Mortgage Default Rates Fall Almost 30 Percent From Year Ago

Mortgage default rates, as tracked by the S&P/Experian Consumer Credit Default Indices, on first mortgages were at .92 in May 2014, down from 1.01 the month before and down almost 30% (29.7%) from May 2013 when the first mortgage default rate index was at 1.31.  The default rate index on second mortgages is improving as well with the index for May 2014 at .57, down from .63 in April and from .60 in May 2013, according to the report.

This is good news for the housing market and consistent with the trend we have seen lately of lower delinquencies and fewer defaults which lead to fewer foreclosures and fewer REO’s, all of which put downward, or negative, pressure on home prices.

 

 

Nine Credit Score Myths

how long to wait after foreclosure

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

We hear lots of advice these days about how to improve a credit score. However, not all advice is good advice. Here are nine credit score myths that could actually do more harm than good:

Myth #1 – Closing out old, inactive accounts will help your score.
Thirty percent of your credit score is based on your utilization rate – your total balances versus the total amount of credit available to you. Canceling old accounts reduces the total amount of your available credit, changing that ratio. Any balance will utilize a higher percentage of your credit, which will hurt your score.

Myth #2 – Opening (but not using) accounts will help your score.
To improve their utilization rate and, theoretically, their credit scores, some people open as many accounts as they can. According to Rod Griffin, director of public education for the credit bureau Experian, “Your score is affected by how well you manage the credit you do have over a period of time, not by how many credit cards you have or the available balances.”

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Mortgage Delinquency Rate Falls To Lowest Level In 5 Years

The mortgage delinquency rate for homeowners 60 days or more delinquent on their mortgages fell below 4 percent during the last quarter of 2013, the first time the delinquency rate has been below 4% since 2008, according to TransUnion.  According to the report, every state in the U.S. saw a decline in mortgage delinquency rates from to the 4th quarter of 2012 to the 4th quarter of 2013 with only two, New Jersey and New York, not seeing a double digit decline. See the info graphic below for more info. Continue reading “Mortgage Delinquency Rate Falls To Lowest Level In 5 Years

Where are home loan rates headed?

St Louis Distressed Home Sales - St Louis Realtor

Home loan rates have been near historic lows for a while now but the $64 question is, where are home loan rates headed in the future?  While there are, of course, a variety of opinions out there, the majority of the noteworthy ones are thinking interest rates are headed upward.  In the Well’s Fargo Securities Economic Outlook report for 2014, interest rates in the year ahead (2014) was addresses, saying “we expect long-term rates to exhibit an upward bias as Fed tapering moves forward. However, the extent of any increase in long-term rates should be modest, given continued low inflation and a reduced federal budget deficit “.  PNC Bank, in their Economic Outlook report for 2014 forecast that 30 year mortgage rates would increase to 4.95% during 2014, about 1% higher than 2013.  Oh yeah, I should also mention, according to a recent poll by Rasmussen Reports, 50% of the consumers surveyed say they expect higher interest rates a year from now.  So there you have it…higher rates on the horizon.

Important Changes to FHA Home Loans Now In Effect

how long to wait after foreclosure

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

The Federal Housing Authority (FHA) has made some changes for 2014, which took effect January 1 and affect FHA home loans. First and foremost, you will see a drop in the maximum allowable loan. In the St. Louis metro area, for example, the new max loan amount for a single-family home has been lowered to $271,050 from $281,250.

Other items of note regarding FHA have not changed; so as a refresher let’s look at FHA qualifications and rules:

  • Borrower must put 3.5% down based on sales price. 100% of the buyer’s contribution can be in the form of a gift. There are no reserve requirements; however, reserves can help to build a stronger case for a “tight” loan.
  • The seller can contribute 6% of the sales price towards closing cost, points and pre-paid items.
  • There is an up-front mortgage insurance premium (UFMIP) of 1.75% for all loan terms and amounts added to the base loan amount.

Some underwriting items include: Continue reading “Important Changes to FHA Home Loans Now In Effect

What is QM?

how long to wait after foreclosure

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

On January 10, 2014 the mortgage world is going to go through some changes. These changes will affect consumers and their ability to qualify for a home loan. Is it doom and gloom? Not really.

“Qualified Mortgage” or QM, is something we at Paramount Mortgage have been doing for a while. It is all about the consumer having the ability to repay the loan and verifying, to the best of our ability, through paperwork, all the facets of a loan approval. It is very possible additional paperwork may be requested from the borrower to accomplish verification going forward. Is it the end of the world? No. We as a team, agent and loan officer, need to relay that information to the client.

We, for the most part, have already been doing that.

The biggest change will be the stringent enforcement of the debt-to-income ratio at 43%. This will be Continue reading “What is QM?

New QM Rules Going To Put Home Loans Out of Reach For Some Buyers Come January

Dennis Norman - St Louis RealtorJanuary 10, 2014 new QM rules (qualified mortgage) will go into effect and will most likely negatively impact the ability of some home buyers to obtain a mortgage.  In terms of how many borrowers the new rules will affect, it is hard to say.  There have been several analysis’ done of the percentage of home loans originated in 2012 would not have met the QM rules and the estimates vary from 12 percent to more than half.  Personally, I think the lower estimates are probably closer to accurate, but it is still a significant number…potentially somewhere around 1 of every 9 home buyers may not be able to obtain a mortgage that, absent the new QM rules, would have been able to.

UPDATE 12/06/13 – Read/download the CFPB Compliance Guide for new QM rule

Watch CFPB Video on QM Rule Here 

What are the QM Rules and who do they affect? Continue reading “New QM Rules Going To Put Home Loans Out of Reach For Some Buyers Come January

REALTORS Warn That Debt Ceiling Impasse May Run Interest Rates Up and Home Sales Down

Dennis Norman - St Louis REALTOR Of The Year 2013Lawrence Yun, chief economist for the National Association of REALTORS (NAR), cautioned today that, given the fact the U.S. Government spends one dollar for every 75 -80 cents it takes in, if the debt ceiling isn’t raised,  the government will have to decide where to cut its spending.  Should the government choose not to pay its interest obligations, “we can expect interest rates on Treasury bonds to rise…and if that happens, mortgage rates will rise, because mortgage rates follow Treasury rates.”

Yun went on to say that if mortgage interest rates do rise we can expect home sales to drop by around 350,000 to 450,000 homes per year for every 1 percent increase in mortgage interest rates.

My advice to anyone in the market to buy a home is to buy sooner than later and, if possible, lock in your mortgage interest rate now before rates go up (think you can’t lock in your rate until after you have found a home? Wrong, contact me and I’ll tell you how).

Search St Louis Homes For Sale Using St Louis’ BEST Search SiteClick Here for Immediate Access

 

 

St Louis Mortgage Interest Rates On The Rise But Still Historically Low

St Louis Mortgage Interest Rates

St Louis mortgage interest rates are on the rise and hitting levels we have not seen in the past year and a half and the 3.x percent rates we have become somewhat accustomed to are gone.   However, before you panic or think the housing market is headed toward another crash as a result, you should keep in mind that todays rates (see below for current rates) of about 4.5 percent for a 30 year fixed rate mortgage is still lower than the average monthly mortgage interest was for more than 40 years proceeding 2012.  Granted, looking back, 2012 was the year to buy a house with an average interest rate of 3.66 percent and lower home prices, but hindsight is always 20-20.  The bottom line is, instead of worrying about the recent increases in mortgage rates home buyers should be thankful that rates remain at historic lows.

Current St Louis Mortgage Interest Rates From Tyler Frank, Paramount Mortgage: Continue reading “St Louis Mortgage Interest Rates On The Rise But Still Historically Low

The Mortgage Interest Deduction…Truth vs Fiction

mortgage interest deduction truth

The truth on the Mortgage Interest Deduction

Currently, lawmakers in Washington D.C., while looking for ways to “close loopholes” and cut spending, are looking hard at something once considered “untouchable”, the mortgage interest deduction (MID).  While there is probably little chance of totally eliminating the ability for homeowners to deduct the mortgage interest they paid on their homes, there is a possibility the deduction could be altered significantly or capped, and, perhaps, even phased out over time.

Like most current  events, there are stories out there with varying degrees of accuracy about the benefit of the mortgage interest deduction as well as who it benefits.  In response to the rhetoric out there, economists with the National Association of Home Builders have published a list of ten common claims about the MID and their findings as to the validity of those claims after researching data from the IRS, Census Bureau as well as other sources.  The complete results are shown below:

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St Louis Mortgage Companies Seeing Fixed Rate Jumbo Mortgages Make Comeback

St Louis Mortgage Company

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

St Louis Mortgage companies were not making many 30-year, fixed-rate jumbo mortgages a year ago, but now many St Louis Mortgage companies are offering fixed jumbos – with very competitive rates, including my firm, Paramount Mortgage.

As interest rates start to rise, homeowners are thinking they may not see rates this low in the future and if their ARM is maturing a couple of years from now, they could be in a tough spot.

Continue reading “St Louis Mortgage Companies Seeing Fixed Rate Jumbo Mortgages Make Comeback

Missouri Has 5th Lowest Average Down Payment In Nation

Average Down PaymentThe average home buyer in Missouri makes a down payment of 13.2 percent and borrows an average amount of $172,998.59, according to the latest data from LendingTree.com. The state with the lowest average down payment is Mississippi at 11.9 percent and the highest, New Jersey at 20.5 percent.

Continue reading “Missouri Has 5th Lowest Average Down Payment In Nation

How Long Do You Have To Wait To Get A Home Loan After Foreclosure, Short Sale or Bankruptcy?

how long to wait after foreclosure

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

Since the real estate market crash, millions of homeowners have lost their homes in a foreclosure, been forced to do a short sale to get out from a home they were underwater on or file bankruptcy as a result of financial hardship as a result of the the market crash and general economic downturn.  Many of these homeowners have resorted to renting or living with relatives but, as time passes and the financial wounds heal, are now wanting to buy a home again prompting the question, “how long do I have to wait after a foreclosure, short-sale, deed-in-lieu or bankruptcy before I can get a home loan again?”.

Fortunately, it is possible for former homeowners who have faced financial hardships to obtain a home loan again, but it does take time and effort on their part.  Before obtaining a home loan after a foreclosure, short-sale or bankruptcy, the borrower will have to reestablish credit and establish a stable income that will support the home loan they wish to obtain.  In addition, time will have to pass as (see the chart below), no matter how well the borrowers situation has improved, there are still some minimum timeframes that will have had to pass in order to be eligible for most types of home loans.  There is no “one size fits all” answer though, so I highly suggest if you are in this situation and want to know what your options are, to use the form below to contact me, I’ll be happy to help. Continue reading “How Long Do You Have To Wait To Get A Home Loan After Foreclosure, Short Sale or Bankruptcy?

Survey Shows One-Third Of Homebuyers Lack Info Needed To Get Mortgage

One-third of Homebuyers Surveyed Are Ill-prepared to Get a Mortgage

st louis mortgage company

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

According to a survey recently conducted by Zillow, many homebuyers are really not armed with the information they should have before attempting to obtain a mortgage.  For example, over one-third (34 percent)  of the prospective homebuyers surveyed did not know that a qualified borrower can obtain a home loan today with less than a five percent downpayment.

In addition, many homebuyers have misinformation that can prevent them from obtaining the best possible mortgage interest rate.  For example, 26 percent of the homebuyers said they thought they were obligated to obtain their home loan with the lender that pre-approved them, and 24 percent believed that all lenders are required to charge the same amount for credit reports and appraisals.

Continue reading “Survey Shows One-Third Of Homebuyers Lack Info Needed To Get Mortgage

Mortgage Interest Rates Hit Record Low

St Louis Interest RatesMortgage interest rates keep falling and this week the interest rate on a 15 year fixed-rate mortgage hit a new record low of 2.8 percent, according to a weekly national survey conducted by Bankrate.com.  Interest rates on a 30-year fixed rate mortgage averaged 3.57 percent this week, a four month low.

As the Bankrate report below for St. Louis shows, St. Louis interest rates are even better: Continue reading “Mortgage Interest Rates Hit Record Low

Free Credit Scores As A Result of New Act

Free Credit Scores

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

Free Credit Scores are Not Part of the Free Annual Credit Report Consumers Currently Receive

Consumers currently have the right to  request their free credit report once a year, but a credit report does not include free credit scores. These two items are often confused to be the same, which they are not.

You generally must pay to see your credit score. It’s a three-digit grade that predicts how risky you are to a lender.

Earlier this month, bills were introduced in the House and Senate to allow all consumers free access to credit scores once a year. The Free Access to Credit Scores Act was authored by U.S. Sen. Bernie Sanders of Vermont and U.S. Rep. Steve Cohen of Tennessee.

Continue reading “Free Credit Scores As A Result of New Act

How to avoid being the victim of a loan modification scam

dennis-norman-st-louis-real-estateAccording to a recent report by the Loan Modification Scam Prevention Network (LMSPN), a national anti-scam effort comprised of Fannie Mae, Freddie Mac, the Lawyers’ Committee for Civil Rights Under Law, the Homeownership Preservation Foundation (HPF), and NeighborWorks America, there have been more than 30,000 loan modification scams reported in the past three years. According to the group, the scammers are becoming “increasingly aggressive online, using targeted web advertisements to reach homeowners who are searching for mortgage relief over the Internet.” The group cautions that homeowners should be aware that no one other than your present lender can guarantee any form of mortgage relief.

Below are six (6) warning signs to look for that may indicate you are dealing with a loan modification scammer: Continue reading “How to avoid being the victim of a loan modification scam

How to make getting a home loan easier; St Louis Mortgage Interest Rate Update

It is more important now than ever, as a result of increasing regulation and scrutiny of the mortgage industry, to plan ahead when you are planning on obtaining a mortgage loan to buy a house or refinance an existing loan to ensure that the process will go smoothly and as expected.  Your loan approval is subject to the financial information you provide at the time of your loan approval. Any subsequent changes in your financial situation before the actual date of closing could jeopardize your loan approval and delay your closing.

By following the simple guidelines below, you are assured a smooth and error-free closing.

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Nobody ‘wants’ to pay PMI; St. Louis Mortgage Interest Rate Update

Nobody ‘wants’ to pay PMI, it’s just that we have no choice, especially if you want to buy a house and don’t have say an extra $50k to $80k lying around for a down payment, which most first-time buyers don’t.”   Chris Durst, a first-time homebuyer and commenter on Investopedia.com.ask-the-expert
The credit experts at MGIC, the nation’s largest private mortgage insurer, wants Realtors® and Lenders alike to know that financing with MI creates opportunities for borrowers: Continue reading “Nobody ‘wants’ to pay PMI; St. Louis Mortgage Interest Rate Update

Interest Rate Change; St. Louis Mortgage Interest Rate Update

FHA Interest Rate  Change:  MHDC’s Cash Assistance  Loan  (CAL)  is now 4%! (APR 4.93)

MHDC is raising mortgage interest rates offered to  first-time homebuyers.  First-time  home buyers receive a forgivable 3% cash assistance loan for down payment and  closing costs.
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FHA Increasing Cost of Mortgage Insurance And Requiring Payment For Life of Loan

Federal Housing Administration Commissioner Carol Galante recently announced a series of changes to be issued that will allow the agency to better manage risk and further strengthen the health of the Mutual Mortgage Insurance Fund (MMI).

FHA will increase its annual mortgage insurance premium for most new mortgages by 10 basis points, or 0.10%.   The FHA will also require most borrowers to continue paying annual premiums for the life of their mortgage loan.
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Continue reading “FHA Increasing Cost of Mortgage Insurance And Requiring Payment For Life of Loan

Cancellation of Debt; St Louis Mortgage Interest Rate Update

As part of the fiscal cliff deal, Congress extended the cancellation of mortgage debt relief provision for 1 year, through the end of 2013.

It seems there is little focus on the importance of this law, it is crucial to foreclosure mitigation efforts such as principal forgiveness and short sales.

Normally, when a lender forgives all or a portion of a borrower’s debt, U.S. law decrees that the forgiven amount is considered taxable income to the borrower.   This “forgiveness” is also known as Cancellation of Debt (COD) Income. COD must be included in a taxpayer’s gross income. The Mortgage Forgiveness Debt Relief Act allows homeowners who received principal reductions or other forms of debt forgiveness not to pay taxes on the amount forgiven.

Consult your tax adviser to determine whether the Mortgage Forgiveness Debt Relief Act is relevant to your particular situation.

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The Number of Homeowners With Negative Equity Continues to Decline

dennis-norman-realtorRising home prices helped 100,000 homeowners in the U.S. crawl out of a negative equity position during the 3rd quarter of 2012, according to a report just released by CoreLogic®.  During the first nine months of 2012, there were a total of 1.4 million homeowners that found themselves moving from a negative equity position on their homes to a positive equity position.  In spite of this vast improvement, twenty two percent of homeowners in the U.S. with a mortgage owe more on their homes than they are currently worth. Continue reading “The Number of Homeowners With Negative Equity Continues to Decline

FHA Loans May Become A Lot More Costly Soon

So…you are looking to buy a home in 2013 and are considering using a FHA mortgage for financing…don’t delay, because that FHA mortgage could end up costing more very soon.

HR 4264 or The Fiscal Solvency Act of 2012 is a bill that has overwhelmingly passed the House and is on its way to the Senate.  This bill among other things grants FHA the power to raise its mortgage insurance premiums to as high as 2.05% annually — nearly twice the 1.20% rate most FHA-Insured homeowners pay today.

Continue reading “FHA Loans May Become A Lot More Costly Soon

Mortgage Interest is Tax Deductible Through 2013; St Louis Mortgage Interest Rate Update

Mortgage Interest  Tax Deductibility passed as part of the American Taxpayer Relief Act of 2012. This allows MI to be tax deductible for 2012 and 2013.  The provision extends the ability to deduct the cost of mortgage insurance on a qualified personal residence. The deduction is phased-out by 10% for each $1,000 by which the taxpayer’s AGI exceeds $100,000. Thus, the deduction is unavailable for a taxpayer with an AGI in excess of $110,000. The bill extends this provision for two additional years, through 2013.

Consult your tax adviser for further information and determine how this will benefit you.

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Optimism in the Mortgage Markets for 2013; St Louis Mortgage Interest Rate Update

Fannie Mae has declared that housing is finally providing a tailwind to economic growth. The company’s December Economic and Strategic Report says that the market “has turned the corner and a sustained recovery is under way.”  Looking into 2013, economists predict mortgage originations will increase by 15% while refinance volume is expected to fall 26%.

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Things You Should Know Before You Repair Your Credit; St Louis Mortgage Interest Rate Update

“Every single thing about housing is flashing green,” stated James Dimon, chief executive of J.P. Morgan Chase, in an interview with CNBC last month. “Household formation is rising, inventory is falling, and affordability is near a record high.”  This should mean many potential homebuyers will be assessing their finances in 2013 to get ready to buy a home.   Checking your credit score is at the top of the list, and in turn credit myths and credit misconceptions are plentiful.

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Things You Should Know Before You Repair Your Credit:

Continue reading “Things You Should Know Before You Repair Your Credit; St Louis Mortgage Interest Rate Update

Saving interest…shorten your term; St Louis Mortgage Interest Rate Update

Mortgage rates have flattened out, but some borrowers are lowering their rates further by opting for a loan with a shorter term.

Freddie Mac says about 30% of borrowers this year have opted for shorter-term home loans when they refinance, with most picking a 15-year mortgage.  Shorter-term loans are particularly attractive to people “who have been homeowners for a number of years…or who want the security of knowing they will own their home free and clear when they retire,”

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Changes in the Mortgage Industry; St Louis Mortgage Interest Rate Update

After the problems we have seen over the past few years in the real estate, mortgage and banking industries, it is not surprising we have seen significant changes in the loan process making it more challenging for a home-buyer to obtain a mortgage. Some of the changes borrowers see when they attempt to obtain a mortgage to buy or refinance a home include:

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Home prices on the rise; St Louis Mortgage Interest Rate Update

According to Lawrence Yun, Chief Economist for the National Association of Realtors, home prices nationally are up 11.1% in October compared to this point last year.  The number of homes available for sale nationally fell reducing the available supply to a level below that of one year ago.  The result is tighter supply of homes helping boost the national median existing-home price level to $178,600 in October; price increases have helped home owners regain equity lost during the housing crisis.

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