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The Federal Housing Administration insures what are called FHA loans. These mortgage loans provide opportunities for buyers with less-than-perfect credit or limited down payments to purchase homes, but they aren’t without potential pitfalls.

FHA loans are available to borrowers with a credit score of at least 580, and you have to make a minimum 3.5% down payment. They’re a popular option for first-time home buyers.

Lenders such as banks and credit unions issue the mortgages, which are insured by the FHA. That protects the lender if the borrower defaults, which is why the terms are more favorable than a traditional mortgage.

Around eight million single-family homes have loans insured by the FHA.

What Can an FHA Loan be Used For?

You can use an FHA loan to refinance single-family houses, to buy a single-family home, to buy some multifamily homes and condos and certain mobile and manufactured homes. There are particular types of FHA loans that can be used to renovate an existing property or for new construction.

How is an FHA Loan Different from a Conventional Mortgage Loan?

The biggest differentiator between an FHA loan and a conventional mortgage is that it’s easier to qualify for an FHA loan. You may get a loan with a lower credit score than you would otherwise, and your mortgage insurance payments may be lower too.

There are also fewer restrictions as far as using gifts from family or donations for your down payment.

If you have a FICO score of at least 580, you have to make a 3.5% down payment. With a FICO score between 500 and 579, you’re required to make a 10% down payment, and mortgage insurance is required. Your debt-to-income ratio needs to be less than 43% whereas with a conventional loan it’s usually 36%. You do need to have proof of income and steady employment, as you would need with a conventional loan.

Are There FHA Loan Limits?

There are limits on the mortgage amount you can get with an FHA-guaranteed loan. The limits vary based on your county, and in 2020 these ranged from $331,760 to $765,600. The limit amounts are updated by the FHA each year based on fluctuations in home prices.

The Benefits of the FHA Loan

The primary benefits of an FHA loan are that buyers who wouldn’t otherwise qualify may be able to own a home and for a lower down payment. Sometimes the FHA will help facilitate coverage of closing costs. If you have problems making payments on an FHA loan you may be eligible for a forbearance period if you qualify.

What Are the Downsides of an FHA Loan?

You will have to pay an upfront mortgage insurance premium with an FHA loan to protect the lender. The fee is due when you close and it’s 1.75% of your loan. You will also have to pay an annual mortgage insurance premium for the life of your loan. The amount can range between 0.45% and 1.05%.

When you buy a home with an FHA loan, it has to meet strict standards in terms of health and safety.

Also, while there are set standards from the FHA, approved lenders can create their own requirements.


Applying for an FHA Loan

You’ll have to first find an FHA-approved lender to get one of these home loans. You’ll need some documents, including proof of U.S. citizenship, legal permanent residency, or eligibility to work in America. You’ll need bank statements for at least the past 30 days, and you’ll probably need to show pay stubs.

Some of the information your lender may be able to obtain on your behalf, such as your credit reports, tax returns and employment records.

There are advantages to an FHA loan because it expands homeownership to more people than conventional loans. It’s just important that if you’re considering this loan you understand the costs and that you’re not taking on more than you’re financially prepared for because of the less stringent approval requirements. 

To view the original article click here 

Posted by Jackie A. Graves, President on October 21st, 2020 8:48 AM

The federal regulator who oversees mortgage giants Fannie Mae and Freddie Mac has compromised on a widely pilloried fee on mortgage refinances, but he’s not backing down.

Mark Calabria, director of the Federal Housing Finance Agency, said the 0.5 percent fee on refinances, set to take effect Dec. 1, is crucial to shoring up the nation’s mortgage market. Without the fee, Calabria said, Fannie and Freddie — which back about two-thirds of U.S. mortgages — could collapse in a housing crisis.

“It is critical to remember that this fee covers losses that are the result of policies that have helped millions of Americans stay safe in their homes during a global pandemic,” Calabria told the Mortgage Bankers Association’s virtual conference Monday.

The Federal Housing Finance Agency roiled the housing industry in August, when it announced the surprise fee would take effect Sept. 1. After an outcry from Realtors, mortgage bankers and housing economists, the agency backed off a bit — it delayed the fee until Dec. 1, and it said the surcharge wouldn’t be due on loans of less than $125,000.

Making the case for a widely criticized fee

Calabria said in August that defaults and the generous mortgage relief extended to borrowers during the coronavirus pandemic would cost Fannie and Freddie $6 billion — a rounding error for two enterprises with a combined $5.7 trillion in their loan portfolios.

But Calabria offered little else in defense of the fee. During prepared remarks Monday, he laid out a detailed case.

“When I walked in the door at FHFA, Fannie and Freddie were leveraged about 1,000 to 1,” Calabria said. “If the enterprises had still been leveraged 1,000 to 1, they would have already failed in response to COVID. On the other hand, if Fannie and Freddie had more capital when COVID hit, they would have been able to provide even more support.”

Calabria, former chief economist to Vice President Mike Pence, took over last year as director of the Federal Housing Finance Agency. The regulator said he has improved the capital position of Fannie Mae and Freddie Mac.

“Fannie and Freddie’s combined leverage ratio is now down to roughly 250 to 1,” Calabria said. “This is certainly better than 1,000 to 1. But it is not close to safety and soundness. In their current condition, Fannie and Freddie will fail in a serious housing downturn.”

In one concession, Calabria said he delayed the new fee by three months to give Congress a chance to step in — although he didn’t comment on the likelihood of such a move in the midst of a contentious election.

“This recognizes that Congress may take the opportunity to review alternatives,” Calabria said.


The new 0.5 percent fee is paid not by borrowers but by lenders. Mortgage lenders have responded by slightly raising rates on refinances.

With mortgage rates at record lows, homeowners have flooded lenders with applications for refinances.

Source: To view the original article click here

Posted by Jackie A. Graves, President on October 20th, 2020 3:46 PM

While you’ve been preoccupied with a plague and politics, mortgage rates have been falling and refinances have been booming. And the boom has a lot of room to expand.

Almost 18 million homeowners could cut their mortgage’s interest rate by 0.75% or more, according to Black Knight, a mortgage analytics company. That transcends the 3 million homeowners who refinanced in the first half of 2020.

Mortgage rates dipped to record low territory this summer and fall. The average interest rate on the 30-year fixed-rate mortgage has been under 3% since early September, according to NerdWallet’s daily rate survey.

Not sure if now is the time to refinance? Quiet your confusion by asking yourself the following four questions.

1. What’s my goal?

What do you hope to accomplish by refinancing? The answer to that question is your goal. Identifying your goal is the first step because it points you toward the right refinance loan.

Here are three common refinancing goals:

•    To reduce the monthly payment. For this simple refinance, apply for a loan of the same term — another 30-year loan, if that’s what you have.

•    To pay less interest. When you refinance a 30-year mortgage into a loan with shorter term, your monthly payments are likely to be higher, but you’ll pay less interest over the life of the loan.

•    To get cash. A cash-out refinance allows you to borrow more than you currently owe and take the difference in cash. It’s a common way to pay for home renovations.

2. Is my goal in reach?

Once you’ve identified your goal, you need to figure out if it’s realistic. The right follow-up question will help.

If the goal is a smaller monthly payment: How long will I remain in the home?

The answer matters because when refinancing, you’ll lose money if you sell the home before reaching the break-even point.

Here’s why: When you refinance, you pay hundreds (or thousands) of dollars in closing costs. You want to keep the loan long enough for the savings to exceed those costs. That often takes a few years. You can estimate your break-even period using NerdWallet’s refinance calculator.

If the goal is to pay less interest: Are the long-term savings worth the bigger payment?

If you shorten the loan term, you’ll probably end up with a higher monthly payment. What happens if you have a financial emergency? Will you still be able to make the monthly payment?

If you have doubts, it might be better to refinance for the same term as the current mortgage instead of a shorter one and pay extra principal each month. You’ll still pay it off more quickly, but you can stop making the extra payments when money is tight.

If the goal is to get cash: Do I have enough equity?

In most cases, you’ll be able to borrow up to 80% of your home’s value. This means that if you currently owe 70% of the home’s value, you’ll be able to cash out 10% of it.

Determine your home’s current value and multiply it by 0.8. That’s roughly the amount you’ll be able to borrow. Ask your lender how much you owe on the mortgage right now (or check a recent statement). You’ll be able to cash out the difference between what you owe and 80% of the home’s value.

3. How will the new refinancing fee affect me?

The refinancing door remains open despite an “adverse market refinance fee” imposed by Fannie Mae and Freddie Mac that effectively raises interest rates on refinances by about one-eighth of a percentage point. While annoying, the fee is too small to erase the savings that most people would realize by refinancing.

The adverse market refinance fee doesn’t apply to every loan. It applies only to conventional mortgages. If you’re refinancing into a jumbo loan, or a mortgage backed by the FHA (Federal Housing Administration), VA (Department of Veterans Affairs) or USDA (Department of Agriculture), the fee won’t be imposed. Those types of loans accounted for about one-third of mortgages in the second quarter of 2020.

The other two-thirds of mortgages were securitized by Fannie Mae and Freddie Mac, and the fee does apply to those. There are a few exceptions: The fee won’t be imposed on refinances of $125,000 or less, construction-to-permanent loans, or HomeReady and Home Possible mortgages, which have income limits.

The fee is paid to Fannie and Freddie by the lender, and is unlikely to appear on your Loan Estimate paperwork. Instead, it will probably be included in your interest rate. A 0.5% fee translates into an interest rate increase of about one-eighth of a percentage point.

If you’re refinancing to reduce your monthly payment, the adverse market refinance fee matters because the higher interest rate will push the break-even point back a few months.

When you refinance for a shorter term, the savings on interest quickly overshadows the slightly higher rate.

And if you’re going for a cash-out refi, the goal is to get cash and not to save money, so the fee is irrelevant to your decision.


4. Can I reach my goal some other way?

Reducing your mortgage interest rate may feel worthy of a humblebrag, but there might be other ways to accomplish your goal if you’re unable or unwilling to refinance.

•    To cut your monthly house payment without refinancing, you could shop for less expensive homeowners insurance.

•    To pay less interest over time without refinancing, you could pay extra principal every month. By doing so, you would hasten the payoff date, reducing the total interest paid on the loan.

•    Instead of doing a cash-out refinance, you could keep your mortgage and get a home equity line of credit or home equity loan instead. These loan products often have higher interest rates than you can get with a cash-out refi, but you have the option of paying them off sooner than required.

Whether you refinance or not, the first step is figuring out your goal. Once that’s identified, you can proceed more confidently toward the best decision for you.

To view the original article click here 

Posted by Jackie A. Graves, President on October 19th, 2020 9:51 AM

Interest rates remain historically low and even though housing prices are increasing in many areas, the market still offers lots of opportunities to become a homeowner. But what's holding many back is saving enough for a downpayment.

Reaching any goal requires dedication to that goal and a mindset that enables you to sacrifice to achieve what you desire. Often that's easier said than done. However, if you analyze your spending and lifestyle habits you can determine where you can conserve to create enough of a reserve to comfortably buy a home without feeling totally deprived.

Here are six tips that can help you put away $50 to hundreds of dollars each month. Start with a fresh sheet of paper or a digital document that you can refer to frequently. Keeping it fresh on your mind will help you achieve your goals.

1. Write down what you owe versus what you earn.

Get clear about how much is coming in and how much is going out. This alone will help you see where the money is being spent and how much is being spent on things that could be cut back or cut out completely.

2. Consider getting rid of recurring expenses for services you don't really use or you use infrequently.

Maybe it's a gym membership that's adding up to more than $1,000 for the year, but you really only use it three or four times a month. That makes no sense. Get rid of it and find a workout buddy and a free place to exercise. Or it could be an audio or video membership that's going to waste. Sure, it might be $20 a month but over a year, that adds up.

Try listening to podcasts. They're free!  Some podcasters are very entertaining and their podcasts can be excellent sources of information and resources for business and personal development.

3. Stop the coffee run each morning.

Do the math. That fancy coffee drink can cost $40 a week, especially if you add a bakery treat. Your waistline and your wallet will take a beating.

4. Cut back on eating out or dine out early.

Make more meals at home. This will allow you to take leftovers for lunch the next day. When you do decide to eat out, dine out earlier in the day. You can often take advantage of eating the same great meal at a less expensive price by ordering from the happy hour menu. These days,  lots of people find saving and living lean to be hip and cool. They'll be happy to join you for an earlier meal.

5. Start a side job.

If you're working a full-time job, evaluate what your skillset is, and see if you can freelance. I spoke with a client recently who had a "day job" and was earning additional income. He was already up about $50,000 from his side job of selling auto parts. It may take a bit to figure out where and how you can earn your side income,  but it's worth exploring. This could even turn into a full-time job. Lots of people are making money working from home using the Internet. Explore your options and see how you can generate some extra cash each month.


6. Use momentum to pay back your debt

Work hard to pay down cards with the highest interest rate first. As one card is paid off, transfer the money you were paying on that card to another card. By combining whatever you were paying on the paid off card to another balance that you're paying down, you're giving it some momentum and you'll get that next card paid down even faster.

Remember that reducing your spending is critical to having what you want. So don't add to your debt. Once you save for your deposit, you'll want to make sure that you also save enough to have a cash reserve for emergency repairs and any unexpected crisis that might occur. Also, make sure that you make this process a good experience rather than a painful one. Keep your eye on the goal and understand that the decisions you make today will impact your future and your opportunity to become a homeowner.

To view the original article click here 

Posted by Jackie A. Graves, President on October 18th, 2020 10:56 AM

With their lenient standards for down payments and credit scores, Federal Housing Administration mortgages offer a lifeline to buyers trying to squeeze into an increasingly unaffordable housing market.

However, the coronavirus recession has hit FHA borrowers hard — and that has led lenders to tighten the availability of FHA loans.

As of mid-2020, a record 15.7 percent of FHA borrowers were behind on their mortgage payments, according to the Mortgage Bankers Association. By contrast, the delinquency rate for conventional loans stood at just 6.7 percent.

Most homeowners have escaped the brunt of the recession so far — that chunk of the population is more likely to hold white-collar jobs and to have kept their paychecks as they shifted to working from home during the pandemic.

FHA borrowers, on the other hand, skew toward workers toiling in service industries that have been forced to close or to curtail offerings during the pandemic.

“It really has to do with the type of borrowers who get FHA loans,” says Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association. “You’re talking about low- to moderate-income workers. They’re more likely to work in leisure and hospitality.”

FHA loans allow borrowers to put down as little as 3.5 percent. Borrowers who take conventional loans — those backed by mortgage giants Fannie Mae and Freddie Mac — typically make down payments of 20 percent.

And FHA loans are available to borrowers with credit scores as low as 580, although the average credit score for FHA borrowers is about 100 points north of that mark.

FHA lenders are making fewer loans to the riskiest borrowers

FHA lenders loosened their lending requirements in 2018 and 2019, perhaps because memories of the last financial crisis had faded.

“If you have a period where the economy is doing very well, risky mortgages don’t look risky because they’re not being stressed,” says Joseph Tracy, executive vice president at the Federal Reserve Bank of Dallas. “But the risk shows up when the economy goes through a period of stress.”

That reality has led FHA lenders to grow stricter since the pandemic.

“Credit availability for FHA loans has tightened,” Walsh says.

A Bankrate review of FHA data shows that FHA lenders are turning away applicants with the rockiest credit histories. In 2018 and 2019, nearly two-thirds of FHA loans went to borrowers with credit scores below 680. This year, that share fell to 58 percent.

Meanwhile, borrowers with credit scores below 620 — low scores indicating severe financial issues — topped 13 percent in late 2018 and early 2019. By this year, just 4 percent of FHA borrowers had credit scores below 620.

Scott Frame, a vice president at the Federal Reserve Bank of Dallas, says there’s a good reason that FHA lenders have stopped making loans to the riskiest borrowers: If a homeowner goes into default or forbearance soon after a loan is originated, the lender will have to accept a discount when selling the loan to investors.

In another sign of shifting underwriting standards, the average credit score for FHA borrowers buying homes fell below 670 in 2018 and 2019. This year, the average was close to 680.

The FHA program also is known for allowing high debt-to-income ratios. A significant minority of FHA borrowers devote more than half their income to debt payments, Tracy and Frame say. All of those factors, combined with this year’s spike in unemployment, set the stage for a potential wave of foreclosures if the U.S. economy continues to struggle.

“This could become a problem,” Tracy says. “Certainly, the conditions are ripe for a large set of these FHA borrowers.”

It’s no surprise that FHA borrowers are struggling to pay their mortgages during a recession. With lower levels of home equity and spottier financial situations, these borrowers went into the downturn with less financial cushion than more affluent borrowers.

“The mission of the FHA is to provide loans to borrowers who wouldn’t otherwise be able to get loans because they don’t qualify for conventional loans,” Walsh says. “If there’s any type of distress in the market, they usually feel it.”


What to do if you can’t pay the mortgage

When the coronavirus pandemic began to hammer the U.S. economy, many states forbade lenders from pursuing foreclosures. Meanwhile, Congress passed the Coronavirus Aid, Relief and Economic Security Act, which lets borrowers off the hook for up to a year. How forbearance works:

  • You have to ask. Borrowers must request forbearance. Don’t stop making payments without checking with your lender or servicer.
  • Qualifying for forbearance is relatively easy. Lenders aren’t demanding proof of hardship.
  • There’s no penalty. Missed payments during forbearance won’t hurt your credit score, and you won’t accrue late charges.
  • You still owe the money. Forbearance pauses payments by extending the length of your loan. After the grace period ends, you’ll resume making regular payments, but the term of your loan will be extended to include the payments you missed.
  • Most loans qualify. While forbearance is mandatory for federally backed loans, including FHA loans, many lenders have voluntarily extended the same terms for loans that aren’t backed by the federal government.

 To view the original article click here 

Posted by Jackie A. Graves, President on October 17th, 2020 12:24 PM

If you’ve ever wondered why mortgage rates go up and down, here are a few things you should understand

The process of buying a home includes a lot of moving parts — but most people (first-time homebuyers included) look at current mortgage rates first. There’s a good reason: the current mortgage rate affects your monthly payments over the life of the loan.

What many home buyers may not understand is multiple factors could cause mortgage rates to go up or down. Mortgage interest rates can also vary significantly between mortgage lenders.

If you're considering taking out a home loan or a mortgage refinance, here's what you need to know about interest rates — and why they tend to fluctuate.

What causes interest rates to go up or down?

Mortgage rates move on a large scale, and on a small scale, which is why two people applying with the same lender for the same loan could have different rates.

Use an online mortgage calculator to review the differences between two mortgage rates. Low mortgage rates can help you save money each month and on the total cost of your loan.

At the macro level, several factors help determine average mortgage rates across the entire country. These factors include:

  1. The Federal Reserve
  2. The bond market
  3. The housing market
  4. Personal level effects

1. The Federal Reserve

The Fed doesn't set mortgage rates. But their decisions affect whether rates go up or down.

For example, in March 2020, the Fed reduced interest rates to near 0% to offset economic problems resulting from the COVID-19 pandemic. The rates are currently at the lowest possible rate (0.00% to .025%) until at least 2023.

This change influenced mortgage rates by affecting the price of credit to lenders. When financial institutions borrow or lend money, they negotiate mortgage rates between each other, but the Fed sets the target rates that influence these numbers. The lower borrowing rates between institutions typically trickles down to the borrower in the form of low mortgage rates.

To take advantage of low mortgage rates, turn to With, you can find out your mortgage rate and estimated monthly payments within minutes. Plus, it's free!

 Another way the Fed can affect mortgage rates is by increasing or reducing the money supply. The Fed is the central bank of the United States geared to create and introduce more cash into the economy. Alternatively, they could reduce the production of money.

Lastly, the Fed could adjust the rates they charge banks or alter how much cash banks must have on hand.


2. The bond market

The bond market, or credit market, sells group debt securities, including mortgages. Investors can purchase bonds from governments or corporations.

Mortgage-backed bonds are groups of properties packaged together. Investors receive dividends from these investments several times per year. To appease investors, mortgage-backed bonds must make an adequate amount of money to pay out dividends.

When bond rates go up, mortgage rates go down. When mortgage rates go up, bond rates go down. Since the bond rates are closely tied to the treasury bond rates, mortgage-backed bonds are less valuable when mortgage rates are high. The reason for this is that when people have higher interest rates, they’re more likely to refinance, which means an investor would lose money when a loan in their bundle is replaced at a lower interest rate.


3. The housing market

The housing market affects mortgage rates through supply and demand. More people are opting to rent than purchase, which reduces the need for new homes. Fewer customers mean that mortgage lenders are more likely to lower their rates to entice more buyers to purchase a home.

When there are more homes available, and more people are opting to purchase homes, they often raise rates. Sometimes higher rates are used to deter customers since mortgage lenders can be overwhelmed with interested buyers when interest rates drop.

If you’re considering purchasing a home, use an online tool like to get in touch with an experienced loan officer. They can help answer any questions you have and provide more information about personalized interest rates. 

4. Personal level effects

On an individual level, factors like credit score, location, and down payment affect mortgage rates. Rates may be higher or lower in your neighborhood based on supply and demand and lender competition. Further, the rates for your mortgage loan could be higher or lower depending on your credit history, credit score, income, loan amount, and the property value of the home you want to purchase.

Additionally, the type of loan you choose will affect your mortgage rate. While variable interest rates often offer lower interest rates for a promotional period, they fluctuate with the market, and your payments could go up or down. Fixed-rate loans provide a single mortgage rate for the entire loan term. 



Today's mortgage rates

Here are the current mortgage and refinance rates as of Oct. 15 from

With these low mortgage rates, it may be a good time for you to refinance your home loan. To see how much you could save on monthly payments, crunch the numbers and compare rates and mortgage lenders using this free online tool to find your rate today.

To view the original article click here 

Posted by Jackie A. Graves, President on October 16th, 2020 1:29 PM

One of the more important documents a lender reviews when a loan application is first submitted is the property appraisal. In reality, once a loan application is turned in, there will actually be two separate approvals- one for the applicant and one for the property. The application is documented with a combination of borrower-provided paperwork along with various third party documentation such as title insurance and an appraisal. What many may not know however is the old-fashioned way of ordering a property appraisal is long gone. Instead, the lender is alerted to the type of appraisal needed based upon the results of an automated underwriting system report.

A full appraisal is one where the appraiser first performs some internal research based upon recent sales in the area of similar properties along with a copy of the subject property’s sales contract. The sales price is a starting point for the appraiser. These recent sales are listed in the local multiple listing service, or MLS. When an appraiser receives an appraisal order, the first thing that is done is perform this research. 

The appraiser will identify recent sales and then make a physical visit to the subject property. The appraiser does both an interior and exterior inspection of the property. Note, this is separate from a buyer-paid property inspection. The appraiser will make a general determination of the property’s condition based upon a visual inspection.  The appraiser will visit the property, make the inspections and take photos of the interior as well as exterior of the property. After gathering this information about the property, the appraiser will then provide a final value. 

There are however different degrees of an appraisal. A full appraisal with interior and exterior photos is the most thorough. But the AUS ‘findings’ might indicate that a full appraisal with photos is unnecessary. The AUS might only need an appraisal with exterior photos. The appraiser completes the appraisal order but does not take interior photos. 

A ‘drive by’ appraisal is actually very descriptive. The appraiser performs the initial research including recent sales of similar properties in the area. Yet the physical visit to the property is limited. There won’t be any interior or exterior photos, much less an inspection of the general condition of the property. Instead, the appraiser will literally drive by the home and make a general comment about the condition of the home.

There is even a ‘desk review’ which means the lender’s underwriter will review a completed appraisal as a secondary approval requirement.


One final note, even though the AUS does not mention a full appraisal but instead just a drive-by, a lender can still override that condition and request an upgraded appraisal from a drive-by to a complete appraisal report. It’s just the lender can’t do the reverse and downgrade an appraisal requirement from a full report to a drive-by. It’s okay to require more documentation but not okay to dismiss requested documents or downgrade an existing approval. The degree of appraisal is clearly marked on the AUS findings and must be followed.

To view the original article click here 

Posted by Jackie A. Graves, President on October 15th, 2020 11:49 AM

Did you know that you can negotiate your mortgage rate? Here's how to do it.

As a soon-to-be homeowner, one of the most important steps of buying a home is securing an affordable mortgage rate. To secure the lowest rates, you may have to negotiate.

With that in mind, there are things home buyers should do when negotiating your mortgage rates. Armed with this knowledge, you should be able to use your negotiating power to the fullest and find lower rates. Here are five ways to negotiate a better mortgage rate:

1.    Compare multiple lenders and loan rates

2.    Ask a bank or lender to match other mortgage offers

3.    Use discount points

4.    Build up your credit card history and score

5.    Make a bigger down payment

1. Compare multiple lenders and loan rates

One personal finance tip shared all the time is to shop around for mortgage rates. This tip is popular because it is true. The rate you were given can vary between mortgage lenders, so it's important to get quotes from multiple companies before applying for a loan.

In today's interest rate environment, in particular, it's possible to secure a historically low rate. At the time this article was written, the average interest rate on a 30-year fixed-rate loan is 2.87%. That's more than half a point lower from the average rate at this time last year, which was 3.57%.

Be sure to visit an online mortgage broker like Credible to get personalized rate quotes in as little as three minutes without affecting your credit score. Once you have this knowledge in hand, you will be able to compare loans to see which one makes the most sense for you.

2. Ask a bank or lender to match other mortgage offers

It's important to note that those rate quotes can also serve a secondary purpose. Often, you can ask lenders to match other mortgage offers. If you choose to do so, having another rate quote available to serve proof that you were given a lower rate will give you more negotiating power.

However, in addition to negotiating your interest rate, you can also ask about the various fees that are being charged. While not all mortgage costs are negotiable, some have more flexibility. For example, while appraisal costs and title insurance fees are usually set in stone, you’ll likely be able to negotiate lender-specific fees like the application fee or origination fee.

3. Use discount points 

If your goal is to secure the best possible interest rate, another option may be to use discount points. Also known as mortgage points, these are fees that you can pay directly to the lender in exchange for a lower interest rate. Essentially, with this method, you're paying upfront to secure a lower payment over the life of the loan. Usually, you can expect to pay 1% of the loan amount per point.

With that said, where points are concerned, it's absolutely crucial to understand how long it will take to break even on your purchase. You’ll also want to consider how long you plan to be in the home. In general, if you're only planning on staying put a few years, points may not be worth the upfront cost.

While any loan estimates you receive will likely contain information about what it would cost to buy down your rate with points, if you decide to go that route, you can also use a mortgage calculator to get a sense of your monthly payment whether investing in points may benefit you.

4. Build up your credit card history and score

Another thing you can do to ensure you secure the best interest rate is to work on your credit score before you apply for a loan. Truthfully, no matter what the current rate forecast looks like, the best interest rates are always given to the borrowers with the highest scores.

If you take the time to ensure your score is in good shape, you’ll have more options when it comes to selecting which loan type makes the most sense.

To that end, if your goal is to increase your credit score, there are a few things that you can do: First, make sure to always make your payment on time. Payment history accounts for 30% of your overall credit score.

Next, make sure to keep your credit utilization ratio, or the amount of credit you're using versus your total available credit, as low as possible. That figure accounts for an additional 30% of your score.


5. Make a bigger down payment

Lastly, making a bigger down payment could also help ensure that you have access to the best interest rates. Put simply, the size of your down payment affects your loan-to-value ratio. If your loan-to-value ratio is less than 80%, which means you’ve made a down payment of over 20%, you'll likely get access to the best available rates.

If you don't have enough savings to make a big down payment, you could always ask your lender about available home buyer programs. Often, these programs try to ease the upfront cost burden of buying a home by offering grants or silent loans that can be put towards your down payment or closing costs.

Source: To view the original article click here

Posted by Jackie A. Graves, President on October 14th, 2020 4:55 PM

If you’re struggling to make your mortgage payments due to a financial hardship or natural disaster, reach out today and start exploring your options. Help is available.

Relief for Homeowners and Renters

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Homeowners    Renters 

Posted by Jackie A. Graves, President on October 13th, 2020 11:20 AM

Mortgage rates are hovering near record lows, and no one knows how low they’ll go. What can you tell clients about this trend?

Mortgage rates have been incredibly low now for quite a while. There are a couple of big reasons for this that we’ll touch on below. There’s no doubt that part of this was due to spooked equities last week as tech stocks in particular have seen volatility. Much of the selloff was based around stocks such as Apple and Amazon.

These had been viewed as winners of the pandemic because they’re largely digital and e-commerce business is not as affected by lockdowns and other business limitations.

There doesn’t seem to be any one thing that caused the change in sentiment, but it appears investors may be wary of the state of the economy in general. There’s also been some speculation in the market, which pushed some money back into bonds and away from stocks.

This bond market trend has kept mortgage rates low and supported the market for both new and existing home sales.

Second, the Federal Reserve has committed to a policy of keeping short-term interest rates low, likely until 2024. Essentially, inflation has been on the weak side, which doesn’t help the economy because people aren’t motivated to buy now. Short-term rates are correlated with the longer-term rates for things like mortgages.

Additionally, the Federal Reserve’s Federal Open Market Committee pledged to keep buying agency mortgage-backed securities. The more buyers there are in that market, the lower mortgage rates can be because the bonds underlying the loans don’t need to offer as high of a return to attract a buyer.

For you, this means it’s a good time to be in the real estate business. Take advantage of the opportunity to help as many clients as you can.

Mortgage rates

As mentioned above, mortgage rates are looking really good right now. I do want to make one special note because I know you’re constantly talking to clients past and present.

In December, the 0.5% refinance fee imposed by the FHFA on Fannie Mae and Freddie Mac to cover costs related to COVID-19 goes into effect.

Because lenders want to make sure turn times are accounted for, this is likely to show up on rate sheets again at the beginning of October. If you have a client who can get a better rate, but isn’t sure of the timing, now might be a good time to reevaluate.


The average rate on a 30-year fixed mortgage with 0.8 points paid in fees was 2.87%, up 1 basis point in the week of September 17. This had fallen from 3.73% a year ago.

The average rate on a 15-year fixed mortgage with 0.8 points paid was down 2 basis points to 2.35%. This represents a sizable drop from 3.21% last year.

Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage with 0.3 points paid was down 15 basis points to 2.96%. This is down from 3.49% in mid-September last year.

Hopefully this has helped broaden the market knowledge you can share with your clients. For even more news, tips and tricks check out our real estate agent page.

To view the original article click here 

Posted by Jackie A. Graves, President on October 12th, 2020 10:50 AM


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