What the FHA rate cut suspension means

A lot of headlines came out of Washington, D.C. recently about mortgage insurance rates. The news is that a mortgage insurance rate cut on loans authorized by the Federal Housing Administration (FHA), which was scheduled to go into effect at the end of January, has been suspended. It is unknown what the future of the rate cut on FHA loans holds, but here are some numbers that may interest you – especially if you’ve decided to purchase a home later this year. Any prospective homebuyer who applies for an FHA loan today will have to pay the same premium insurance rate that’s held since 2015 (see below). Here is how the rate breaks down, according to the Chicago Tribune: ● Most borrowers pay an upfront insurance fee (be sure to ask your lender about this). ● Borrowers may pay 0.85 percent of the loan amount for premiums each year. ● The proposed rate would have dropped rate to 0.60 percent (this is the rate that was suspended). ● In 2014, the rate was 1.35 percent. Many of the characteristics that define an FHA loan remain in tact. Here are the characteristics of an FHA loan: • Low down payment, typically a minimum of 3.5 percent; which is great for first-time home buyers • Higher loan limits allow homebuyers to buy higher-priced homes with less down payment • Borrowers must live in the home as the primary residence • Requires a home appraisal by an FHA-approved appraiser* • Requires borrowers to pay mortgage insurance premiums* • Flip properties are allowed • Credit scores to 640, flexible debt ratios, and seller contributions permitted FHA loans are perfect for first-time buyers, and those who want a second chance […]

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With increase in interest rates, now may be a good time to lock in rate

The average 30-year-fixed mortgage rate increased in recent weeks to 3.94 percent. This according to CNN Money, which also points out that rates this time last year were actually higher at 3.97 percent. According to ABC News, the lowest point for 30-year rates came in 2012 when they were at 3.31. Interest rates are based on the mortgage-backed security market, stock market, economic data, inflationary pressure and other national and international factors. So predicting where interest rates will go from here is uncertain. If rates were to continue to rise, however, now may be the right time to lock in a rate on your new home. Homebuyers may want to purchase sooner rather than later also due to the fact that there is low inventory and it is a competitive market. The decision to lock in a rate is one that should be made between the borrower and their loan officer as the timing could also depend on having a ratified contract. Typically, a home buyer will have the option of locking in their rate in 30, 45, 60 or 90 days. It should be noted that typically, the longer the homebuyer waits, the higher the rate will be. Popular loan options include: 30-year fixed; 15-year fixed; Adjustable Rate Mortgage; FHA; VA; Jumbo/Non-conforming; and Interest Only. More information on these, can be found here. The best first option in the home-buying process is to get information on the pre-approval process and to see if you qualify for a loan. We at Guarantee Mortgage can help guide you through the process. That’s why we encourage you to connect with a loan advisor. The consultation usually takes between 15 and 30 minutes. An advisor will answer your […]

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First-time home buyers boosting existing home sale numbers

The housing market is hot for first-time home buyers. In fact, first-time home buyers helped turn existing-home sale numbers around in September, according to a report from the National Association of Realtors (NAR).

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Interest rates keep housing market strong as home prices increase

The housing market remains strong despite the recent rise in home prices. Freddie Mac’s national Multi-Indicator Market Index (MiMi) value, released in September, indicates strong housing activity thanks in large part to low interest rates. Freddie Mac Deputy Chief Economist Len Kiefer explained this in a press release: “Nationally, MiMi in July was largely unchanged for the third consecutive month at 85.1, yet marking a 4.7 percent year-over-year increase. Despite rising house prices, the majority of housing markets have sustained their momentum due in large part to low mortgage rates. For example, purchase applications, as measured by MiMi, were up more than 17 percent year over year in July and remaining at their highest level since December 2007,” Kiefer said. This may be the perfect storm for homebuyers as home prices are only expected to continue to increase. According to CoreLogic, it is estimated that home prices will jump 5.4 percent by July 2017. Boosting home prices is the fact that inventory remains low, as it has been for most of the year. Waiting for prices to drop is always a gamble as interest rates could increase. In August, the 30-year mortgage rate sat at 3.4 percent, which put it at the fifth lowest rate in 20 years. What’s more, Freddie Mac recently forecasted that a 30-year fixed rate mortgage could average around 3.6 percent by the end of 2016, which would be a historic low not seen in 40-plus years. Considering the circumstances, homebuyers may want to purchase sooner rather than later given that there is low inventory, it is a competitive market and interest rates are still favorable. The best option is to get prequalified or preapproved for a mortgage first. We at […]

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How to determine if discount points are right for you

If you are entering the home-buying process, one question you may want to have answered is whether using discount points to lower your interest rate is the best option for you.

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