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!
Tuesday, October 28, 2008
How to shop for a Arkansas Mortgage
You can save real money if you carefully shop for an arkansas mortgage. Even a one-quarter percentage point difference in interest rates can mean savings of thousands of dollars over the life of the loan.
Banks, credit unions, savings and loans, insurance companies, and mortgage bankers all make home mortgage loans in Arkansas. The terms change frequently, so it's good to compare at least a half a dozen lenders -- or to get the help of an experienced mortgage bank like The Mortgage Bank of Arkansas, who can help you sift through the latest offerings.
Start by deciding what type of Arkansas mortgage you're interested in, whether it's a fixed rate, adjustable rate, or one of the many mortgages available. Once you've narrowed your sights -- for example, to a 30-year fixed rate mortgage for $300,000 -- you'll be ready to compare apples to apples, using the research tools described below.
Newspaper Ads
Mortgage rates and fees are usually published in the real estate sections of metropolitan newspapers. Take a look at these even if you decide to work with a mortgage bank or broker, so that you'll have a sense of the mortgage market in Arkansas.
A Mortgage Broker
Good mortgage brokers are trained to scour the entire market for the best loan at the lowest interest rate. Most brokers collect a fee from the lender (though this ultimately adds a little to what you pay for your mortgage); other brokers charge the consumer directly.
Your Local Bank
If you have a bank you trust, stop by and ask about its offerings (or check its website). But be aware that you'll be offered a limited menu, consisting of only that bank's loan products.
Friends and Relatives
Private sources of mortgage money -- parents, other relatives, friends, or even the seller of the house you want to buy - are a widely used source of home-loan money.
Online Mortgage Sites
Like http://www.themortgagebankar.com/ has many tools necessary to complete your mortgage application and pre planning with a qualified representative.
Banks, credit unions, savings and loans, insurance companies, and mortgage bankers all make home mortgage loans in Arkansas. The terms change frequently, so it's good to compare at least a half a dozen lenders -- or to get the help of an experienced mortgage bank like The Mortgage Bank of Arkansas, who can help you sift through the latest offerings.
Start by deciding what type of Arkansas mortgage you're interested in, whether it's a fixed rate, adjustable rate, or one of the many mortgages available. Once you've narrowed your sights -- for example, to a 30-year fixed rate mortgage for $300,000 -- you'll be ready to compare apples to apples, using the research tools described below.
Newspaper Ads
Mortgage rates and fees are usually published in the real estate sections of metropolitan newspapers. Take a look at these even if you decide to work with a mortgage bank or broker, so that you'll have a sense of the mortgage market in Arkansas.
A Mortgage Broker
Good mortgage brokers are trained to scour the entire market for the best loan at the lowest interest rate. Most brokers collect a fee from the lender (though this ultimately adds a little to what you pay for your mortgage); other brokers charge the consumer directly.
Your Local Bank
If you have a bank you trust, stop by and ask about its offerings (or check its website). But be aware that you'll be offered a limited menu, consisting of only that bank's loan products.
Friends and Relatives
Private sources of mortgage money -- parents, other relatives, friends, or even the seller of the house you want to buy - are a widely used source of home-loan money.
Online Mortgage Sites
Like http://www.themortgagebankar.com/ has many tools necessary to complete your mortgage application and pre planning with a qualified representative.
Saturday, August 16, 2008
Explaining the New Housing Bill
Many people are still a little confused as to what the new housing bill aims to accomplish. It seems to be a very positive move, except for the removal of down payment assistance. This bill will save hundreds of thousands of homeowners.
Under the HOPE for Homeowners Program, 400,000 distressed homeowners can pay off their troubled mortgages and replace them with more affordable, FHA-insured loans. Its estimated that it will refinance somewhere in the neighborhood of $300 Billion in worth of loans into FHA loans. To qualify, a borrower's monthly payment on existing mortgage loans must be over 31% of his or her income as of March 1, 2008 (hence demonstrating the borrower's inability to afford the original loans). The original loans must have been originated before 2008, and secured by the borrower's principal residence (as well as only residence). Also to qualify, the borrower must satisfy FHA underwriting requirements for the new FHA-insured refinance loan.
The FHA refinance will be a fixed rate loan up to $550,400 for at least 30 years, and will include charges for FHA insurance premiums. The maximum loan-to-value ratio of the FHA refinance is 90% of the appraised value. If the refinance proceeds are insufficient to pay off the existing liens, the refinance will not go through unless the original lenders voluntarily agree to accept a short payoff as payment in full. Rules will be established to allow, among other things, equity sharing for the original junior lienholders.
Upon obtaining the FHA refinance, the borrower must share with the FHA at least 50% of any equity realized through a subsequent sale or refinance. The FHA's share in equity will be based on a sliding scale of 100% of any equity realized within the first year of the FHA loan, 90% the second year, and so on, but not less than 50%. The HOPE for Homeowners Program shall be in effect from October 1, 2008 to September 30, 2011.
With certain exceptions, a first-time homebuyer will receive a tax credit of 10% of the purchase price up to $7,500 maximum, for the tax year in which the buyer purchases a principal residence. The tax credit, however, must be repaid like an interest-free loan in equal installments over the next 15 years or in full if the homebuyer sells the property for a gain. A buyer qualifies as a "first-time" homebuyer as long as the buyer (and spouse if any) has not owned a principal residence in the U.S. for the last three years. The tax credit phases out for a taxpayer with a modified adjusted gross income over $75,000 (or $150,000 for joint returns). This tax credit is available for qualifying homes purchased from April 9, 2008 through June 30, 2009
Under the HOPE for Homeowners Program, 400,000 distressed homeowners can pay off their troubled mortgages and replace them with more affordable, FHA-insured loans. Its estimated that it will refinance somewhere in the neighborhood of $300 Billion in worth of loans into FHA loans. To qualify, a borrower's monthly payment on existing mortgage loans must be over 31% of his or her income as of March 1, 2008 (hence demonstrating the borrower's inability to afford the original loans). The original loans must have been originated before 2008, and secured by the borrower's principal residence (as well as only residence). Also to qualify, the borrower must satisfy FHA underwriting requirements for the new FHA-insured refinance loan.
The FHA refinance will be a fixed rate loan up to $550,400 for at least 30 years, and will include charges for FHA insurance premiums. The maximum loan-to-value ratio of the FHA refinance is 90% of the appraised value. If the refinance proceeds are insufficient to pay off the existing liens, the refinance will not go through unless the original lenders voluntarily agree to accept a short payoff as payment in full. Rules will be established to allow, among other things, equity sharing for the original junior lienholders.
Upon obtaining the FHA refinance, the borrower must share with the FHA at least 50% of any equity realized through a subsequent sale or refinance. The FHA's share in equity will be based on a sliding scale of 100% of any equity realized within the first year of the FHA loan, 90% the second year, and so on, but not less than 50%. The HOPE for Homeowners Program shall be in effect from October 1, 2008 to September 30, 2011.
With certain exceptions, a first-time homebuyer will receive a tax credit of 10% of the purchase price up to $7,500 maximum, for the tax year in which the buyer purchases a principal residence. The tax credit, however, must be repaid like an interest-free loan in equal installments over the next 15 years or in full if the homebuyer sells the property for a gain. A buyer qualifies as a "first-time" homebuyer as long as the buyer (and spouse if any) has not owned a principal residence in the U.S. for the last three years. The tax credit phases out for a taxpayer with a modified adjusted gross income over $75,000 (or $150,000 for joint returns). This tax credit is available for qualifying homes purchased from April 9, 2008 through June 30, 2009
Subscribe to:
Posts (Atom)
Posts
