Switching to 4.0% Coupon

Filed under FHA Interest Rate by on December 1, 2009 at 8:12 am {no comments}

This is great news.  When we look at , we track a GNMA mortgage bond.

Recently, we’ve been using the 4.5% coupon.  With rates dropping so rapidly, we’re switching over to the 4.0% coupon as that is more closely related to the security that lenders are using to set FHA interest rates.

Mortgage bonds are flat to open today.  It could get a little dicey as fears over the Dubai debacle are subsiding.  With the high quantity of securities bought during this recent flight to safety, we could have a situation where the rate could correct pretty quickly.

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FHA Interest Rates Almost 2 Points Lower

Filed under FHA Interest Rate by on November 30, 2009 at 12:37 pm {no comments}

It’s been an incredible month for the .

Today, we’re looking at the 4.75% 30 Year Fixed Rate.

On October 16th, the discount points required to buy the loan down to 4.75% was 1.82%.

As of today, it’s…..0.000%.

This is a staggering 182 basis point run in just 45 days.  On an average loan of $250,000, this is a whopping $4,550 in reduced closing costs to end up with the same low of 4.75%.

We’re currently at the best rates of all time.  Even one year ago when conforming rates dropped, the comparisons were not this even.  We’re now only seeing a spread of .125% between the two rates and the comparisons increasingly favor FHA when either of two conditions is true:

  • Credit score is below 720
  • Down Payment is less than 10%

Under either scenario, you’re looking at sub-5% rates but long-term savings typically lean towards the .

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

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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.

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FHA vs. Conventional 700 & 680 FICO

Filed under FHA Interest Rate, FHA vs Conventional by on November 17, 2009 at 11:51 am {no comments}

The Rates continue to trade within just a narrow margin relative to conforming.  With credit scores driving the conventional mortgage rate and the associated PMI, here’s a comparison of how the FHA vs. Conventional dynamic changes based on credit score.

Today’s example uses a $300,000 home at 5% down.  The FHA mortgage rate won’t change, nor will the monthly mortgage insurance.   Here’s a look at the data:

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FHA Interest Rates Continue Trend

Filed under FHA Interest Rate, FHA Mortgage Refinance by on November 16, 2009 at 6:50 pm {no comments}

Last week brought a third-consecutive week of improvement.  On the heels of a dismal University of Michigan Consumer Sentiment report on Friday, rates followed through and finished off the week strong.

We go into this week with a few key readings, namely, the CPI and PPI.

Current Status: Inflation Low. Rates Low.

If that current status shows inflation is heating up, rates will jump.

This week also welcomes the new FHA Streamline Refinance changes and that brings on a new world to the .  The new requirements on the refinance are essentially “normal” on the “streamline” refinance.

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FHA Loan Rates Below 5%

Filed under FHA Interest Rate by on November 13, 2009 at 10:58 am {no comments}

The continues to trend lower.   Mortgage rates plunged through the 5% mark and are sitting at their best levels, in the FHA products, in quite some time.

The much-loved FHA Streamline Refinance program has big changes coming next week.  Beginning November 17, FHA Streamline Refinance applicants will need to evidence:

  • Income
  • Verification of Employment prior to close
  • Assets to cover the cash-to-close.

Further, the FHA is limited loan-to-values to 97.75% for homeowners that want to “roll closing costs” into their mortgage.

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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…

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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 economic news in the past day or two, but mortgage rates 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 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.

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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)

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