Mortgage Rate Volatility and the End of the Refinance Boom
Posted On: December 2nd, 2010 by James Posted In: FHA Mortgage • Financial Health • Government Actions • Mortgage Rates • Mortgages • Refinancing
Kind of feels like an epic hangover. The low low rate party that seemed like it would never end, has come to a decidedly abrupt change in direction. The sunlight is streaming into the windows, our clothes are all wrinkled, and there are spilled drinks and confetti everywhere. We’ve seen a handful of days in the bond market this month that have been extremely precipitous in speed and size of the deterioration. Since April of 2010, every time I have locked a loan it has been a bittersweet and slightly regrettable experience. Of course every loan must be locked at some point in the process, but it was a strange new frustration to see rates improve so steadily and relentlessly. We would lock and fund, and then within a day or so rates would just get better. I got in the habit of floating everyone for as long as possible to capture as much of the improvement as we could. Continue Reading – Mortgage Rate Volatility and the End of the Refinance Boom
First Time Home Buyer Programs in Portland, Oregon
Posted On: November 2nd, 2010 by James Posted In: FHA Mortgage • Financial Health • Government Actions • Local Interest • Mortgage Programs • Mortgages • Portland Real Estate
I was recently made aware of an OLD program called the “MCC” (Mortgage Credit Certificate). The MCC Program is a special benefit for the first time home buyers in the Portland, OR market. If you are a first time home buyer (defined by not having owned a home in the previous 3 tax years) AND you qualify for the income threshold* AND are purchasing a home in the city of Portland, OR the MCC program can provide a significant discount to the cost of your mortgage.
*INCOME REQUIREMENTS TO QUALIFY:
- Families of 1-2 must make less than $71,200/year
- Families of 3 or more must make less than $81,880/year
Here is how it works:
Continue Reading – First Time Home Buyer Programs in Portland, Oregon
The Difference Between New & Old FHA Rules
Posted On: September 27th, 2010 by James Posted In: FHA Mortgage • Government Actions • Mortgage Insurance • Mortgage Programs • Refinancing
Just recently for Portland Home Loan, I prepared an analysis for 4 purchase scenarios on the same property. It is a purchase of $300,000 here in Portland, OR, and the 4 options are:
- 5% down conforming
- 10% down conforming, and
- 2 FHA options
One FHA option is the current FHA cost structure, which has been in place since April of 2009. The other option is the new FHA cost structure, which becomes unavoidable after October 4th of 2010. FHA mortgage insurance has always been paid in two places on the loan:
- The monthly premium (which is discounted based on a large upfront lump sum), and
- The Upfront Mortgage insurance Premium (which is 2.25% of the loan amount and automatically added to, and financed into the life of the FHA mortgage.
The major change starting Oct 4th 2010 is a shift of the mortgage insurance cost away from that “financed upfront premium” and more towards the monthly premium.
In short — FHA loans are about to become a little bit more expensive.
I have prepared an interactive FHA loan report that shows the breakdown more clearly.
The new Upfront FHA mortgage insurance premium will be reduced from 2.25% to 1% of the loan amount. However, the monthly mortgage insurance cost will almost double — being increased from 0.55% annually to 0.90% annually. In my example above, this shows up as a jump in payment of $69 per month on the same $300k mortgage.
Ultimately, FHA loans are still going to be amazingly popular, and continue to make a lot of sense for borrowers as we move forward. They still have the smallest available down payment requirement (at 3.5%) as well as the most flexibility around borrower credit history.
But I do think that this change will make a loan with 5% down and private mortgage insurance more attractive to borrowers with top credit scores. Additionally, the FHA streamline refinance will become much less attractive for many borrowers. I am scouring my client list and the wider community for last minute FHA streamline refinances! Last call for the good stuff!
7 Critical Things to Avoid During the Loan Process
Posted On: September 15th, 2010 by James Posted In: FHA Mortgage • Financial Health • Mortgage Programs • Mortgage Rates • Mortgages • Refinancing
Our new credit environment is fast becoming one of extremely rigid guidelines. Your ability to obtain a mortgage is dependent on the financial scenario presented in the loan application. Think of this application as a snapshot of your existing circumstance. If there are any material changes to this picture, it can mean the difference between having a loan approved, and having it declined.
Certain things are verified and then re-verified at different points in the process, and here is a list of common bugaboo’s that uninformed mortgage borrowers can sometimes find themselves in.
A Special Message to My Friends and Clients
Posted On: August 30th, 2010 by James Posted In: FHA Mortgage • Financial Health • Mortgage Rates • Portland Real Estate • Refinancing
This is my plea to all of my clients past and present: Even if we closed a mortgage earlier this year, even if you think you are upside down on your homes equity, even if you think for some reason that this recent outbreak of mortgage refinance activity will not apply to you… you have to give me a ring, or send an email to james@pdxhomeloan.com. Many of you are invested in 401(k) plans, and mutual funds, and have been taking a beating from the plunge of the stock market since 2008. Well… think of the ridiculously low mortgage rates that are currently available as a way to BENEFIT from that same down market. (Because as stock markets shrink, money goes to bonds, and when bond yields get lower, so do long term mortgage rates!) Continue Reading – A Special Message to My Friends and Clients
