FHA Loan Rate Recovers

Filed under FHA Loan Rate by on February 5, 2010 at 10:01 am {no comments}

What a wild day already.  At the opening today, the government’s Non-Farm Payrolls report came out.

Expectations were for job creation of about 15k.  We lost 20k jobs on the month.  On this negative , the should have normally improved, but nothing is normal these days.

The market plunged at open and it looked like were headed higher.  Now, 2.5 hours after all of the opening-bell fireworks, we’re back to exactly flat on the day.

There is absolutely no good reason for the FHA to still be at 5%, but it is.  If you’re looking at a purchase or refinance anytime soon, there is almost no room for rates to go lower and plenty of room for rates to go up.

Use our quick form and we’ll get quotes from the four best FHA lenders sent to you immediately.

Tags: , ,

Fed Indirectly Helps FHA Loan Rate

Filed under FHA Loan Rate by on December 17, 2009 at 10:30 am {no comments}

There is no correlation between the Fed Funds Rate and .  There is a strong correlation between the Federal Open Market Committee’s statement and .

The FOMC meeting yesterday was the big news item of the week.   The tone was balanced and mortgage bonds have responded well today.  Rates are lower by .125%.

Here’s is what we learned yesterday:

Economic Outlook

The Fed is being very cautious in its statements, but it’s being mildly optimistic.   We have generally good economic signals and there is little concern over inflation.   The job market is showing stabilization and possibly improvement.  Housing has already turned the corner and is showing significant improvement.

There is concern and there could be set-backs along the way.  We don’t have a perfect job market, confidence is low, and things are not fixed.  They’re better and the signs say the worst is behind us.

FHA

Mortgage rates are increasingly getting closer to the beginning of the end.  The Fed reiterated its plan to complete the $1.25 trillion commitment to the mortgage bond purchase plan.  This will end by the end of March 2010.

Rates will go up.  Simple.  The “insider numbers” say that 1% is the target.  WSJ reported that the Fed insiders think we’re looking at a 1% mortgage rate increase when support is gone.

On a $200,000 loan, the difference between today’s 5%-ish rates and April 2010′s 6%-ish rates would be about $125/month.

Tags: , , , ,

Interest rates starting to correct

Filed under FHA Loan Rate by on December 2, 2009 at 10:07 am {no comments}

We’re seeing some follow-through from yesterday’s big sell-off.  Presently, the GNMA 4% is off about 20 basis points.  That might or might not be enough to move rates a full .125%.

Gold hit another record, now up to $1,207/oz.

The ADP jobs report came in today.   The report was worse than expected in terms of how many jobs were lost, yet are deteriorating.  Right now, the momentum appears to be that mortgage bonds were a little overbought in these past few weeks.  The FHA have to be more heavily favoring rates rising rather than falling.

Tags: , ,

Rates Sell Off Today

Filed under FHA Loan Rate by on December 1, 2009 at 11:08 pm {no comments}

More to follow tomorrow.

We saw profits coming off the table and year-end positioning being set up.  We saw part of a correction today, the question is whether it will continue tomorrow.  We’ll keep you posted.

Tags:

FHA Loan Rate Hovers at 4.75%

Filed under FHA Loan Rate by on December 1, 2009 at 11:50 am {no comments}

We’re starting to see a reversal today as the GNMA bond is under pressure.  The Dubai mess is unwinding and appears to be regional.  We’re getting blistering numbers in the housing market.  Add to this the fact that mortgage bonds appear to be overbought, we’re ripe for a reversal.

We’ll start today at 4.75% on a 30 Year Fixed with EXTREME volatility possible.

Tags: , , ,

FHA Interest Rates Open Below 5%

Filed under FHA Interest Rate, FHA Loan Rate by on November 23, 2009 at 12:07 pm {no comments}

Another interest week as have a lot of information—in a very compressed holiday week.

  • Today:  Existing Home Sales, Up 10%+.  Homes are selling!!
  • Tuesday:  Consumer Confidence, Home Price Index, Fed Minutes
  • Wednesday:  New Home Sales, Personal Income and Outlays

The events that would cause the FHA to go up are more likely than the events that would cause mortgage rates to go down.

(more…)

Tags: ,

30 Year v. 20 Year – Term Reduction

Filed under FHA Loan Rate, FHA Mortgage Refinance by on November 19, 2009 at 7:01 am {no comments}

Today, we’re looking at the value of term reduction on a mortgage loan.  Term (length of the loan) reductions can be a great vehicle to accomplish two goals:

  1. Pay off the loan more quickly
  2. Reduce the total cost of interest over the life of the loan

In general, the mortgage interest rate goes lower as the term of the loan is made shorter.   The 15 Year will nearly always carry a lower rate than the 30 Year.

The 20 Year is odd.  Sometimes it is virtually identical to the 30 Year, sometimes it will be as much as .25% lower.  These numbers look at the total cost of the mortgage (cumulative interest paid) over two-year intervals from closing until the 10th year.  Years 21-30 are very heavily weighted in favor of the 20 Year Fixed since that homeowner no longer is making payments.

(more…)

Tags: ,

FHA Interest Rates Hold Steady

Filed under FHA Interest Rate, FHA Loan Rate by on November 12, 2009 at 11:33 am {no comments}

In spite of the stock market rally last week, the rates have held right at the 5% range over the past week.

Given that the FHA loan requirements are some of the most flexible in lending, this is fairly incredible.   The FHA rates sit roughly even with Conforming loans right now.

For borrowers with 3.5% down, there is no comparison.  FHA is the only game in town.

For borrowers with 5% down, the monthly mortgage insurance factors between the two loans can very quickly tip the scales in favor of the FHA mortgage.

Here’s an example:  A 680 FICO score, for a conforming loan at 5%, carries a mortgage insurance factor of 0.94% on this sheet from PMI.  For an FHA loan at the same level, it is .5%.   The FHA up-front mortgage insurance premium is 1.75% so the break-even is roughly 4 years.  In the past, it wasn’t uncommon for the Conforming loan to outperform the FHA loan on Day 1 until the end of the loan.

My how times have changed…

Tags: ,

Interest Rates Dropping

Filed under FHA Interest Rate, FHA Loan Rate by on November 5, 2009 at 12:18 pm {no comments}

We’ve had a flood of good in the past day or two, but have held their own.

The Fed’s statement offered muted optimism that the economy is improving and that housing has stabilized.  Jobless claims were slightly lower and the stock market is rallying.

Still, mortgage rates have held steady.

The FHA dipped back to about 5% with no points in the past two trading sessions.  We’ll see if today’s rally holds up, but that is an incredible rate when you consider that we’re only 4 months away from the Fed no longer subsidizing rates.  The difference between buying a home today and buying a home in 4 months could be a full 1%.  If so, today’s homes look even more affordable.

Tags: ,

News Influencing the FHA Interest Rate

Filed under FHA Interest Rate, FHA Loan Rate by on November 3, 2009 at 7:37 am {no comments}

A very busy week starts rolling today.  The Fed starts the two-day meeting today and the Policy Statement is the big one tomorrow.  The Jobs data on Friday could also be a big mover.

Warren Buffet’s Berkshire Hathaway announced a $44 Billion acquisition of Burlington Northern Sante Fe Corp.  This is an extremely bullish play on the U.S. economy and a big play from the old sage.  It will be interesting to see how this ends up moving the stock market.  Futures will still lower in morning trading.

Tuesday:
10:00 Sept factory orders (+0.9%)
2:00 Oct auto and truck sales

Wednesday:
8:15 ADP Oct job loss estimate (-190K)
10:00 Oct ISM services sector index (51.5 frm 50.9)
2:15 FOMC policy statement

Thursday:
8:15 ADP Oct job loss estimate (-190K)
8:30 weekly jobless claims (-10K to 520K; continuing claims 5.75 mil, down 5 mil)
Q3 productivity (+6.5%)

Friday:
8:30 Oct non-farm jobs (-175K; unemployment 9.9% frm 9.8%)
10:00 Sept wholesale inventories (-1.0%)
3:00 Sept consumer credit (-$10.3B)

Tags: ,