Hello and welcome to this week’s edition of Moorings. First let’s take a look at rates and see where the market is at. For a thirty year fixed conventional loan a borrower should expect to obtain an interest rate of approximately 5% or 4.875% for an FHA loan with a 1% discount point. The difference being that an FHA loan can be up to 96.5% LTV as opposed to 95% LTV with a conventional loan. FHA also allows lower credit scores. The one drawback is with FHA there is an up-front fee of 1% as well as an annual mortgage insurance rate of 1.15% which is usually higher than private mortgage insurance needed on a conventional loan of greater than 80% loan-to-value. While both of these programs are popular for different reasons, they both have positive and negative guidelines with which your loan officer will be aware.

Another great option that we see being used more and more is a USDA loan. The United Stated Department of Agriculture will guarantee a loan up to 100% loan-to-value in areas it deems to be rural.  Locally that includes most of Brunswick and Pender Counties and a few sections of New Hanover County. The major limitation for these loans other than the home’s location is the limit on income. A one to four person household cannot make more than $74,050 and a five to eight person household cannot make more than $97,750. With a USDA loan you can receive a rate as low as 4.875% with a 1% discount point and there is only a 3.50% onetime up-front mortgage insurance cost which can be financed into the total loan amount or paid by the seller. This means that many clients who choose this option have to bring very little or even no money to the closing. For first time homebuyers or any clients looking in Leland or Hampstead, this is an extraordinary opportunity to own a new home at a payment that is probably less than rent.

Last but not least, I thought I might also share some rates and information on programs that I don’t normally talk about, namely second-home and investment properties. With a second-home, rates are actually comparable to primary residence rates, hovering at around 5%. The main difference is that at least 10% down payment is going to be required on the purchase of a second home. For an investment property, a minimum of 15% down payment will be required (often this will be 20%) and the rate will likely go up to 5.875%. Investment properties are obviously more of a risk to an investor, therefore that risk is reflected in the rate. With all of the above scenarios that I quote, a 740 plus credit score is required and of course adequate income, credit history, employment and assets are all needed to qualify. Guidelines and rates change daily and knowing your product is paramount, so make sure you pick a loan office with the experience and knowledge to guide you in the right financial direction.

On a personal note, I competed in the NC State Bodybuilding Contest in High Point this weekend, and won 1^st place in 50 Masters Division as well as 1^st in the Lightweight Division against all age groups.  Well that’s it for this week, until next, Be Blessed and Numbers 6:24-26 be on you.

Hello and welcome to this week’s edition of Moorings. To say it has been a tumultuous past week in both the mortgage world and the political world would be an understatement.  Between a possible government shutdown and the Dodd Frank Act, we in the mortgage business have been kept on our toes. However, before we get into all of that, let’s take a look at rates. Currently a borrower looking to purchase a home could expect to obtain a mortgage at 5% for a thirty year fixed rate, assuming adequate credit, income, etc… Another option for a qualifying customer with less than perfect credit is an FHA loan which would be available at 4.875%, but does come with limitations such as the amount of the loan and value of the house. Take a good look at the incredibly great rates on 5 and 7 year Adjustable Loans, which are fixed for 5 or 7 years and then adjust over the remaining term. Very little risk for substantial savings.

Moving on to the big story of the past week, the possibility of a government shutdown definitely impacted the financial markets. A partial shutdown was avoided late Friday night when Democrats and Republicans agreed on a budget deal and a short-term funding extension, less than an hour before the deadline, but it only lasts until April 15^th…tax day.  All of this uncertainty throughout the week caused Bonds and home loan rates to worsen through the week. In addition, the dollar is rather weak at the moment which helps the stock market with investors moving money into it, but this takes money away from the bond market which hurts interest rates.

In other news, the Dodd Frank Wall Street Reform and Consumer Protection Act was schedule to go into effect on April 1^st, but an appellate court stay held off the implementation of this new bill until the 6^th, when it became law. As I have stated in a previous article, this bill is quite complex, but the immediate effect to mortgage industry is the compensation of loan officers, with them receiving the same compensation on every loan and loan type, with the only variable being the loan amount.   One of the likely side effects of this bill is that over time, rates will most likely equalize across mortgage companies and customer service will become the main factor for choosing a mortgage provider. If and when this happens, be sure to look for certain things from your mortgage company such as: they should be a mortgage bank and not a broker, use of local appraisers, in-house underwriting and processing, and long term experience is always a plus.

With all that said and done, interest rates are still at incredibly low levels in comparison to historical averages. Anyone who lived through the 1980’s knows that rates well into the teens were not uncommon and even the 1990’s saw rates that were nowhere near as favorable as current levels. Too many clients look for the lowest possible rate and will often wait and wait until they have missed out on the savings they would have had with a rate that is lower than their current mortgage. You can always refinance if a year from now you want to, but that savings can never be recovered. Well that’s it for this week, until next, Be Blessed and Numbers 6:24-26 be on you.

Hello and welcome to this week’s edition of Moorings. Before we get into any news, let’s take a look at rates and where they are at. Currently a borrower looking to purchase a home with five percent down and adequate credit history, income, assets and other qualifying factors would expect to have an interest rate of 4.75% with a one percent origination fee or 5% with no fee.  This is large unchanged from last week several weeks before that with only a minor one eighth percent change at any given time. That scenario is based on a qualifying credit score of 740 or more, whereas going down to a score of 640 (the minimum allowed), causes the scores to go up to 5.375% and 5.625% respectively. Just this past week I had a former client who had always had stellar credit but due to a mistaken address on a bill, they had a $17 collection fee show up on their credit which impacted her score enough to drastically change the rate on a loan for a vacation home that she was looking at purchasing. Like I’ve said many times before, it’s imperative that you keep an eye on your credit score and keep it at 740 or above.

In major financial news, the United States Treasury Department announced it is going to begin selling some of its massive Mortgage Backed Securities holdings. This is important to anyone looking to purchase or refinance a home. That’s because this announcement immediately pushed Bond prices significantly lower, as Traders tried to get their own positions sold. Think of it as a financial game of musical chairs… in which no one wants to be the last one standing with a mitt full of 4% Mortgage Backed Securities in a 5% market. This isn’t the last we’ll hear about this – and since home loan rates are tied to Mortgage Backed Securities, this creates the potential for home loan rates to rise in the near future. Fortunately, home loan rates are still at very attractive levels for now, despite the Bond market taking a hit for most of last week. So if you’ve been thinking about purchasing or refinancing a home, this is the time to see how you can benefit before rates possibly move higher. Because as bad as it was to lose some Bond pricing in the last few days, prices could move significantly worse depending on how they hold on.

In more local news, I thought I would give a brief update on Wrightsville Beach real estate. Year-to-date there have been 14 homes sold on the Island at an average selling price of $923,429. These homes sold at an average of 88% of their listing price and were on the market for an average of 240 days. While perhaps not the best of statistics there is at least some movement in this market including one property that sold for nearly $3,000,000. Well that’s it for this week, until next, Be Blessed and Numbers 6:24-26 be on you.

Hello and welcome to this week’s edition of moorings, your source for local and national mortgage industry news. The notion of “it’s a small world after all” was especially evident last week, with both the news in Japan and the Middle East impacting our markets. Here’s what happened, and what the impact was on home loan rates.

The first thing to understand is the concept of “safe haven trading.” At times of global unrest and uncertainty, like with last week’s nuclear ‘crisis’ in Japan and the ongoing fighting in Libya, Traders will park their money in “safe” investments like United States Treasury Bonds. Along with this they also buy Mortgage Backed Securities for a higher yield, which is how home loan are traded. Moving with one another, when Bond pricing improves, MBS pricing improves and our home loan rates improve… which is what we saw last week. But it’s also important to understand how incredibly volatile this situation is. A “safe haven trade” is just that… a trade, which is short-term. Should events around the world become more stable, this safe haven trade can unwind very quickly… with Bond prices and home loan rates worsening as a result.

Another thing to note is that Bonds and home loan rates are facing some additional headwinds that could hamper their improvement. If Japan sells some of their Treasury holdings to help finance the recovery and reconstruction, like they did in 1995 after the Kobe earthquake, this could spur a sell-off in Bonds overall, which would cause Bonds and home loan rates to worsen. In addition to this possibility, the market is also dealing with the problem of inflation both here and abroad, in developing areas like China. Inflation has always been the enemy of Bonds and home loan rates. The bottom line: if inflation is allowed to grow, it can be very difficult to rein in and control, and this will hinder improvement in home loan rates, which of course effects a great deal of other industries including home builders and real estate. Add the Fed announcement on Monday morning that they are systematically selling off their MBS (Mortgage Backed Securities) that they hold and zoom the market nosedives. I say all this to show that market volatility is with us everyday, and there is no way anyone can justify a prediction of lower rates in the longer term.

So with all the changes happening in the marketplace and the world, let’s take a look at where interest rates actually are right now (as of Monday). As of today a borrower with a 740+ credit score, adequate income, assets, and qualifying factors should expect to be able to obtain a mortgage with an interest rate of 4.75% with a one percent origination fee, or 5% with no origination fee, which is slightly better from last week. As is always the case, these short-lived improvements in mortgage rates should be pounced upon by anyone who has been considering refinancing their home or even purchasing a new home. Sitting around and waiting for bottom of the rate market rarely every benefits anyone, since the bottom will come and go before you can say the word go. Take advantage of the incredible gift of low rates that history is handing you and lock in on either a purchase or refinance.

Well that’s it for this week and once again, we extend our thoughts and prayers to not only those affects by the many difficult issues around the word, but also the men and women serving in the armed forces that help and protect us, all around the world. Until next, Be Blessed and Numbers 6:24-26 be on you.