Thursday Is the Best Day to List Your House

Not that it matters much these days, but apparently Thursday is the best day to list your home for sale.

This is the latest advice from iBuyer and home valuation company Zillow, which noted that 21% of properties are listed on that particular day of the week.

What’s So Great About a Thursday Anyway?

  • Roughly 21% of properties are listed for sale on Thursdays (the most of any other day)
  • The share of homes listed on Thursdays is as high as a third in some markets nationwide (Portland, Seattle)
  • Properties listed on a Thursday typically go pending faster than homes listed on any other day of the week
  • And homes listed on Thursdays are more likely to sell above their asking price

I like Thursdays – ever since college it’s been the unofficial start of the weekend, something I didn’t grasp until, well, college.

Fridays are generally the lighter work days (or school days), with most of the heavy lifting completed earlier in the week.

The other special thing about a Thursday, at least when it comes to real estate, is that open houses and private showings often take place on the weekend, when folks aren’t working.

So if a property is listed just a day or two before, there’s a good chance it’ll be seen very shortly after, as opposed to sitting on the market all week before the prospective buyers start showing up.

Conversely, if you put your property on the market on say a Sunday, for some bizarre reason, it might not get a showing until five or six days later.

By then, it could be seen as a stale listing, at least in today’s lightning fast housing market.

And considering the average time a property spent on the market in April was exactly one week (yes, seven days), a day or two more can be meaningful.

Per Zillow, 21% of homes are listed on a Thursday, with a rate around 33% in Portland and Seattle.

Meanwhile, just 13% of homes are listed on a weekend, which is lower than any individual weekday.

[The Best Time to Buy a Home Is in August and September]

Also List Your Home Before Labor Day If Possible

  • Listing during the week of April 22nd resulted in the best chance of selling above asking
  • The worst weeks of the year to sell recently were in mid- and late October
  • Homes sold the slowest during the week ending September 1st (Labor Day 2019)
  • Early-mid fall is the time when homes tend to sit on the market the longest

While day of the week can play a role, especially if the housing market isn’t bananas, the time of year is probably a lot more important.

Generally speaking, Labor Day tends to represent the end to the traditional home shopping season, which begins in spring.

This is mostly a weather-driven phenomenon, largely because it’s difficult to sell a home during a cold winter when it’s snowing outside.

But in areas of the country where the temperature is nice year-round, it may not be much of a factor.

For example, you might be able to get away with listing a home in Southern California or Florida at any time throughout the year without a noticeable difference in demand and/or sales price.

However, to maximize your chances of a high selling price, list on a Thursday before Labor Day.

As you can see from the chart below, properties sold faster and were more likely to go above list in April for the metro of Los Angeles, based on pre-pandemic 2019 data.

time of year home sale

The same held true in many other markets, while late summer and fall tend to perform the worst.

This is typically because families are settled for the school year, assuming they have children, and other prospective buyers might be traveling and/or beginning to hunker down for winter.

In fact, Zillow even refers to that time of year as the “fall stall,” when days on market rise and asking prices fall.

Forget About Dates, Focus on the Details

  • Dates can certainly play a role in real estate but aren’t the be all, end all
  • Sellers can see success any time of year if they do their homework and use a good agent
  • A home sale can also fall flat during peak selling months if the listing and/or agent is poor
  • And it may not always be convenient to sell at a certain time of year anyway

While “best” days and months of the year are interesting and fun to read about it, perhaps more important is listing your property with care.

That means selecting a competent real estate agent, making necessary repairs ahead of time, staging your property using the latest trends, and even ordering a home inspection for yourself before a buyer does.

All of these things can easily eclipse the value of a specific list date, whether it’s a Monday or a Thursday, an April or an October.

If you don’t take the time to do your homework, clean and stage your home, address any red flags, and so on, it might not matter what day or month you list.

Sure, Sunday is the worst day to list for a quick sale, with properties remaining on the market a full eight days longer than homes listed on a Thursday.

And homes listed on a Sunday (and Saturday for that matter) were less likely to sell above ask. Fortunately, this issue can probably be easily remedied, but not the time of year if life has its say.

Ultimately, understand that there are better and worse times to sell a home throughout the year depending on your individual market, but if you can’t time it perfectly, at least get all the other details right.

Read more: 12 Home Selling Tips for 2021

Source: thetruthaboutmortgage.com

Nation’s Top Wholesale Mortgage Lender Launches New Line of Adjustable-Rate Mortgages

Posted on May 13th, 2021

Declaring that ARMs are back, United Wholesale Mortgage (UWM) has just rolled out a new line of adjustable-rate mortgages for its mortgage broker partners.

The new offering from the nation’s largest wholesale mortgage lender includes a 5-, 7-, and 10-year ARM to flank the usual fixed-rate options, such as the very popular 30-year fixed and the shorter-term 15-year fixed.

What makes these loans interesting is the fact that they come with significantly better pricing than fixed-rate mortgages currently available with other lenders.

And that might be enough to change the ARM argument, which has been decidedly dour for years now thanks to record low fixed mortgage rates.

How Long Will You Actually Keep Your Home Loan?

  • Something like 90% of purchase mortgages are 30-year fixed loans
  • And roughly 80% of all mortgages including refinances are 30-year fixed loans
  • Yet less than 10% of borrowers actually keep their home loan for more than seven years
  • This means the bulk of homeowners with a mortgage are overpaying for the perceived safety of a fixed interest rate

UWM aptly points out that fewer than 10% of borrowers stay in the same mortgage for more than seven years, yet something like 80% of mortgagors hold 30-year fixed mortgages.

In other words, a large majority are paying too much for their home loan, yet never actually receiving the benefit of an interest rate that is fixed for the life of the loan.

And because many adjustable-rate mortgages come with a lengthy initial fixed-rate period, many of these homeowners could actually benefit from an ARM without ever worrying about a rate adjustment.

UWM notes that pricing on its 7-year ARM could be anywhere from 50 to 75 basis points (.50%-0.75%) better than a 30-year fixed loan.

For example, if a 30-year fixed is priced at 3%, it might be possible to get a 7-year ARM for 2.25%.

If we’re talking about a $350,000 loan amount, that’s a payment difference of about $140 per month and roughly $18,000 in interest saved over 84 months.

That’s the draw of an ARM – to save you money while also providing a lower monthly payment while you hold the thing.

And if you get rid of it during the fixed-rate period, which in the case of these loans is 5, 7, or 10 years, you essentially win.

Are ARMs Set to Get Popular Again?

  • Adjustable-rate mortgages have mostly been a home loan choice for the very rich lately
  • The ARM share was just 3.8% of total mortgage applications last week per the MBA
  • That may begin to change as mortgage rates rise and lenders embrace ARMs again
  • UWM has been a leader in mortgage innovation so this could be a sign of things to come in the industry

Chances are ARMs will gain in popularity as fixed rates begin to rise, assuming that happens over the next few years.

They may appeal to both new home buyers who want a lower interest rate, and existing homeowners who want to tap equity via a cash out refinance.

The adjustable-rate mortgage was super popular during the housing boom in the early 2000s, though they often featured extra-risky options like interest-only payments and negative amortization.

While an ARM is still a risk to some degree, given you don’t really know where interest rates will be at first adjustment, those who do have a clear vision can benefit, as illustrated above.

UWM’s suite of ARMs are all tied to the newly-launched Secured Overnight Financing Rate, otherwise known as SOFR, the LIBOR’s replacement.

Additionally, they all adjust every six months once they become adjustable, meaning they are 5/6, 7/6, and 10/6 ARMs.

This can be slightly more stressful than an annually adjusting ARM, such as the popular 5/1 ARM or 7/1 ARM.

The good news is the cap at each adjustment is just 1%, meaning the interest rate can’t increase by any more than one percent every six months.

And remember, the first adjustments don’t start for 60, 84, or 120 months, respectively, which as UWM noted, shouldn’t affect many homeowners who either sell their homes or refinance before that time.

The new ARMs are available on primary, second, and investment properties, for purchases, rate and term refinances, and cash out refis.

They are conventional loans (backed by Fannie Mae or Freddie Mac) and a minimum FICO score of 640 is required, with a maximum loan-to-value (LTV) ratio of 95% is permitted.

UWM has been a bit of a vanguard in the mortgage space, so there’s a good chance other mortgage lenders will soon follow suit and begin offering ARMs at a discount to their fixed-rate counterparts.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

New Fannie/Freddie Refinance Option Drops Adverse Market Fee, Offers $500 Appraisal Credit

Posted on April 28th, 2021

In an effort to undo some of the damage the Federal Housing Finance Agency (FHFA) basically caused itself, it’s throwing a bone to so-called low-income families to save on their mortgage.

It all spurs from the adverse market fee the very same agency implemented back in August 2020 to contend with heightened losses related to COVID-19 forbearance and loss mitigation.

The 50-basis point fee, which went into effect on September 1st, 2020, applies to all new refinance loans backed by Fannie Mae and Freddie Mac.

While it’s not a .50% increase in mortgage rate, the fee does get passed along to consumers in the form of either higher closing costs or a slightly higher mortgage rate, perhaps an .125% increase all told.

Either way, it wasn’t well received at the time, and still isn’t today, and this announcement is a somewhat bittersweet one, as it only applies to a certain subset of the population.

Still, the FHFA believes families who are eligible for this new refinance initiative could see monthly savings between $100 and $250 on average.

Who Is Eligible for Adverse Market Fee Waiver and Appraisal Credit?

  • Applies to homeowners with incomes at or below 80% of the area median income and loan amounts at/below $300,000
  • Must result in savings of at least $50 in monthly mortgage payment, and at least a 50-basis point reduction in interest rate
  • Must currently hold an agency-backed mortgage (Fannie Mae or Freddie Mac)
  • Property must be a 1-unit single-family that is owner-occupied
  • Borrower must be current on their mortgage (no missed payments in past 6 months, 1 allowed in past 12 months)
  • Max LTV is 97%, max DTI is 65%, and minimum FICO score is 620

Perhaps the biggest eligibility factor is the borrower’s income must be at or below 80% of the area median income.

This new refinance program specifically targets what the FHFA refers to as low-income families, which director Mark Calabria said didn’t take advantage of the record low mortgage rates.

Apparently more than two million of these homeowners did not bother refinancing, even though it would have been advantageous to do so (and still is).

He noted that this new refinance option was designed to help eligible borrowers who have not already refinanced save somewhere between $1,200 and $3,000 annually on their mortgage payments.

That’s actually a requirement as well – the borrower must save at least $50 per month in mortgage payment, and their mortgage rate must be at least .50% lower.

For example, if your current mortgage rate is 4%, you’ll need a rate of at least 3.5% to qualify.

Additionally, you must currently have a home loan backed by either Fannie Mae or Freddie Mac, and your property must be owner-occupied and no more than one unit.

I assume condos/townhomes work as well, as long as it’s your primary residence.

The adverse market fee is waived as long as your income is at/below 80% of the area median AND your loan balance is at/below $300,000.

If your loan amount happens to be higher, my understanding is you can still get the $500 appraisal credit.

You’ve also got to be current on your mortgage, meaning no missed payments in past six months, and up to one missed payment in past 12 months.

Lastly, there is a maximum loan-to-value ratio of 97%, a max debt-to-income ratio of 65%, and a minimum FICO score is 620.

Most borrowers should have no issue with those requirements as they are extremely liberal.

Is This New Refinance Option a Good Deal for Homeowners?

  • It’s an excellent deal for those who haven’t refinanced their mortgages yet
  • You get a slightly lower mortgage rate and/or reduced closing costs
  • And with mortgage rates already super cheap it could be a double-win to save you some money
  • Even though who don’t qualify for this new program should check to see if a refinance could be worthwhile

As Calabria said, many higher-income homeowners probably already refinanced, or are currently refinancing their mortgages to take advantage of the low rates on offer.

Meanwhile, lots of lower income borrowers haven’t for one reason or another, perhaps because they’re not aware of the potential savings or had a bad experience with a mortgage lender in the past.

Whatever the reason, those who haven’t yet and meet the income requirement can take advantage of a refinance without the pesky adverse market fee.

That means they could get a mortgage rate maybe .125% lower than other borrowers who aren’t eligible for this program.

Additionally, they’ll get a $500 home appraisal credit from the lender, assuming the transaction doesn’t already qualify for an appraisal waiver.

Either way, eligible homeowners won’t have to pay for the appraisal, which is another plus to save on the refinance itself via lower closing costs.

It’s actually a great deal for those who haven’t refinanced yet because you might wind up with an even lower mortgage rate and reduced closing costs.

And because your new mortgage payment must be at least $50 cheaper per month, there’s less likelihood of it being a meaningless refinance.

All in all, this is good news for the so-called low-income homeowners who’ve yet to refinance, but bittersweet for everyone else.

Still, mortgage rates remain very attractive for everyone, so even if you have to pay the adverse market fee (and the appraisal fee), it could be well worth your while.

The FHFA said the new refinance option will be available to eligible borrowers beginning this summer, though it’s unclear exactly what date that is as of now.

Read more: When to a refinance a mortgage.

Source: thetruthaboutmortgage.com

Why Is the Housing Market So Hot?

Real estate Q&A: “Why Is the Housing Market So Expensive Right Now?”

If you asked me this same question a few years ago, I would have had the same basic answer I’m about to explain.

And since that time, home prices have surged much, much higher, which basically tells me the same fundamentals have been at play for quite a while now.

Additionally, they may continue to more years to come.

Similar to a market downturn, when things are hot, they remain hot for years, which is why it can pay to hold on, just like those who didn’t sell their bitcoin at first-profit.

Reason #1: There Is Very Limited Inventory and Lots of Buyers

The top reason why the housing market is so high right now has to do with limited inventory, or supply.

It’s one of those fundamental concepts even a child can comprehend. When you have a small or finite amount of something, and people want it, its value goes up.

This is basically what’s been going on with real estate since the market bottomed in 2012.

In reality, supply has been tight ever since the market peaked and the foreclosure crisis took hold because banks were careful to flood the market.

Even back then, it was difficult to scoop up a property because many of them were either foreclosure sales, which aren’t for novice home buyers, or short sales, which took bank approval and months and months to close.

I remember looking at homes in 2012 and it wasn’t much different than today. Sure, home prices were significantly lower, but inventory wasn’t all that great.

Much of what was listed either needed work or wasn’t in the most desirable area. For me, that hasn’t changed over the past decade.

Yes, a good property comes on the market here and there, but if and when it did/does, it becomes a “hot home” and a bidding war ensues.

It’s for this main reason that home prices are at all-time highs nationwide, with the median home valued at roughly $273,000, up from $215,000 in early 2007, per Zillow.

Reason #2: Record Low Mortgage Rates

  • Despite a recent uptick mortgage rates are lower than they were a year ago
  • This has allowed purchasing power to stay strong while home prices rise
  • The only increased burden is a higher down payment for prospective buyers
  • It may remove some buyers from the picture but not enough to lower prices

Now if reason number one weren’t reason enough for real estate to be booming, sprinkle in some record low mortgage rates.

To get this straight, there’s a short supply of something people want and it’s on sale from a financing point of view. No wonder everyone is going wild.

While the listing price might be quite a bit higher than it was five or 10 years ago, the fact that mortgage rates are roughly half the price they were then is huge.

This has kept home purchasing power intact despite a big run-up in home prices, basically only making the required down payment an issue for some prospective buyers.

And remember, because there’s a limited supply of homes available, it doesn’t really matter if some would-be buyers are shut out of the market due to affordability constraints.

There are still enough willing and able buyers to come in and pick up any slack, of which there isn’t much of to begin with.

So the bidding war might only have 20 participants instead of 30 – that’s not going to make any impact whatsoever on the final sales price.

Reason #3: Rising Incomes and Inflation

home price affordability

Lastly, we can’t simply look at unadjusted (nominal) home prices and say whoa, they’re even higher than they were back in 2006 when real estate was in a massive bubble. They must crash!

Yes, unadjusted home prices are about 22.2% above the peak seen in 2006 when the housing market last boomed, per First American (see the blue line above).

But that alone isn’t enough to determine whether the market is overvalued or not.

Ultimately, you have to factor in inflation, mortgage rates, and wages to get a complete picture.

Speaking of wages, median household income rose 6.2% year-over-year in January and is up 74.8% since January 2000.

Meanwhile, real house prices (those adjusted for inflation) were about 25.6% less expensive to begin the year than in January 2000.

And so-called “house-buying power-adjusted house prices” are still 47.8% below their 2006 housing boom peak, meaning rather incredibly, there’s still a lot of room to run.

Just check out the chart above – from October 1993 to December 1994, nominal home prices barely budged one percent, but the Real House Price Index (RHPI green line) increased over 20% because purchasing power decreased by 16% due to rising mortgage rates.

Then from January 2005 to March 2006, nominal house prices surged about 13% while mortgage rates remained mostly steady, pushing the RHPI up a big 15%.

At that time, affordability was eroded because nominal home price appreciation far outpaced purchasing power.

Finally, nominal home prices increased more than 13% year-over-year in January 2021, but house-buying power (yellow line) jumped 19% as the RHPI fell nearly five percent.

Why did housing affordability improve despite rising home prices? Because median household income increased and the 30-year fixed fell from 3.62% in January 2020 to 2.74% in January 2021, per Freddie Mac.

In other words, you can’t look at nominal home prices in a vacuum, aka firing up the Redfin app and saying OMG, that $500,000 home from last year is now selling for $600,000!

You need to consider the big picture and factor in wages and how cheap/expensive financing is.

If you look back at that chart, nominal home prices (blue line) have risen steadily since around 2012, and are now above the scary 2006 housing peak levels.

But the RHPI has reached its lowest point since the series got started in 1990, and at the same time the House-Buying Power Index has surged higher, especially recently.

All of this may explain why despite double-digit year-over-year gains and nominal home prices that might be up nearly 100% from 2006, the buyers are still coming. And they’re bidding over asking!

It also supports the idea that the next housing crash (or beginning of a decline) won’t happen for a while still, perhaps my longstanding prediction of 2024.

In other words, if you’re a prospective home buyer, don’t get your hopes up for a discount anytime soon, though if mortgage rates do rise, we might see a moderation in home price appreciation and perhaps less competition.

But the only real relief will come from increased home building, which is beginning to ramp up as housing starts and housing completions are both up significantly year-over-year.

As to how real estate could go from red hot to ice cold again, picture a scenario a few years out when home builders overshoot the mark and mortgage rates are back at 4-5% for a 30-year fixed.

Oh, and asking prices are up another 10-20% from today’s levels. That’s where you can start to imagine another major correction, especially if the wider economy hits another snag.

Read more: 2021 Home Buying Tips

Source: thetruthaboutmortgage.com

Medical Collections Killing Refinance Frenzy?

medical

Everyone knows mortgage rates have plummeted in recent weeks, but what does that actually mean for those looking to refinance?

With tough guidelines in place and flagging property values, it could equate to a lot of spinning wheels and paperwork.

And one mortgage banker is arguing that erroneous medical collections showing up on potential borrowers’ credit reports are throwing another wrench in the deal.

“The tragedy is that the collection accounts, even those that have been paid in full, are lowering these individuals’ credit scores, often to the point that they either can’t qualify for a loan, or will have to pay higher interest rates if they do,” said Rodney Anderson of Rodney Anderson Lending Services.

According to Anderson, 45 percent of the 1,701 loan applications his company received between June and September involved borrowers with at least one medical collection.

And these collections can kill an applicant’s credit score (whether legitimate or not), even if the remainder of their credit profile is sound, eliminating the possibility of any mortgage rate relief.

Anderson noted that medical billing is “notoriously error-prone,” and as a result, has launched a petition to lessen the severity of medical collection-related credit dings, which he says can lower credit scores more than 100 points.

The petition essentially calls for a new federal law mandating the removal of a medical collection from a borrower’s credit report within 30 days of it being paid or settled, instead of it kicking around for seven years.

Medical billing is certainly an area that needs to be looked at, but the whole credit reporting industry is in need of some serious revamping, and could easily be blamed for a share of the mess were in now.

(photo: paulkeleher)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Bank of America Refinancing Under Making Home Affordable Program

Last updated on February 2nd, 2018

bankofamericarates

Bank of America said today it has begun processing refinance applications under the Treasury’s “Making Home Affordable” program, with nearly 200,000 customers contacting the company to determine eligibility.

“Combined with historically low interest rates, this program has generated significant interest from borrowers seeking the benefit of lower mortgage payments,” said Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services, in a release.

“We are proud to be one of the first lenders to take loans from application to closing under the Treasury’s plan, providing the opportunity for more Americans to save money on their monthly mortgage payments and supporting efforts to stabilize the nation’s housing market.”

However, the bank seems to be focused on specific applicants, namely those with Bank of America or Countrywide serviced loans and no mortgage insurance on their current loans.

The bank said additional customers will be served “as systems become operational.”

In the next two weeks, the company expects to begin offering trial loan modifications under the Treasury Department’s “Home Affordable Modification” program, and has extended its foreclosure moratorium on potentially eligible loans until April 30.

Bank of America, since snatching up former top mortgage lender Countrywide Financial, services roughly one out of five mortgages in the United States.

I’ve been told by my friends in the industry that Bank of America has been offering mortgage rates much lower than the competition, effectively pricing out them out in the process.

The company is also planning to roll out a jumbo mortgage program focused on loan amounts between $730,000 and $1.5 million, with 30-year fixed mortgage rates beginning in the upper five-percent range.

Apparently there are profits to be made in mortgage.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Wells Fargo Hired 5,000 Employees to Handle Mortgage Workload

Last updated on August 9th, 2013

opportunity

San Francisco-based bank and mortgage lender Wells Fargo reportedly hired 5,000 employees to handle its ever-increasing mortgage workload, according to Bloomberg.

Wells Fargo CFO Howard Atkins said in an interview that the bank increased staff over the past couple of months to process its record haul of mortgage applications, which made it the top mortgage lender over Bank of America/Countrywide.

The company originated $101 billion in first mortgages during the first quarter, more than double the $50 billion in the fourth quarter and nearly half the $230 billion for all of 2008.

The correspondent/wholesale channel contributed $49 billion to that, practically double the levels seen in earlier quarters; home equity lines and loans, however, totaled just $1 billion.

All those applications led to the best mortgage origination quarter since 2003, contributing to the company’s record $3.05 billion net income in the first quarter.

But what happens once mortgage rates rise and refinance dries up, pushing volume back to more historical levels?

Sure it’s great that the bank took on thousands looking for work, but it seems to be only temporary employment.

And it’s wonderful that they’re upping their fulfillment areas, but what about staff in the company’s loss mitigation department?

“We remain focused on proactively identifying problem credits, moving them to nonperforming status and recording the loss content in a timely manner,” said Chief Credit Officer Mike Loughlin in a release.

“We’ve increased and will continue to increase staffing in our workout and collection organizations to ensure these troubled borrowers receive the attention and help they need.”

I doubt they’ve hired many employees in their workout and collection units, as they seem pretty focused on bringing in all those new mortgages with the low mortgage rates.

Shares of Wells Fargo were up $1.24, or 6.59%, to $20.05 in midday trading on Wall Street.

(photo: jasontester)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Now You Can Get a 30-Year Fixed at 3.25%

low rate

We all know mortgage rates are low, but this is seemingly ridiculous.

The New Hampshire Housing Finance Authority is currently offering a mortgage rate as low as 3.25% on a 30-year fixed-rate mortgage.

And that’s with as little as 3.5% down (FHA loan). Of course, there are several strings attached. There are income and purchase price limits in place, and the property must qualify for the financing.

Only certain homes in certain areas are eligible, and underwriting is probably pretty darn strict, but it still illustrates how low interest rates have fallen in recent weeks and months.

But is the rate really as low as it appears?

While the NHHFA (possibly a made-up acronym) is pitching the 3.25% rate, the APR is actually significantly higher. In fact, it’s 4.158%.

What gives?

Well, there are a number of fees, including two mortgage points that must be paid to get that low rate.  The par rate is actually 3.50%.

So it’s not necessarily as low as it seems. But the APR does factor in private mortgage insurance, and likely everything else that you must pay at closing.

There’s a problem with APR though – it varies so much from lender to lender that it’s not always possible to get an apples-to-apples comparison when mortgage quote shopping.

[Mortgage rate vs. APR]

For instance, over at the Zillow Mortgage Marketplace, the best advertised quote delivered today was a rate of 3.875% on a 30-year fixed.

The APR was 4.018%, lower than the 3.25% rate offered by the NHHFA.

Why? Well, for one the mortgage discount fee is only 1.50%. And the loan-to-value ratio is 80%, meaning the borrower must come in with a 20% down payment.

The New Hampshire deal only requires a 3.5% down payment, and borrowers can even receive a grant so long as they bring in at least one percent of their own funds.

[Why are mortgage rates different?]

The fees on the Zillow quote are probably also smaller/fewer, which drives down the APR, but who knows exactly what’s being included.

Lowest Rate Not Always the Best Deal

So the takeaway here is that the lowest mortgage rate doesn’t always equate to the best deal.

And it’s only a matter of time before someone comes out with a 30-year fixed at 2.99% or something similarly outrageous.

Just make sure it’s actually a good deal for you. What I mean by that is that the super low rate actually benefits you.

If you don’t plan to pay off your mortgage or stay in your home long term, buying down an interest rate to a psychological level doesn’t make a lot of sense.

Sure, you can brag to your neighbors that you’ve got the lowest rate in history, but you may have wasted money obtaining it.

And a slightly higher rate may make more sense if your money is better invested somewhere other than housing, somewhere more liquid.

Finally, when you’re buying down your interest rate, be sure to find a certain point where the cost and the associated rate make the most sense (do the math!).

You probably won’t want to pay an extra or point or two to lower your rate just a .125 or a .25 of a point for bragging rights alone.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Home Builders: Housing ‘Highly Affordable’

reduced

Housing affordability remained near its highest level on record for the sixth consecutive quarter, according to the latest survey from the National Association of Home Builders.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) indicated that 72.3 percent of all new and existing homes sold during the second quarter were affordable to families earning the national median income of $64,400.

That’s up slightly from the first quarter and just shy of the record-high 72.5 percent seen in the first quarter of 2009.

Before 2009, the affordability index rarely topped 67 percent, and had never reached the 70 percent-mark.

But record low mortgage rates and falling home prices have opened the door for more buyers, less the tighter underwriting environment.

Kinda makes you wonder why no one is interested in buying a home these days – maybe affordability isn’t the driver.

After all, a ton of buyers pre-mortgage crisis couldn’t even afford to make their mortgage payments in the conventional sense, so they opted for mortgage programs with teaser rates like the option arm.

Perhaps they were more interested in the thought of home price appreciation, as opposed to simply living in a home.

Syracuse, NY Most Affordable Housing Market

The most affordable major housing market in the country was Syracuse, NY, pushing Indianapolis-Carmel, IN off the top spot, which it held for almost five years.

Nearly all (97.2%) of the homes sold there were affordable to households earning the median family income of $64,300.

Detroit, Youngstown, and Buffalo also made the list of the most affordable metros.

Meanwhile, the New York-White Plains-Wayne, NY-NJ area continued to be the least affordable major housing market during the second quarter, with just 19.9 percent of all homes sold deemed affordable to those earning the median income of $65,600.

Los Angeles, the Bay area, and Honolulu continued to linger at the bottom of the affordability scale during the quarter as well.

Read more: What mortgage can I afford on my salary?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

A 30-Year Fixed in the 3% Range? Maybe, But Does Anyone Care?

Last updated on December 19th, 2017

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The good news about the continued economic uncertainty is interest rates keep slipping lower and lower.

The basic principle with regard to mortgage rates is that bad economic news pushes them down, and good news makes them rise. Fairly simple.

And so over the past few weeks, mortgage rates have been inching back toward what could be new all-time record lows.

In fact, there’s even talk of the popular 30-year fixed-rate mortgage falling into the 3% range, which is certainly uncharted territory. Hooray! Pop the champagne, right?

Right now you can get your hands on a 30-year fixed in the high 3% range if you pay several mortgage discount points at closing, but clearly not everyone has the money nor wants to buy down their interest rate.

It just doesn’t make sense given all the “uncertainty.” And yes, I only quoted that to emphasize

Still, rates are so low that some fence sitters may be looking to buy real estate again, especially first-time home buyers with no existing home equity concerns.

Current Homeowners Trapped

You see, those who already own a home are kind of trapped – despite mortgage rates marching to new all-time lows, property values are also sinking.

So these people can’t put their home on the market unless they’ve got some serious home equity.

And the only people who do are those who purchased before the housing boom and didn’t elect to take a cash-out refinance or home equity line of credit at any point during the housing run-up.

Unfortunately, this is a select few, so the unprecedented mortgage rates aren’t having their desired effect.

This is evidenced by the lackluster mortgage application and pending home sale figures that continue to be reported each month.

Strange that no one seems to care about mortgage rates this low, isn’t it? But is it a lack of care, or more a lack of confidence in housing and the economy at large?

Housing No Longer the Ultimate Investment

It seems nobody is interested in buying a home, despite being able to actually afford one now, probably because they won’t be able to “flip it” and “make millions” overnight.

That was the draw of purchasing a home during the run-up and subsequent bubble. To get rich. That mentality seems to have vanished, so who cares about low mortgage rates?

Sure, your monthly mortgage payment will be super low and you’ll be able to buy a larger home, but without kick-butt appreciation, what’s the point? Why not just rent?

Perhaps that’s the mentality now – it’s not a sure thing anymore, so why take the risk and go through the trouble?

Interestingly, low mortgage rates can matter a lot more than home prices. I wrote about the two previously.

The scary part though is if prospective home buyers aren’t biting now, who will be once mortgage rates rise?

And what will happen to home prices if rates rise to more sustainable, natural levels? Will they too need to plummet to garner any interest?

Perhaps I’m being overly cynical, but you’d think there would be more excitement about mortgage rates this low.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com