WASHINGTON - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.
The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.
"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."
Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.
According to estimates by the National Association of Home Builders, the Administration's homebuyer tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA's current market share, it's estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.
Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.
For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.
HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.atlloans.gov and espanol.hud.gov.
Federal Housing Commissioner Brian D. Montgomery has extended the temporary property flipping waiver to May 10, 2010. Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. The waiver does not apply to entities that purchase foreclosures either singly or in bulk for resale. Subsequent sales of such properties will continue to be subject to the standard regulatory requirements.
The waiver expires for all loans for which the sales agreements were signed by the seller and buyer on or before May 10, 2009. http://www.atlloans.com/home.html
Conforming mortgage rates rose by 0.625 percent Wednesday. Yes, you read it right. Zero-point-six-two-five percent.
The surprise surge in pricing started shortly after 1:00 P.M. ET, then continued all the way until the market's closing. It was the sharpest one-day surge in mortgage rates in recent history. Perhaps ever.
For mortgage rate shoppers swept up in the surge, monthly payments are now higher by $29 per $100,000 borrowed.
That's a significant shift.
For as rare as Wednesday's events were, though, middle-of-the-day, 0.625 percent rate changes don't just happen. Yesterday, the action was the result of a confluence of factors, including:
Rising oil prices and gas prices
Optimistic predictions about the end of the recession
Concerns over the U.S. total debt load
Fears of inflation
In addition, momentum trading played a role.
As markets worsened, selling begat more selling, amplifying Wall Street's total losses. As mortgage bond prices fell, mortgage rates went up. By a lot.
Mortgage markets are notoriously fickle and yesterday's events proved it. Days like Wednesday are precisely why insiders recommend shopping for mortgage rates in a compressed timeframe. The faster you finish, the lower the risk of losing low interest rates to new market conditions.
Mortgage rates fell after the Federal Reserve released its April 28-29, 2009 meeting's internal notes Wednesday.
Officially known as "Fed Minutes", the report is an in-depth account Federal Reserve's last get-together, detailing the discussions and decisions that create our country's monetary policy.
It's the lengthy companion to the Federal Reserve's brief, post-meeting press release.
For comparison's sake, the Federal Reserve's April 29 announcement contained 383 words. The minutes of that same meeting held 5,754 words. The extra words offer extra details about what the next monetary steps might be for the nation's policymakers.
This is a big deal to markets because investors are always looking for clues about what's next -- especially considering how the April Fed Minutes showed that group discussed increasing its $1.25 trillion mortgage market commitment to something bigger.
Remember that the Fed's mortgage-buying program is largely credited with keeping mortgage rates low this year. If there's more buying ahead, that should help rates stay similarly low. Mortgage rates fell Wednesday in anticipation of a move like that. For now, though, the Fed Minutes are just talk.
As economic conditions change later this year, so might the Federal Reserve's stance.
In this 4-minute piece with NBC's The Today Show, Barbara Corcoran talks about the difficulties today's timeshare sellers face with respect to a down economy, revealing sales strategies in the meanwhile.
Visit msnbc.com for Breaking News, World News, and News about the Economy
Among the advice:
* Know what your share's worth, then lower it by 20%
* Don't overlook obvious marketing techniques
* Consider auction sites to sell a timeshare
* Donating to charity open up tax breaks
Selling timeshares is always more difficult than selling a "regular" home; and today's recessionary economy doesn't make it any easier. Watch the complete clip for more tips on selling timeshares at MSNBC.com.
How Credit Cards May Be Replacing Home Equity As A Funding Source
Credit card spending is increasing
As mortgage guidelines loosened between 2002 and 2006, homeowners often used their home equity to retire credit card and other consumer debt. They did this by increasing the size of the mortgage and taking "cash out" from their home.
As you'd expect, this type of mortgage transaction is called a "cash out" refinance.
Well, now that mortgage guidelines are tightening, it's growing more difficult for a homeowner to engage in this type of home loan.
Mortgage lenders are restricting the total amount of equity that can be withdrawn from a home, usually as a percentage of the home's value.
This may be one reason why the amount of credit card debt is rapidly increasing among Americans.
Throughout May and June, for example, credit card balances increased 12% and 8% respectively even as consumer spending remained relatively flat.
Therefore, we can hypothesize that Americans -- unable to "cash out" from their homes -- are putting more money on their credit cards and slowly reaching their collective credit limits (upon which the borrowing stops).
When the borrowing stops, spending stops, too, and this has the impact of slowing down the economy.
A slower economy, of course, reduces inflationary pressures and that makes the U.S. dollar stronger to international investors. That strength, in turn, creates buying pressure on mortgage bonds which pushes mortgage rates down for everyone. Naturally, lower rates encourage more borrowing.
Yes, it's a cycle. And it's one worth watching.
Retail Sales are down worse-than-expected for April 2009. After a dreadful start to the month of May, mortgage markets improved last week, pushing mortgage rates lower overall. The ANGELs.
It was the first week since late-April in which mortgage rates fell.
The biggest reason rates improved last week was because the economic optimism that was responsible for the stock market's 30% gain since March faded somewhat.
Retail Sales came in weaker-than-expected as did Initial Jobless claims. Both of these data points show that the economy may not be recovering as quickly as investors had wanted to believe.
Combined with gas prices ballooning more than 10 percent over the last 3 weeks, it's clear that consumer spending will be muted this summer and into fall. THE DEMONS
Consumer spending is important because it accounts for two-third of the economy. If it's slowed for any reason, the economy is less likely to emerge from the current recession as quickly as had been anticipated. THE DEMONS
This is good news for mortgage rates because a slow economy tends to draw investors out of stocks and into bonds, including the mortgage-backed kind. More mortgage bond demand leads to higher bond prices and, therefore, lower bond yields and mortgage rates. THE ANGELS
This week, there isn't much data to watch and, because of Memorial Day, trading will be very light towards Thursday and Friday. THE ANGELS
It's during "calm" weeks like this that mortgage rates can make huge movements up or down. With no official announcements against which traders can make bets, every piece of news is a surprise. THE DEMONS
If you're still floating a mortgage rate, take some risk off the table by locking in this week. Call 404.643.4793 or see http://www.atlloans.com/
The Federal Reserve Senior Loan Officer Opinion Survey April 2009Getting approved for a home loan isn't getting easier, but it doesn't appear to be getting much more difficult, either.
In its quarterly survey to member banks, the Federal Reserve asked senior bank loan officers whether "prime" residential mortgage guidelines had tightened in the last 3 months.
Nearly 50 percent of banks said guidelines tightened last quarter, a much lower figure than during all of 2008 and a signal that mortgage lending may be turning a corner.
Guidelines remain restrictive, however.
Versus 18 months ago, lenders subject would-be borrowers to all of the following:
* Higher minimum credit score thresholds
* Larger minimum downpayments
* Lower debt-to-income requirements
* Mandatory fees based on certain loan traits
In addition, the availability of subordinate financing has all but disappeared when a home's loan-to-value exceeds 80 percent.
Combined, these changes preclude a lot of Americans from getting access to today's low rates but that could change in the coming months if the Fed's reported trend continues.
Some experts believe that credit tightening started the recession. Credit loosening, therefore, could help lead us out.
And while the April data may look bad, it's actually 10% better than what was expected.
As a result, it's turning into a bad day to be shopping for mortgage rates.
After bottoming out early last week, conforming, 30-year fixed rate mortgages have risen in cost by as much as three-quarters of a percent. Today's good-for-the-economy report may push costs higher still.
Now, it may seem odd to categorize 539-thousand lost jobs as "good-for-the-economy", but it's important to remember that on Wall Street, expectations are everything.
Investors are constantly buying and selling securities based on what they think will happen in the future. And, up until this morning, there was an expectation that 600-thousand jobs had been lost in April.
As it turns out -- relative -- the actual job loss data wasn't so bad.
Now, markets are making adjustments and re-forming expectations of what's ahead for the economy. They're preparing for things like higher levels of consumer spending in the months ahead, and fewer home foreclosures nationwide. Both outcomes would help to spur the economy from recession.
This helps explain the stock market's early rally, too.
For now, mortgage markets remain sensitive to whiffs of an economic recovery. In general, if there's good news for the country, it going to be bad news for mortgage rates.
Mortgage rates are off slightly in advance of the weekend.
The retail price of gasoline is rising nationwide, now up 30 percent since the New Year.
It's a similar run-up to what we've seen for retail gas prices in each of the last 5 Spring Seasons.
For people trying to time the mortgage market's bottom, clues about the future of mortgage rates may be at the local gas station.
Rising gas prices are indicative of the rising cost of energy and, indeed, crude oil is closing in on its 2009 highpoint. As these energy costs grow, so do inflationary pressures on the U.S. economy.
Inflation, of course, is awful for mortgage rates. When it's present, mortgage markets deteriorate and rates tend to rise -- often sharply and with little advance warning.
So, for today's homebuyers-in-process and would-be refinancers, prices at the pump may foreshadow bad news for the future of housing affordability. Even a modest, quarter-percent increase would have a palpable effect on payments, adding $372 in annual costs to a $200,000 home loan.
Since last week, gas prices are already up by 10 cents per gallon.
If you need help with your loan call 770-792-7979 or 1-800-792-0244 ext 107
Both mortgage guidelines and the economy have tightened since 2006, bringing more attention to "joint homeowners" -- non-spousal partners that buy and share a home as roommates.
The practice is not new, but, anecdotally, co-purchasing is becoming more common.
In the video above -- filmed two years ago but still on-target today -- real estate expert Barbara Corcoran provides good advice for co-purchasing partners. Like any business relationship, it's important to plan ahead.
* Hire an attorney to draft contracts and agreements
* Have a plan for when one or both parties wants to move or sell
* Consider life insurance policies on each other
The over-riding theme for co-purchasing arrangements is to be prepared. Done right, however, they can create two proud homeowners where there would have otherwise been none.
Your Equifax Beacon Score tells lenders how much of a risk you are, and hence it determines how much you'll pay for your next mortgage. So it's important to know what affects it.
Beacon scores range from 300 to 900 (a perfect score). The average adult has a Beacon near 700.
Many people think you need to be in the 800's to get great mortgage rates. That isn't the case. Only 11% of Canadians rank above 800, and it's virtually unheard of to see a Beacon near 900. All you really need is 680-700 to get the best mortgage rates. Even 600 can get you a decent enough deal if you can prove income and haven't had any delinquencies for at least a last year.
As of October 15, 2008, 620 is the minimum credit score for insured mortgages. That means you'll need at least a 600 score to qualify for good rates on mortgages with less than a 20% down payment.
If your score is below 620, you're what lenders call a "B" client (i.e. there's issues with your credit that banks won't like). 2 out of 5 are in this boat. Your credit can be fixed and there are still lenders willing to give mortgages to the credit challenged if you have a big enough down payment.Also keep in mind, the exact score needed depends on the type of mortgage you require. For example, mortgages for the self-employed, or for rental properties, often require higher scores.
Here's a table showing the approximate effect of different Beacon scores on mortgage interest rates. This is based on our enecdotal experience and not empirical data. But it gives you a rough sense for how rates go up as your Beacon score goes down.
Assuming you want to improve your credit (and who doesn't?) you should know how the Beacon formula is calculated. Here are the main criteria: see above pie chart
While no one knows the exact formula (except the inventor, Fair Isaac Corporation), Beacon scores are roughly based on:
Besides the obvious (bankruptcies, judgments, etc.) the top Beacon killers are:
If you have a lot of maxed out cards, bring them at least below 85% of their limit (or a least below 50% is better. Below 10% is best). Your credit score can jump considerably in as little as a month.
The moral of this story is, know your credit score and manage it carefully. Over 70-80% of all people have mistakes on their credit report. Don't be afraid to to check here. www.atlloans.com ask for expert to help you.
Midwest saw declines. The average 30 yr mortgage rate according to the
MBA was 5.10% in Feb and fell to 4.77% in March and that likely was a
key catalyst for the improvement in conjunction with the lower prices
that foreclosures bring. One thing to watch looking out the next few
months is the end of the foreclosure moratorium at many banks and how
much more supply that creates. Also, to watch is the recent uptick in
mortgage rates in response to the rise in longer term bond yields. Today
the 30 yr FNMA coupon is rising to the highest level since March 17th.
Mortgage markets faced a broad sell-off last week, sparked by the Federal Reserve and consumer sentiment.
This caused mortgage rates to spike from Wednesday to Friday and it caused the "lowest rates of all-time" to seem like an opportunity lost.
It's the first time in 4 weeks that mortgage rates rose overall.
Last week was a strange week, to say the least. Aside from the large docket of economic data, there was also:
- A Federal Reserve meeting
- 160 of the S&P 500 firms reporting earnings
- A global public health emergency
It all combined to make for a volatile week in mortgages and the biggest losers were the people that hadn't yet locked a mortgage rates. Based on the current market, each quarter-percent that mortgage rates rose added $32 per month per $100,00 borrowed.
This week, the market should be similarly jumpy.
Early in the week, there's not much data to sway markets, nor is there much in the way of public policy. Therefore, expect external factors like the Swine Flu to dictate the market's path. If the outbreak's intensity grows, look for Safe Haven to lower rates much like it did last Monday.
Also, be aware and listen for Stress Test rumors.
Thursday, the government is expected to release its bank Stress Test results. However, history shows that markets often make large movements before news is ever official -- mostly on rumors. As a result, expect mortgage markets to carve out wide ranges on Tuesday and Wednesday in advance of the reports, making it very hard to "time" low mortgage rates.
And lastly, Friday brings us April's employment data. There's nothing the report can show us that we don't already know so the biggest risk here is that employment is not as bad as we all expect it to be.
If that's the case, stock markets will rally and mortgage rates will rise.
Like always, mortgage markets can change in an instant -- especially when there's outside influences on "normal" trading like we're seeing with Swine Flu and the Stress Test. If you're offered a rate and it fits your budget, consider locking right away. It may not last long.
Who among us doesn't love a legitimate tax deduction?
The IRS expects to process 138 million tax returns this year and accompanying those returns will be a melange of tax deduction requests.
Most will be run-of-the-mill including such staples as mortgage interest, vehicle mileage, and child care deductions. Others, however, will be less ordinary.
On its website, TurboTax pays homage to some of the most off-the-wall, offbeat tax deductions through the years permitted by the IRS.
Among the "weirdest deductions allowed":
- A bodybuilder's body oil so his muscles would glisten in competition
- A private airplane for owners of investment properties
- Landscaping for a sole proprietor that meets clients at home
- A swimming pool for a man with emphysema
Tax deductions are prized by U.S. taxpayers. Hopefully, your 2008 tax returns included some good ones, too.
The Case-Shiller Index is a popular reporting tool for the nation's home prices. Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public.
The Case-Shiller Index is not a perfect measurement by any means. It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states. But that doesn't diminish its importance to the housing sector.
Because the Case-Shiller Index comes from the private sector, it's an excellent counter for the U.S. government's home value reporting tool -- the House Price Index.
In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government. This doesn't make either method more accurate, it just provides a helpful point/counter-point.
And that's why February's Case-Shiller Index is so important.
Despite reporting falling values in each of its 20 tracked cities, the Case-Shiller Index showed values falling with a lesser speed and intensity than in months prior.
It's a small victory, but if the Case-Shiller Index shows that home prices are starting to mend, you have to pay attention -- especially because the index is on a 2-month delay and doesn't account for Spring Buyers or the $8,000 first-time homebuyer tax credit.
One month doesn't make a trend, but if often-negative Case-Shiller Index turns in similar numbers for March, it could be the signal that housing has bottomed.