Keep Your Money Where It Is, if you’re planning on buying a home!

Keep Your Money Where It Is, if you’re planning on buying a home!

spend_less_money_save_moreIt’s not wise to make any huge purchases or move your money around three to six months before buying a home. You don’t want to take any big chances with your credit profile. Lenders need to see that you’re reliable and they want a complete paper trail so that they can get you the best loan possible.

If you open new credit cards, amass too much debt or buy a lot of big ticket items, you’re going to have a hard time getting a loan.

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Fannie Mae sets new rates effective October 14

Fannie Mae sets new rates effective October 14

Fannie Mae is set to raise the benchmark interest rate for its Standard Modification program. Fannie Mae will raise its required interest rate for standard modifications from 4.375% to 4.5%.  The rate was lowered from 4.5% to 4.375% on Sept. 15, but will now rise again in one week. Fannie Mae announced the change on Tuesday in an email sent to its servicers.

When the program began in Jan. 2012, Fannie’s benchmark interest rate was 4.625%. Fannie lowered the interest rate to 4.25% in Sept. 2012, before dropping it to 4% on Dec. 1, 2012.

“Fannie Mae Standard Modification interest rate is not determined on a preset schedule,” Fannie said in the note to its servicers. “The interest rate is subject to periodic adjustments based on an evaluation of prevailing market conditions.”

Fannie also noted that any loan modification requests that were approved at the previous rate are not eligible to be resubmitted for approval under the new modification rule

Mortgage Rates slightly higher

Mortgage Rates slightly higher

Finding-a-refinance-rate-for-your-homeMortgage rates are higher today, leaving September as one of only 3 months this year with noticeable upward movement.

And today was an exception to that recent trend, but it’s tempered by the fact that yesterday’s gains were the best of the month.

The only downside is that the most prevalently-quoted conforming 30yr fixed rate for top tier borrowers remains 4.25% whereas it would have likely moved to 4.125% if rate went the other direction today.

These movement considerations may be small scale compared to what lies ahead.  Several big tickets events are coming up in the second half of this week and they stand a good chance to increase the level of volatility.

September:  Highest Consumer Confidence

September: Highest Consumer Confidence

Consumer confidence reached its highest level since the Great Recession in September, according to the Thomson Reuters and University of Michigan Surveys of Consumers.

consumer-confidenceSeptember’s increase in consumer confidence is the result of optimistic outlooks on the overall economy and personal incomes.  The consumer expectations index rose 5.8 percent over the month of September, while the current conditions index fell 0.9 percent.

Additionally, a growing number of consumers expect their incomes to increase over the next year. The median income growth expectation reported in September was 1.1 percent, which is the highest expectation since late 2008. At the same time, more households anticipate income growth now than at any time since September 2008.

The renewal of income growth is particularly important for sparking consumer spending, and adding pending changes to monetary policy will make income gains prompt to boost even more consumer’s confidence.

80,000 Foreclosures prevented!

The Federal Housing Finance Agency (FHFA) indicated in its report on foreclosure prevention  for Q2 2014 released on September 24, that Fannie Mae and Freddie Mac  prevented nearly 80,000 foreclosures nationwide in the second quarter, raising the total number of foreclosures prevented since the start of the conservatorship in September 2008 to 3.3 million.

fThe measures taken by the two GSEs to prevent foreclosures have helped about 2.7 million borrowers remain in their homes in the last six years, with approximately 1.7 million of those borrowers receiving permanent loan modifications. The number of foreclosures prevented is down 10 percent from Q1, when GSE measures stopped almost 89,000 foreclosures.

FHFA reports as well that about 37 percent of those who received permanent loan modifications were able to reduce their monthly payments by more than 30 percent in second quarter.

FHFA outreaching more Homeowners

FHFA outreaching more Homeowners

In an effort to sign more eligible homeowners up for the Home Affordablefhfa Refinance Program (HARP), the Federal Housing Finance Agency (FHFA)   is holding its third HARP outreach event in October, 2014.

The goal is to get the word out about HARP to borrowers who are current but underwater, and help borrowers who are either delinquent or at risk of losing their home recognize that they too have options.

  • Borrowers are eligible for a HARP loan if they meet the following requirements:
  • Their loan must be owned or guaranteed by Fannie Mae or Freddie Mac;
  • The loan must have been originated on or before May 21, 2009;
  • LTV ratio must be greater than 80 percent;
  • Borrower must be current on mortgage payments.

Borrowers who could benefit from HARP are referred to as “in the money” borrowers; they are “in the money” if they meet all the HARP eligibility requirements, have a remaining balance on their loan of greater than $50,000 with more than 10 years left on their term, and have an interest rate of more than 1.5 percent more than current market rates.

As of June 2014, about 3.1 million homeowners have refinanced through HARP since it was introduced by FHFA and Treasury in 2009 as part of the Making Home Affordable Program.

Homeowners Pay Less for  Mortgage than Renters for Rent

Homeowners Pay Less for Mortgage than Renters for Rent

Paying a mortgage is cheaper than paying rent. But owning a home costs more.  The never ending debate…Is better to buy or rent?  This could be answered only after considering all of the expenses that contribute to homeownership.

The Bureau of Labor Statistics (BLS) says it’s cheaper to own. It has become less expensive to own. From 2009 to 2012, fueled by falling interest rates, ForRentForSalehomeownership has become more affordable, while renters saw costs go in the opposite direction, according to the BLS.

A recent report by Zillow found that current U.S. home buyers can expect to pay 15.3% of their incomes to a mortgage on the typical home – down considerably from the 22.1% of income homeowners had to budget in the pre-bubble years but renters pay today over 29.5% of their income to rent, compared to 24.9% in the pre-bubble period.

The main reason for the budget disparity is the income gap between owners and renters. At the end of the second quarter, the Census Bureau reported the median annual income in the U.S. was $53,216. But among homeowners, median salaries were $65,514 per year, while the typical renter’s income was just $31,888.

Fannie Mae reduces waiting period for distressed borrowers

Fannie Mae reduces waiting period for distressed borrowers

A recent report revising the waiting periods for distressed borrowers with a derogatory credit event such as a foreclosure, bankruptcy, short sale, or deed-in-lieu of foreclosure on their credit history to obtain a new loan has been released by Fannie Mae. This revised statement reduces the waiting period up to two years for borrowers with a short sale or deed-in-lieu of foreclosure on their record if there are extenuating circumstances that borrowers can prove. FannieMae

According to Fannie Mae, extenuating circumstances are defined as “nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.”

If a borrower has a foreclosure on his or her credit record, the new minimum waiting period is seven years. Under extenuating circumstances, that period is shortened to three years with some additional requirements for up to seven years. For those with a bankruptcy the waiting period is four years but two years with extenuating circumstances from the discharge date.

Fannie Mae said in the report that it is “focused on helping lenders to provide access to mortgages for creditworthy borrowers while supporting sustainable homeownership” and that the new policy “provides opportunities for borrowers to obtain a loan to Fannie Mae’s maximum LTV (loan-to-value) sooner after the Pre-foreclosure, Short Sale or DIL.”