Thursday, July 19, 2012

Steady Mortgage Rates Contribute to Housing Market Improvements

It was good news this past week for housing when data for pending home sales showed an unexpected jump in May.
According to the National Association of Realtors, pending homes sales, which represents the number of contracts signed, increased 5.9% to 101.1 from 95.5 in April. Construction Spending also rose 0.9% in May, according to the Commerce Department, which was the biggest gain since December. While some area markets are stabilizing, S&P/Case-Shiller Index of Property Values showed that the decline in home prices during the month of April was at the lowest since November, 2010. Home prices are still down even as the housing market sees some improvement.
FreeRateUpdate.com's survey of wholesale and direct lenders shows that mortgage rates have remained steady with 30 year fixed mortgage rates at 3.375%, 15 year fixed mortgage rates at 2.750% and 5/1 adjustable mortgage rates at 2.125%, all available with 0.7 to 1% origination fee for well qualified borrowers. As these mortgage rates continue at historic lows, home affordability is still high which is helping those who wish to purchase a home. It is necessary to have good credit and qualifications for conforming mortgage approval and many consumers have taken the time to clean up their credit so that they could take advantage of this opportunity.
Even with a low 5% down payment, obtaining a conforming mortgage with private mortgage insurance is possible and available. With mortgage rates this low, it is a really good time to obtain a mortgage refinance, and now existing borrowers who have mortgages that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009, have HARP 2.0 available for those underwater mortgages. In many instances, HARP will not require an appraisal or other detailed information since it has been expanded to include unlimited loan to values.
Although HARP guidelines do differ from lender to lender due to overlays, many borrowers have been receiving successful approvals. There are still millions of borrowers who are eligible for HARP which is available until the end of 2013. Seeking a HARP refinance with an online inquiry can bring more success since it opens the door to a variety of lenders who are willing to assist.
The FHA Streamline Refinance is now another popular mortgage product for borrowers who have existing FHA mortgages that were endorsed prior to June 1, 2009. With no cash out, there is no need for an appraisal or other documentation and verifications. The biggest perk for this program is the extremely low upfront mortgage insurance premium at .01% which gives all eligible borrowers the opportunity to refinance to lower FHA mortgage rates. Current FHA 30 year fixed mortgage rates are at 3.125%, FHA 15 year fixed mortgage rates are at 2.625% and FHA 5/1 adjustable mortgage rates are at 2.625%.
FHA mortgages for home buyers are still available with different programs to fill a variety of needs. The FHA rehab mortgage is now a favorite especially when purchasing foreclosures or short sales. Borrowers who use the FHA rehab mortgage are able to complete the home improvements and repairs without the need of a second loan. Even though FHA closing costs are high because of the upfront mortgage insurance premium and other FHA fees, FHA still offers one of the lowest down payment requirements and flexible credit qualifying, which is not found with other mortgages. Since any FHA approved and participating lender can handle FHA loans, including the FHA streamline refinance, seeking information online has become very popular and successful for many borrowers.
Jumbo 30 year fixed mortgage rates dropped .125% this week and are currently at 4.125%. Jumbo 15 year fixed mortgage rates are at 3.125% and jumbo 5/1 adjustable mortgage rates are at 2.250%. Excellent credit is required in order to receive these lowest jumbo mortgage rates with 0.7 to 1% origination fee. The jumbo mortgage market is still somewhat tight right now, but is starting to see some improvements. Private mortgage insurance companies, such as Radian, are beginning to expand their involvement with jumbo mortgages which will help make these loans more readily available for suitable borrowers. Since jumbo mortgages are private loans that are held within a lender's portfolio, they are usually stricter, although high end borrowers usually have the means to meet the guidelines.
This past week, even though stocks took back some of their losses, MBS prices were able to hold on which kept mortgage rates steady. MBS prices affect mortgage rates which move in the opposite direction. Consumer sentiment was reported as weaker than expected, but personal income matched predictions.
The Conference Board's Sentiment Index fell to 62 as consumers express increased concern over jobs and income, although the Commerce Department reported that the economy grew at a 1.9% annual pace for the first quarter. Core PCE inflation came in lower than expected rising at a 1.8% annual rate. While Durable Orders for May increased 1.1%, ISM Manufacturing was weaker for May. Jobless claims were 386,000 and close to expectations. The Euro zone continues to be a major global issue as Euro leaders have now turned to the European Central Bank for help to keep markets calm.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.

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