Thursday, May 31, 2012

15-year loan dipping below 3 % for the first time ever.

NEW YORK (CNNMoney) -- Mortgage rates continued to plunge to new lows this week, with interest rates on the 15-year fixed rate mortgage dipping below 3% for the first time on record.

The 30-year fixed mortgage, the most popular mortgage product, fell by 0.03 percentage points to 3.75%, setting yet another record for the fifth week in a row, according to a weekly survey by Freddie Mac. Last year, 30-year loans averaged 4.55%. The new low can save borrowers about $47 a month for every $100,000 borrowed. Over a 30-year term, that comes to $16,756.

Rates on the 15-year fixed mortgage, which is popular among those looking to refinance, fell to 2.97% -- the first time it has dropped below 3% since Freddie Mac began tracking the weekly data. Down from 3.74% a year ago, the new 15-year rate would lower borrowing costs to $689 a month for every $100,000 borrowed, a $37 savings compared to last year.

The continued slide in mortgage rates is, in part, due to ongoing economic turmoil in Europe, according to Freddie Mac's chief economist, Frank Nothaft.
 
"Market concerns over tensions in the Eurozone led to a decline in long-term Treasury bond yields helping to bring fixed mortgage rates to new record lows this week," he said.
Rates are almost half what they were at the peak of the housing bubble in mid-2006. At the time, the average interest rate was about 6.75% for a 30-year loan.

Meanwhile, home prices have hit new post-bubble lows, according to the most recent S&P/Case-Shiller home price index of 20 major markets. Home prices have not been this low since mid-2002.

Much lower home prices, along with affordable mortgages, should help to bolster the housing market, but don't expect a vigorous recovery to follow, said Mike Larson, a housing market analyst for Weiss Research.

"The less you have to pay for a house the better that is but it's not a cure all," he said. "Despite lower interest rates, there is still a weak economy and weak job market. That's not good for underlying housing demand." 

Top Tips for Refinancing a Mortgage

RoadFish.com men’s lifestyle and finance magazine urged readers to seek the advice of expert’s tips if they are considering taking advantage of the 60-year low in mortgage rates by refinancing a home mortgage.

SmartMoney.com released four tips for people thinking about refinancing their mortgages, suggestions that are aiming to make the process easier and hopefully save the borrower as much money as possible.

Ruth Simon of SmartMoney.com reported that mortgage rates hit a low last week of 3.84%, down from 4.22% in March and the lowest the U.S. economy has seen in 60 years. Simon states that due to the record-low rates, the time has never been better to refinance a home mortgage. The article states that nearly 20.5 million homeowners currently possess mortgages with a 5% interest rate or higher, and 12.9 million borrowers’ rates are between 4-5%. However, Simon warns that it may prove difficult for responsible homeowners and borrowers—even ones with a good credit score and who make timely payments—to refinance mortgages due to low appraisals and increasingly strict lending measures.

To give borrowers who are considering a refinance some guidance, Simon offers four tips designed to help folks who are wading through the refinance process have an easier time, and save them the most money.

The first tip is to repair one’s credit score, so that the borrower can clean up any errors and get the report looking as good as possible. Borrowers are shooting for a score of 740 or higher to get the very best rate. Fair Isaac spokesman Anthony Sprauve is quoted as saying, “Someone with a higher score who misses a payment could take a bigger hit than someone with a lower score, because there’s further to fall when they stumble.” Assessing your report and score in advance and fixing mistakes could therefore be crucial in the refinancing process.
RoadFish.com’s Senior staff writer is quoted as saying, “I am pretty astounded at how low the mortgage rates have dipped. I have lots of friends and family both house hunting and refinancing their mortgages, and I’m really happy for them because they are going to be getting some amazing deals. Even my parents and in-laws have refinanced their mortgages. The interest rates are hard to look at and not want to take advantage of them.”

The above-mentioned SmartMoney article gives some impressive numbers on how much homeowners can save just by refinancing. The example was given that if a borrower took out a $400,000 mortgage at this same time last year, the rate would have been around 4.75%. That same person could save over $200 per month by refinancing their mortgage right now, with the current rates almost a full 1% lower than in May 2011.

Over years, that 1% makes a huge difference and can save thousands of dollars. As an example, the article highlights a money manager who secured a 5.25% interest rate in 2010, when he first refinanced his Houston home. Given the lower rates this year, Lance Roberts is in the process of refinancing to a loan 1.25% lower than his previous one.

The monthly and yearly averages of 30-year fixed-rate mortgages can be found on Freddie Mac’s website. Data goes as far back as 1972. Looking at the past 5 years, it is quite easy to see the rates plummet, bottoming out this year.

In 2007, the average for the year for a 30-year fixed-rate mortgage was 6.34%.

In 2008, it was 6.03% and in 2009, 5.04%. The rate dipped even lower, to 4.69% for an overall average in 2010, and lower to 4.45% in 2011.

If you took the average for the first four months of 2012, the average rate so far for this year is just 3.92%. Looking back at the oldest data on the site, 40 years ago, in 1972, the rate was 7.38% as a yearly average. There isn’t even data old enough on the Freddie Mac site to get within 3% of what the incredibly low rate is in our current year.

1. Repair your credit. Pull a copy of your credit report before beginning the refinancing process. "You want to give yourself ample time to clear up any mistakes and put your best foot forward in the qualification process," says Greg McBride, a senior financial analyst at Bankrate.com. Borrowers with good credit scores of 740 or more generally get the best rates, he says.
Low-income borrowers aren't the only ones who can run into credit problems. "Someone with a higher score who misses a payment could take a bigger hit than someone with a lower score, because there's further to fall when they stumble," says Anthony Sprauve, a spokesman for Fair Isaac (FICO: 39.99, -0.22, -0.55%), creator of the FICO credit score. Borrowers who have elected not to use much credit can wind up with a low credit score.
Under the Fair Credit Reporting Act, borrowers are entitled to one free credit report from each of the three main credit bureaus -- Equifax (EFX: 45.15, -0.08, -0.18%), Experian and TransUnion -- every 12 months. You can request a free credit report at AnnualCreditReport.com or by calling 877-322-8228.

2. Shorten the loan term. If you are several years into your mortgage, you can maximize your savings by opting for a new loan with a shorter term.
Consider a borrower who took out a $200,000 30-year fixed-rate mortgage with a 5% rate in 2009. Refinancing into a 30-year fixed-rate mortgage with a 3.875% rate would lower monthly payments by $177 to $897, according to HSH.com, and provide about $25,000 in savings over the life of the mortgage.

Shift to a 25-year mortgage with the same rate and the payment falls by about $100 less, to $993, but the savings over the life of the loan jump to nearly $50,000. With many borrowers seeking to pare debt, a growing number of lenders now offer mortgages with terms of 25, 20, 15 and even 10 years.

3. Contact many different lenders. Rates are at historical lows, but the gap between the best and worst deals can be as much as a full percentage point, according to HSH.com. With pipelines near capacity, some large lenders have been raising rates in an effort to hold down volume while boosting profits.
Loan costs can vary substantially. When Bankrate.com surveyed lenders last year, "origination fees," which compensate the lender or broker for arranging the loan, ranged from a low of $123 to more than $2,000 on a $200,000 loan, depending on the lender. Getting estimates from multiple lenders can give you ammunition to negotiate a better deal, says Mr. McBride of Bankrate.com.

Even in an era of tight credit, standards vary. Borrowers with good credit scores, who have been on the job for at least two years and aren't self-employed, and have at least 20% equity are likely to have the easiest time refinancing, says David Zugheri, co-founder of Envoy Mortgage.

Meanwhile, those with weak credit and reduced incomes face substantial hurdles.
Jason Russell, a San Francisco mortgage broker, says he approached five lenders before finding one that would refinance one of his clients, a partner in a law firm who had solid finances but couldn't show two years of self-employment income because his firm recently had been acquired.

4. Relationships can make the difference. Banks remain cautious about mortgage lending, but some show more flexibility to their better customers. Daniel Goldstine, a psychologist who lives in Berkeley, Calif., says several lenders refused to refinance his $1 million mortgage, even though he has good credit, substantial assets and his home was appraised for about $5 million. Mr. Goldstine says he was able to secure a refinance through Citigroup after making a large deposit there.

"Sometimes we will ask customers to bring additional assets to the bank," says CitiMortgage president Sanjiv Das, who declined to discuss specific customers. "Then we know you have the ability to pay based on your assets."

Bank of America is offering more underwriting flexibility to certain customers who have at least $250,000 in assets with the bank or its Merrill Lynch or U.S. Trust units. For instance, a borrower with a company car might be allowed to provide three months of documentation showing that the employer is picking up the expense, instead of 12 months, as is standard.
J.P. Morgan has "slightly higher" loan-to-value cutoffs thresholds for its deposit and investment customers, a bank spokeswoman says.
Community banks and credit unions can also be more understanding. "It's much easier to deal with customers on a holistic basis," says Noah Wilcox, chief executive of Grand Rapids State Bank in Grand Rapids, Minn. "It's easier to manage the risk."

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713 NMLS#4256

Visit First Capital Online or call: 310-458-0010

Wednesday, May 30, 2012

Benefits of FHA Loans


FHA loan is a mortgage loan provided by private FHA-approved lenders and backed by Federal Housing Administration.
It’s a form of federal assistance which protects both American people with lower incomes who want to buy a house by borrowing money and these private FHA-approved lenders. The policy began in 1930s and has been widely carried on and welcomed by millions of people, especially first-time home buyers.

Why FHA Loans are popular?
Compared with Private Mortgage Insurance (PMI), FHA loan affords several advantages which are also the reasons why so many people choose it.
Competitive interest rates. Compared with other loan types, FHA loan has lower and more competitive interest rates. FHA loan will help cost you less. That’s all because it’s insured by federal government. FHA loans have little or no adjustment of interest rate.

Low down payment. One highlight is that you can pay only as low as 3% of the whole payment. Other standard loans may require higher down payment. Besides, FHA loan allows the payment to come from your family member, friends, boss, charitable organization and other sources as a gift. In some cases, the down payment can be decreased to zero.
There are also protections to avoid foreclosure. FHA loan can offer various options which will help you keep your house and avoid foreclosure while they meet some financial difficulties. 

Basic requirements of FHA loan
FHA loan boasts easy qualification while most of loans usually issue strict qualifications to avoid default loans. If you are late for paying or unable to pay every month, FHA, instead of you, will pay the lender. Most of FHA lenders willingly offer loans with relatively lenient qualification while the federal government provides supports and guarantee. Usually, lenders are likely to offer your loan which can be paid in a relatively long loan term. Even if you have suffered from bankruptcy and foreclosures, you are able to apply for a FHA loan as long as bankruptcy happened two years ago and foreclosure three years ago.

According to the related regulations of FHA loan, there are no income limits for those applicants. If you’re a first-time homebuyer and have unstable and flexible salary, you also have opportunities of applying for FHA loan and getting your own house. You should have a stable job for two years, preferably provided by the same employer. Your income of last two years should be the same or increasing.

If you have less wonderful credit in your personal history, other types of loans, including conventional loan, will not offer your opportunity. If you have credit score of 700 or higher, you’re likely to apply for a conventional loan with only 10% down payment. If your credit score is below 650, you will impossibly succeed in applying for a conventional loan. The minimum credit score of 620 or sometimes zero credit score is needed. FHA loan is the most suitable loan for those who don’t have a perfect credit history. A decent loan is enough for you. Even when you have a financial problem or debt, you will be qualified for FHA loans.

Benefits of FHA Loan
Looking to purchase a new home but don’t have enough money for a down payment? A home loan insured by the  Federal Housing Administration (FHA) could be an ideal solution. The FHA offers a variety of federally backed loan programs to help home ownership available and affordable for first-home buyers and low income families. Even better, FHA loans requirements are not too strict and almost everyone can get such a loan.
Undecided whether to apply for FHA loan? Now, let’s figure out more benefits about these loans to help you make the decision.

Low down payment: According to FHA loan guidelines, the minimum down payment for an FHA loan can be as low as 3.5%, based on the FHA loan type, borrower’s credit, the state where the property is located and other factors.
Flexible credit requirements: Speaking of credit, it is also one factor to consider in FHA loan qualifications. In fact, FHA loans require an easy credit qualifying. Precisely, a credit score of more than 500 can be eligible for an FHA loan. However, if you want to qualify for a 3.5% down payment, you are required to have a credit score of 580 or higher.

A Deep Exploration of FHA Loans
To help those who cannot afford to buy a new house, the Federal Housing Administration provides a kind of federal assistance, namely FHA loans. Due to its special purpose, the FHA loan rates are always much cheaper than commercial loans. But what is an FHA loan? In fact, FHA loans are made through individual FHA-approved lenders, instead of the FHA. This form of mortgage loans features low down payment and low closing cost.
Since an FHA loan just requires a low down payment for the purchase a new home, it’s a terrific choice for most home buyers obviously. But what about a conventional loan VS FHA loan? Is FHA loan still a preferable option? The answer is yes! FHA loans still have several advantages over conventional loans, such as lower down payment and easier credit qualifying.
With so many great benefits, you must want to know how to get an FHA loan. The application process is quite simple. Once you’re sure that you do qualify for any of the FHA loan program, contact potential lenders and submit your application together with needed documents.

FHA Loans Qualifications: FAQs about Income and CreditFHA loans can be one of the easiest types of mortgages to qualify for. Even when you are not eligible for a traditional mortgage, you’re likely to get approved for an FHA loan. In order to be eligible to receive an FHA loan, you have to meet the standards of income and credit. Read more

Detailed Requirements of FHA LoansFHA loan is a mortgage loan provided by private FHA-approved lenders and backed by Federal Housing Administration. It assists American people with lower incomes who want to buy a house in borrowing money from FHA-approved lenders. FHA loans are the easiest type of mortgage loan to apply for and feature easy and lenient qualification. In order to apply for a FHA loan successfully, learning these details requirements is imperative.

Income Qualification
Most recent two years complete tax returns and pay stubs should be included in the employment information. Compared with conventional home loans, the income qualifications are much more flexible. But it’s not simple to decide how much of your total income you can spend on the house you purchase. This also affects whether the loan lenders are willing to approve your application. Before you apply, you should take a consideration about your gross income which is all the money you earn before taxes including overtime, dividends, commissions and any other sources.

As long as you show that you have a steady income for the passing two years, you are likely to succeed. Generally, the housing expense including the mortgage, property taxes, mortgage insurance and hazard insurance is the 29% of our total income. Read more.

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713 NMLS#4256

Visit First Capital Online or call: 310-458-0010

Friday, May 25, 2012

Sales of existing homes increase

Existing home sales rose last month, offering further evidence that the U.S. housing market is on track for a slow and bumpy recovery.

In April, existing home sales were up 3.4% from March to a seasonally adjusted annual rate of 4.6 million, the National Association of Realtors reported Tuesday. They rose 10% from a year ago.

Sales were higher in all four regions of the U.S. "April's numbers reassure us that this market is still on the mend," says IHS Global Insight economist Patrick Newport.

The NAR data show distressed sales were 28% of April's total, down from 37% a year ago. Fewer distressed home sales, which include foreclosures and short sales, helps values. Distressed homes sold at a 14% to 21% discount in April, vs. non-distressed home sales, NAR says.

The inventory of homes for sale has also shrunk year-over-year. Nationwide, the number of homes listed for sale in April was down 21% from a year ago, the NAR says.

Home sales

Meanwhile, demand is up, given job growth and a strengthening economy, says Jed Kolko, economist for real estate website Trulia.

"There's more buyers, but they're chasing fewer homes on the market," Kolko says.
In some areas of the country, the inventory of homes for sale is particularly tight, including: Washington, D.C.; Miami and Naples, Fla.; Phoenix; Orange County, Calif.; and Seattle, the NAR says.

"We expect stronger price increases in most of these areas," says Lawrence Yun, NAR chief economist.

Some of those markets have seen inventories shrink more than the national average.
Southern California had 41% fewer homes for sale in April than a year ago, says Steven Thomas, who tracks the market for ReportsOnHousing.com. "Multiple offers are now the norm," he adds.

Investors and foreign buyers have helped reduce Phoenix's housing inventory to its lowest level in more than six years, says John Burns Real Estate Consulting.

Multiple offers are also the norm for homes in the east side of Seattle, including Bellevue, Wash., says Coldwell Banker Bain Realtor Anthony Gilbert. The competition for homes has heated up so fast that some buyers have been surprised, he says.

This week, he had a client who was shocked to find out that her offer was one of six on a home.
As the market continues to improve, Gilbert expects more sellers to put homes on the market. Now, many sellers are waiting for better prices, he says.

The NAR's data show median existing home prices in April up 10% from a year ago. The NAR's data doesn't adjust for the mix of homes sold, so a spate of more expensive home sales or fewer distressed home sales can skew results.

Trulia data shows that homes listed for sale in the February, March and April time period were, on average, 6.2% larger this year than last, suggesting that higher-price homes may be making up more of the market.

While home sales are up from last year, they're coming off one of the worst years ever. IHS expects home sales to climb 10% this year vs. last year. Tight credit, which makes mortgages hard to get, is a key obstacle to a "strong recovery," IHS says.

There are also plenty of distressed homes still in the market. Nationwide, 3.6 million homes in April were 90 or more days delinquent on a mortgage payment or were already in foreclosure, say data from mortgage tracker Lender Processing Services.

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713 NMLS#4256

Visit FirstCapital Online or call: 310-458-0010

Thursday, May 24, 2012

New U.S. home sales climb above forecast

Demand for new U.S. homes increased more than forecast in April as low mortgage interest rates and an improving economy drew buyers.

Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported today in Washington. The median forecast in a Bloomberg News survey of economists was 335,000. Data released Tuesday showed sales of existing homes rose in April in every region.

Job growth, affordability and record-low interest rates are bringing single-family homes within reach of more buyers, chipping away at a weakness in the world’s largest economy as risks from Europe’s debt crisis climb. At the same time, banks remain reluctant to lend and foreclosures continue to move through the system, which means a sustained housing recovery will take time to develop.

“It’s very clear now that the housing market has turned a corner,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston. “The only question is how strong the rebound is going to be. It bodes well for the broader economy.”

Stocks held earlier losses after the report amid concern that Greece may leave the euro as the region’s leaders meet in Brussels. The Standard & Poor’s 500 Index dropped 0.7 percent to 1,307.13 at 10:14 a.m. in New York.

Survey Results

Estimates of the 72 economists in the Bloomberg survey ranged from 325,000 to 375,000. New home sales are logged when purchase contracts are signed. The March reading was revised up from a previously estimated 328,000.
The median sales price increased 4.9 percent from the same month last year, to $235,700, today’s report showed.

Purchases increased in three of four U.S. regions last month, led by 28 percent gains in both the Midwest and West. The South was the only area to show a decline, falling 11 percent.
The number of newly constructed houses on the market rose to 146,000 from 144,000 in March, which was the fewest reported in data going back to 1963. It was the first increase in inventory since April 2007.

Because the rate of sales climbed faster than inventory, the month’s supply of new houses on the market dropped to 5.1 months from 5.2 months in March.
Demand for new houses peaked at 1.28 million in 2005 during the housing boom, then fell to 306,000 million in 2011, the lowest in records dating back to 1963.

Smaller Share
Newly constructed houses made up 6.7 percent of the residential market last year, down from a high of 15 percent during the boom of the past decade, making them an unreliable predictor of the overall single-family market. Buyers are taking advantage of the large inventory and affordability of previously owned homes.

Sales of those existing homes, tabulated when a contract closes, increased 3.4 percent to a 4.62 million annual rate in April, just shy of the 4.63 million in January that was the highest in almost two years, the National Association of Realtors reported earlier this week. Resales could rise to a 4.6 million to 4.7 million range this year, the group projected, from 4.26 million in 2011.

Builder confidence rose to a five-year high in May, with the National Association of Homebuilders/Well Fargo sentiment gauge rising to 29. The measure had been as low as 14 in September. A measure of sales expectations for the next six months rose to 34 from a revised 31, and the gauge of buyer traffic increased to 23, the highest since April 2007, homebuilders reported earlier this month.

More Orders
Toll Brothers Inc., the largest U.S. luxury-home builder, today reported a second-quarter profit that beat estimates as sales and orders increased amid improving demand for the company’s move-up houses. Toll’s homes are marketed to wealthier buyers with easier access to cash and credit. Bookings rose 14 percent from a year earlier to 671 homes.
“It appears that the housing market has moved into a new and stronger phase of recovery,” Chief Executive Officer Douglas Yearley said in the statement. “The spring selling season has been the most robust and sustained since the downturn began.”
Lower borrowing costs are helping underpin demand. The average cost of a 30-year, fixed-rate mortgage fell to 3.79 percent last week, an all-time low, according to a Freddie Mac survey of lenders.

Tightening Credit
Nonetheless, some banks remain hesitant to lend. In the first three months of the year, 5.6 percent of lenders said they had tightened credit standards for long-term, fixed-rate mortgages, according to an April Federal Reserve survey of senior loan officers.
Some banks continue to work through the costs of the foreclosure crisis. BB&T Corp., a regional bank based in Winston- Salem, North Carolina, is clearing its portfolio of failed real estate loans even as it works to grow new residential construction lending, Chief Financial Officer Daryl Bible said.

“We’re actually making construction loans again, not robust but we’re making loans,” Bible said at a May 22 investor conference. “So, there is definitely more activity than what we’ve had in the last three years.”

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713 NMLS#4256

Visit FirstCapital Online or call: 310-458-0010