Weekly Mortgage Rate Report for April 27, 2013

ir-2Mortgage Rates Hit 2013 Lows, Big Week Ahead

Market Summary
Minneapolis, MN:   Mortgage rates finally made a break from a narrow range that’s persisted since April 15th.  They’d edged up to the top of that range by Thursday, but then made their first authoritative move lower to end the week at the best levels of 2013.



Average Home Buyer Numbers

fico_graphMinneapolis, MN:  According to a recent information from EllieMae, the average mortgage customer today has the following status:

  • Average credit score: 743
  • Average down payment: 19%
  • Average housing debt ratio: 25% of income
  • Average overall debt ratio: 35% of income
  • Average score of a denied client: 702

Where do you fit?

Do NOT let this fool you.  I was rather shocked to read this information. That doesn’t sound like my average customer!

Best advice? Contact a local licensed mortgage professional.  Provide them with a full application, and let them determine if you qualify for a mortgage loan with your credit score, your income, and your down payment size.

Average home price in St Paul Minneapolis up 18.9%

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.



Minnesota Real Estate – A Sellers Market

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.


Economy stimulated by low mortgage rates

Minneapolis, MN:  As mortgage rates continue to hover near the all-time historic low rates that we saw last November (2012), the nation’s overall economic outlook has seemed to improve.

saveIn November 2012, rates fell down to levels that had not been seen since 1971. While current rates are not at all-time lows, they are just slightly above those rates, and at levels that have not been seen since January.

The low mortgage rates are helping to stimulate the recovery of the housing market. They low rates have helped to increase home sales and home refinances. Many current homeowners have taken advantage of the low rates by refinancing their home loans, freeing up money to be spent elsewhere.

While the Federal Reserve plans to continue to keep mortgage rates low through the purchase of mortgage-backed security bonds, mortgage rates are not likely to stay this low forever. CNN Money expects that as the economy continues to improve over the course of the year, mortgage rates will begin to rise this fall – but just slightly.

Taking advantage of mortgage rates while they remain low is essential. First time home buyers can afford to purchase a property that is on average 20 percent more expensive than they were when mortgage rates were in the 4-5 percentile range. Refinancing to shorter term can also help buyers pay off their home in less time and lower their monthly mortgage payments.

Low down payment mortgage loans on the rise

hammer_bankMore mortgage lenders are offering conventional loans with down payments well below the 20% or higher levels of recent years.

In another sign of the housing market’s brightening outlook, more home buyers are discovering conventional loans with down payments well below the 20% or higher levels of recent years.

Until recently, many borrowers had to go through a government guaranteed loan program, such as the Federal Housing Administration (FHA Loans) or the Department of Veterans Affairs (VA Loans), to get a mortgage with less than a 10% down payment.


HARP Refinance program extended to 2015

underwaterMinneapolis, MN:  The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to extend the Home Affordable Refinance Program (HARP 2.0) by two years. The program was to expire at the end of 2013, but will NOW expire December 31, 2015.

The program is being extended so more underwater homeowners can benefit from refinancing to today’s low mortgage interest rates.  Already, some 2 million plus homeowners have successfully refinanced their homes using the HARP 2 refinance program.

FHHA also announced they will be launching a nationwide campaign to inform homeowners about HARP refinances, and eligibility requirements.

LEARN MORE about the HARP Refinance Program

To be eligible for a HARP refinance homeowners must meet the following basic criteria:

  1. The loan must be owned or guaranteed by Fannie Mae or Freddie Mac (Check and see for free)
  2. The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  3. The current loan-to-value (LTV) ratio must be greater than 80 percent.
  4. The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months.

If your current loan is an FHA Loan, or a VA Loan, you also have refinance options if your home is underwater with a FHA Streamline Refinance, or a VA IRRRL Streamline Refinance.


Mortgage Rates down for the Week ending 4/11/2013

arrow_percentFreddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging down for the second consecutive week following weak employment reports. The average 30-year fixed-rate mortgage at 3.43 percent this week remains near its 65-year record low and continues to provide support for the housing recovery.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.43 percent with an average 0.8 point for the week ending April 11, 2013, down from last week when it averaged 3.54 percent. Last year at this time, the 30-year FRM averaged 3.88 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 2.74 percent. A year ago at this time, the 15-year FRM averaged 3.11 percent.
  • 5-year  adjustable rate mortgages (ARM) averaged 2.62 percent this week with an average 0.5 point, down from last week when it averaged 2.65 percent. A year ago, the 5-year ARM averaged 2.85 percent.
  • Interest rates for HARP refinance transaction slightly higher
  • Interest Rates for FHA Loans, and VA Loans slightly lower

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

“Mortgage rates fell further this week following a lackluster employment report for March. The economy added just 88,000 net new jobs last month, about one-third as many as February and the fewest since June 2012. In addition, approximately 496,000 people left the workforce causing the unemployment rate to fall to 7.6 percent. Further, average hourly earnings were unchanged in March, indicating income growth remains tepid.”


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.


Is it OK to make a lowball offer?


Minneapolis, MN:  The spring real estate market is is upon us. The past few years have been tough in the real estate market, but like a roller-coaster, the market has plenty of ups and downs.  So where is the market today?  Can you make a lowball offer anymore?

As a general rule of thumb, it’s a bad idea for potential home buyers to make a low offer in the spring market, as multiple offers and increased sales activity mean sellers are more confident in rejecting your offer. In some cases, though, you might still be able to get away with making a low offer, depending on the specifics in your area and the home you’re considering.

Remember – all real estate is local.   In the Minneapolis / St Paul area, good inventory is low. Any home priced under $200,000 in good condition is going fast with multiple offers.

Local Sales Activity:  If sales activity in your region is low, you may be able to make a low offer on a home and actually have it accepted. The real estate market is in recovery phase in much of the country, but in some places, houses are still staying on the market for a long time, and sellers may be more willing to take a low offer in order to move the home. Your real estate agent can advise you on sales activity in your region. Are homes selling? How long are they on the market? Low activity may support a lower offer.

Inventory:  Inventory is a huge factor in whether you can get away with making a low offer. If there’s a surplus of inventory in your region, homes will sit on the market significantly longer, and sellers may be willing to entertain lower offers. If inventory is scarce or in high demand, though, sellers are probably getting multiple offers, so your low offer is likely to quickly be rejected.

neg_termPrices:  If homes are selling in your region, at what price point are they selling? It’s possible for a real estate market to be brisk, but a home that’s priced higher may sit on the market for months while the homes around it sell quickly. Evaluate the prices at which homes are selling, and if you’re willing to take a risk, make an offer on the home that is comparable to other sales. This is more likely to be successful if a seller had originally priced a home high to begin with.

Mortgage rates:   With current mortgage rates hovering at history lows, more people are able to afford homes, hence more people are in the market.  More people, more competition.

Phychological Warfare:  We all feel the need to “win”.  You want to win with your lower price, and the seller wants to win with their higher price. Don’t let emotions and personality interfere.

Also consider overall payment before being stubborn causes you to lose your dream house. At a  3.50% interest rate, $5000 more in purchase price is just $22.50 more a month.  Talked to your Loan Officer, or review the overall mortgage payment with a mortgage payment calculator.

Deal breakers after a pre-purchase home inspection

St Paul, MN:  It is that time of year – and the spring housing market is off to a great start. Good inventory is low , so if you put your home up for sale, you might find that it is quickly scooped up by an eager buyer. As a home buyer, you might have to settle for a great home that doesn’t match all of your wish list items, and even then, may be in a multiple bid situation with other house-hungry buyers.

HORNot every home is perfect – and most buyers will do a home inspection BEFORE finalizing a purchase agreement. So what on an inspection is a deal breaker?

Common Deal Breakers

No home is perfect, but certain types of problems are serious enough to send buyers packing and force a seller who thinks he has a deal to renegotiate the selling price.

  • Foundation problems. The home may show a few minor cracks after settling but larger cracks may mean expensive trouble.
  • Wiring issues. Old wiring such as knob and tube or aluminum may present a fire hazard, while the fuse box or circuit box may show the wiring is inadequate for modern appliances.
  • Roof. Roofs have a lifespan that can be expanded by patching, up to a point. If the roof is past its prime, or if the flashing is in poor condition (or nonexistent), the roof can leak or admit water that causes damage before you even know you have a problem.
  • HVAC problems. A inspection can uncover ineffective and dangerous heating and cooling units.

Assessing What’s A Deal Breaker

Most of the repairs mentioned can cost a few thousand dollars – enough to make a buyer reassess whether to continue with the sale. While remodeling an outdated bathroom or upgrading the flooring does not have to be done immediately, the new owner must have serious problems fixed immediately to make the house safe for occupancy.

Some mortgage loan programs, particularly FHA, may not be willing to fund the loan if certain defects are not fixed BEFORE you can buy the house.

Handling Deal Breakers If You’re A Buyer Or A Seller

For buyers, finding problems like this on a home inspection means that unless you can negotiate repair costs with the seller, you will have to make repairs out-of-pocket if you stick with the deal. Many buyers, especially first-time buyers, cannot absorb a hit of several thousand dollars after buying a home. Even if you love the home and are feeling pressured to move, financial realities may make you reconsider whether you can afford a particular house, no matter how much you love it. House love can turn to hate very quickly if your dream home turns out to be a money pit. Before finalizing your home purchase, always be sure to have a home inspection done

For sellers, the possibility of unknown costly defects underscores the importance of having your home inspected before the house goes on the market. If the inspector finds a major flaw, you must disclose it, but you can list the house. “as-is” if you are unable to make repairs. Upgrading the electrical system or fixing other costly issues may net you a better selling price, but in any case, a pre-listing inspection will save you the grief of having to make repairs or lower the price after the buyer’s home inspection is complete.