Arkansas Mortgage rates dropped dramatically after the Federal Reserve announced that it would buy up to $500 billion of securitized home loans.
Rates on 30-year, fixed-rate, mortgages fell into the low to mid 5’s after the Fed announced Tuesday morning that it would buy up to 500 billion dollars' worth of mortgage-backed securities over the next 12-18 months. The Mortgage Bank of Arkansas had rates as low as 5.25% for a while. Last week, the Arkansas 30-year fixed averaged 6.125- 6.375%.
The rate reduction is exactly what the Fed intended: "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," the central bank said in its announcement.
Two years ago, the average rate on a 30-year fixed was about 6.5 percent. At that rate, the principal and interest on a two hundred thousand -dollar loan was $1,264 a month. Now, if someone borrowed $200,000 at 5.5 percent, the monthly principal and interest would be $1,104. This is a yearly savings of almost two thousand dollars. A Arkansas homeowner could make an additional mortgage payment each year with the savings thus cutting several years off of their mortgage.
The Fed's action helps not only buyers, but also homeowners with adjustable-rate mortgages who want to refinance into fixed-rate loans
Tuesday, November 25, 2008
Thursday, November 13, 2008
Arkansas' Increase in FHA Lending
Is the rapid rise in FHA Lending in Arkansas a cause for concern? The fall of the subprime mortgage industry and its fallout on conventional lenders has led to such a boom in business at the Federal Housing Administration that the agency is now insuring nearly one in five new residential mortgages, helping salvage some neighborhoods in some of the nation’s battered real estate markets.
The FHA’s surge in business, which includes many loans to high-risk borrowers who put just 3 percent down in markets where real estate prices are in decline, raises questions about a potential hit to taxpayers in the future. An FHA spokesperson however said there is no cause for concern and that FHA is doing very well and that they expect to continue with current FHA lending programs as is. FHA has offset some of their risks buy increasing their Mortgage Insurance.
A big concern with the FHA boom is that values are dropping and nobody’s got a safety net. The tax payers are taking on a lot of risk that use to be on the private sector. Look at some of these alarming FHA Lending Stats:
FHA’s single-family market share has skyrocketed to 17 percent, a nearly six-fold increase in the last two years. This will only continue with current mortgage crisis.
The volume of FHA-insured single-family mortgages, for both purchases and refinances, has risen from an average of $4.9 billion a month in fiscal 2007 to over $24 billion in the last quarter — a pace that threatens to surpass the agency’s congressional authorization of $180 billion in new business for the year.
FHA currently insures 4.4 million single-family mortgages — or about one in every 10 U.S. home mortgages, with a total unpaid balance of $474 billion.
FHA borrowers typically have less money for down payments and poorer credit than conventional borrowers. While most FHA loans require down payments of at least 3 percent, the entire amount can be a gift from a friend, a relative or other sources as long as it isn’t from the seller. The FHA does not set minimum credit scores for borrowers and allows them to have less than stellar credit that would prevent them from obtaining conventional loans. With that said most lenders have instituted their own min credit scores which is now at 580.
When subprime lending dried up, FHA quickly became a good option for many borrowers, including some with good credit and larger down payments. Across Arkansas, lenders and mortgage brokers that sell FHA products have ramped up that part of their business.
Only time will tell if the subprime debacle will bleed over to FHA lending and tax payers bear the burden of the looser lending practices of the FHA programs.
The FHA’s surge in business, which includes many loans to high-risk borrowers who put just 3 percent down in markets where real estate prices are in decline, raises questions about a potential hit to taxpayers in the future. An FHA spokesperson however said there is no cause for concern and that FHA is doing very well and that they expect to continue with current FHA lending programs as is. FHA has offset some of their risks buy increasing their Mortgage Insurance.
A big concern with the FHA boom is that values are dropping and nobody’s got a safety net. The tax payers are taking on a lot of risk that use to be on the private sector. Look at some of these alarming FHA Lending Stats:
FHA’s single-family market share has skyrocketed to 17 percent, a nearly six-fold increase in the last two years. This will only continue with current mortgage crisis.
The volume of FHA-insured single-family mortgages, for both purchases and refinances, has risen from an average of $4.9 billion a month in fiscal 2007 to over $24 billion in the last quarter — a pace that threatens to surpass the agency’s congressional authorization of $180 billion in new business for the year.
FHA currently insures 4.4 million single-family mortgages — or about one in every 10 U.S. home mortgages, with a total unpaid balance of $474 billion.
FHA borrowers typically have less money for down payments and poorer credit than conventional borrowers. While most FHA loans require down payments of at least 3 percent, the entire amount can be a gift from a friend, a relative or other sources as long as it isn’t from the seller. The FHA does not set minimum credit scores for borrowers and allows them to have less than stellar credit that would prevent them from obtaining conventional loans. With that said most lenders have instituted their own min credit scores which is now at 580.
When subprime lending dried up, FHA quickly became a good option for many borrowers, including some with good credit and larger down payments. Across Arkansas, lenders and mortgage brokers that sell FHA products have ramped up that part of their business.
Only time will tell if the subprime debacle will bleed over to FHA lending and tax payers bear the burden of the looser lending practices of the FHA programs.
Wednesday, November 12, 2008
Delinquent Home Owners Get More Help
On Tuesday, federal housing regulators announced a program to fast-track mortgage modifications for homeowners in Arkansas and around the count who are at least 90 days past due on their house payments. Recipients will get some combination of longer mortgage terms (i.e., a 40-year loan replacing a 30-year loan), lower rates or deferral of principal. Currently 9% of all homeowners are in some stage of default in the U.S.
Housing officials call it a "streamlined modification" program. It's for the 20 percent of delinquent mortgages that are owned or guaranteed by Fannie Mae or Freddie Mac. As for the other 80 percent of delinquent mortgages, the government hopes those investors will sign onto this plan, too.
Housing officials call it a "streamlined modification" program. It's for the 20 percent of delinquent mortgages that are owned or guaranteed by Fannie Mae or Freddie Mac. As for the other 80 percent of delinquent mortgages, the government hopes those investors will sign onto this plan, too.
Tuesday, November 11, 2008
Arkansas Loan Limits
Conforming mortgages are appropriately named; they "conform" to the mortgage underwriting guidelines of Fannie Mae or Freddie Mac. Mortgages that meet these criteria are later sold and securitized on Wall Street as mortgage-backed bonds.
But no matter how strong a mortgage applicant's profile may be, conforming loans are still limited by dollar size. The 2009 conforming loan limits, as released by the government, are:
1-unit properties : $417,000
2-unit properties : $533,850
3-unit properties : $645,300
4-unit properties : $801,950
However, maximum conforming loan limits don't apply to all housing markets equally.
Areas designated by the government as "high-cost" get the benefit of higher loan size limits based on typical home prices throughout the region. A condo in Los Angeles, for example, is conforming up to $625,500. By comparison, a home in Little Rock, Arkansas is capped at $417,000.
There are 59 designated high-cost areas in the U.S., most of which are in California. For everyone else, the 2009 conforming loan limit is $417,000. Loans in excess of the 2009 conforming loan limits are commonly called "jumbo", or "super jumbo", depending on their size.
"Conforming" is a Fannie Mae convention so if your loan is not destined for sale and securitization on Wall Street, the loan limits don't apply to you. This is why we keep hammering home the point -- if you've got a jumbo or super-jumbo home loan in the works, think local instead. Local banks and lenders like The Mortgage Bank of Arkansas are often better equipped to handle these loans. The fees are less and the rates are better.
But no matter how strong a mortgage applicant's profile may be, conforming loans are still limited by dollar size. The 2009 conforming loan limits, as released by the government, are:
1-unit properties : $417,000
2-unit properties : $533,850
3-unit properties : $645,300
4-unit properties : $801,950
However, maximum conforming loan limits don't apply to all housing markets equally.
Areas designated by the government as "high-cost" get the benefit of higher loan size limits based on typical home prices throughout the region. A condo in Los Angeles, for example, is conforming up to $625,500. By comparison, a home in Little Rock, Arkansas is capped at $417,000.
There are 59 designated high-cost areas in the U.S., most of which are in California. For everyone else, the 2009 conforming loan limit is $417,000. Loans in excess of the 2009 conforming loan limits are commonly called "jumbo", or "super jumbo", depending on their size.
"Conforming" is a Fannie Mae convention so if your loan is not destined for sale and securitization on Wall Street, the loan limits don't apply to you. This is why we keep hammering home the point -- if you've got a jumbo or super-jumbo home loan in the works, think local instead. Local banks and lenders like The Mortgage Bank of Arkansas are often better equipped to handle these loans. The fees are less and the rates are better.
Monday, November 10, 2008
It Shouldnt Take A Long Time To Process an Arkansas Mortgage
Fact: Working with an experienced Arkansas mortgage lender should only take around 10 minutes to get pre-approval.
The average Arkansas Mortgage lender requires 2 to 72 hours to grant a conditional loan approval. Better than that, an experienced Arkansas Mortgage lender like The Mortgage Bank of Arkansas can grant an approval within 10 minutes after reviewing your income, debts, down payment and credit history. Of course, the Arkansas Mortgage lender has to take your word that all the information providing is accurate and complete. Pre-approval means all necessary financial documents have been provided to the lender.
Would you like to have an Arkansas Mortgage pre-approval in 10 minutes? Contact The Mortgage Bank of Arkansas Today!
The average Arkansas Mortgage lender requires 2 to 72 hours to grant a conditional loan approval. Better than that, an experienced Arkansas Mortgage lender like The Mortgage Bank of Arkansas can grant an approval within 10 minutes after reviewing your income, debts, down payment and credit history. Of course, the Arkansas Mortgage lender has to take your word that all the information providing is accurate and complete. Pre-approval means all necessary financial documents have been provided to the lender.
Would you like to have an Arkansas Mortgage pre-approval in 10 minutes? Contact The Mortgage Bank of Arkansas Today!
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