Weekly update January 6th

During the first week of the new year, mortgage rates continued to be influenced by the same factors as in 2011. Stronger than expected US economic data roughly offset continued concerns about Europe, and mortgage rates ended the week nearly unchanged.
Friday’s Employment report provided further support that the US economy is gaining strength to begin the new year. Against a consensus forecast of 150K, the economy added 200K jobs in December. The Unemployment Rate unexpectedly fell to 8.5%, the lowest level since February 2009, from 8.7% in November. The decline was partly due to the increase in jobs and partly due to people dropping out of the labor force. Average Hourly Earnings, a proxy for wage growth, increased 2.1% from one year ago. This was an encouraging report in nearly every area.
While prospects in the US appear to be picking up, signs of improvement in Europe have been frustratingly slow to emerge. Bond yields in troubled countries remained at elevated levels, and European banks had to pay higher than expected costs to raise additional capital. Investors are still demanding very large premiums to lend money to European countries which are considered risky, making recovery efforts even more costly. Relatively safer assets, such as US mortgage-backed securities (MBS), continued to benefit this week from the lack of progress in Europe.

Weekly mortgage market update from Phoenix Arizona

With little economic data in the US this week, the focus was on Europe. Some investors were hoping that a more concrete plan to address the region’s issues would be announced during the week, but they were somewhat disappointed. As a result, relatively safer assets saw gains, and mortgage rates ended the week lower. A highly anticipated EU summit left investors with mixed feelings and produced little reaction in financial markets. On Friday, European leaders announced that at least 23 of the 27 members of the European Union have agreed in principle to tighten their fiscal coordination and to limit budget deficits. The details, which will determine the effectiveness of the plan, are to be worked out in the future. In essence, investors viewed this news as only a small step forward.

What investors really would like to see is a major new aid program for the European countries with debt problems. The issue remains, though, that someone must pay for the aid, and the countries providing the funds understandably want to be reassured that the countries receiving the aid will demonstrate greater budgetary discipline. Investors expect that if European leaders eventually reach an enforceable agreement, then the European Central Bank (ECB) or another institution will provide additional aid. It appears that the European debt issue will continue to be a major influence on US financial markets for quite a while.

The loan process with Robyn Robertson and Irene Hammond

What do you need to get prequalified for a loan with Irene Hammond and Robyn Robertson

FHA loan limits go up – loan limits for October 2011 through Decmber 2012

The loan limits for a single unit FHA loan in Arizona are:-
Maricopa County $346,250
Coconino County $450,000
Apache County $281,250
Gila County $325,000
Mohave County $322,500
Navajo County $308 750
Pima County $316,250
Pinal County $346,250
Yavapai $390,00

Weekly update on Mortgae rates

This week, the effects on mortgage rates from increased optimism about Europe and stronger than expected US economic data were offset by increased expectations for additional Fed purchases of mortgage-backed securities (MBS). As a result, mortgage rates ended the week with little change.

Global actions taken this week increased optimism that the European debt situation will improve. On Wednesday, major central banks around the world announced a joint program to lower the borrowing costs for banks. This will increase liquidity and decrease the risk of failures. China also lowered rates for the first time in three years. It appears that central bankers in Europe and China are becoming more willing to risk higher future inflation to spur economic growth. In addition, comments from the head of the European Central Bank (ECB) and from the leader of Germany suggested that if euro zone governments reach agreement on a “new fiscal compact” to better control their budgets, then the ECB may provide more aid.

Capping off a week of generally stronger than expected economic data, Friday’s Employment report also exceeded expectations in nearly every area. Against a consensus forecast of 130K, the economy added 120K jobs in November, but revisions to prior months added an additional 72K jobs. The big surprise came from the Unemployment Rate. Expected to remain unchanged at 9.0%, the Unemployment Rate dropped sharply to 8.6%, the lowest level since March 2009. The news was not quite as impressive as the headline number might suggest, though, as a good portion of the decline resulted from a decrease in the labor force participation rate, meaning that many people stopped looking for work.

It was a surprisingly quiet week for mortgage rates with little of the daily volatility seen in recent weeks. Investors continued to watch the situation in Europe, but events there had little impact. The US economic data was roughly neutral for mortgage rates, and rates ended the week with little change.

The economic data released this week was positive for the economy, with stronger than expected economic growth and lower than expected inflation. Retail Sales, Industrial Production, Housing Starts, and Jobless Claims all exceeded their consensus forecasts. Meanwhile, Core CPI inflation was a modest 2.1% higher than one year ago. For mortgage rates, the tame inflation data was positive, while the relatively strong growth data was negative.

Investors continued to closely monitor the debt troubles in Europe. While Italy’s bond yields remained below the highs reached last week, bond yields in France and Spain climbed to new highs. Investors are concerned that nearly every euro zone country except Germany is at risk of seeing a sharp rise in yields, which will make it even more difficult to meet their debt obligations. Weaker euro zone countries are increasingly looking to Germany for additional aid, but the Germans are reluctant to bear the cost. The level of aid provided by Germany, most likely through the European Central Bank (ECB), will heavily influence the ability of the other countries to resolve their debt problems.

FHA mortgage insurance changes coming April 18,2011

FHA loans will see the monthly mortgage insurance increase from 0.9% each month to 1.15%. This is for all loans registered after April 18th. What does this look like for a monthly payment
on a $100,000 loan amount. Currently the monthly mortgage insurance payment is $75 and will increase to $95.83 in April.
The Upfront mortgage insurance will remain 1%.
This is good motivation to get FAH loans registered before APril 18th,2011.

Tax credit money has gone but new bonds available in Arizona

New Bond Funds become available.

 Now that the tax credit has come and gone, the government is looking to keep the housing market afloat with some different funding. It comes in the form of a bond which will “give” 5% towards down payment or closing costs. The total grant is $25million and it is for all of Arizona except Maricopa or Pima counties. The 5% grant will be “gifted” and not repaid unless the house is sold or refinanced within 5 years.. The interest rate for the loan is 4.99%, the minimum credit score is 660 and the minimum amount of cash the borrower is required to bring to the deal is $1000.There is a recapture tax if three criteria are met – these are ,- the house sells for a profit, the income of the borrowers increases more than 5% per year  and if the home is sold within 9 years. The borrower will need to be a first time home buyer and attend an online education class.

Changes coming on Waiting periods for Conventional Loans

This is for conventional loans.

Currently the waiting period for purchasing a home after a foreclosure is 5 years. As of October 1^st 2010 the waiting period will be extended to 7 years.

Summary of Waiting Period Requirements

Bankruptcy Chapter 7 or 11 = 4 years

Bankruptcy Chapter 13   = 2 years from discharge date

Multiple Bankruptcy Filings = 5years if more than one filing in the last 7 years.

The Requirements for :-

Deed in Lieu of Foreclosure}

Preforeclosure Sale}

Short Sale}

  are dependant on the loan to value

- with a maximum loan to value of 80% after 2 years.

- a maximum loan to value of 90% after 4 years and

- is back to “normal” after 7 years.