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St Paul

Rates jump up after jobs report

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lmrMinneapolis, MN:  Mortgage rates jumped up  at their fastest pace in two months after this weeks employment report, which showed that more jobs than anticipated were created in April.  Anytime we see good economic news, it tends to cause long-term mortgage interest rates to move higher.

Not only were April’s numbers good, the report also revised March’s numbers higher – which combined, added to the increase in mortgage interest rates.

While this all sounds like doom and gloom for anyone looking to buy a new home, or refinance their existing mortgage to save money – it just means that for a perfect customer, a 30-year fixed rate is back up to about 3.50%…  Hardly terrible news!

While we never know what mortgage interest rates will do, today’s rates are awesome.  There is very little room for downward improvement, and lots of room to move up.  I suggest locking in these great low rates, and never look back.

Average home price in St Paul Minneapolis up 18.9%

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St Paul, MN: The median price of a home in the Twin Cities rose 18.9 percent in the past year and stood at $192,557 in March, according to a study by an online real estate website.

The study, released Thursday, April 25, reflects a well-documented shortage of homes for sale in the Twin Cities, which has contributed to an increase in prices.

READ THE FULL STORY

 

Minnesota Real Estate – A Sellers Market

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St Paul, MN:  The latest report from the Minnesota Association of Realtors shows what we mortgage lenders already knew… That lower quality inventory is sparking higher prices across the state, but primarily in the Minneapolis / St Paul area.

real1The report for March showed the lowest number of homes currently on the market, at 11,784, since 2005. The report also shows the highest March average price for homes in four years, at $155,000 statewide.

The low inventory, combined with increased consumer confidence, and historically low mortgage rates, has created bidding wars on many properties, with the homes selling quickly, and ABOVE asking price.  This goes against the grain of what many home buyers think, that they can still make low ball offer on homes.  For the most part, low ball offers are a thing of the past.

More homes are expected to come on the market as we finally get some spring weather, but expect the fury of multiple offers on great, well priced homes to continue.

Your best bet to make a successful competitive offer is to be fully Pre-Approved, from a LOCAL reputable lender, and to be working with experienced knowledgeable real estate agents.

 

Lack of quality homes for sale causing problems

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Minneapolis, MN:  Who would have thought we would be saying this, but strong demand for housing is now running into supply problems, according to the National Association of Realtors® (NAR), and what I see and hear from my mortgage clients everyday.
real1Homes For Sale:
The lack of quality supply in homes for sale, especially in the under $150,000 price range in the Minneapolis / St Paul area if very evident with the number of clients unable to find a home that doesn’t need a lot of repair.  Any home in good condition, and priced right for today’s market is selling very fast, with multiple offers, and within just days of being put on the market. Home buyers need to be pre-approved, and ready to immediately offer full price.
Nationally, signed purchase agreements  in February and NAR’s Pending Home Sales Index slipped 0.4 percent from the previous month.

The Index, an indicator of future home sales, dropped to 104.8 from a revised 105.2 in January, but is still at a recent high, second only to April 2010 when it reached 110.9 shortly before the end a government home buyer tax credit program.  The index was 8.4 percent higher than a year earlier when it was 96.6 and February marked the 22nd month that contract activity increased on an annual basis.

On a regional basis the Index declined 2.5 percent in the Northeast but was 6.8 percent higher than a year earlier at 82.8.  The Midwest was up 0.4 percent month over month to 103.6 and 13.2 percent year over year.  Pending home sales in the South slipped 0.3 percent to an index of 118.8 in February but are 12.1 percent above February 2012.  In the West the index increased 0.1 percent in February to 101.4 but is 0.8 percent below a year ago.

The National Association of Realtors expects existing-home sales to rise about 7 percent in 2013 to approximately 5 million sales, which is near the current level of activity.  The volume of home sales appears to be leveling off with the quality inventory problems, and the leveling of the index means little change is likely in the pace of sales over the next couple months.

Because of limited inventory of quality homes,  NAR also expects the median existing home price to increase about 7 percent, while they expect mortgage nterest rates to slowly move up to closer to 4% by the end of the year.

Can’t refinance – Maybe you can with HARP – Find out here

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HARP 3.0 ???  Help for underwater home owners

St Paul, MN:  Virtually, all homeowners have lost value on their homes in recent years.  For many, this has created some challenges to refinancing and taking advantage of today’s super low mortgage interest rates.

There are a few programs with can help, depending on what type of mortgage loan you have today.  May people have successfully used program like HARP (Home Affordable Refinance Program), the FHA Streamline Refinance, or even the VA Streamline refinance known as an IRRRL loan.

Sadly, not everyone fits the criteria.  Therefore Washington has been floating the idea of an expanded HARP 3 Refinance Program.  It doesn’t exist yet, and may never exist…  But if it does, here is what it may look like:

There are some basic criteria for the #MyRefi or HARP 3 refinance program:

  • Current loan is NOT backed by FHA, USDA, Fannie Mae, Freddie Mac
  • Primary home only. No second homes or investment home
  • Loan less than $750,000.
  • On time mortgage payments for the past 6 months, with no more than one 30-day late payment in the past year.
  • Credit score above 580

This new HARP 3 refinance program proposal mirrors the current HARP 2.0 refinance loan program (possible no appraisal, less document, etc), except it would potentially also allow any underwater home owner, not just those who have a loan owned by Fannie Mae or Freddie Mac.

Try out the governments “Would I qualify for a refinance” below..

Mortgage rates bounce near records lows for week ending 12/14/2012

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Mortgage Rates Mixed, 30-Year Fixed Averages 3.37 Percent

ST Paul, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates mixed following data reports on inflation and the housing construction market. The 30-year fixed moved up averaging 3.37 percent, while the 15-year fixed eased to 2.65 percent, both remaining near their record lows.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.37 percent with an average 0.7 point for the week ending December 20, 2012, up from last week when it averaged 3.32 percent. Last year at this time, the 30-year FRM averaged 3.91 percent.
  • 15-year fixed rate mortgages this week averaged 2.65 percent with an average 0.7 point, down from last week when it averaged 2.66 percent. A year ago at this time, the 15-year FRM averaged 3.21 percent.
  • 5-year adjustable (ARM) mortgages averaged 2.71 percent this week with an average 0.7 point, up from last week when it averaged 2.70 percent. A year ago, the 5-year ARM averaged 2.85 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were mixed this week following data reports on stable inflation and a thriving home construction market. The 12-month growth in the core consumer price index has remained between 1.9 and 2.1 percent for the past five consecutive months ending in November. Meanwhile, housing starts averaged the strongest three months in November since September 2008, and homebuilder confidence rose in December to its highest reading since April 2008.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

 

Mortgages rates hover near record lows for week ending Nov 2, 2012

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Mortgage Rates Settle in Near Record Lows

Minneapolis, MN: Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates mixed following the monthly employment report but continuing to hover near their record lows over the past six weeks. Last year at this time, the 30-year fixed-rate mortgage averaged 3.99 percent, dropping below 4.00 percent for the first time since Freddie Mac started reporting its weekly mortgage rates survey in 1971.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.40 percent with an average 0.7 point for the week ending November 8, 2012, up from last week when it averaged 3.39 percent. Last year at this time, the 30-year FRM averaged 3.99 percent.
  • 15-year fixed rate mortgages this week averaged 2.69 percent with an average 0.7 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15-year FRM averaged 3.30 percent.
  • 5-year adjustable mortgages (ARM) averaged 2.73 percent this week with an average 0.6 point, down from last week when it averaged 2.74 percent. A year ago, the 5-year ARM averaged 2.98 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates remained near record lows following the employment report for October. The economy added 171,000 jobs, above the market consensus forecast, and the two prior months were revised up a combined 84,000. The Labor Department also reported that the unemployment rate ticked up to 7.9 percent and that average hourly wages were unchanged.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Waiting for lower rates could be costly

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St Paul, MN: We get it. You want the lowest mortgage interest rates. What you may not realize is that waiting for that low rate could make you your own worst enemy.

When shopping mortgage rates, understand that the quote you got yesterday or last week is meaningless. Interest rates can change throughout the day and that may cost you dearly while you think about it. Face it, rates change daily – sometimes even multiple times in one day.

Did you know you can pick any interest rate you want? Do you know the difference between the rate and pricing for the rate? Are you willing to pay the price to get a rate? Do you want lower closing costs? Has your loan officer explained these options and differences?

Have you ever thought “When the rate hits (your rate here), I’ll lock.” When the rate does hit your mark there is nothing lenders can do because the application/approval process hasn’t begun. Knowing this here is a simple plan to position you to lock in rates that meet both your payment and equity objectives.

1. Call a local licensed loan officer (not a bank) and begin discussing the refinancing of your home, along with the best rate and cost options to fit your needs.

NOTE: It goes against the grain of what most people think, but your current lender is almost without fail, the most expensive refinance option.

2. If the refinance rate and savings makes sense, start an application with your local lender, but don’t pay any application fee. You may have to pay a small fee to have them pull your credit. If they request/demand an application fee, or have cancellation fees you should select another lender no matter how great their interest rate quote appears.

3. Once the lender has you in application you’re now in a position to lock in a rate that meets both your payment and equity objectives and in the interim you can begin gathering all the needed items to seek an approval for you loan. Starting an application and signing the initial disclosures does not constitute a contract. You are under no obligations at this time to continue.  It does however, allow for an approval, which simplifies the entire process and puts you in the best position of strength for obtaining and locking your rate or making an offer on a new home.

Should you lock a rate, or hold out for something better?

We are asked this question an untold number of times a week. Everyone wants “the lowest rate” and no matter what great refinance rate I quote, human nature takes over. Everyone panics about locking today, because “what if rates go lower next week?” The first question to ask yourself is “Does the rate meet my payment objective?” If so, then lock, it really is that simple.

When the decision to lock has been made there are three possible outcomes;

  • Rates drop – ok, not good, but usually not enough to realistically impact a decision.
  • Rates remain the same – No worries
  • Rates go up – Lucky me, I locked!

So using the three outcomes above you only have a 33% chance of a rate improvement, and a 66% of no change or rates going higher.  What kind of gambler are you?

Little change in Mortgage Rates this week following employment report

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Mortgage Rates Change Little Following Employment Report

Minneapolis, MN: Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging slightly higher while remaining near their all-time record lows coming off the employment report for September.

News Facts 

  • 30-year fixed-rate mortgages (FRM) averaged 3.39 percent with an average 0.7 point for the week ending October 11, 2012, up from last week when it averaged 3.36 percent. Last year at this time, the 30-year FRM averaged 4.12 percent.
  • 15-year fixed rate mortgages this week averaged 2.70 percent with an average 0.6 point, up from last week when it averaged 2.69 percent. A year ago at this time, the 15-year FRM averaged 3.37 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.73 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.06 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were little changed this holiday week following the employment report for September. Payroll employment increased by 114,000 workers, although manufacturing jobs dipped for the second month in a row. Employment in the prior two months was revised up 86,000 and the unemployment rate fell to 7.8 percent, marking the lowest rate since January 2009.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

In Real Estate, When you snooze, you lose

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In Real Estate – When You Snooze, You Lose!

Minneapolis / St Paul, MN: A big shift in the housing market in our area has taken many by surprise. Any qualify house under $200,000 is selling in just days, with multiple offers, and above asking price.

With dwindling inventory, mostly from fewer foreclosures, increased demand with more competition because of terrific interest rates, we are seeing more and more multiple offers. This often happening soon after a property hits the market. It brings to mind the popular axiom “when you snooze you lose.” Wait too long to look at a great, well-priced property, or to make a strong offer, and you’ve lost your opportunity.

The problem some of you must confront is that even once you learn NOT to snooze and to move fast, you still might lose.

Why?? 

  1. The offer isn’t strong enough even at list price
  2. There are many offers (sometimes 10 and more)
  3. Cash buyers are too plentiful
  4. Lending rules on homes needing a little work

Is this the case with all properties? Certainly not. But we are seeing more competing offers at many price points, and new listings moving more quickly than in the past few years. This is not intended to scare you, and or make you feel that you cannot compete effectively. Simply understand the market has shifted in some significant ways and you need to be aware so you can react accordingly when you find a home you really like.

PAUSE – if you aren’t ready to jump, then you shouldn’t.  Just because things have heated up and there are “bidding wars” does not mean you should get bent out of shape or move quickly on an offer when you are really not ready. It’s a huge decision and an expensive one that shouldn’t be taken lightly. Make the decision that is right for you. And be prepared to live by it. 

Tips to help you win the deal: 

  • Be SURE to discuss any offer with your mortgage lender BEFORE writing the offer
  • Paying Cash? Have Proof of Funds ready to supply with your offer.
  • Know the comparable properties – this is what you pay a Realtor for.
  • Do not delay in making an appointment to see a hot new listing. Go now. Take time off work.
  • Do NOT assume a listing you like that has been languishing on the market will continue to sit there while you ponder. Remember…NEW BUYERS are hitting the market all the time and they might like the same house YOU do and be prepared to make a move
  • Know your budget (not just what you qualify to borrow) and make SURE you know what you are and are NOT willing to spend
  • Be ready to make an offer immediately if you like the house. Taking a night or two to “think about it” might be the kiss of death. REMEMBER THE TITLE OF THIS POST?!
  • Don’t get caught up in the auction-like atmosphere that can happen with multiple bids
  • Just because the tax value is significantly higher than the asking price DOES NOT mean you are getting a deal on the house.
  • Know that the home still has to appraise if you are getting a mortgage loan. Just because you are willing to spend more does not mean the bank will.

 

Minneapolis Area Medium Home Values UP 12.4%

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Minneapolis, MN:  Metro area home prices were up 3.3% in March according to the widely watched Case-Shiller home price index.

This report confirms what what I have been saying for some time now – that home prices in the Minneapolis / St Paul area are increasing, the market is stabilizing, and that especially in the sub $200,000 price range, good houses are going fast with multiple offers above asking price just days on the market.

All real estate is local. Our increase bucks the nationwide trend.  Overall, U.S. home prices fell in March, ending the first quarter with some of the lowest levels scene since the housing crisis began in mid-2006. During the first quarter, home prices nationally reached new lows, falling 1.9 percent year-to-year.

Nationwide, average home prices are down roughly 35 percent from their peak in the second quarter of 2006.

Demand for homes has been showing some serious signs of stabilization, as low mortgage rates, low home prices, and improved job growth have pushed first time home buyers off the fence and into the housing market.

According to information from the Minneapolis Area Association of Realtors, March marked the first time since 2010 that median home prices had risen in the Twin Cities.  The Minneapolis / St Paul median home price rose 6.4 %, to $149,000. The positive news continued in April, when a shrinking supply of homes on the market helped drive the median sales price up 12.4% to $163,000. Foreclosures and short sales also made up a smaller share of sales in recent months, which helped boost prices.

Forget the national reports. In this market, everyday you wait is going to cost you. Get pre-approved today, and be in your own home next month.

Stop Renting – First Time Home buyer myths

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STOP RENTING. No more excuses. Go buy a home!

The housing market has changed dramatically, and everyone should be taking advantage of some of the most affordable home prices, and lowest mortgage rates in history. You may be hearing a lot in the news today that in some markets it is cheaper to own than it is do rent. It’s true!

Stop listening to the doom and gloom drum beat the media plays. Bad news sell newspapers, so that is the spin they like to portray.

Common myths and misconceptions may be holding you back but shouldn’t.

  • My credit is not the best at this present moment: OK then stop delaying and start on the path to improve your credit scores. The vast majority of people can turn bad credit to good credit in less than a year – IF YOU WORK ON IT.
  • I do not have money for a down payment. Did you know you can buy a home worth $100,000 with just $3500 down payment?   There are many acceptable sources of down payment. Savings, 401k retirement plan, sale something, tax refund, or even a gift from a relative.
  • I do not feel comfortable with the economy:  WHO DOES?  But you have to live somewhere, so make that somewhere a place of your own?
  • I don’t think I will qualify for a mortgage: It takes just a few minutes for a licensed mortgage Loan Officer to review your basic information. There are no obligations, and you are committing yourself to nothing by talking to a Minneapolis, St Paul, or Duluth MN area mortgage lender. It really isn’t  as scary as some people think being a first time home buyer.

HARP 2: Another Obama Housing Refinance Failure?

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The Federal Housing Finance Agency plan to revamp the Home Affordable Refinance Program will result in just 17% of Fannie Mae and Freddie Mac 30-year loans qualifying for refinancing, according to one analyst.

Sarah Hu said there are some benefits of HARP 2.0, which is how bond investors refer to the plan, but also believes hurdles remain.

READ THE FULL STORY

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Winning or losing – How to play the Mortgage Interest Rate Game

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Mortgage interest rates — just like stock prices — change price daily and you can win big or lose big if you don’t know what you are doing.

#1 Mortgage Interest Rate and Lender Shopping Tip | MN and WI Mortgage Rates | Quote, Float, or Lock? |

For the home buyer that is “shopping” for a mortgage, or waiting for rates to fall, or just “hasn’t gotten around to it”, we suggest you almost always lock, and to do it quickly. The sooner you lock your rate, the less chance you have of losing in the Mortgage Rate game.

If you are refinancing, you can gamble a bit more, but if you have a signed purchase contract in hand, lock your rate as soon as possible.  There is no better way to protect yourself from the fickle mortgage markets. Holding out for 1/8th – 1/4% more is just not worth the risk! If you want to gamble… go to Vegas.

What is a Rate QUOTE? When buying a home or refinancing, it is common to call around to many lenders to get a rate quote. A quote is not a guaranteed rate. Another common issue with getting a quote is you often get one from Lender A on Monday, Lender B on Tuesday, and Lender C on Wednesday. Rates can change daily, sometimes multiple times, so unless you get all your quotes at the same time, you don’t have accurate information. THE ONLY QUOTE THAT MATTERS IS THE DAY YOU LOCK. Many lenders quote you low to get you to stop shopping, knowing that you will usually NOT be locking the same day of the quote – especially for any purchase loans. Be wary of anyone significantly lower than anyone else.

What is a Rate Lock Period? The lender will usually quote rates along with a rate lock period, usually 15, 45, or 60 days. The loan must close within this period. The longer the rate period, the higher the interest rate.

What is a Rate Lock? When you “LOCK” your interest rate with your lender, you and the lender agree this is the guaranteed rate you will receive, and that no matter what the markets do before closing, you will not be charged a higher rate if rates go up, and you will not be able to get a lower rate if rates go down. Your rate lock should be in writing.

What Does It Mean to Float? Floating your rate means means that while your loan is in progress, the rate is NOT yet guaranteed. You are taking the risk that interest rates will either not go up or that they will fall. If rates have been dropping, then you might want to take a chance that rates will be lower by the time you close your loan than they are today. Discuss the floating with your Loan Officer. Sometimes it is worth the gamble, sometimes it isn’t.

Government to step in with new refinance options?

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Minneapolis, MN: Many reports have surfaced recently that the government is seriously considering a wide range of ideas to assist consumers in refinancing their homes loans owned by Fannie Mae and Freddie Mac to take advantage of today’s amazing low interest rates. For a variety of reason, mostly to due to negative equity or current tighter credit underwriting guidelines, large numbers of these homeowners have been left to the sidelines.

As a Loan Officer, I have never fully understood some of the silliness in some underwriting guidelines, and have a few suggestions.

If Fannie Mae or Freddie Mac (you and I since the government took the over during the peek of the credit crunch) already “own your loan”, you are current with your payments, and your basic financial position is OK, what does it matter if your home is underwater? They already own the the loan, and have all the risk. Wouldn’t lowering their payment reduce the risk and simply make sense?

While allowing these people to refinance, I would add one rule…  That being that you couldn’t “go backwards”. In other words, if the homeowner currently has a 30-yr fixed mortgage with 26-year remaining, they would not be allowed to have a new loan longer than 26-years.

While it is little know, and even less used as most people select a very traditional 15-yr, 20-yr, or 30-year mortgage, many mortgage lenders (including us) allow you to select any number of years you wish. If you want a 17-yr fixed, or the aforementioned 26-yr fixed, no problem. We can do that.

For FHA loan holders, a quick, immediate fix is possible to help those people refinance by simply changing a mortgage insurance rule. Allow people with existing FHA loans to refinance with their current mortgage insurance rate.

Everyday I speak with homeowners with FHA loans, where I could easily lower their interest rate by 1% – 1.5%, but it makes no financial sense for them to do it.

FHA loans all have mortgage insurance. Up until recently, the cost of the insurance, which is included in their monthly payment, was just 0.55% of their loan amount. A simple way to understand the cost, is on a $200,000 mortgage loan, the insurance costs $110 per month.

Last year, FHA increased the insurance to 1.15%. So on the same $200,000 loan, the monthly cost is now $230! YIKES. The higher insurance cost eats up most, if not all of their potential monthly savings, leaving many FHA homeowners unable to take advantage of today’s low mortgage rates.

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