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.

Do I have the best rate possible?

One of my preapproved first-time home buyers asked me if they have the "best rate possible".  The phrase "best rate" can mean different things to different people, in my opinion, the most common definitions to a borrower would be:

• best rate possible based on qualifying; or
• lowest rate possible based on current market pricing.

Best rate based on qualifying means that your credit scores are as high as they can possibly be and you're putting enough money down (or have enough equity) to where there are as few price adjustments to your scenario.

With FHA loans, there are no price improvements after a credit score of 720 or higher. There is a slight improvement to mortgage insurance premiums with FHA at 5% down. With FHA a 720 score with 5% down will provide you the "best payment".

With conventional financing, you can see by Fannie Mae's chart below that there are different price adjustments based on credit score and loan to value. The best pricing on this chart is with 40% down (or equity) with credit scores of 700 or higher. There are additional charts for conventional depending on program features, such as an adjustable rate or the Home Affordable Refinance.

Below is a chart from a lender showing various adjustments based on program, credit score and loan to value.

 

If you're interested in obtaining the best rate possible based on qualifying, consider starting the preapproval process very early so that you have time to work on your credit, debts and/or down payment. I enjoy helping my clients develop a plan to put them in best possible situation based on their scenario. Sometimes this may take a month or two and sometimes it may be a year or more, depending on what my clients situation is.

Best rate based on pricing may be the very lowest rate available at that moment, which would take paying additional discount points and would increase your closing cost. Some might think "best rate" is lowest rate at the least amount of cost (par pricing or using rebate pricing).  Whether you want your rate priced with discount (higher fees/lower rate) or rebate credit to pay for closing cost (lower fees/higher rate) is up to the borrower. 

Keep in mind that mortgage rates are a moving target, much like buying stocks. Rates often change several times a day. A mortgage interest rate is only secure once it is locked. Once you pull the trigger to lock in a rate, rates may improve or deteriorate. You can lock in a rate once you have a signed around contract with a specific closing date if you're buying a home. If you're refinancing a home, you can lock in whenever you know what your approximate closing date should be.

Mortgage originators are restricted from advertising that they have the "best rate" since this is something a lender cannot guarantee. It's impossible to know what all our competitors are currently offering in pricing and therefore, no lender can truly say they have the "best" or "lowest" rates.

As a correspondent lender, we work with several banks and lenders and utilize a pricing engine which compares their mortgage rates based on a borrower's specific scenario so that we can select who has the most competitive pricing at that time available to our company for that borrower.

If you're considering buying a refinancing a home anywhere in Washington, from Redmond to Walla Walla (and everywhere in between), I'm happy to help you with your mortgage needs. Click here for your personal rate quote.

LIVE POST: Mortgage Rates for Washington State Homes and other Mortgage Miscellany

This week is loaded with scheduled economic data that may influence mortgage rates ending with the big daddy: The Jobs Report. Remember, good news that causes the stock market to rally may cause mortgage rates to deteriorate and the reverse may be true. This is because investors will trade the safety of bonds for stocks and vice versa. Signs of inflation may also drive mortgage rates higher. Here's whats on deck for this week:

Monday, January 30: PCE (Personal Consumption Expenditure)

Tuesday, January 31: ECI (Employment Cost Index), Chicago PMI and Consumer Confidence

Wednesday, February 1: ADP National Employment Report and ISM Index

Thursday, February 2: Initial Jobless Claims and Productivity

Friday, February 3: THE JOBS REPORT and ISM Services Index

As I write this portion of my post (8:35 am) the DOW is down about 78 with concerns of Greece impacting the markets again. 

FHA misc: the difference in rate between a 700-719 mid-credit score and 720 or higher is 0.25% in fee. 

To see if a condo is currently approved for FHA financing, use HUD's site and enter the city and zip code and look for your condo's name/phase. Sometimes entering too much info may not produce the results you're looking for.

The difference between a townhome and a condo (or townhome legally described as a condo) is 0.75% in fee if you're using conventional financing with a mortgage term longer than 15 years and loan to value over 75%.  If you are considering buying a condo, the property and association will need to meet lender guidelines - this process is easier with a Homepath property.

11:00 am quoting scenarios for a townhome in Seattle (non-condo) based on a sales price of $200,000 for an investor using a 30 year fixed rate with credit scores of 740 or higher. With an investment property, the seller can contribute up to 2% of the sales price towards closing cost.

• 4.875% for a Fannie Mae Homepath with no appraisal and no pmi and 10% down payment (apr 5.064). P&I is $952.57 with $4170 in closing cost.
• 4.125% for a Fannie Mae Homepath with no appraisal and 20% down payment (apr 4.324).  P&I is 775.44 with $4170 in closing cost OR 4.500% with p&i of $810.70 and closing cost of $1960 (apr 4.608).
• 4.125% for a Fannie Mae Homepath with no appraisal and 25% down payment with a p&i of $726.97 and closing cost of $2800 (apr 4.258).

Same scenario as above except the townhome is not eligible for Fannie Mae Homepath financing (not a Fannie Mae foreclosure). Minimum down payment required for an investment property is 20% and an appraisal will be required.

• 4.500% with 20% down payment and p&i of $810.70 and closing cost of $5120 (4.758).
• 4.125% with 25% down payment and p&i of $725.97 and closing cost of $3820 (apr 4.317). 

11:50 DOW is down 21.68.

Quoting 4.250% for Home Affordable Refi - Fannie Mae DU Plus in Renton with a loan amount of $401,000 subordinating a second mortgage with loan to values of 81/106. P&I is $1972.69 (apr 4.330). 

12:10 pm: Quoting 4.250% for a cash-out refinance in Seattle (apr 4.325). Loan amount is $318,750 with a loan to value estimated at 75%. Principal and interest of $1568.06 and closing cost of $3046. Credit score estimated at 700 - 719.

Speaking of cash-out refinances, did you hear that Bank of America is reported as no longer offering cash-out refinances?  We offer cash-out refinances at Mortgage Master Service Corporation.  

Rates change constantly. If you would like a mortgage rate quote for your home located anywhere in Washington, click here.

Buying a $500,000 Seattle Home with 10% Down

I was recently contacted by a home buyer in Seattle who wanted to know what mortgage programs we have available for a sales price of $500,000 with a 10% down payment. With less than 20% down, the loan will probably have mortgage insurance unless they can find a Fannie Mae Homepath property.

Let's review some scenarios assuming the home buyers have excellent credit (scores over 740) and a 30 day closing with a loan amount of $450,000.  With a 10% down payment, the seller can pay up to 3% (Freddie Mac) or 6% (Fannie Mae) with a conforming high balance mortgage. Rates quotes are effective as of 5:00 pm on January 24, 2012.

Conventional 30 Year Fixed with Private Mortgage Insurance.

4.375% with a PIMI (principal, interest and private mortgage insurance) payment of $2543.03 and with closing cost of $3074 (apr 4.858).

4.125% has a PIMI of $2477.17 and will cost more in discount points with closing cost of $7988 (apr 4.686).

4.500% has a PIMI of $2422.58. The payment is lower due to the lower pmi rate since a portion of it is paid for "up front' as a "split premium" similar to FHA except at a much reduced cost. Net closing cost, after lender credit applied with rebate pricing is estimated at $5063, including the upfront pmi (apr 4.856).

For the above scenarios, it will take about 7 years for the private mortgage insurance to drop off of the mortgage payments, at which time, the home owner will benefit from having a reduced payment. When considering a second mortgage piggy back scenario, you may want to estimate how long you will have the second mortgage and what the cost will be over the life of the loan compared to private mortgage insurance.

Fannie Mae Homepath will require the buyers find a Fannie Mae REO property that is eligible for financing utilizing a Homepath mortgage. I just checked Homepath.com and found the most expensive home currently listed in Seattle is $449,000 (which you can actually purchase with as little as 3% down payment). Homepath Mortgages do not require an appraisal nor do they have private mortgage insurance. For the comparison purposes, the following quote is based on a $500,000 sales price with 10% down payment using Fannie Mae Homepath:

5.125% for a 30 year fixed with a principal and interest payment of $2450.19 and closing cost estimated at $2762 (apr 5.187).

FHA is an option for these buyers however I would only recommend it IF:

• buyers are considering allowing their mortgage to be assumed in the future;
• buyers are converting existing home into a rental since FHA requires less reserves than conventional financing;
• credit scores are lower

Here is how an FHA high balance loan would compare based on today's pricing:

3.750% for a 30 year fixed with a PIMI of $2513.91 with $2782.50 for closing cost assuming the upfront MIP is financed (apr 4.397).  

I am seeing sellers very open to paying for closing cost. I'm also hearing from my clients in the Seattle area that homes that are new on the market and not short sales have been moving fairly quickly.

If I can provide you with a rate quote or help you prepare for buying a home anywhere in Washington, please contact me.

LOCK IN SOON!! Mortgages will Cost More thanks to Temporary Payroll Tax Cut

UPDATE: Since publishing this post this morning, another major bank announced a significant increase in their extension fees as noted below.

If you obtain a new mortgage next year for a refinance or purchase (for any purpose) and it is securitized by Fannie Mae or Freddie Mac or insured by FHA, you're helping to pay for the recently passed payroll tax cut bill.

From the FHFA:

“On Dec. 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011.  Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie Mae and Freddie Mac( the Enterprises) by no less than 10 basis points from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities. This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury, rather than retained as reserves by the Enterprises.... FHFA will announce plans for further guarantee fee increases or other fee adjustments that will then be implemented gradually over the two-year implementation window, taking into consideration risk levels and conditions in financial markets..."

What I'm seeing from some of the various banks and lenders we work with ranges from announcements they're increasing their extension fees 0.25% 0.40% across the board and other lenders announcing fee increases to up to 0.5% to take effect in the next couple weeks. 

On a $400,000 loan, a 0.5% fee to interest rate increase means you'll be paying $2000 more for the same rate once the fee increases go into place!  

With a rate lock extension, currently the charge from one bank who has announced the price increase, 7 days cost 0.125% and now with the 0.4% add, the 7 day extension cost 0.525%.  Where an extension before would have cost $500 on a $400,000 loan, now it will cost $2,100 for the same seven days! This will force many borrowers to consider longer rate locks in order to avoid such a hefty penalty.

What can you do? 

If you are considering refinancing your mortgage, contact your local mortgage professional to discuss current rates and securing your lower (pre-fee) rate today. If your home is located anywhere in Washington state, I can help you.  

If you are buying a home and are in contract, but not yet locked, you may want to investigate locking.  

Whether you are buying or refinancing your home, make sure that the lock is for a long enough period to avoid possibly higher extension fees.

Different lenders have different guidelines and ways they're implementing their fee structures. One of the benefits of working with a correspondent lender, like Mortgage Master Service Corporation, is that I work with several different banks and lenders and can filter out who is offering the most competitive price for your program at the moment you are ready to lock.

If you would like a rate quote for your home located in Washington, click here or contact me.

LIVE POST: Mortgage Rates for Homes in Washington and other Miscellany

It's the last week of 2011! Thanks to the holidays, this is another short week. Today's Consumer Confidence revealed some of the highest figures since April, jumping up to 64.5%. On Thursday we'll have Initial Jobless Claims and Pending Home Sales and ending the week on Friday with the Chicago PMI. With this being a "holiday week", you can expect additional volatility. 

Several different factors impact how mortgage rates are priced and rates may change several times a day. If you would like a rate quote based on your personal scenario for your home located anywhere in Washington, please contact me!

9:45 am: quoting 3.750% for FHA 30 year fixed purchase in Seattle (apr 4.616). With the seller paying all closing cost and prepaids, the buyers only need to bring in the minimum required down payment of 3.5%.

DID YOU KNOW... that the FHA upfront funding fee that is often financed, can be paid separately as a closing cost instead of being financed? If the seller is contributing enough towards closing cost, they can actually pay for the upfront funding fee. Currently the maximum a seller can contribute is 6% of the sales price towards actual closing cost and prepaids.

doh! Just realized I haven't been updating my live post with rates!  Stay tuned...

1:45 pm: quoting 4.375% for a 30 year fixed rate-term refinance on an investment property in Whatcom County (apr 4.510) with excellent credit and a loan to value of 75%. Depending on what the home appraises for, this transaction may very well be a "cash-in" refinance.

2:45 pm: quoting 4.250% 30 year fixed FHA purchase in Kent (apr 5.191). Interest rate is priced above "par" to create a rebate credit to reduce closing cost to $1000, which the seller will contribute. Sales price of $150,000 means buyer only needs $5250 to meet minimum down payment requirement of 3.5%.

DID YOU KNOW... your income tax refund from the IRS is considered "seasoned funds"?

3:20 pm: quoting two different scenarios for a home owner in Seattle who's looking at reducing her term to a 15 or 10 year amortized mortgage. He currently has a second mortgage that will need to be subordinated and has excellent credit.  Based on a loan amount of $258,000 and combined loan to values under 70%:

• 15 year fixed:  3.500% (apr 3.655) with closing cost of $2800 and a principal and interest payment of $1884.40.
• 10 year fixed: 3.375% (apr 3.599) with closing cost of $2125 and a principal and interest payment of $2,536.18.

 

Mortgage Update for the Week of December 19, 2011

Can you believe Christmas is almost here and 2011 is about to come to an end? Here are some economic indicators that may impact mortgage rates this week and holiday closures to be aware of:

Tuesday, December 20: Housing Starts and Building Permits

Wednesday, December 21: Existing Home Sales

Thursday, December 22: GDP Chain Deflator, Initial Jobless Claims, Gross Domestic Product (GDP) and UoM Consumer Sentiment Index

Friday, December 23:  Personal Consumption Expenditure (PCE), New Home Sales, Personal Income, Personal Spending and Durable Goods Orders. NOTE: Mortgage Master Service Corporation will be closing at 3:00 pm on Friday in observance of the holiday weekend.

Merry Christmas!

Monday, December 26: Christmas Holiday observed - banks and courthouses (and Mortgage Master) will be closed.  

Friday, December 30: Mortgage Master Service Corporation will be closing at 3:00 pm in observance of the holiday weekend.

Happy New Year!

Monday, January 2: New Years observed - banks and courthouses (and Mortgage Master) will be closed.

Thanks again for making 2011 a wonderful year. Happy Holidays, Merry Christmas and a Happy New Year to you and yours.

LIVE POST: Mortgage Rates for Washington State and other Miscellany

Happy Monday! We have a lot of economic indicators to be released this week which may impact the direction of mortgage interest rates. Here are just a few of them:

Tuesday, December 13: FOMC Meeting and Retail Sales

Thursday, December 15:  Producer Price Index (PPI), Empire State Index, Initial Jobless Claims and Philadelphia Fed Index

Friday, December 16:  Consumer Price Index (CPI)

It doesn't take a scheduled event to influence mortgage rates. The woes of Europe continue to impact the stock markets, which in turn helps to keep mortgage rates low. Remember, bad news for stocks tends to mean lower mortgage rates as investors will seek the safety of bonds (like mortgage backed securities) over stocks.

I'm going to attempt to post live mortgage rates from quotes that I'm doing for homes located in Washington. If you would like a quote for your home located in Bellevue, Seattle or even Walla Walla, I'm happy to help!

8:24 am:  DOW down 174.

Quoting 4.250% 30 year fixed Fannie Mae Home Affordable Refi (HARP) with NO APPRAISAL (apr 4.335%) with closing cost of $2830. Seattle home owner has existing small home equity loan which the bank will need to subordinate. Borrower has excellent credit and will reduce his monthly mortgage payment by $400. 

9:30 am: DOW down 226

Quoting 4.000% 30 year fixed Home Affordable Refi - HARP (apr 4.144%) with closing cost of $5740. $313,000 loan amount with a principal and interest payment of $1,494.31. We won't know if the appraisal is waived on this Maple Valley home until we submit this loan through Fannie Mae's automated underwriting system. If so, the closing cost will be reduced by $425. 

10:00 am: DOW down 228

Explaining how the refinance process works when there is an existing second mortgage that is not going to be paid off as part of the refi.  Even if the first mortgage is approved without an appraisal, the second lien holder may require one before they consider if they will subordinate (keep their lien position subordinate to the new first mortgage). At least with a home affordable refi, if there is no appraisal required with the new HARP mortgage and the second lien holder elects not to subordiate, the home owner isn't out the $500 appraisal fee.

11:15 am: quoting 4.500% 30 year fixed rate-term Home Affordable refinance in Kitsap County $405,000 loan amount subordinating a second mortgage (apr 4.566) with $2786 in closing cost.

NOTE: Most of the rates I'm posting here are as close to "par pricing" as possible, meaning that I'm pricing with as little discount or rebate credit as possible. If my clients want to reduce their rates, they can have the quotes repriced with discount points or if they want to reduce their closing cost, we can increase the rate to create a rebate credit.  

DOW closes down 162.

1:15 pm: quoting 3.375% for 15 yr fixed rate-term refi with combined loan to value of 70% and excellent credit (apr 3.505) closing cost of $3000 in King County. Second mortgage will need to be subordinated or possibly paid off, if the borrower elects.

NOTE:  Paying off a second mortgage that was not obtained at the time the home was purchased constitues a "cash out" refinance - even if you're not taking any cash out with the transaction.  Cash-out refinances have different pricing than rate-term refinances and underwriting guidelines.

Update... I've not forgotten this post... I've been locking in rates and preparing the required documentation.  It will be interesting to see how rates perform tomorrow with the results from the FOMC meeting.

Stay tuned!

Monday Morning Mortgage Update

This is a short week with Thanksgiving this Thursday. Here are a few economic indicators that my move mortgage rates this week:

Monday, November 21: Existing Home Sales

Tuesday, November 22: Gross Domestic Product (GDP) and FOMC Minutes.

Wednesday, November 23: Consumer Sentiment Index, Core Personal Consumption Expenditure, Personal Incomes and Spending and and Initial Weekly Jobless Claims

Thursday, November 24 and 25: HAPPY THANKSGIVING!  

Right now stocks seem to be showing disappointment with our "Super Committee" not being able to come to an agreement. We are also being impacted by the continuing drama with Europe.  As I write this post (8:35 am) the DOW is down 319.

With holiday weekends, it's not unusual to see more volatility with the markets as some traders may extend their weekend and take time off.

Currently mortgage rates are slightly improved compared to last Monday's post by roughly 0.159 in fee based on the quotes below. 

As of 8:45 this morning, rates for a 30 year fixed conventional based on a sales price of $500,000 with a 20% down payment and excellent credit (scores of 740 or higher) for a single family-detached home closing by December 29, 11 in Seattle is:

3.875% (apr 4.036) with 1.192 in total points, your closing cost (including said points and excluding prepaids/reserves) is $8181 with principal and interest payment of $1880.95. This rate is improved by 0.164% in points from last Monday's post (closing cost for same scenario is $656 less).

4.250% (apr 4.313) with a rebate credit towards closing cost of 0.217% with net closing cost of $2531 and principal and interest payment of $1967.76.  This rate is improved by 0.154% in rebate credit from last Monday's post (closing cost for same scenario are $602 less).

Remember, it's your choice on whether you want your mortgage rate reduced by paying discount points or if you would rather not pay points and have a rebate credit towards closing cost by increasing your rate.

If you would like me to provide you with a rate quote for your home located anywhere in Washington State, where I'm licensed, please contact me. 

What May Move Mortgage Rates the week of November 14, 2011

Mortgage rates are based on mortgage backed securities (bonds) and often change throughout the day. When stocks are taking a hit, you'll often see mortgage rates improve as traders will seek the safety of bonds and mortgage rates often rise when the stock market is doing well. When mortgage rate quotes are provided, unless that rate is locked, the quote is only effective from when the mortgage originator obtained the quote. In a volatile market, it's possible the rate may have changed by the time you've received it.  

There are no economic reports due out today. However on Tuesday, we have Retail Sales, Producer Price Index (PPI) and Empire State Index.  On Wednesday, the Consumer Price Index (CPI), Capacity Utilization and Industrial Production will be released.  On Thursday, it's the Initial Jobless Claims, Housing Starts, Building Permits and the Philadelphia Fed Index to watch for.  If these reports reveal inflation or are positive reflections on the economy, mortgage rates may rise.  Keep an eye on the continuing saga in Europe as this continues to impact our markets and mortgage rates. 

As I prepare to publish this post, rates for a 30 year fixed conventional based on a $500,000 sales price with 20% down payment, excellent credit (scores of 740 or higher) for a single family-detached home closing by December 22, 2011 in Seattle is: 

3.875% (apr 4.050) with 1.356% in points, your closing cost (including the points and excluding prepaids and reserves) estimated at $8837 with principal and interest at $1880.95.  So yes...3.875% IS available, IF you want to pay more for the rate.

4.000% (apr 4.128) currently priced with 0.780% in points with closing cost are estimated at $6533 with principal and interest at $1909.66.

Don't want to pay any points? It's your choice on how your rate is priced - with rebate or with points.  Here is the closest I can get to "zero points (origination or discount) based on the above criteria:

4.250% (apr 4.314) has a small rebate credit of 0.063% with net closing cost estimated at $3,133 with a principal and interest payment of $1967.76.

This week we should have more details about HARP 2.0 - here are some tips you can do to prepare if you have a conventional mortgage that qualifies.  We also expect to learn sometime this month what the conforming, FHA loan limits will be for 2012. It's quite possible that they may be reduced (again) so if you have a loan amount over $417,000, you might want to consider refinancing sooner than later. I would hope that Congress would, at the very least, keep loan limits at their current 2011 levels (restoring the "temporary" limits would be better). Currently in the greater Seattle area, conforming and FHA loan limits are $506,000. Bottom line, we don't know what the actual loan limits will be until we hear from FHFA and HUD.

Are you considering buying a home or refinancing? Interested in a mortgage rate quote based on your personal criteria?  If the property is located anywhere in Washington State, where I licensed, I can help you! I enjoy sharing information with my readers via my blog, however I pay my bills by originating mortgages for homes located anywhere in Washington, including Seattle, Bellevue, Tacoma, Everett and even Walla Walla. Click one of the tabs above for more information or contact me.