Mortgage bond prices rose last week applying slight downward pressure on mortgage interest rates. Weakness in the equity markets helped bonds recover from losses seen earlier in the week. On Thursday the Dow Jones index closed at October 2002 levels. The Federal Reserve continued buying mortgage bonds with the purchase of about $20 billion from February 12 through February 18.
Fannie, Freddie to fund part of $75B foreclosure fix
Obama administration is only using $50 billion of financial bailout package to fund its loan modification program. Remaining $25 billion coming from Fannie Mae, Freddie Mac and Department of Housing and Urban Development.
Stimulus Plan and what it entails:
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing. Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, they can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phase-out Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
To break down what this phase-out means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future. As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
Keep in mind that market conditions as of late have been choppy and unpredictable. Any future data releases showing a rebound in the economy as well as the Fed's promise to buy Mortgage Bonds could lead to mortgage interest rate volatility, so lower rates are not a given.
Please give me a call if you have any financial questions or if you need a second opinion on a loan scenario. If you are calling after hours or on weekends, please call my mobile at 480-225-2987 for immediate pre-qualifications.
Rates for February 20th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.986%APR
30 Year Fixed Interest Only 6.375%, 6.488%APR
15 Year Fixed Conventional 4.375%, 4.498%APR
3/1 LIBOR ARM Conventional 4.50%, 4.613%APR
5/1 LIBOR ARM Conventional 4.25%, 4.363%APR
5/1 LIBOR ARM Interest Only 4.625%, 4.738%APR
30 Year FHA/VA 5.50%, 5.752%APR
*30 Day Locks
JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.375%, 5.476%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks
ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.50%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.875%, 7.132%APR
*60 Day Locks
6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.
Friday, February 20, 2009
Friday, February 13, 2009
Weekly Rates + Market Commentary + Program Update
We still can get your FHA loans done in 2 weeks when needed and we can go down to a 540 fico score!!
For housing stimulus updates, click here.
Mortgage bond prices rose last week pushing interest rates lower. Stocks struggled throughout most of the week, which helped funnel some funds toward bonds. The Treasury auctions dominated trading along with headlines questioning the efficacy of continued bailout efforts. Fortunately the Fed continued to buy mortgage bonds with purchases of about $23.2 billion February 5 through February 11. This buying helped buoy mortgage bond prices.
Continued stimulus spending developments dominate the financial headlines. Political party and intra-party disagreements are a daily occurrence as the merits of the proposals both future and past are debated. The debate involves who should get the money, how the money will be tracked, what ultimate effect will the money have on employment, and much more. Even with the stimulus, past and future, most signs point towards continued economic uncertainty.
One positive development for lower mortgage interest rates appears to be the purchasing of mortgage bonds by the Fed. This is separate from the stimulus spending that regularly makes the news. The Fed continues to buy billions of dollars of mortgage bonds. While the ultimate outcome is debated, the short-term reality is that the Fed’s purchasing has helped mortgage interest rates at the very least remain historically low. Whether the Fed can accomplish their goal of driving interest rates lower is still uncertain, but they obviously are trying. We know everyone would like to see lower rates but remember that stability is equally important. Sustained low rates generally are better than rapid fluctuations down and then quickly back up. Keep in mind that market conditions as of late have been choppy and unpredictable. Any future data releases showing a rebound in the economy as well as the Fed's promise to buy Mortgage Bonds could lead to mortgage interest rate volatility, so lower rates are not a given.
Please call me over the weekend at 480-225-2987 if you need 2nd opinions on loan scenarios or for quick pre-qualifications. Or, you can go directly to my website at http://www.creativefinanceaz.com/
Rates for February 13th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 6.375%, 6.488%APR
15 Year Fixed Conventional 4.50%, 4.613%APR
3/1 LIBOR ARM Conventional 4.625%, 4.738%APR
5/1 LIBOR ARM Conventional 4.50%, 4.613%APR
5/1 LIBOR ARM Interest Only 4.75%, 4.863%APR
30 Year FHA/VA 5.50%, 5.752%APR
*30 Day Locks
JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.375%, 5.476%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks
ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.50%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.875%, 7.132%APR
*60 Day Locks
6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.
For housing stimulus updates, click here.
Mortgage bond prices rose last week pushing interest rates lower. Stocks struggled throughout most of the week, which helped funnel some funds toward bonds. The Treasury auctions dominated trading along with headlines questioning the efficacy of continued bailout efforts. Fortunately the Fed continued to buy mortgage bonds with purchases of about $23.2 billion February 5 through February 11. This buying helped buoy mortgage bond prices.
Continued stimulus spending developments dominate the financial headlines. Political party and intra-party disagreements are a daily occurrence as the merits of the proposals both future and past are debated. The debate involves who should get the money, how the money will be tracked, what ultimate effect will the money have on employment, and much more. Even with the stimulus, past and future, most signs point towards continued economic uncertainty.
One positive development for lower mortgage interest rates appears to be the purchasing of mortgage bonds by the Fed. This is separate from the stimulus spending that regularly makes the news. The Fed continues to buy billions of dollars of mortgage bonds. While the ultimate outcome is debated, the short-term reality is that the Fed’s purchasing has helped mortgage interest rates at the very least remain historically low. Whether the Fed can accomplish their goal of driving interest rates lower is still uncertain, but they obviously are trying. We know everyone would like to see lower rates but remember that stability is equally important. Sustained low rates generally are better than rapid fluctuations down and then quickly back up. Keep in mind that market conditions as of late have been choppy and unpredictable. Any future data releases showing a rebound in the economy as well as the Fed's promise to buy Mortgage Bonds could lead to mortgage interest rate volatility, so lower rates are not a given.
Please call me over the weekend at 480-225-2987 if you need 2nd opinions on loan scenarios or for quick pre-qualifications. Or, you can go directly to my website at http://www.creativefinanceaz.com/
Rates for February 13th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 6.375%, 6.488%APR
15 Year Fixed Conventional 4.50%, 4.613%APR
3/1 LIBOR ARM Conventional 4.625%, 4.738%APR
5/1 LIBOR ARM Conventional 4.50%, 4.613%APR
5/1 LIBOR ARM Interest Only 4.75%, 4.863%APR
30 Year FHA/VA 5.50%, 5.752%APR
*30 Day Locks
JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.375%, 5.476%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks
ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.50%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.875%, 7.132%APR
*60 Day Locks
6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.
Monday, February 2, 2009
Weekly Rates + Market Update
Last Week In Review:
"ACTION IS THE REAL MEASURE OF INTELLIGENCE." Napoleon Hill. Last week was definitely action packed, though only time will tell how intelligent each action was - here are the highlights.
On Wednesday, the Fed announced that it decided to keep the Fed Funds Rate steady at the current 0 - .25% range, the lowest ever. They also indicated that "economic conditions are likely to warrant exceptionally low levels of the Federal Funds Rate for some time" and that "inflation pressures will remain subdued in coming quarters".
Also last week, the Federal Deposit Insurance Corp (FDIC) announced that it may set up a "bad bank" as a vehicle to buy toxic or illiquid assets from banks. What does a "bad bank" do? No, it doesn't talk back to you, give you attitude and treat you with disrespect. Lenders and the entire financial sector are struggling with "mark-to-market" accounting issues, and in the absence of a repair of the mark-to-market system, lenders are forced to sell assets in a market where there are few buyers. Hence the bad bank plan, to create an entity that will purchase the assets that no one else will buy, which is yet another very creative way for the government to breathe life back into the financial sector. This action is not finalized, so we'll keep watching closely to see how it plays out in the days ahead.
In other news, the House of Representatives passed President Obama's $819B stimulus package, by a vote of 244-188, being split fairly cleanly by party lines. Existing Home Sales did surprisingly come in a bit better than expected, but 4th Quarter Gross Domestic Product (GDP) numbers showed the economy contracted in the 4th quarter, as you can see in the chart below. While the numbers were better than estimates, the economy was still at its slowest pace in 26 years.
Last week was indeed action packed, and Bonds and home loan rates felt the effect, with rates ending the week about .25% worse than where they began.
TAKING ACTION TO MAKE SURE YOUR BUDGET IS IN ORDER IS CERTAINLY AN INTELLIGENT MOVE DURING THESE CHALLENGING ECONOMIC TIMES.
Rates for January 30th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 5.00%, 5.113%APR
30 Year Fixed Interest Only 6.50%, 6.723%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 4.875%, 4.973%APR
5/1 LIBOR ARM Conventional 4.875%, 4.976%APR
5/1 LIBOR ARM Interest Only 5.125%, 5.238%APR
30 Year FHA/VA 5.50%, 5.752%APR
*30 Day Locks
JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.375%, 5.476%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks
ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.00%, 6.382%APR
5/1 LIBOR ARM (Jumbo) 6.375%, 7.757%APR
*60 Day Locks
6,9,12, and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.
"ACTION IS THE REAL MEASURE OF INTELLIGENCE." Napoleon Hill. Last week was definitely action packed, though only time will tell how intelligent each action was - here are the highlights.
On Wednesday, the Fed announced that it decided to keep the Fed Funds Rate steady at the current 0 - .25% range, the lowest ever. They also indicated that "economic conditions are likely to warrant exceptionally low levels of the Federal Funds Rate for some time" and that "inflation pressures will remain subdued in coming quarters".
Also last week, the Federal Deposit Insurance Corp (FDIC) announced that it may set up a "bad bank" as a vehicle to buy toxic or illiquid assets from banks. What does a "bad bank" do? No, it doesn't talk back to you, give you attitude and treat you with disrespect. Lenders and the entire financial sector are struggling with "mark-to-market" accounting issues, and in the absence of a repair of the mark-to-market system, lenders are forced to sell assets in a market where there are few buyers. Hence the bad bank plan, to create an entity that will purchase the assets that no one else will buy, which is yet another very creative way for the government to breathe life back into the financial sector. This action is not finalized, so we'll keep watching closely to see how it plays out in the days ahead.
In other news, the House of Representatives passed President Obama's $819B stimulus package, by a vote of 244-188, being split fairly cleanly by party lines. Existing Home Sales did surprisingly come in a bit better than expected, but 4th Quarter Gross Domestic Product (GDP) numbers showed the economy contracted in the 4th quarter, as you can see in the chart below. While the numbers were better than estimates, the economy was still at its slowest pace in 26 years.
Last week was indeed action packed, and Bonds and home loan rates felt the effect, with rates ending the week about .25% worse than where they began.
TAKING ACTION TO MAKE SURE YOUR BUDGET IS IN ORDER IS CERTAINLY AN INTELLIGENT MOVE DURING THESE CHALLENGING ECONOMIC TIMES.
Rates for January 30th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 5.00%, 5.113%APR
30 Year Fixed Interest Only 6.50%, 6.723%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 4.875%, 4.973%APR
5/1 LIBOR ARM Conventional 4.875%, 4.976%APR
5/1 LIBOR ARM Interest Only 5.125%, 5.238%APR
30 Year FHA/VA 5.50%, 5.752%APR
*30 Day Locks
JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.375%, 5.476%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks
ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.00%, 6.382%APR
5/1 LIBOR ARM (Jumbo) 6.375%, 7.757%APR
*60 Day Locks
6,9,12, and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.
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