Category Archives: Interest Rates

What Brexit Means for American Mortgage Rates

dreamstime_s_54561593Britain’s vote to leave the European Union on Friday shocked many and left Americans wondering what effect the action would have on our economy. International concerns play a large role in the mortgage-backed security market. As a general rule of thumb, when there is risk or danger in the financial markets, investors and speculators tend to flee to ‘safe haven’ assets, such as U.S. treasury bonds and U.S. mortgage-backed securities. This typically results in lower mortgage rates and mortgage-bond purchasing leads to higher prices and lower bond yields.

For Americans who have been waiting for one reason or another to refinance, now is the time to act. Rates are back at historic lows and the Federal Reserve is likely not going to be raising short-term rates again for a while. Investors are putting their funds toward the safest assets, such as U.S. Treasuries, mortgage -backed securities, and gold. According to financial analysts, this won’t last long. Homeowners are urged to act quickly, and lock in rates as soon as possible.

The Brexit vote and ensuing turmoil in Europe also strengthened the U.S. dollar overseas. As a result, imported goods, such as German automobiles or appliances, could also see some price improvements over time with a stronger U.S. dollar, along with a decrease in the cost of traveling to Europe.

It is certainly worth a conversation this week about where your mortgage rate is and whether or not the team at Fairway can help you save money each month. Call our partner at Fairway, Jarred Alexandrov, to discuss where rates are and how he can assist you with a quick refinance for your home. If you have been considering moving to a new home, he can talk about your options as well, as there may not be a better time to buy in 2016 than in the coming weeks and months!

JarredA
Jarred Alexandrov
Office: 508.735.0078
Cell: 508.735.0078
Email: jarreda@fairwaymc.com

 
Source: Fairway Independent Mortgage

 

Why Getting a Loan Approved Will Get Harder October 20th

By Jarred Alexandrov of Fairway Independent Mortgage Corporation

It’s what nobody wants to hear…but getting a loan (especially a condo loan) may get more difficult as of October 20th 2012 due to an update to Fannie Mae’s “Desktop Underwriter” (DU) system.

The more you know about the changes, the better you can adjust to them in advance. REALTORS® can correctly advise their clients based on the these changes. Lenders can accurately qualify potential borrowers.

What is DU?

DU is the online system through which lenders like Fairway Mortgage submit their mortgage applications to get instant feedback on whether a loan will qualify under Fannie Mae’s standards.

We run DU on every loan, so when there is an update to the DU system, it can affect every loan application.

The Changing Appraisal Requirement

“Exterior Only” appraisal inspections will no longer be offered…full interior/exterior appraisals only.

The Change to Condo Project Reviews

DU will require a full project review, as opposed to a Limited Review, on principle residences in condo projects when the LTV/CLTV is greater than 80%.

DU Will Require 2 Years of Tax Returns from the Borrower

Fairway currently requires 2 years of tax returns (as opposed to 1 year), so this will not be a change for Fairway clients.

Funds to Cover Unpaid Credit Card Balances

Findings will require that we document that the borrower has sufficient funds to cover the unpaid balance of all 30 day charge accounts.

There are sure to be a few other changes when the DU update is released on October 20th 2012 that will impact the qualifying process of our loan applications.

However, the agents and lenders who adjust to these changes in advance will be able to best serve borrowers looking to get a loan in the 4th quarter of 2012 and beyond.

Be Looking out for more updates on the current market and what to expect for the rest of 2012 and 2013. Prudential Unlimited Realty will also be featuring some great Do-It-Yourself Articles, Rental/Sales Market Updates and GIVE-AWAYS! Check back weekly!

Thinking About Buying? Why Not?

Why does the real estate market work in such crazy ways? This past spring, the market was flooded with First Time Homebuyers hoping to take adantage of the $8,000 Federal Tax Credit for first time buyers. The deadline to find a home and put it under contract was April 30, 2010 and originally, the transaction had to close by June 30, 2010. That has since been extended to September 30, 2010.

The media started to talk about the economy coming out of recession. Builders and developers began buying land and renovating and improving existing structures. Locally, developers were back out on the prowl looking for multifamily homes and apartment buildings with the hopes of converting to condominiums. Many developers were able to buy a multifamily in the fall, renovate and do a condo conversion, and subsequently sell all the units in the first half of the year.

The increase in demand created by the tax credit found many buyers shut out by May 1st. Many had experienced and lost multiple offer bidding wars. Many had experienced similar heart breaks similar to those experienced at the height of the real estate market of the mid 2000-2010 period. Many walked away empty handed feeling it was just not meant to be this year.

But why? Was an $8,000 tax credit really the only reason worth buying a first home? Why end your search and leave the market now? Below are 4 reasons why now is an even better time to buy a home.

1. You’re still renting. You’re still paying your landlord’s mortgage, why not pay your own? You’re still living under some else’s roof. You are still throwing money away each month with little to no tax benefits. You still have no opportunity to enjoy in the appreciation in home prices over time.

2. Demand is lower. As mentioned above, buyers were routinely losing the properties they coveted because someone else either beat them to the punch, paid more than them, or had more money to put down than they did. The tax credit created demand, gobbled up all the good supply and put pressure on prices. In many cases, the increased demand caused prices to climb by more than $8,000. If that was the case, then what good is the tax credit. It was great for some sellers who have been waiting he last couple of years for a good time get out. It seems to reason, that if you could get the home you wanted, at the price you wanted AND you could take advantage of the tax credit, then the tax credit was great but not otherwise. If the demand caused prices to increase more than the amount of the tax credit or it caused buyers to settle for a home they didn’t like as much as another, then it wasn’t necessarily a great reason to buy on it’s own.

3. The Fall Market. With the exception of last year when the government first introduced the tax credit, the fall season usually shows some somewhat predictable trends. Many sellers (and their real estate agents) perceive the post-Labor Day market to be more like a mini spring market. However, this is not necessarily the case. In fact, if you look at historical trends, the fall is often the time of the year where the supply of housing inventory actually grows and sellers have a difficult time selling (especially unrealistic sellers).

Experienced and knowledgeable real estate professionals often times monitor the housing supply and compare it with demand. The housing supply can be measured by the absorption rate (which is basically the rate of houses coming on the market versus the rate of houses going off the market) or by months of inventory . When more houses are coming on the market than coming off, the absorption rate slows, the supply increases, and therefore, there is a higher number of months of inventory. Months of inventory indicates how many months it would take at current activity levels to absorb all of the available housing units if not one more additional property were brought on the market (which we all know is unrealistic).

For

serious buyers, this should be a great time to buy a home. It is true, more homes come on the market. It is also true that relative to the number of new homes on the market, there is usually not a similar spike in the number of buyers. This creates opportunity for a serious buyer. There is more to choose from. There is usually more negotiating room, and there is less pressure to make a quick decision. Serious buyers have a lot of opportunity. Between Labor Day and Thanksgiving, there is usually a build up of supply. Between Thanksgiving and New Years, many sellers take their property off the market in anticipation of waiting until the spring market causing the supply to decline. Then, at the beginning of the calendar year, the whole cycle starts over again.

4. Interest Rates. During this past spring market and during the time the tax credit was available, interest rates were at least a half point (0.50%) or more higher than they were as of last week. Last Tuesday, interest rates on a 30 year fixed conventional mortgage for top tier buyers was at 4.375% whereas during the spring, interest rates were 5% or more (not that that’s a high interest rate). Therefore, based on the difference between 5% and 4.375, a buyer who owns their home for 5 years, would benefit from buying now based on interest rate alone than if they bought during this past spring, all other things equal and got the tax credit.

Based on all of the above, a buyer looking to buy now rather than this past spring can probably benefit from more choice, more negotiating room, more motivated sellers, and lower interest rates, while still benefitting from tax deductions for mortgage interest and real estate taxes, and a higher probability in the long run for price appreciation.

If you are thinking about buying a home now or in the future, go to our website www.prudentialunlimited.com and search for homes by map or search parameter, sign up for one our well-known free, monthly First Time Homebuyer Seminars or sign up to meet with one of our experienced buyers agents to receive free representation on your home purchase.