The Mortgage Porter

Mortgage Rate Market Movers for the Week of February 13, 2012

We have plenty of economic indicators on the plate for this week not to mention to continued Euro-story. Remember, positive information, when the stock market is doing well or data that indicates positive inflation tends to cause mortgage rates to rise. Mortgage rates are based on bonds (mortgage backed securities) and investors tend to trade the safety of bonds for better return found with stocks when possible.

There are no economic indicators scheduled for today and the DOW is currently up 34 at 12,836 as I publish this post on 7:45 am PST on February 13, 2012.

Here's are a few reports that are scheduled for this week:

Tuesday, February 14, 2012: Retail Sales.  HAPPY VALENTINES DAY!

Wednesday, February 15, 2012: Empire State Index, Industrial Production, Capacity Utilization and FOMC Minutes

Thursday, February 16, 2012: Building Permits, Housing Starts, Producer Price Index (PPI), Initial Jobless Claims and Philadelphia Fed Index

Friday, February 17, 2012:  Consumer Price Index (CPI)

Today's my first day back from a couple days off at Mortgage Tech Summit in Scottsdale so I won't have time to update this post with live rate quotes. I will share live rate quotes on Twitter AND I'm happy to provide YOU with a no obligation mortgage rate quote for your home located anywhere in Washington state.  For your personal mortgage rate quote, click here.

Mortgage Update for the first week of 2012

Even though this week is another short one from yesterday's holiday, it's packed full of economic indicators that may impact mortgage rates:

Tuesday, January 3: ISM Index and FOMC Minutes released.  

Thursday, January 5: Initial Jobless Claims and ISM Services Index

Friday, January 6: THE JOBS REPORT 

Positive economic data tends to cause mortgage rates to trend higher.  This is because investors will pull money from the safety of bonds (like mortgage backed securities) for a possibly better return with stocks. The reverse is also true.  Also remember that mortgage rates can and do change often, sometimes several times a day.

As I write this post, the ISM Index has already been released this morning revealing stronger manufacturing data than anticipated. The DOW is up around 240 and MBS (mortgage backed securities) are "in the red".

For your personal mortgage rate quote for your home located in greater Seattle, Bellevue, Walla Walla or anywhere in Washington State, please contact me.

Happy New Year! 

Risk and Reward: the Trade-offs of Buying a Distressed Home

Many home buyers are interested in taking advantage of the lower prices offered on distressed homes.  Distressed homes are those that are short sales or foreclosures (REO) and in the Seattle area, the sales price of distressed homes were discounted about 37.4% in August over a "non-distressed" home.

Something to keep in mind before you buy a "discounted" distressed home is that these transactions are not as "easy" as a traditional, non-distressed sale.  For starters, you're most likely dealing with a bank (and/or one of their representatives) as one of the selling parties. As much as you would think they really want to sell the property to get it off their books, they can leave you wondering where their heads are at throughout the transaction.  

This may be especially true with a short-sale if there are two mortgages on the property.  Sometimes the second mortgage/lien holder will take their sweet time approving the transaction and just prior to closing, only to demand that "someone" pay them thousands of dollars to close.  By the way, this extortion money payment must be disclosed on the HUD-1 Settlement Statement or it's fraud.  Even if the first and second mortgage are with the same bank/lender, please do not assume they won't play games with you or each other...it happens.

Something else that I've recently seen happen with distressed property is vandalism...just days before closing, someone steals the appliances or even takes plants from the garden. Vandalism could happen to non-distressed home as well but since most of these properties are vacant, they seem to be getting targeted.

These transactions tend to take longer to close and may have more drama. Be prepared to have your rate lock extended, perhaps a few times!  If you're patient and can keep in mind that you're probably getting a discounted price, the rewards may be worth it if you can tolerate the risk and all that goes with it.

In my experience, I've found that Fannie Mae Homepath properties have had the least amount of issues especially when you factor in the attractive financing programs that are available for owner occupied and investment property.  

If you're considering buying a short sale or foreclosed home anywhere in Washington state, I'm happy to help you with the financing.

Potential Mortgage Rate Movers this Week

This week is packed full of scheduled economic indicators that may impact mortgage rates. Mortgage rates are based on mortgage backed securities (bonds). Typically, good news for stocks means that mortgage rates may rise as investors will trade the safety of bonds for a greater return received from stocks. The reverse is also true. Signs of inflation will also impact mortgage rates for the worse.  Here are some of the scheduled reports to be released this week:

Tuesday, May 31, 2011:  Chicago PMI and Consumer Confidence

Wednesday, June 1, 2011:  ADP National Employment Report and ISM Index

Thursday, June 2, 2011:  Initial Jobless Claims and Productivity

Friday, June 3, 2011: THE JOBS REPORT and ISM Service Index

Other data and world events also impact mortgage backed securities and mortgage rates, such as Europes debt issues.

Does your mortgage originator know the next economic indicator that's scheduled to be released that may impact mortgage interest rates?  Does your mortgage originator have access to live pricing of mortgage backed securities?  I've had Seattle area competitors ask why I tweet about rates or which way rates are trending.  They don't know what's going on in the markets, or what may impact rates, this type of mortgage originator simply wait for their rate sheets to be issued. 

I encourage you to ask your mortgage originator what is the next scheduled economic indicator that may impact mortgage rates? If they say "huh?" or offer an excuse, is this who you want to help you with one of your largest debts? 

I quote mortgage rates live on Twitter @mortgageporter. If you would like a no-obligation quote for your mortgage scenario for homes located anywhere in Washington state, please contact me. 

This Week Could be a Doozie for Mortgage Interest Rates

In the past, I've included the scheduled events that may impact mortgage interest rates in my rate weekly rate post.  However, this week is so packed data that I thought it was worthy of a post all its own.  Check this out (items that are bold tend to be the may be the most influential to rates):

Monday, April 25:  New Home Sales

Tuesday, April 26:  Consumer Confidence

Wednesday, April 27:  FOMC Meeting and Durable Goods Orders

Thursday, April 28:  Gross Domestic Product, Initial Jobless Claims, GDP Chain Deflator and Pending Home Sales.

Friday, April 29:  Personal Consumption Expenditures and Core PCE, Employment Cost Index, Chicago PMI and Consumer Sentiment Index (UoM).

Wednesday, we'll learn if the Fed's interest rate decision and possibly gain clues as to their plans with QE2.  Ben Bernanke is going to be having a news conference following the FOMC meeting which many will be tuned into hoping for clarity on his views of the direction of our economy.  You can see the entire week offers plenty of data to be digested.  

Remember, mortgage rates are based on mortgage backed securities (bonds) and are not set by the Fed.  Mortgage rates may are impacted by how MBS are being traded on the bond markets.  When the stock market is rallying or there are signs of inflation, mortgage rates tend to raise higher.  When the stocks are tanking, investors will often seek the safety of bonds which will cause rates to move lower.

Whether or not you should lock or float (not lock) your interest rate depends on your personal risk tolerance.  My general stance is that if you like the rate that is currently available - you should consider locking.  Decide which scenario is worse for you: losing today's rate by not locking or locking todays rate with a rate drop tomorrow.  Please discuss this with your local mortgage professional.  I am a NMLS Licensed Mortgage Originator dedicated solely to Washington State.    If you are interested in a mortgage for a home located anywhere in Washington State, I am happy to help you.

NOTE:  I plan on posting mortgage interest rates today.  Stay tuned!

Gas Buddy may be my new Best Friend!

One of my current favorite aps for my Droid has got to be Gas Buddy.   Gas Buddy allows me to find the cheapest gas by grade in any area.   It confirms that when I'm filling up in my neighborhood of West Seattle, that I'm not paying more than I need to.  Gas Buddy helps me when I'm trying to find a gas station that won't ping my wallet more than it needs to.   

Let's face it, gas is getting very expensive!  Gas Buddy's heat map shows some scorching prices in various Seattle and Bellevue neighborhoods.

Here's some good news, you don't need to have a "smart phone" to use Gas Buddy.  You can also find out who has the best deals by visiting their site online at www.gasbuddy.com.

We all need to do what we can to save money!  What are some of your favorite tips?

President Obama Declares April National Financial Literacy Month

Recently President Obama declared April as National Financial Literacy Month.  

In recent years, our Nation's financial system has grown increasingly complex.  This has left too many Americans behind, unable to build a secure financial future for themselves and their families.  During National Financial Literacy Month, we recommit to teaching ourselves and our children about the basics of financial education.

I've always felt that financial education should be taught in high school.  I'm not talking home-ec, at least not the the home-ec I attended at Hazen High School where I grew up in Renton, where we made up incomes and came up with a rough budget.  I'm talking about a detailed course where students would focus on the benefits and consequences of credit and debt.

I think it's great that the President is bringing attention to Financial Literacy.  During the subprime era of mortgage, I met with people who wanted to buy a home because their friend or co-worker just did.  They had no idea what financial responsibilities coincide with owning a home.  They often wanted to buy as much as they could be qualified for based on guidelines at that time even if the mortgage payment or program was not suitable. 

More from President Obama's proclamation:

The new Consumer Financial Protection Agency I have proposed will ensure ordinary Americans get clear and concise financial information.... While our Government has a critical role to play in protecting consumers and promoting financial literacy, we are each responsible for understanding basic concepts....

I wonder what is an "ordinary American" and what if you're not an "ordinary American"?  In his proclamation, he also talks about how our "recent economic crisis was the result of irresponsible actions on Wall Street and everyday choices on Main Street" and includes "large banks [that] speculated recklessly".  His list of who's at fault no where includes our Congress who mandated that Fannie Mae, Freddie Mac and FHA create programs or different guidelines to help more Americans buy homes. 

From the Wall Street Journal:

Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained. Rep. Barney Frank (D., Mass), for example, now the chair of the House Financial Services Committee, openly described the "arrangement" with the GSEs at a committee hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing." The hint to Fannie and Freddie was obvious: Concentrate on affordable housing and, despite your problems, your congressional support is secure.

But I digress...

President Obama is promoting a website they've created for financial literacy which appears to be an assortment of various government links organized on one site.   It' looks like it's well meaning advice but I'm not sure it's the best or most practical advice--very similar to HUD's book on buying and financing your home.  The site also has information that is very biased, in my opinion, about financial tools such as reverse mortgages, which are not right for everyone but when used in the right situation, can make a huge difference for the better in a seniors life.  I also found some information about credit repair that would potentially provide the result a consumer would be looking for.

I highly recommend that you subscribe to Get Rich Slowly.  This is a fantastic blog that is packed full of common sense financial information on getting out of debt and building your savings.  J.D. Roth's blog was recently named the most inspiring money blog by Money Magazine.

Washington State's Department of Financial Institutions also has a blog that you may find interesting:  Money Talks.  I'm a new subscriber to this blog and so far, the information seems very good.   In fact, it was from DFI's blog that I learned about the Twitter hashtag for April's Financial Literacy Month: #FinLit10. 

Of course I hope you're a subscriber to my blog, The Mortgage Porter.  I don't only write about mortgages or post interest rates on my blog, you'll also find quite a bit of information about credit scoringwhich impacts your life every day.  I cover other topics too.  You can subscribe in the upper right corner by entering your email address and you can un-subscribe anytime.

During April, I'll share information in recognition of National Financial Literacy Month...actually I hope that's what I've been doing at Mortgage Porter for the last couple of years!

What's worse than a low appraisal with a mortgage? How about losing your job.

Appraisals coming in lower than the home owner estimated is not uncommon these days...most of time, the transaction may still work outdepending on if the mortgage has to be repriced due to higher loan to values or if the home owner wants to bring in additional cash to apply towards their home equity to lower their loan to value.  They at least have options.  

I have lost more transaction to clients losing their jobs or having their hours cut back.  It's really sad to see people who have dedicated years of their life to a company to be dismissed and to add insult to injury, they're most likely not able to obtain a much needed lower rate through refinancing.  They can try contacting their mortgage servicer to see if a loan modification is possible--results vary.

Friday the Jobs Report comes out this Friday and it's weighing heavy on my mind.  How many hundreds of thousands of Americans will be join our millions and millions of unemployed workers.   With an unemployment rate of 9.5%, I think it pays to ask yourself "what would I do if I were laid off tomorrow?"  Nobody expects it, but in this climate, we have a 1 in 10 odds of losing our jobs (hopefully Friday's report will show improved figures).

I strongly encourage you to consider this and to make sure that you have an emergency reserve fund with at least 3 months of your living expenses set aside.  Do you know how much it cost for you to live one month?  Add it all up and review your budgets--how would your spending behavior change if you knew your paycheck might be ending.

I also recommend that after you have 3-6 months of living expenses put away in a safe spot that you look at your credit cards.  What are your current interest rates?  Has the bank recently jacked up your payment percentage?  I do not recommend closing them at this time--should you wind up being unemployed, you might need to rely a bit on the cards (ugh, I hate saying that).

And remember just about everything is temporary.  Should you wind up unemployed...things will get better eventually.  Blemished credit will recover and jobs will come back.  

I've just always been one to plan for the worse and expect the best.

NOTE (added after publishing the post):  I recommend that if you are employed and have benefits (such as insurance) that you take advantage of them sooner rather than later.  Schedule appointments with your dentist, doctor, etc. and get your check-ups. 

To try to end this post on a light note... how about some comedy from Abbott and Costello.  You can always get a job as a union loafer.

Reminder: No Closings this Friday for King and Snohomish Counties

Due to budget restraints in King and Snohomish Counties, the recorders office will be closed this Friday and will not reopen until Tuesday (due to Memorial Day).  This means that if you are buying, selling or refinancing a home; the Deed or new mortgage (Deed of Trust) cannot be recorded on these dates.  Pierce County's recorders office will remain open Friday, May 22, 2009.

The Talon Group has calendars available with recording schedules for King, Pierce and Snohomish Counties--click here.   Each county is doing their own thing to their respective budgets.   Just last month, Snohomish County announced that they are closing early on Friday's (if they are not on furlough).

If you have a transaction scheduled to close on property located in King or Snohomish Counties this Friday, May 22, you may want to check with your real estate and mortgage professionals.

Upside down in your home with good credit? March 4, 2009 may be an important date for you.

Just received this email, which I'm sure echos the thoughts of many home owners:

"Been meaning to contact you to get your take on the recent wholesale changes that are coming hard and fast at the mortgage bankers out there and, of course, see if there can be any benefit to a re-fi given the new lending "rules" (for lack of a better term). We're horribly upside-down on our current loan balance vs. current home value, so we don't know what can happen for us, if anything. But if there's a way to get that rate down and send out less each month. we're listening! What do you think about all this?"

Last week, President Obama announced his plans to help stimulate the economy and help provide stability with America's housing.  With the Homeowner Affordibility and Stability Plan, home owners who are "credit worthy" may be able to refinance their home up to 105% loan to value. 

On March 4, 2009, more details are suppose to be announced.  Here's what we understand so far:

• The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

• First mortgage may not be more than 105% of the value of the property. 

• Borrowers with a second mortgage may still be able to refinance if the second mortgage lien holder is willing to remain in second lien position and if the borrower still qualifies.

• The program will offer 30 year or 15 year fixed interest rates based on market rates.

• The program only applies to the home you live in.  It does not apply towards vacation or second homes or investment properties.

According the the Treasury, this program will not be available until March 4, 2009.  Lenders will become even more buried with refinance business once this happens.  It is to your advantage to be prepared.  By gathering the following information:

• 2008 W2s (if self employed or paid commission, 2 years of complete tax returns)
• Most recent paystubs covering 30 days of income.

• Most recent mortgage statements.

• Information on current monthly debts including amount paid monthly and amount owed.

• Most recent bank statements/asset accounts (all pages).

If your home is located in Washington State, you can apply on line now by clicking the link under my photo.  However, I don't anticipate having more details until March 4, 2009.

More to follow.