Here are the 6 things you need to know about these changes:

1. The Up Front premium is now 1.0 % for all standard FHA programs

2. The Annual premium is now .90% for LTVs GREATER than 95% on 30 year loans

3. The Annual premium is now .85% for LTVs EQUAL to or LESS than 95% on 30 year loans

4. The Annual premium is now .25% for LTVs GREATER than 90% on 15 year loans

5. The Annual premium is now .00% for LTVs EQUAL to or LESS than 90% on 15 year loans

6. These premiums apply to purchases, regular refinances and streamlines

Please note that this new law also gives FHA the authority to raise the Annual premium at will up to 1.5% for LTVs at or below 95% and 1.55% for LTVs more than 95%.

The result will be HIGHER monthly mortgage payments on new loans, although Borrowers will maintain a bit more equity. Just what we needed, right? HIGHER mortgage payments!!!

The question I ask myself now is – “why doesn’t every homeowner with an FHA loan that paid Up-Front Mortgage Insurance of 2.25% consider REFINANCING not only a lower rate, but to receive a full refund of the unused Up-Front MIP they paid?” Didn’t anyone in Washington think of the Negative effect this will have on the FHA coffers???

Call Todd Abelson & Tyler Ford at Sunstreet Mortgage in Tucson, AZ at (520) 331-LEND for all your mortgage needs!

According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier.  It’s the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.

That said, homeowners and home buyers in Tucson would do well to temper Case-Shiller enthusiasm. The June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.

• Existing Home Sales are down 27 percent
• New Home Sales are down 12 percent
• Homebuilder confidence is down

Stories like these highlight a key weakness of the Case-Shiller Index — it’s out of date as soon as it’s published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don’t buy homes in the “60 days ago” real estate market, after all.

June is ancient real estate history to buyers and sellers in Tucson.

However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street’s expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.

Mortgage rates are low right now but pinning them down this week could be a challenge. As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause mortgage rates in Arizona to get jumpy.

As mortgage rates change, so does the long-term cost of owning a home. Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between “vacation days” and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

1. Conforming mortgage rates are based on the price of mortgage-backed bonds
2. Mortgage-backed bonds can’t trade without a buyer and a seller at a specific price

So, as the week progresses and more traders leave for their respective “extended” 3-day weekends, there’s fewer buyers and sellers left on Wall Street to connect for a trade.  As a result, mortgage bond prices move across larger gaps than on a “normal” day which, in turn, translates into faster, larger changes in rates.

This phenomenon can be exaggerated during periods of economic uncertainty — like what we’re in now — and, furthermore, there’s a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week. The presence of Labor Day just piles on.

Mortgage rates may rise this week, or they may fall.  Either way, if you have a chance to lock something favorable and within your budget, consider doing it.  Rates are at all-time lows and likely won’t last.

Give the Tucson Mortgage Team a call today at 520-331-LEND (5363) to lock in a great rate.

Meanwhile, the same type of news that drove rates lower Monday through Thursday also contributed to rates rising Friday — revised projections for the U.S. economy.

Early in the week, “bad” news piled on which, in turn, lowered expectations for the economy and pushed mortgage rates down:

• Existing Home Sales dropped 27% from June
• Single-Family New Home Sales dropped 12% from June
• Purchases of “big ticket” items plunged

Then, on Friday, two events revised the market’s expectations back higher:

• Q2 GDP was revised lower, but not as low as had been expected
• Fed Chairman Ben Bernanke said the economy will keep expanding through the end of the year and into 2011

When Chairman Bernanke talks, markets listen. His comments about the U.S. economy helped fuel that late-Friday surge in mortgage rates last week.

This week, the momentum could continue — depending on the data.

There’s a lot for markets to digest this week including key inflation figures from the government; home value data from Case-Shiller; Fed Minutes from the Federal Reserve; and, the always-important jobs report due Friday.

Since April, mortgage rates have been on a downward trajectory and that may continue this week.  Or, it may not. If you own a home and haven’t talked to your loan officer about a refinance, now is as good a time as any — rates are at historic lows and could rebound at any time.

Last June, mortgage rates rose 1.125% in 10 days. Under the right circumstances, it could happen again.