Currently browsing September 2008 monthly archives.

$7,500 First Time Homebuyer Tax Credit

On September 25, 2008, in Mortgage Educational Information, Mortgage Programs & News, by Tyler Ford | View Comments

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President Bush signed the The Housing Stimulus Bill (H.R. 3221), which has a key provision for qualifying homebuyers: a $7,500 tax credit.  The $7,500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

The National Association of Realtors has put together two good documents summarizing what this might mean for you:

Questions and Answers

What is the First-Time Home Buyer Tax Credit?

The Tax Credit is part of the Housing and Economic Recovery Act of 2008, signed into law on July 30, 2008.

The intent of the tax credit is two fold:

  • To provide a financial resource for home buyers in the year that they purchase a home
  • To provide a stimulas to the housing market and the economy, helping to stabalize home prices and increase home sales.

First Time Home Buyers… Give Tyler Ford and Todd Abelson of Sunstreet Mortgage, right her in Tucson, AZ, a call so you can take advantage of this $7,500 tax credit.

PS: First Time Home Buyers receive the tax credit with any loan program: FHA loans, Conventional loans, VA loans, etc.

For more info visit:  www.GetHomeGetCash.com

CALL US @ 520-331-LEND (5363)

FHA Makes Homeownership More Affordable For Tucson — But Not Until October 1, 2008

On September 24, 2008, in Mortgage Programs & News, by Tyler Ford | View Comments

The FHA established a moratorium on new loan fees, effective October 1, 2008Earlier this year — and for the first time in its history — the FHA changed its funding fees and mortgage insurance structure.

Effective October 1, 2008, it’s repealing those changes.

Partly to keep FHA home loans affordable, and partly to comply with new laws, the FHA is rolling back its up-front fees and ongoing mortgage insurance requirements and replacing them with new ones.

The new up-front FHA fees are as follows:

  • 1.750% : All purchase and “standard” refinances
  • 1.500% : All “streamline” refinances
  • 3.000% : All FHASecure programs for delinquent mortgagors

These fees are paid as a one-time cost at closing, and are calculated by multiplying the loan size by the fee.  A $200,000 FHA purchase, for example, now carries a $3,500 one-time charge.

Ongoing mortgage insurance requirements have changed, too.  These changes are based on the loan type and the amount of equity in the home.

  • 15-year fixed with 90% borrowed or less: 0.000% annually
  • 15-year fixed with more than 90% borrowed: 0.250% annually
  • 30-year fixed with 95% borrowed or less: 0.500% annually
  • 30-year fixed with more than 95% borrowed: 0.550% annually

Mortgage insurance premiums are calculated by multiplying the initial loan size by the annual premium.  The same $200,000 FHA purchase outlined above, using a 95% 30-year fixed mortgage, would require a monthly mortgage payment add-on of $83.33 until the loan is paid in full.

FHA-insured mortgages have grown in popularity this year because, while the guidelines of other mortgage products have tightened, FHA guidelines have remained relatively loose.  FHA allows 3.500 percent downpayments on purchases, for example, and allows “cash out” refinances to 95 percent.

Fannie Mae and Freddie Mac do not.

What Happens To Mortgage Rates When Crude Oil Adds $25 In One Day

On September 23, 2008, in Mortgage Educational Information, by Tyler Ford | View Comments

September 22, 2008, Crude oil prices jumped $25 in one day before settling up 16 percentCrude oil prices jumped $25 at one point Monday, ending the day up by 16 percent.

This is an unwelcome development for home buyers because the same market forces that pushed up oil prices had a similar impact on mortgage rates.

It all comes down to the U.S. dollar.

Because both crude oil and mortgage-backed bonds are denominated in dollars, the fate of both instruments has been closely tied to the greenback lately.

With respect to the mortgage market, when the dollar has been strengthening, rates have tended to fall.  And, when the dollar has been weakening, mortgage rates have tended to rise.

Yesterday, the U.S. dollar had its worst one-day performance against the Euro in history so it only follows that conforming mortgage rates spiked.  Across the board, they added about a quarter-percent.

Add this quarter percent to the run-up from last week and conforming mortgage rates are now close to 0.750% higher than where they were last Monday, further evidence that how quickly the market can move.

(Image courtesy: GasBuddy.com)

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Looking Back And Looking Ahead : September 22, 2008

On September 22, 2008, in Market News, by Tyler Ford | View Comments

Federal intervention in September 2008 helped drive mortgage rates higherIn a historic week for American Finance, mortgage rates rose considerably, reversing a 3-week trend through which rates had fallen. 

The U.S. Treasury is the biggest reason why most conforming mortgage rates increased by a half-percent.

Hank Paulson’s government group helped to restore investor confidence that had steadily eroded from concern to fear since July 2007, before succumbing to outright panic last week.

Wall Street nerves were so frayed that at one point Wednesday, yields on government bonds were actually in the negative; investors were paying the U.S. government to hold and protect their money in exchange for a guaranteed loss of investment.

After the Treasury’s interventions, however, a sense of normalcy returned to Wall Street.  Money poured back into stocks, siphoned from the bond market and that pushed rates higher.

This week, it’s anybody’s guess what will happen. 

From a data perspective, it’s light — there’s Existing Home Sales, New Home Sales, and not much else.  From a policy perspective, however, the week is heavy: 

  • Congress is expected to authorize “hundreds of billions” for market support
  • Ben Bernanke and Hank Paulson will testify before the Senate Banking Committee
  • 7 members of the Fed are making public appearances

With so much rhetoric, it’s difficult to predict how mortgage rates will perform this week.  The stock market may be the best predictor of rates.

If stocks are up, risk-taking is back in vogue and the bond market should suffer, pushing mortgage rates higher.  By contrast, if traders stay clear of stocks in search of safer investments, mortgage rates should fall.

Brought to you by Tyler Ford and Todd Abelson of Sunstreet Mortgage: www.TucsonMortgages.com

(Image courtesy: Wall Street Journal)

How To Lower Your Mortgage Rate Every Time The Market Dips

On September 19, 2008, in Interest Rates, by Tyler Ford | View Comments

Getting low mortgage rates is matter of preparationGetting a great, low mortgage rate is often a combination of luck and preparation. 

Consider what happened in conforming mortgages this week:

  • Monday, mortgage rates plunged to their lowest levels of the year
  • Tuesday, they bounced back in full
  • Wednesday, they clicked higher by a eighth-percent
  • Thursday, they clicked higher by another eighth-percent

And so, here we on are Friday, four days after the best rates of the year, and the mortgage market barely resembles itself.  Despite what the papers tell you, mortgage rates are not low anymore.

That’s the luck element — you can’t plan for rates moving up and down.

But, if you missed Monday’s plunge, and don’t want to miss the next one, all you have to do is get prepared.  Then, you’re waiting for luck when it happens.

There are 4 basic steps to prepare for low rates and the key is to follow them before rates plunge, not during.  That way, you’re ready to pounce on low rates at the moment they present themselves.

Call you loan officer to give a mortgage applicationThe first step is to contact your loan officer. 

If you don’t have a loan officer, or your loan officer is no longer in the business, ask a friend for a referral.  Do not call the 800-number on your mortgage statement — you’ll almost always get a better “offer” from a live person than from a call center representative. 

Next, give your loan officer a complete mortgage application, including a “credit pull”.  Be honest and accurate and don’t worry about the credit check harming your score — the bureaus protect it for a period of 30 days.

Then, ask your loan officer what supporting documentation will be required to approve your eventual home loan.  Whatever it is, gather it and send it in — either by fax or email.

And lastly, be ready to act when your loan officer calls with the good news. If rates have dipped to lower-than-normal levels, it likely won’t last long.

This preparation process is very similar to what home buyers do before making an offer on a home.  Getting ready for a refinance is like getting pre-approved, but instead of waiting to pick out a home, it’s waiting to pick out a rate.  

So, to summarize:

  1. Contact your loan officer
  2. Give a complete application
  3. Gather and submit supporting documentation
  4. Be ready to act

Mortgage rates don’t plunge often, but when they do, it’s usually short-lived.  If you’re prepared for when it happens, you can lock in the best mortgage rate available at the best possible time.

It will be your lucky day and you will have been ready for it.

Give Tyler Ford and Todd Abelson of Sunstreet Mortgage a call to lower your rate.

Call 331-LEND or visit our website: www.tucsonmortgages.com

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