaid mortgage balances.

The one-time modification would lower their monthly payments in addition to the total amount owed on the mortgages, FHFA said.

To qualify, owners must have a mortgage backed by Fannie Mae or Freddie Mac; live in the home; be 90 days or more delinquent as of March 1; have an outstanding unpaid mortgage balance of $250,000 or less as of March 1; and owe more than 115 percent of what the house is worth.

Statewide, 6,260 homeowners are potentially eligible for the principal reduction program, according to FHFA. Nationwide, 30,761 could qualify, the agency said.

During the worst of the housing crisis, mortgage principal reduction was considered a last resort among lenders because so many people across the country owed more than their homes were worth, said Guy Cecala, publisher of the Inside Mortgage Finance newsletter in Bethesda, Md.

What's more, there was concern that homeowners would intentionally default on mortgages to qualify for a principal reduction, and lenders did not want to reward those people, Cecala said.

Now that the housing crisis is over, reducing mortgage balances for struggling homeowners won't result in big dollar losses for the government, according to Cecala.

"The numbers are quite small," he said. "The inventory of distressed properties has shrunk dramatically. Dealing with it now is much more manageable."

To accept the offer, homeowners have to make three on-time payments and sign an acceptance letter, according to FHFA.

The agency encourages homeowners who think they qualify but have not received an offer in the mail to contact their individual lenders directly.

Even if homeowners aren't eligible for principal reduction, they may qualify for another program, FHFA said.

"The sooner you let them know you're having difficulty, the greater the number of options your servicer will have at their disposal to help," the agency said in a blog post.

FHA Lowers Borrowers’ Mortgage Insurance Premiums

WASHINGTON – Jan. 9, 2017 – Lower costs are coming for homebuyers seeking a Federal Housing Administration-insured (FHA) mortgage.

FHA announced that it's cutting annual premiums for mortgage insurance from 0.85 percent to 0.60 percent, a move the National Association of Realtors® (NAR) says breathes new life into the program. With FHA loans, buyers pay mortgage insurance to protect FHA's funding in exchange for downpayments as low as 3 percent.

"FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders," says NAR President William E. Brown. "The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track."

Following the Great Recession, FHA increased its monthly mortgage insurance premium from 55 basis points to 90 basis points; then, in April 2013, it increased them again due to post-recession concerns over credit risk and the need to strengthen FHA's Mutual Mortgage Insurance Fund (MMIF). At the time, however, NAR research found that the overall 80 basis point increase nixed 1.45 million to 1.65 million renters out of the market.

Since then, the MMIF has shown continued good health, including achieving a much-watched capital reserve ratio over 2 percent for two years in a row. In light of that strength, NAR applauded FHA's move in January 2015 to reduce premiums to 85 basis points, and since then has advocated for a further reduction.

FHA mortgages are important for low- and moderate-income buyers in particular because a lower downpayment is required than with many conventional mortgage options. Buyers with lower credit scores may find more favorable treatment with an FHA loan than a conventional product as well.

"This is a question of simple math," Brown says. "Every time we cut the cost of mortgage insurance, it means more borrowers meet the debt-to-income ratio required to purchase a home. It follows that dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA. That puts more money in the fund to protect taxpayers – and it puts more families in homes so they can live out the American dream."

While Brown thanked the FHA and Department of Housing and Urban Development (HUD) for the premium cut, he suggested one other change to "better achieve FHA's mission" of serving creditworthy families: Eliminate FHA's "life of loan" mortgage insurance requirement, which forces borrowers to maintain mortgage insurance on an FHA-insured property regardless of their equity position. Borrowers with traditional mortgage insurance can typically extinguish their mortgage insurance once they reach 20 percent equity in the property.

"HUD and FHA leaders are to be commended for recognizing the need we have before us," Brown said. "Our work continues, but we're encouraged by today's announcement."

© 2017 Florida Realtors  

How to Get Your Down Payment and Closing Costs Paid For You

Buyers can finance their Down Payment and Closing Costs with Community Second Mortgages - Community second mortgages allow eligible homebuyers to finance their down payments, closing costs and even home improvements.

This type of assistance may be offered by states, counties, local housing agencies, nonprofit organizations or Employer Assisted Mortgage (EAM) programs.

Subject to qualification, Fannie Mae and Freddie Mac allow buyers to finance over 100 percent of your home's purchase price.  They do this by combining the first mortgages with a second mortgage (this loan arrangement will work with HomeReady and Home Possible programs).

The Fannie Mae program is called Community Seconds, and the Freddie Mac option is called Affordable Seconds.

Down Payment Assistance and Closing Costs

Community second mortgages allow eligible homebuyers to buy houses with no out-of-pocket down payment or closing costs.

Repayment may be structured in several ways:

  • they may make monthly fixed monthly payments until the loan is repaid.
  • they may be allowed to defer (put off) repayment for some period. Then, you make fixed monthly payments until the loan is repaid.
  • they may not have to make payments at all. The loan is only repaid if you sell the property.
  • they may not have to repay the loan if you remain in your home for a specified number of years.

If repayment is deferred for five years or more, the second mortgage payment is not counted when the lender calculates the debt-to-income ratio (DTI).

Who Is Eligible For Community Second Mortgages?

Community second mortgages are offered by many sources.

According to the OCC (United States Office of the Comptroller of the Currency), most EAM programs have some income-eligibility requirements. With regard to income, generally, no more than 120 percent of the Area Median Income (AMI).  As it concerns credit scores, no lower than a 640.  Further, buyers must qualify in the usual manner as it relates to job stability, income sources etc.

The assistance may be limited to first-time buyers, and require some form of homebuyer education or counseling.

Every loan has its own requirements, so once the down payment and closing cost programs have been located in the buyers’ area, attention must be paid to the specific guidelines.

Finding Your Program

These second mortgage programs requirements can vary from county to county of state to state.

An online search for "community second mortgage by city, county or state will bring up programs offered by local housing departments.

HUD’s State pages may also have some resources.  Select State, then "Homeownership Assistance," and a list of links and contact information for many programs will be generated.

Mortgage rates for home loans with Community Seconds or Affordable Seconds are still very low. Combining the two mortgages can get a buyer into a home they can afford with little or nothing out-of-pocket.  These programs take time, so preparation and an early start is the key.  ** Funds are subject to availability.

This year, let’s be creative and continue to help our buyers get the best of what’s available to them.