Fed’s hike of 0.25 point in short term rates

Fed’s hike of 0.25 point in short term rates

For the first time in a year and only the second time in a decade, the Federal Open Market Committee (FOMC), the policy making arm of the Federal Reserve, voted on Wednesday in its eighth and final meeting of the year to raise the federal funds target rate by 25 basis points up to the 0.50 to 0.75 percent range. Analysts in the housing industry have been speculating for weeks as to what the effect of a Fed rate hike would be on mortgage interest rates and overall affordability. In the month prior to the Fed voting to raise the federal funds target rate, the average 30-year FRM rose by more than 50 basis points to a level above 4 percent for the first time in more than a year.

“While the Fed’s hike of 0.25 point in short-term interest rates may trickle down to long-term rate products like 30-year mortgages, the more immediate impact will be felt by borrowers with variable-rate mortgages and home equity lines of credit who can expect an increase in their payments at their next rate reset,” said Tim Manni, mortgage expert at NerdWallet. “Homebuyers shouldn’t be particularly concerned with today’s Fed move. Even with rates hovering over 4 percent, they’re still historically low.

The Fed released a new forecast Wednesday and it projects U.S. economic growth this year to be 1.9% and next year to be 2.1%, both slightly better than the Fed’s previous projection in September. The rate increase indicate that the U.S. economy no longer needs the Fed’s crutches and consumers and businesses can afford to pay more to borrow.

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

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.

Orange County the third and Los Angeles the ninth most expensive housing market in the U.S.

Orange County the third and Los Angeles the ninth most expensive housing market in the U.S.

According to the newest report from the National Assn. of Realtors, Orange County is considered the third and Los Angeles the ninth most expensive housing markets in the U.S., this measured the open space with fire placemedian price of homes sold in the second quarter.    Orange County’s median —          the point at which half of homes sold for more and half for less — hit $691,900 in the quarter, trailing only the San Jose and San Francisco metro areas.

The San Diego area ranked fifth at $504,200 and metro Los Angeles, Los Angeles County ranked ninth at $420,300.  Even the relatively inexpensive Inland Empire sat 21st pricier than Miami; Austin, Texas; or Chicago with a median of $274,600.

While this may seem reasonable to some, these statistics should raise concern considering the median household income in Orange County is $75,566, according to the Census Bureau. In Los Angeles County it is $56,241.

Is This a Good Time to Refinance?

Is This a Good Time to Refinance?

Is This a Good Time to Refinance?

By Sandy Flores

 Instructor in real estate in the Santa Ana College

We are experiencing a rapidly changing market real estate. But while we are appreciating that current interest rates are at one of their lowest levels in recent years.

The higher payments are not the only reason to change a variable rate mortgage to another fixed rate mortgage, but it is usually the main reason. Especially if we consider that the interests that are currently offering are definitely lower than the interest you have in your home loan.

 Many homeowners took advantage of low-interest at three and four years and saved a lot of money.

But now advise these homeowners have a studio again to consider refinancing to a fixed interest rate, and lower, as there is currently so they can be a more affordable monthly payment your budget.

The important thing is to take an individual decision based on your personal financial situation.

Here are some points to consider:

If your first mortgage has a fixed rate, it is easy to compare with the current rates and relatively see if indeed you are going to experience considerable savings or not.

If the current rates are lower than the rate you currently have, you might consider a refinance, but not before considering the own costs of refinancing.

If you will not stay in the property long enough to experience the monthly savings refinancing costs including time, then it makes sense to refinance.

If you desperately need lower payments, refinancing may be a good choice even if you plan to move in a short time of ownership.

If you have a variable rate mortgage and you are experiencing the rise in its budget that economic limits of level you can afford, it is probably time to consider refinancing and compare different estimates of financial companies that offer these services.

It is easy to calculate what a new loan added to their monthly fee, but it is more difficult to determine how much you need to stay home to be sure that refinancing has paid all the costs of refinancing among other considerations.

Note that the numbers vary if you:

Taking money from refinancing your equity, for example, to pay bills, make home improvements, college education, a business venture, among other causes.

Consolidating your first and second mortgage. Get eliminate the second mortgage, which is usually at a higher interest rate and very often a line of credit with a variable interest rate.

Refinance line of credit only to avoid losing interest in you already have on your first mortgage.

Depending on the terms of the second mortgage, and bank loan programs, you can refinance your second mortgage with only minimal cost of fees, converting to a fixed interest rate and probably below the variable that you have now.

The essence of refinancing is to find the best fit for you and financial balance and your family.

Do not refinance, please consult with a financial professional and, even better, get second opinions to make a comparison which is the best deal that suits you. Also, remember that you have the right to receive a “Good Faith Estimate” that allows him to know in detail all costs and expenditure of this process.