Mortgage Interest Rates Hit All Time Low

Average 15-Year Fixed-Rate Mortgage Breaks Barrier, Falls To 2.97 Percent

MCLEAN, Va., May 31, 2012 /PRNewswire/ —  Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates following bond yields lower to new all-time record lows. The 30-year fixed averaged 3.75 percent setting a new all-time record low for the fifth consecutive week. The 15-year fixed averaged an unprecedented 2.97 percent bringing three of the four benchmark mortgage rates below 3 percent for the first time in Freddie Mac’s weekly survey.

NOTE: Rates reported by Freddie Mac are averages from last week, and may or may not be reflective of actual interest rates available today, nor your individual situation

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.75 percent with an average 0.8 point for the week ending May 31, 2012, down from last week when it averaged 3.78 percent. Last year at this time, the 30-year FRM averaged 4.55 percent.
  • 15-year FRM this week averaged 2.97 percent with an average 0.7 point, down changed from last week when it averaged 3.04 percent. A year ago at this time, the 15-year FRM averaged 3.74 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.84 percent this week, with an average 0.6 point, up from last week when it averaged 2.83. A year ago, the 5-year ARM averaged 3.41 percent.
  • 1-year Treasury-indexed ARM averaged 2.75 percent this week with an average 0.4 point, unchanged from last week. At this time last year, the 1-year ARM averaged 3.13 percent.

Minneapolis Area Medium Home Values UP 12.4%

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.

CFPB to steal Loan Officers Income – Real Estate Agents Next

May 23, 2012  – Washington D.C. – Small Business Panel and Small Entity Representatives (SER’s) meet to discuss CFPB’s Proposals Under Consideration

The Meeting’s Outcome Flat fees – YES!!!???

Real Estate Brokers – Might be welcome to wage control for you, too!!!

CFPB listening – NO!!  Industry Has to Act – Yes!

 The meeting makes it is clear that amending the Dodd Frank Act is the only way to avoid a January 2013 train wreck!

The Box Score as of May 23, 2012 –

Comrades for Penalizing Brokers (CFPB) – 1; Small Business – 0


go to: http://www.change.org/petitions/petition-to-amend-the-dodd-frank-act and sign the petition – it may be your only hope! Then circulate the petition to 10 or more people you care about.

Read on to learn more about why you better care and act!

On Wednesday in a building on the White House compound about seventeen selected small entity representatives (SER’s) sat with representatives of the CFPB, Office of Management and Budget and the SBA’s Office of Small Business Advocacy. According to information shared by one of the broker representatives: five of those attending were mortgage brokers. The others were from community banks, credit unions and non-profit organizations.

This meeting is one of the required steps in the CFPB’s rulemaking process. This precedes its upcoming notice for proposed rule making which will implement specific mortgage or mortgage related provisions of the Dodd Frank Act.

On May 9th the CFPB posted, quietly and without public announcement in the Newsroom area of its website, a release that described the process. The information in the release conflicted with the information in its Outline of Proposals but so few picked up on the event that except for some media attention, no one even knew there was a six page instruction sheet for the people who attended the May 23rd meeting. The information sheet listed the questions the Small Business Panel was seeking input on. But, no one knew they could send answers to the Bureau.

If you want to read their questions and send your answers you can do so by going to www.immaag.com and using the link on the home page to read the well hidden document and get the email address to send your answers.

The CFPB has not reached out beyond the selected SER’s to notify industry about what is happening or to let others know that six page document exists. Answers to the questions in those 6 pages were to form the foundation of the May 23rd D.C. meeting.

Your cause for concern!

There are several things which should cause concern to everyone who cares about housing recovery, free markets, and their future to serve as a mortgage professional, real estate professional or even to be an American adult who aspires to own, buy, rent, sell, invest in or refinance real estate:

1)                   Nothing in any document prepared by the CFPB indicates they are listening to input they are receiving from anyone. They are ignoring input about how wrong the Dodd Frank Act is in its approach. They do not appear to care about proof that its “corrections” just like the ones in the FRB’s loan originator compensation rule will harm or already are harming consumers and industry. In fact, if the initial report from one of the broker participants at the meeting is true, not only is the Bureau not listening, it plans to be even more rigid in its rule making and appears bent on over-stepping its authority just as the Federal Reserve Board did before it!

2)                   The May 23rd meeting implied that the “flat fee” approach to origination fees is real and it is not just an additional fee allowed to provide flexibility in creditor paid transactions which is enabled by the Bureau’s “exemption authority”. It appears the CFPB may believe it should be the only compensation. Is this true? Frankly, it is impossible to tell from the conflicting information contained in the two May 9th postings on the CFPB’s website and reports from the meeting. But, at least one SER at the Wednesday meeting is absolutely sure that is what the group took away with it.

3)                   In discussing flat fees the same SER came away with the conclusion that even though Real Estate Brokers are exempt from the CFPB’s supervision (See Section 1027 of the Dodd Frank Act) the Small Business Panel representative implied in the discussion of affiliated businesses that flat fees are being considered for real estate commissions. NAR – what do you think about that?

The conflicting information between the CFPB’s own written documents, the confusion about what the Dodd Frank Act requires or allows, and the uncertainty about what the CFPB intends to do should serve as a strong motive for you

to act and act now!

If the CFPB repeats the Federal Reserve Board’s approach to its notice for proposed rule making, even thousands of comments will not de-rail what appears to be a runaway train headed directly at you and every American who aspires to be involved in owning real estate — if that is the case you have only one seriously meaningful way to stop this assault on you and your customers –

You must support the initiative to amend the Dodd Frank Act – you must step up, sign and circulate this petition.

Go to: http://www.change.org/petitions/petition-to-amend-the-dodd-frank-act and sign it TODAY then share it with 10 friends and so on.

Yes, we must still respond to the inevitable notice for proposed rule making. But the only sure way to prevent what appears to be an act by the Comrades for Penalizing Brokers (CFPB) to decimate your business and harms millions of consumers is to take away their authority to do it.

Act TODAY! And help this go viral — tell everyone you know to Act.

The petition is going to be shared with the Congress in June. It has over 5,200 signatures today  but it needs 100 times that. We have a chance to stop the CFPB by amending the Act that gives them what they think they have to do. But only you can make it happens and it only takes seconds and no money!

 Don’t put this off or think someone else will do it!

If you don’t do it, no one will!

CFPB and Frank Dodd costs consumers more to get a home loan

The new CFPB (Consumer Financial Protection Bureau) is destroying the mortgage industry because of the bad Frank / Dodd Financial Reform laws.

This continued government overstepping will again cost the consumer MORE, not less to get ahome loan.

Sign the NO petition at http://tinyurl.com/73qpyox

Comment: “I am an industry professional. The comp rule in Dodd-Frank iis forcing me to overcharge borrowers of higher loan amounts. I also can no longer offer discounts for borrowers who refinance multiple properties with me at a time. Who is helped by this?”

Comment: As a mortgage lender, I have basically stopped doing loans under $100k. The reason, I do not make enough money to justify the time. I am not alone. Fact is this is harming low-end homebuyers. It is FAR too overreaching.

Comment: Frank Dodd, despite all its good intentions, has made it more difficult to obtain a mortgage and more difficult to understand closing costs. It needs to go if we’re looking for housing recovery in earnest.

Comment: I feel strongly that our Congressional Representatives and Senators need to be made aware of the serious adverse effects of Dodd-Frank Act. Dodd-Frank not only harms the financial industry as a whole but more importantly it harms the very group it claims to help, the consumer. I agree that an independent evaluation should be conducted and due diligence should be done before any additional initiatives of the Dodd-Frank Act are implemented. If this is done objectively, our leaders will see that the only true solution is to eliminate Dodd-Frank all together.

Home prices leap – Time to buy

Twin Cities home prices bounced up in April with the largest jump since before the housing market meltdown.

A shrinking supply of homes on the market and the reappearance of multiple offers helped drive the median sales price up 12.4 percent to $163,000 over the previous April.

That’s the largest increase since January 2004, the Minneapolis Area Association of Realtors said in its monthly report Thursday, May 10.

Fewer foreclosures also helped boost prices, as traditional sales accounted for a greater share of the market, which “tends to drive up median and average prices since they tend to sell for more than foreclosure properties,” said Cari Linn, president of the trade group.

Read the full story

Check Minnesota Mortgage Interest Rates



No closing cost loans and interest rates

Best Interest Rate or Low Closing Costs?

One of the most confusing areas for consumers in a mortgage loan transaction are closing costs. There are advantages and disadvantages of the highly advertised no closing cost loans.

First and foremost, there is no such thing as a zero cost loan! No one works for free!

Everyone knows there are costs associated with getting a mortgage loan; appraisal, credit reports, state taxes, county recording fees, title companies fees, lender fees, escrows, and more. Someone has to pay these fees, and it is always YOU. How you pay them is you need to understand.

In a no lender fee or no closing cost mortgage loan, the lender simply uses “negative” points to offset your costs. For example by selecting maybe a 4.75% interest rate versus a 4% interest rate, you can reduce (or offset through interest rate) most, if not all of your closing costs.

By choosing this option, it appear as if you saved thousands in closing costs. GREAT! But while lower costs always sounds good, you now have a significantly higher interest rate! OK, now what?

No matter what anyone says, a no closing cost, or no lender fee loan is NOT automatically a great deal!

Although it may sound so much better than paying thousands in closing fees, you have to analyze each individual loan and client situation to determine the benefits. Many lenders speak highly of the “thousands of dollars” you save in fees. They never discuss the fact that you may spend significantly more in interest over the full life of the loan than you ever saved in up-front closing costs!

There is a break even point… Generally speaking, if you are in the home under 5-years, a low or no closing cost can be a good deal. On the other hand, being in the loan more than 7-years generally means the no closing cost loan actually costs you a lot of excess interest.  Talk to a local licensed mortgage professional (not a bank application clerk) and have them run the numbers on both options to see what makes most sense for you!

FHA Streamline loans getting cheaper

Minneapolis, MN: For certain FHA loan backed homeowners, refinancing via the FHA Streamline Refinance program is about to get a lot less expensive. Beginning June 11, 2012, FHA implements a new policy for its mortgage insurance rates.

Millions Of FHA Homeowners Now Eligible

FHA mortgage rates have been steadily falling. Unfortunately, the FHA mortgage insurance rates have not. Today’s FHA homeowners pay up to 1.25% in annual mortgage insurance premiums — triple the rates that FHA backed homeowners paid just 4 years ago.

For new FHA homeowners, those buying a home today and using the FHA’s low down payment mortgage program, for example — the FHA’s rising mortgage insurance rates are a nuisance more than anything else. High insurance premiums are the price you pay for getting access to a mortgage with just 3.5% down.

But, for homeowners who already have an FHA backed loan, rising mortgage insurance rates have made it difficult to qualify for the FHA Streamline Refinance, the FHA’s “no appraisal needed” refinance program. This is because while for many people, we can lower their interest rate over 1%, the new higher mortgage insurance costs eat up all the savings. The program rules state that a mortgage applicant’s mortgage payment fall by at least 5% in order to qualify for the FHA Streamline Refinance.

“Mortgage payments” are defined as (1) monthly principal + interest payments, plus (2) monthly mortgage insurance payments. Principal + interest payments have dropped significantly since 2008, but rising mortgage insurance rates have negated these effects. Making that 5% savings marker has become exceedingly difficult.

Potentially millions of FHA-backed homeowners, while eligible, were effectively eliminated from the FHA Streamline Refinance program and from access to today’s low rates.

For long-time FHA-backed homeowners, that’s all changing.

If your current FHA mortgage was endorsed by the FHA prior to June 1, 2009, you are eligible for the FHA’s “grandfathered” mortgage insurance premiums. The new premiums are dramatically lower than the premiums paid by today’s new FHA customers, making the FHA Streamline program once again a great option for home owners.

For eligible homeowners, the new FHA Mortgage Insurance schedule is as follows :

  • All loans : 0.01% upfront mortgage insurance premium (verus 1.75% for new loans)
  • All loans (except 15-year fixed with LTV of 78% or less) : 0.55% annual mortgage insurance premium (verus 1.25% for new loans)
  • 15-year fixed with LTV of 78% or less : No annual mortgage insurance premium

Winning in multiple offers without paying more

How To Win in a Multiple Offer Situations without paying more!

Minneapolis, MN:  Multiple offers on homes just days on the market appears to be back,  especially for homes priced under $200,000.

There’s a mixed bag of buyers out there:  conventional buyers, FHA buyers, VA buyers, all-cash buyers, and investors.

In a multiple offer situation, the offer price is probably one of the biggest factors when the seller is deciding which offers to entertain or accept.

But what do you do when you’ve reached your affordable max and can’t really come up any more in price?

Here are just a few things that I recommend to my buyers.  Some requires a little investigative work, but it may pay off for you.

1. First, be sure to be fully pre-approved with an approval letter from a rock solid local lender with a great reputation that real estate agents trust. This is almost never an internet lender or the big banks.

2. Find out where the seller is moving to, and what logistics are involved with that – Is is the case where and when they’re moving may cause them need a short rent-back from you?  In other words, after the close of escrow, it may help if they stayed in the home anywhere up to 30 days in which they can pay you based on your P.I.T.I. (Principle, Interest, Taxes, Insurance) calculated on a daily rate, or if you’re in a financial position to do so, offer them a free rent-back period.  A good example is when the seller’s new home is not quite ready to move into and they need just a small amount of time.  Offering the seller a rent-back is HUGE when it comes to these situations.  No seller really wants to have to go into temporary housing and have to move twice!

3. Do the sellers have any pets that for whatever reason will be difficult for them to take to their new home?  Once again, if you’re in a position to do so, offer to adopt the pet.  Or perhaps there is someone you know that may want to adopt the pet.  This is a major relief when a problem arises for those sellers that are moving to an environment where the little guys may not have as friendly and safe of an environment.  And since the pet is already accustomed to that home, there shouldn’t be too much of a transition for the pet other than getting used to their new owners.  Something like this can truly set you apart from the other buyers tremendously.

4. Write a fast inspection period into the contract – Get your inspection done within three-days and have the contingency removed from the contract.  Why? It shows the seller you’re willing to get your due diligence done quickly and efficiently.  That can score quite a few points with both the seller and listing agent.

5. Offer to inherit personal property that would be difficult to move – Is there any personal property that is large or difficult to move that would create a huge cost factor for the seller?  Offer to keep the personal property or purchase the personal property depending on what type it is.  Maybe there are some old paint cans or bricks/boards, etc. on the property. This can save the seller a lot of money not having to pay to move items that could create a substantial moving expense.

6. Write a personal letter to the seller that you’ve found you have a connection with – Do you and the seller both have children?  Pets?  Belong to the same organizations / clubs / charity?  Share the same spiritual beliefs?  Taste in architecture?  Perhaps you share similar life experiences?  Writing a personal letter to the seller that is sincere and makes some kind of connection or that creates some kind of bond with them can be HUGE in their decision to choose a buyer in a multiple offer situation. From personal experience, this helped me win the home I am in today!

The best advice I can give a buyer is:  BE A STRAIGHT SHOOTER AND WEAR YOUR HEART ON YOUR SLEEVE.  Don’t be crafty or coy.  It never works and you’ll always create an environment of mistrust and animosity, and that’s a recipe for disaster.

Adjustable mortgage loans popular again. Here is why.

Adjustable (ARM) Loan Resets Cause Foreclosures – Fact or Fiction?

Saint Paul, Minnesota: Requests for adjustable mortgage loans dropped to near zero the past few years because of the general belief that adjustable loans are bad, and that recent high levels of foreclosures was because homeowners were doing fine with their loans until their adjustable loans reset to higher rates.

Lenders are again starting to see inquiries about, and home buyers again taking adjustable rate loans because of the super low adjustable loan rates.

FACTS VERSUS FICTION:  According to recent nationwide data, the number one reason homeowners default on their home loans was because their income was cut. This accounted for just under 60% of loans in default. Once traditional causes of foreclosure are factored in (divorce, major illness), cash flow problems added up to a whopping 80% of all “causes” of defaulted mortgages nationwide.

Adjustable payment loans resetting to a higher payment alone accounted for just 2%, according to the data. Rather than being the cause, they appear to be the final straw that breaks the camels back of people who were already in financial trouble.

ADJUSTABLE RATE MORTGAGES: Adjustable Rate Mortgages (ARMs) became one of the most popular and effective tools for helping some prospective homebuyers achieve their dream of homeownership between 2000 and 2007. Initially developed during a time of high interest rates that kept many people out of the housing market, the ARM offers lower initial interest rates by sharing the future risk of higher rates between borrower and lender.

IS AN ADJUSTABLE MORTGAGE RIGHT FOR YOU? Talk to a local licensed Loan Officer (not an unlicensed bank application clerk) about the benefits. ARMs can be an excellent choice of financing under certain conditions, such as rising income expectations, high interest rates, and short-term homeownership plans. But because payments and interest rates can increase, either steadily or irregularly, homebuyers considering this kind of home mortgage loan need to have the income to keep up with all possible rate and/or payment changes. Each ARM has four basic components:

  • Initial interest rate, which is typically one to three percentage points lower than that of most fixed rate mortgages.
  • Adjustment interval, at the time between changes in the interest rate and/or monthly payment will be.
  • Index, what lenders use to determine future rate changes. This is usually LIBOR.
  • Margin, or the additional amount the lender adds to the index to establish the adjusted interest rate on an ARM.

Typical adjustable loans come in 1-year, 3-year, 5-ya, 7-year, and 10-year initial fixed term options. The 5-year adjustable is super popular. The rate is fixed for the first five years of the loan, then becomes adjustable on a yearly basis.

Is the real estate market going Up or Down?

Is the real estate market finally going up, or still in trouble?

It depends on what market statistics you are looking at. Is there a real estate recovery, or is this just a small blip in the radar of a longer housing cycle?
For the 7th month, home prices of non-distressed properties have declined, according to Inman News. Not good news for sellers, but awesome news for buyers.
In another report,  pending home sales are up in March, an indicator of a real estate recovery, according to the National Association of Realtors. That index is now 111, and 100 or above is considered a healthy real estate market. The index in March 2011 was 89. The index right now is what it was in 2001 before the market started climbing.
But the public appears to be wary of all the discord between the talking heads, and all their doom and gloom. Buyers appear to be finally getting off the fence, taking advantage of super low mortgage interest rates,  and house prices not seen in a decade.
What’s different today? Is this just an uptick on the graph that will quickly be pulled down by the shadow inventory and new distressed sales?  Are we truly pulling out of the mire of dismay and dismal market we have suffered through since Fall 2008?
From my individual perspective, there is a change in the real estate market that I have not seen in years. Buyers are eager to buy, they are making offers, they are NOT sitting on the fence any longer, and good homes, priced right, especially in the under $200,000 market, are once again selling in just days with multiple offers.  The buy versus rent question is clearly leaning towards home purchase once again, especially for first time home buyers.
Buyers need to be fully pre-approved from a licensed mortgage loan officer and ready to make an offer.

HARP 2.0 is really HARP point NO for many people

HARP Refinance – The first few months

HARP 2.0 has been in place for awhile now, and although I have helped several people refinance their underwater loans with the HARP 2.0 loan program, it has actually been a bit disappointing. As typical with government programs, the reality of HARP 2.0 falls short of the perception.

When the program was announced back in October, 2011 it sounded like everyone – no matter what their loan to value or their income would be able to refinance at today’s low interest rates.

When the program moved full steam ahead in March, 2012, many people have been left on the sidelines wondering why they can not qualify, or why they have been denied. Many people with loan-to-values over 105% or with private mortgage insurance are finding their options even more limited.

Here is what I have learned about HARP 2.0 so far…

  • Freddie Mac. For a while it was almost impossible to get an “Approval” through Freddie Mac’s automated underwriting engine. They supposedly have tweaked their system, so if you have a Freddie Mac loan that was denied just weeks ago.  Try again.
  • Unlimited Loan To Value Guidelines – When the guidelines of HARP 2.0 were release last year, they announced that loan to value restrictions were being removed. Although this was the guidelines of the program, most of the large lenders are limiting the loan to value.
  • Appraisal Waivers – The appraisal waivers come from Fannie Mae and Freddie Mac. Each have their own automated valuation systems that determine their estimated value of a property. If the automated system accepts your estimated value of the property, then no appraisal is needed. Keep in mind that not every HARP 2.0 refinance will qualify to have the appraisal waived, and that we are seeing very loan “automated” values.

To read more about the reality of HARP 2.0

Credit tips for first time home buyers

 Credit tips for buying a home

We all should know that it’s important to have solid good credit when thinking about buying your first home. We all know that lenders and banks want to see solid credit in any borrower.

But what exactly does that mean for first time home buyers?

It means having some credit.  It means having a score in the mid-to-upper 600 range (although that doesn’t mean you’re out in the cold if you’re in the low 600’s).  It means no major negative items like a repo or bankruptcy in the past few years.

In short, it means you’re responsible with your money, and you pay your bills on time.  The way lender determine if you are doing these things is with a FICO credit score.

How do you make sure your credit is good in general? Let’s explore 6 credit tips for first time home buyers that you could follow even if you’re not a first time buyer.

  • Pay your bills on time, every time. This is a simple rule when it comes to establishing good credit (not always easy to follow, but it’s vital). You have to keep your bills current.
  • Have a diverse credit portfolio. This can include secured credit cards, a small car loan and maybe a store credit line. A diverse mix shows that you are able and willing to pay your bills.
  • Keep your credit charges below 30% of the limits. Going above this number will reduce your credit score. Paying the debt down is the best way to make this happen. You could also ask the credit company to raise your limit (but don’t charge more if they do!).
  • Check your credit history every quarter. You have a right to know what’s on your credit report. Thanks to the government, you actually have the legal right to get your credit report once a year from each of the 3 credit bureaus. That means you can actually check your credit report 3 times per year.
  • Keep your lines of credit open. Closing a paid-off account is a good step after you have your mortgage. A longer, more diverse credit history is important.
  • Once you have a few lines of credit, don’t open any more. Continuously opening new credit accounts is risky, and your score will reflect this.

You can explore more on how to get your credit ready to become a first time home buyer with reading “The Understanding Your FICO Score” at the button below. The Pamphlet covers what makes up a credit score, how to improve your FICO score, steps to rebuilding credit and more.