Buying Arizona Real Estate » interest rates

Those Who Wait Will Pay Thousands More This Spring

RebeccaRoberts — Thu, 04 Mar 2010 16:23:24 +0000

Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

It is important to note that in order to be eligible for the lower cost up-front mortgage insurance, a lender has to order a case number from the FHA before April 5th. A case number can only be generated for loan applications where a property is involved and a fully executed purchase contract exists. Home buyers who have been pre-approved but are not under contract will not be eligible for the reduced premium effective April 5th.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.

If I can answer any questions you may have about how these changes could impact you, call me. I appreciate your business.

Sincerely,

Rebecca Roberts
The Lending Co.
602-791-6262
rroberts@thelendingco.com
equal opportunity lender
BK0909441 NMLS#231543

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MBA to Hill: Expand Home Buyer Tax Credit

Tony Pomykala — Sat, 17 Oct 2009 19:57:55 +0000

Email provided by Kathy Morrow
Branch Manager/Sr. Loan Specialist for CNN Mortgage, Inc.

Article by Sorohan, Mike
The Mortgage Bankers Association, in a statement submitted to a House committee, urged Congress to extend a popular home buyer tax credit set to expire next month, and to expand its scope.

MBA told the House Small Business Committee the $8,000 first-time home buyer tax credit passed by Congress earlier this year has had measurable benefits to both the housing market and the overall economy, and that it should be extended by at least another year and expanded so that all home buyers could use it.

“The first-time home buyer tax credit has had a stimulating impact on our economy, and MBA supports extending and expanding it so it can help more buyers and sellers,” MBA said. “As we approach the end date of the current $8,000 tax credit, we urge Congress to expand the program to include all home buyers, increase the credit up to $15,000, make the funds available for closing and extend the overall program by at least 12 months.”

MBA noted that the “fragile” U.S. economy is just beginning to show signs of stabilizing, but economic recovery will not be complete until the current oversupply of houses on the market has decreased.

“We should not jeopardize our recovery by letting this tax credit expire,” MBA said. “The home buyer tax credit is helping hundreds of thousands of Americans realize the American dream, and it is creating thousands of jobs that rely on homeownership. Problems in the housing industry led us into a global recession, and housing stimuli can help lead us out of the recession.”

MBA has supported the first-time home buyer tax credit since it first passed Congress as part of the Housing and Economy Recovery Act of 2008 and expanded in the American Recovery and Reinvestment Act of 2009. The Internal Revenue Service recently reported that more than 1.4 million taxpayers have benefited from the tax credit; other reports corroborate that figure. However, the credit is set to expire on Nov. 30.

In June Sen. Johnny Isakson, R-Ga., introduced S. 1230, the Home Buyer Tax Credit Act of 2009, that would increase the maximum amount of the credit from $8,000 to $15,000 and expand the current tax credit so that it applies to any buyer of any home, not just first-time buyers. The legislation also would eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit so that there is no income limit for eligibility. It would also extend the tax credit for one year from date of enactment and would still allow home buyers to claim the credit on their 2009 tax return for purchases made in 2010.

Although MBA has seen some improvement in the housing market, it said the favorable impact of the first-time home buyer credit should continue beyond the Nov. 30 expiration date.

“We have an excessive inventory of available homes in many parts of the country,” MBA said. “This glut of existing homes will continue to put downward pressure on home values, which impacts the surrounding communities and perceived homeowner wealth, which is a driver of consumer spending. In simple terms, demand is not keeping up with the current supply. MBA supports tax initiatives that would encourage home purchase activity.”

Specifically, MBA recommends the following changes to the current tax credit:

–Expand eligibility to all home buyers.While the tax credit has proven to be effective in helping first-time home buyers, a large number of Americans are thinking about moving from their current home for various reasons and might be incented by a tax credit to do it now, when the economy needs it the most.

–Increase the tax credit to a maximum of $15,000. Increase the tax credit to up to 10 percent of the home purchase price up to a maximum of $15,000. The credit may include a phase-out based upon adjusted gross income as reported on a borrower’s most recent tax returns.

–Require the tax credit to be repaid in certain instances. The borrower should repay the tax credit only if the residence is sold within the first three years (exception for employment-related moves) or in the event of a taxpayer default on any other mortgage that existed at the date the tax credit is claimed. This would discourage “buy and bail” behavior, where a borrower uses the tax credit for his or her advantage and walks away from an existing mortgage obligation.

–Tax credit should be available for settlement. If practical, facilitate the IRS sending funds claimed by the taxpayer directly to the settlement agent of the property transaction for a downpayment

–Enhancements effective immediately. Any enhancements to the program should be effective on the date of enactment and should be in effect for at least 12 months to ensure the greatest economic stimulus.

Have a Wonderful Day!

Kathy Morrow Branch Manager/Sr. Loan Specialist
CNN Mortgage, Inc. San Tan Mall Office ~ Coming Soon!
2151 East Broadway Road #210 Tempe, AZ 85282
Cell: 480-363-8901
E-Fax: 480-383-6141
kmorrow@cnnmortgage.com
equal opportunity lender

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Treats, Not Tricks, Await Those Who Act Now!

Tony Pomykala — Sat, 17 Oct 2009 18:42:21 +0000

Treats, Not Tricks Await Those Who Act!

Last chance, last dance, last call. All sayings conjure up images but one thing remains constant. Miss the opportunity and it’s gone. Home loan rates recently hit all-time lows, and if you don’t act now, you could miss your chance to save thousands of dollars over the life of your loan!

According to Freddie Mac, interest rates recently dropped to all-time lows in some categories, and within a hair of all-time lows in others. We will likely never see rates at these levels again. If you missed the chance to refinance earlier this year, you just got a do-over. Don’t miss out a second time!

Why Act Now?
While the reasons to act now are numerous, here are just a few.

No one, not even George Washington, had a chance to borrow money at these rates…but you do!

The Federal Reserve implemented a mortgage-backed securities buying program to artificially lower rates, and that program is nearing its end. The originally scheduled end date was December 31, 2009. While this deadline has been extended the amount of purchases remains the same, which means the level of participation will wane, decreasing by half as much. Rates will be forced to levels seen before the program started, likely near 6.50% and in short order.

Inflation, while currently contained, is likely to show its ugly head as all the stimulus from Washington continues to pour into the system. The end result will be increasing inflation pressure across the board, which will cause all interest rates to rise.

Don’t Miss the Boat Here
Sydney Smith, an English clergyman from the 1800′s once said, “Regret for the things we did can be tempered with time; it is regret for the things we did not do that is inconsolable.”

It is likely that interest rates at these levels will never be seen again in our lifetime. Take advantage of them today while you still can so you’ll never have to look back and say, “I wish I had….” If you took advantage of this opportunity earlier this year, congratulations! If not, call me so we can discuss your situation.

Likewise, if you know someone else who can benefit, be it a family member, friend, or co-worker, please have them call me or let me know who they are and I will reach out to them. This could be the greatest gift you could offer someone this year.

I look forward to speaking with you soon, but if not, I hope you have a Happy Halloween!

Christopher Holmes Prospect Mortgage 5301 N Pima Rd #130 Scottsdale, AZ 85250

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Will Homeowners and Buyers Lose $45,000?

Tony Pomykala — Fri, 14 Aug 2009 21:10:46 +0000

An email article I received from Christopher Holmes of Prospect Mortgage. Very informative stuff!

Buyer Urgency – Interesting Article

This article says much better than I have been saying, why rates will be headed up by the end of the year and early in 2010. - Christopher

Will Homeowners and Buyers Lose $45,000?

Ann Arbor, MI August 13, 2009 –
Federal Reserve officials met yesterday and issued a statement saying that their program to purchase $1.25 trillion of mortgage-backed securities will be winding down by the end of year. “The Fed is the single largest buyer of mortgage bonds in the market today,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “The way mortgage companies set their interest rates is by figuring out the price that Fannie Mae and Freddie Mac are willing to pay them for the mortgage. Fannie and Freddie set their price by figuring out what investors on the bond market are willing to pay them for the Mortgage-Backed Securities (mortgage bonds) that they issue. When the Fed stops buying mortgage-backed securities, the demand for these bonds will be much less, and mortgage rates will go higher.”

Since the Fed began purchasing mortgage bonds and intervening in the mortgage markets, interest rates on fixed rate mortgages have dropped a full percentage point below where they would be otherwise. “Take out the Fed’s subsidy, and mortgage rates are likely to drift back up by at least one percent,” Nicholas said. “A one percentage point increase in mortgage rates – from 5.25% to 6.25% – would cost an extra $127 per month and $45,730 in interest over the life of a $200,000 30 year mortgage. This is exactly what could happen in 2010 once the Fed stops buying mortgage bonds.”

Fed officials have been signaling for some time that their unprecedented interventions in the mortgage markets may come to an end or even be reversed once the economy begins to improve. “While we don’t believe the Fed will start selling mortgage bonds right away, we do believe that rates will start drifting higher in 2010 once the Fed stops purchasing mortgage bonds,” said Nicholas. “After all, it’s not every day that the Fed spends a whopping $1.25 trillion to subsidize mortgage rates. Take out this enormous subsidy, and the average person with a $200,000 mortgage who refinances or buys a house stands to lose $45,000 over the life of their home loan. That is why homeowners and buyers should really talk to their Certified Mortgage Planning Specialist and take advantage of this window of opportunity to refinance or buy a home while rates are still artificially low.”

Christopher Holmes, Certified Mortgage Planner
Prospect Mortgage 5301 N Pima Rd #130 Scottsdale, AZ 85250
Phone: 602-525-9593 | Toll Free: (800) 329-1817
ChristopherHolmes@cox.net www.ChristopherHolmes.web-loans.com
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