Posts Tagged ‘First Time Home Buyer Mortgage’
First Time Home Buyer Rates Improve On Fed Release
Posted by Chris Richter in FOMC Tuesday, 16 March 2010 13:32 No Comments
The Fed Open Market Committee posted a 9-1 vote in favor of leaving the Fed Funds Rate unchanged.
That doesn’t directly relate to “no change” in rates for the first time home buyer programs, but the release was good news for mortgage rates.
In its press release, the FOMC noted a number of positive things. Sound bites included:
- U.S. economy “has continued to strengthen”
- Jobs market “is stabilizing”
- Business spending “has risen significantly”.
Positive economic news is typically negative for bonds. This is six straight optimistic releases from the Fed and we’re moving out of the 2008-2009 recession.
The main reason that first time home buyer mortgage rates didn’t move was that there is simply no threat of inflation right now. That’s great news for bonds and great news for mortgage rates.
There are still some threats:
- High unemployment threatens consumer spending
- Housing starts are at a “depressed level”
- Consumer credit remains tight
Positive tone, slight concerns, and indications that inflation is under control. Does housing drive the economy or does the economy drive housing? Probably both.
What we’re seeing from the Fed right now are the signs that the people who buy now should see lower rates and lower home prices. Better news for today’s first time buyer is that a rising economy will help make buying today a great long-term option as housing prices recover.
Next release is April 27-28.
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First Time Home Buyer Mortgage Rate Predictions
Posted by Chris Richter in Weekly Review Monday, 1 March 2010 07:46 No Comments
Mortgage rates on nearly all first time home buyer programs improved last week as a number of influential economic reports came in softer than expected, including:
- Consumer Confidence posted 16% short of expectations
- New Home Sales posted 13% short of expectations
- Initial Jobless Claims were higher than expected
Rates didn’t go as low as they could have for one major reason. Fed Chairman Ben Bernanke explicitly eased some concerns that the monetary policy would get too tight, too quick for the liking of the stock market. In his semi-annual testimony before Congress, Bernanke stated that the Fed Funds Rate would stay low for an extended period of time. Stock traders like the prospects of low rates and Wall Street rallied on Friday afternoon.
Mortgage Rate Predictions for First Time Home Buyers
This week should see any of a few things move rates for first time home buyer programs.
The jobs report hits on Friday and should be the most influential piece of data this week. Expectations are that 30,000 jobs were lost in February. More losses, lower rates. Less jobs lost, higher mortgage rates.
Additionally, the U.S. dollar will swing rates. As the dollar grows stronger, rates go lower. With absolute chaos in Europe right now, rates have been held lower. If the EU can figure out what to do with Greece, rates could tick a bit higher.
This all ties into the “free market” mortgage rates, conforming rates and the FHA rates. Other loans for first time home buyers, such as the state programs, do not change as often.
Right now, rates are incredibly low. We’re still forecasting them to go up eventually, it’s just a matter of when.
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Homebuyer Tax Credit Ends in 100 Days
Posted by Chris Richter in Homebuyer Tax Credit Wednesday, 20 January 2010 06:47 No Comments
The expanded version of the home buyer tax credit endThe expanded version of the home buyer tax credit ends on April 30, 2010. To meet the requirements, you must be under contract by April 30th and closed by June 30th. There’s 100 days left to claim it.
- You can’t purchase the home from a parent, spouse, or child
- You can’t purchase the home from an entity in which they’re a majority owner
- You can’t acquire the home by gift or inheritance
- All parties to the purchase must meet eligibility requirements
The new law includes some notable updates, however.
First, the subject property’s sales price may not exceed $800,000. Homes sold for more than $800,000 are ineligible. And, also, household income thresholds have been raised to $125,000 for single-filers and $225,500 for joint-filers.
And lastly, don’t forget that the program is a true tax credit — not a deduction. This means that a tax filer who’s eligible for the full $8,00 credit and whose “normal” tax liability totals $5,000 would receive a $3,000 refund from the U.S. Treasury at tax time.
The complete list of qualifying criteria is posted on the IRS website. Review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.
There’s just 100 days to go.
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First Time Homebuyers Loan Options
Posted by Chris Richter in First Time Homebuyer Loans Friday, 15 January 2010 10:19 No Comments
The first time homebuyer loan options for 2010 start out looking more attractive by the day.
After watching mortgage rates move higher day after day in December, they’re starting to turn around. Rates hit all-time mortgage lows six times last year, finally setting their best mark right after Thanksgiving. So, while rates had increased nearly .625%, they had only moved up to around 5.25%.
To start 2010, the loan options are beginning to look more attractive. Here’s the cheat sheet what programs to look for:
- Less than 3.5% down–Check the state-by-state of loans for first time home buyers.
- 3.5-5% down–FHA is likely the best option
- 5% down–
- 740 FICO: Likely going to lean towards Conventional on a single-family home
- 620-679 FICO: Likely going to lean towards an FHA loan on a single-family home
- 680-739 FICO: See the first time home buyer mortgage comparisons
- Condo: See comparisons tagged condo loans
Stay tuned, we’ll have a few new comparisons up next week.
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FHA vs Conventional at 680 FICO
Posted by Chris Richter in First Time Home Buyer Mortgage Friday, 18 December 2009 10:43 No Comments
One of the more common loan comparisons for a first time home buyer is the FHA vs Conventional analysis.
When looking at the loans for first time home buyers today versus a few years ago, there are significant differences. There were countless exotic, but dangerous, loan programs a few years ago. The 80/20 loan, the 2/28 ARM, and others are all gone.
We’re in a 30 Year Fixed market. The two main varieties are the FHA 30 Year and the conventional 30 Year Fixed from agencies like Fannie Mae and Freddie Mac.
In the past few years, private mortgage insurance has become more expensive and loan level price adjustments are higher for lesser credit scores.
Today, we’ll look at an example. We’re using a $300,000 purchase price. We’re assuming a 680 FICO score and a 5% down payment. This triggers a 1.188% loan level price adjustment. This is a fee charged for the 680 FICO score.
The biggest differences are as follows. The mortgage rates are comparable. We’re looking at a .125% difference. At the 680 FICO, the mortgage insurance factors and loan level price adjustment lay down a one-two punch of a higher monthly payment plus a higher dollar amount out of pocket at closing.
How we do the math on these is pretty straightforward. The cost of a mortgage is equal to how much it costs up-front plus how much it costs over time. To be accurate, we include the financed FHA up-front mortgage insurance premium and the non-financed conventional loan level price adjustment as costs that occur immediately.
We also include the cumulative interest and monthly mortgage insurance as part of the ongoing costs. We disregard principal in these calculations.
Over the first 10 years, the “best loan” changes one time around the second year. The reason for this is that the FHA loan does have a large up-front fee, almost $5,000 in our example. Over time, the cheaper monthly mortgage insurance adds up to make the FHA loan the cheaper option for the 680 FICO score and 5% down payment.
Every situation varies so contact us if you’d like a custom comparison.
