Daily Archives: March 13, 2014

Why the mortgage business is now hyper-competitive | Bedford Corners Real Estate

 

Mortgage applications are relevant to a number of industries—from banks to non-banks, to mortgage REITs like Annaly (NLY) and American Capital (AGNC), to homebuilders like KB Home (KBH), Lennar (LEN), and Toll Brothers (TOL). This series will break down the different indices and help you learn what insight you can glean from them. If you’re a bank, you’re looking at these indices and trying to determine whether you’re competitive in all the segments you want to be competitive in. If you’re a non-bank, you might be looking to see if you’re gaining share or losing share. If you’re a mortgage REIT, you’re focusing on the refinance index and what it might mean for prepayments going forward. And if you’re a homebuilder, you’re watching the purchase index as a way to gauge future demand.

 

Mortgage rates fall slightly as bonds yields increase

The average 30-year fixed-rate mortgage rose 6 basis points, from 4.31% to 4.37%, while the ten-year bond yield rose 15 basis points as Ukrainian fears began to fade into the background. The Fed decided to start tapering at the December FOMC meeting and reduced its pace of purchases by $5 billion a month. It made a similar move at the January FOMC meeting. Given how much issuance has fallen, the Fed’s footprint was getting bigger even though it wasn’t increasing purchases. It made sense for the Fed to reduce purchases. The fear, of course, is that the absence of Fed activity will make mortgage rates rise even if the ten-year stays the same.

 

http://finance.yahoo.com/news/why-mortgage-business-now-hyper-194503535.html

17 Signs You Live in the Country | Chappaqua Real Estate

 

1. Sorry, McMansions-it’s houses like this one that make you go weak in the knees.

2. You start mapping our your garden plans while there’s still snow on the ground.

3. You have a pet pig.

4. You drink cocktails out of Mason jars.

5. You dream of wraparound porches.

6. You think of bargain hunting as a competitive sport.

7. Forget high heels-cowboy boots are as fancy as you get.

8. You’ve pulled over to salvage a piece of furniture someone’s tossed out on the side of the road too many times to count.

9. Your chicken coop is your most-prized possession.

10. You can’t think of anything better than a glass of cold lemonade on a hot summer’s day.

11. You think the best farmer’s market is your own backyard.

12. You’d rather repurpose something old than buy something new.

13. Two words: Tree. Swing.

14. You’re not ashamed to admit you’ve taken the salt shaker straight to the garden before.

15. You fall asleep every night to the sounds of cicadas, crickets, and frogs.

 

http://shine.yahoo.com/at-home/17-signs-live-country-173100611.html

 

HARP refinances drop off as interest rates for mortgages increase | Armonk Real Estate

 

The Home Affordable Refinance Program (or HARP) was instituted in 2009 to allow homeowners with negative equity to take advantage of today’s low interest rate environment. Before HARP, banks wouldn’t lend more than the home’s value. In real estate jargon, they won’t underwrite loans with a loan-to-value ratio (or LTV) greater than 1.0. So if a homeowner bought their home in 2006 with a 6.5% mortgage rate, they’d be unable to refinance if they owed more than the home was worth. The government created HARP with these people in mind. Since its inception, the HARP program has refinanced 2.5 million mortgages.

 

To be eligible for HARP, the borrower must have a loan guaranteed by Fannie Mae or Freddie Mac, have an LTV ratio above 80%, and be current on their mortgage. The program was designed primarily to help people who wanted to stay in their home and who had adjustable-rate mortgages where they could afford the initial “teaser” rate but wouldn’t be able to afford the payment once the mortgage adjusted upward. The program gave them a new 30-year fixed-rate mortgage at the initial teaser rate. Homeowners can check if they have a Fannie Mae or Freddie Mac loan by checking the respective company websites or by checking with their servicer.

HARP refinances decrease as rates climb

HARP refinances fell to 30,000 in December from 38,700 in November. Refinance activity has dropped across the board, so this result isn’t a surprise. Overall, HARP activity started falling off a cliff early last year as rates began to rise.

 

http://finance.yahoo.com/news/harp-refinances-drop-off-interest-195918759.html

Mortgage rates ticked up, but homebuilders should be okay | Mt Kisco Real Estate

 

Mortgage rates are the lifeblood of the housing market, which is why Bernanke and the Fed began conducting quantitative easing (or QE) in the first place. Lower rates allow homeowners to refinance, which increases their disposable income and helps stimulate economic growth. Lower rates enable first-time homebuyers to move out of an apartment and into a house, which means higher consumption (and good things for home improvement retailers like Home Depot and Lowe’s). Consumption accounts for some 70% of the U.S. economy, and consumption has been depressed since the housing bubble burst. The Federal Reserve would prefer to keep rates as low as possible for as long as possible.

 

Mortgage rates rise as the ten-year bond falls

The average 30-year fixed-rate mortgage rose 7 basis points as the ten-year yield increased 15 basis points, and TBAs sold off. With the refinance boom over, originators are overstaffed and cutting prices to drive business. We’ve seen a number of small originators go out of business, as they found themselves unable to compete in a purchase-driven mortgage market. The purchase market is fundamentally different from the refinance market in that it’s driven by relationships and not price. Last week, we heard from the biggest banks in the mortgage business, and every one reported drops in origination activity of 30% to 40%. Margins are getting squeezed as bankers compete for business.

The confirmation of Mel Watt as FHFA Chairman might give originators a break, as he’s expected to endorse further government homeowner assistance, which could mean an extension of HARP (Home Affordable Refinance Program) eligibility dates. This could trigger a new refinance boom.

 

http://finance.yahoo.com/news/mortgage-rates-ticked-homebuilders-okay-170018801.html

 

How to Get the Best Home Loan for Your Needs | Bedford NY Real Estate

 

Location, school ratings, number of bedrooms, outdoor spaces. These are the things potential homeowners focus on when they start house hunting. They’re all important factors, for sure. Even more crucial: How will you pay for your home?

 

Home loans are not a one-size-fits-all proposition. They differ based on their type, such as fixed or adjustable rate, and their loan term. Loans also vary in interest rate and annual percentage rate (APR).

To ensure you’re getting the best home loan for your situation, you’ll want to do your homework, talk to reputable credit counselors and lenders and follow these tips:

Fixed or adjustable?

There are two main types of mortgages: fixed rate and adjustable rate.

Most homeowners today opt for fixed-rate mortgages. With a fixed-rate mortgage, you are locked in to a set interest rate, resulting in monthly mortgage payments that remain the same for the entire term of the loan. The No. 1 benefit of this type of mortgage is inflation protection. If mortgage rates go up, your rate will not follow suit. Conversely, if rates drop, your interest rate will not drop. (Of course, you could refinance your mortgage if rates dropped significantly.)

Most lenders offer 15- and 30-year fixed mortgages, and some also offer 20-year terms. The longer the term of your fixed mortgage, the lower your monthly payment because you’re paying over many years. With a 30-year term, however, you will end up paying more interest over time.

A 15-year fixed mortgage will have a higher monthly payment because you’re paying for fewer years. On the other hand, you’re building equity at a faster rate and will pay less interest over the life of your loan. The shorter the term of your loan, the lower your interest rate will likely be.

An adjustable-rate mortgage (ARM) is a loan with an interest rate that will change over the life of the loan. ARMs have adjustment periods that determine how often their interest rates can change and they have initial “fixed” periods during which their interest rates won’t change at all — most often 3, 5 or 7 years. After this period, rates can readjust. These loans are often considered riskier because the interest rate and payments can increase when the loan adjusts. However, if you’re planning to live in your home for a shorter period of time, these loans may make sense for you, especially because you’re likely to obtain a lower interest rate than with a fixed mortgage.

 

 

http://homes.yahoo.com/news/best-home-loan-needs-224044975.html

Source: tribecca.ca/home-equity-loans-toronto/

Why credit is continuing to ease up in the mortgage market | Pound Ridge Real Estate

 

 

Is credit beginning to thaw?

Average FICO scores are finally starting to fall. After plateauing at 750 for most of late summer and fall, average FICO scores for approved loans have fallen to 724, which is approaching normalcy. During the bubble years, credit was very lax, and average FICO scores were around 720 for 2006, 2006, and 2007. After the bubble burst, credit became very tight, and average FICOs increased to 757. Now that the refinance market is drying up and lenders are taking more risk in order to drive business.

The Consumer Financial Protection Bureau had hoped that the new Qualified Mortgage (or QM) rule would have eased credit conditions somewhat. The QM rule sets standards for new mortgages that codify the “ability to repay” rules. Exotic mortgages—like negative-amortizing (pick-a-pay) loans or high-cost loans—are ineligible for qualified mortgages. The CFPB has set a debt-to-income ceiling of 43%. FICO scores aren’t part of the equation. In return, borrowers are unable to sue a lender if they end up defaulting. Credit is becoming easier to get. But the question is whether that’s due to home price appreciation or due to the QM rule.

 

http://finance.yahoo.com/news/why-credit-continuing-ease-mortgage-171607986.html

One-Room Living: A Shape-Shifting Studio Apartment in London | Bedford Corners Real Estate

 

When a young, single Londoner set out to buy an apartment in the center of the city, she discovered she had two options: she could afford to buy a characterless one bedroom, or she could downsize to a studio and have some money leftover to make it her own.

She opted for a studio with high ceilings and charming details, and partnered with Jennifer Beningfield of Openstudio Architects (members of the Remodelista Architect/Designer Directory) to transform it into an adaptable living, working, and cooking space tailored exactly for her. The pair co-opted half of the high ceiling as a sleeping loft, then created a masterful modular plan for the main room.

There, the kitchen and office space remain hidden when not in use. Says Beningfield, “The problem with open kitchens in small spaces is that the entire space looks like a kitchen, with all the mess (or constant cleaning up) that entails.” Beningfield painted the room a warm white and cleverly assigned bright colors to its customized features, so that the kitchen or office define the space when engaged, but fully retreat when not in use. “The idea was to create a room that moves and changes around the client,” says Beningfield.

 

http://homes.yahoo.com/news/one-room-living-shape-shifting-studio-apartment-london-170000757.html

This Housing Indicator Continues Its Downward Spiral | South Salem Real Estate

 

After managing a bounce from levels not seen in decades, mortgage applications continued their downward spiral. In the latest update from the Mortgage Bankers Association, for the week ended March 7, applications for home loans fell 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 1 percent.

There has been a steady slide in mortgage applications over the past nine months as the housing market returns to a more sustainable pace. As the chart above shows, applications are near their worst level in years. The Refinance Index also fell 3 percent from the previous week, while the Purchase Index declined 1 percent. On an unadjusted basis, the Purchase Index was 17 percent below year-ago levels.

Overall, the refinance share of mortgage activity accounted for 57 percent of total applications, the lowest shares since April 2011 and down from 58 percent a week earlier. Furthermore, interest rates rose in the latest report, which will likely hinder any momentum in refinance activity.

 

http://wallstcheatsheet.com/personal-finance/this-housing-indicator-continues-its-downward-spiral.html/?ref=YF

 

The Hidden Costs of Buying a Home | Cross River Homes

 

You’re looking for a house and see the perfect listing. It has a big number on it. For simplicity’s sake, say $200,000. If you’re like most prospective homeowners, you think you will soon be talking to a lender and getting a loan for this amount.

But as veteran homebuyers already know, you are going to pay much more than $200,000.

True, almost everything we buy has a hidden cost. You buy a toothbrush for a couple bucks, and since you’ll have to purchase toothpaste, the ownership cost of a toothbrush is more than $2 — especially if you throw in a toothbrush holder. Obviously, the hidden costs of buying a house are far more complex. And if you aren’t prepared for them, you may come away from the experience feeling as if you’ve been kicked in the teeth.

So if you’re thinking of buying your first house, be on the alert for these hidden costs.

 

http://news.yahoo.com/hidden-costs-buying-home-151852332.html

When to pay off your mortgage aggressively | Katonah Real Estate

 

The clear advantages of paying off your mortgage as quickly as possible have changed quite a bit over the past few years. The urgency to pay it off has somewhat diminished, as interest rates have plummeted to historical lows. It’s no longer the black and white decision it was back when interest rates hovered between 6% and 9%, and even the 11% to 13% we saw a couple of decades ago.

I am a big proponent of paying down that ugly mortgage beast as soon as is practical. But, before you go cutting a check to the bank, there is a pecking order of financial priorities you need to address before you consider tackling your mortgage.

In order of importance, here are the places you need to put your financial attention first:

Take The Cards Off The Table: Pay off all credit cards with high interest rates. Consider the huge discrepancy between credit cards with interest rates of 13% – 23%, and a 4% mortgage interest rate.

In Case Of Emergency: You need to build an emergency fund, ideally 8-12 months of living expenses. Yes, today’s job market is improving, but if you suddenly find yourself facing a layoff, you need to be prepared to sustain up to one year of living expenses.

Build Up For Retirement: Are you able to make the maximum yearly contributions to your retirement accounts, 401K, IRA or an equivalent?  Ask your accountant what the maximum allowable is for you and go for it!

 

http://www.usatoday.com/story/money/personalfinance/2014/03/12/when-to-pay-off-mortgage/6327487/