Quicken Loans Mortgage News

A Bonus Investment: Wall Street Bankers & Real Estate

Jenny Zhang — Mon, 08 Feb 2010 21:50:44 +0000

While the majority of home buyers are in the market to take advantage of the $8,000 first time home buyer tax credit, or $6,500 for existing homeowners, there is a whole other group of buyers we wouldn’t have thought of – Wall Street bankers.

According to a recent New York Times article, bankers are now considering real estate with their bonus money. While these infamous bonuses have been reported to be mostly paid in stocks this year, there does appear to be an increase in financial experts investing in real estate.

Traditionally, when you think of bonus money – real estate generally isn’t on the shopping list. But with low property values and low mortgage rates (making this one of the rare times expensive real estate is actually affordable), anyone with an eye on the market would want to invest now.

According to the New York Times, bankers do report that real estate has bottomed out, and that now is the time to step in and buy a home. And while most of us can’t afford the million dollar condos like investment bankers, now is still the best time to buy a home for most people.

In many areas, property values have steadily dropped and bottomed out. For many cities, housing prices have already begun their recovery, while in other areas home buyers still have time to buy their dream home before prices rise. Combined this with low mortgage rates that probably won’t last long, and the tax credit, home buyers who were hesitating to buy a home aren’t likely find a better opportunity later on.

Not long ago, we also reported that couples are now putting off their wedding to buy a home first. For many people, the choice is either to buy a home now, or wait and save a long time for a home. In populated cities like New York or Los Angeles, real estate has always been scarce and expensive. Home buyers are relying on this opportunity to finally own a home in the city they work in.

(Photo courtesy of Daniele Sartori.)

Capital Markets Update – Treasury Auctioning $81 Billion

Jenny Zhang — Mon, 08 Feb 2010 15:32:55 +0000

There is no economic data slated for today, but notable releases this week include the January retail sales report that will be released on Thursday.

Also, the Treasury will be auctioning $81 billion in longer-term Treasuries which will add pressure to any interest rate improvement this week.

Getting an FHA Loan? Hurry Before the Insurance Rises

Jenny Zhang — Fri, 05 Feb 2010 21:50:47 +0000

With the flexible credit requirements and low down payment, an FHA loan is quickly becoming one of the most popular loans for new buyers. The loan comes in a 30 or 15 year fixed, just like conventional loans, but the Federal Housing Administration insures the loan amount to make buyers more attractive to lenders.

But if you’re shopping for a house right now, and plan on getting an FHA loan – don’t wait too long or your upfront Mortgage Insurance Premium will go up.

FHA loans come with Mortgage Insurance Premiums that are built in over the course of the loan. When you close, there’s also a one-time upfront Mortgage Insurance Premium due at closing. FHA is now increasing this upfront cost by 0.50% from 1.75% to 2.25%.

How much does this equate to?

Well, on a $200,000 loan, this is an increase of $1000! So if you’re looking for a home, and planned on getting an FHA loan, don’t procrastinate, as you could end up losing money if you don’t have a case number assigned before April 4th. FHA is making this increase effective on case numbers assigned on April 5th, 2010 and forward.

America’s Largest House

Jenny Zhang — Fri, 05 Feb 2010 16:41:31 +0000

Among investors, Ira Rennert is infamous for acquiring companies by using junk bonds or bonds that are rated below investment grade. To us, he just has the largest house.

In 1994, Rennert bought 63-acres of oceanfront property in Sagaponack. By 1998, construction began on what would be a 66,395 square foot Italianate mansion. As you can probably guess from the name, Italianate is a style of architecture that resembles many historical Italian buildings. The Vanderbilt family also built the Breakers in the same style.

By 2004 the construction was complete, and after some controversy over his extravagant sprawling mansion which apparently upset the neighbors – Rennert finally moved in.

So what can you buy with $170,167,400 these days? Well, Rennert’s home includes 29 bedrooms, 39 bathrooms, a staff wing, a 17,000 square foot garage (to fit over 100 cars), gym, game room, indoor tennis courts, bowling alleys, and the list goes on.

Rennert was also reported to have given over $30 million apartments to both his daughters as a gift, one of which used to belong to Vera Wang. For the full story, check out Cityfile.

(Photo courtesy of Cityfile)

Capital Markets Update – Jobs Report Reveal Loss of 20,000

Jenny Zhang — Fri, 05 Feb 2010 15:17:47 +0000

The highly anticipated monthly jobs report was released today. January saw job losses of 20,000 and did not turn positive as expected.

The prior period was revised downward to -150,000. The unemployment rate fell to 9.7% from 10.0%. manufacturing payrolls increased 11,000.

U.S. Treasury and mortgage bond prices are off of yesterday’s highs, but are still trading slightly higher than they were yesterday morning.

ARM Adjusts Lower than Initial Rate

Jenny Zhang — Thu, 04 Feb 2010 21:47:50 +0000

While the common perception for ARMs or Adjustable Rate Mortgages is that your mortgage rate will adjust up over time, recently we have seen just the opposite happen. The interest rate on an ARM is composed of two portions. The first portion is a fixed interest rate, while the second is a fluctuating interest rate based on an index (generally the index is LIBOR or London InterBank Offered Rate). Together, these two add up to the total mortgage rate of the ARM.

Currently, the fluctuating portion of the ARM has adjusted to an incredibly low percentage, thus bringing the overall mortgage rate to an even lower percentage than what many homeowners began with initially. This new trend in mortgage rates adjusting lower has made the ARM an even more attractive loan for many buyers. For more information on whether an ARM is right for you, check out Refinancing Into an ARM.

Generally, ARMs are good for people who plan on moving soon, and only plan on staying in their home for the fixed period of the loan. Previously, homeowners who reached the adjustment period on their 5/1 ARM would often refinance into a fixed mortgage. However, with the recent adjustments down on ARMs – homeowners may just want to wait to refinance.

Depending on what type of ARM you have, ARMs offer a fixed mortgage rate for the initial period (a 5/1 ARM means the first 5 years are fixed). During this period, the initial interest rate is often much lower than other loans such as the 30-year fixed, giving homeowners the opportunity to save thousands from a lower interest rate. For some borrowers, this initial savings is substantially larger than getting a fixed loan, even after they refinance after the fixed period is up. Other borrowers prefer a long term fixed mortgage so they never have to worry about the adjustments.

Regardless of which type of loan you choose, be sure to look over all options carefully, and review the differences. ARMs like every other type of loan, are great for a certain type of homeowners. To learn more about which loan suits you best, be sure to talk to a Home Loan Expert today.

Buying Investment Properties? Look in these Cities

Jenny Zhang — Thu, 04 Feb 2010 19:28:58 +0000

CNN Money recently published an article on America’s most overvalued cities, which included a list of both over and under valued cities. While this may not mean much initially for those of us who don’t live in them, it may actually still apply to you. If you already own your dream home, and don’t plan on moving anytime soon, now may be a good time to start thinking about an investment property or vacation home.

You’ve heard it many times, now is the best time to buy a home. The mortgage rates are still low compared to a few years ago, and property values have certainly dropped in most parts of the country. So how can you take advantage of this if you already own your home?

Well, if you had been planning to buy a second home – now would be the time to do it. Now is an especially good time for investment properties, or homes in areas you previously weren’t able to afford. So where are some of the best places to buy a home? The first place goes to Las Vegas, with homes undervalued by 41%. California, where real estate prices used to be incredibly expensive, made the list with three of their cities with a 32%-37% drop. For the full list, check out the article in CNN Money.

(Photo courtesy of ThinkPanama)

Capital Markets Update – ADP Declined by 22k

Jenny Zhang — Thu, 04 Feb 2010 15:44:03 +0000

Bonds traded lower yesterday after the ADP Employment Change Index (Jan), declined by -22k, less than the -30k expected while the December revision improved by over 20k.

This morning, Treasury and mortgage bond prices are opening up higher as European sovereign debt issues, notably Portugal and Spain, grab the headlines.

Why You Should Refinance to Eliminate Credit Card Debt

Jenny Zhang — Wed, 03 Feb 2010 20:52:23 +0000

Credit card debt is incredibly easy to accumulate, and with millions of Americans in debt beyond what they can handle – eliminating credit card debt has become a large goal for many. But with a struggling economy, money is often tight and getting ahead often seems impossible.

However, according to a recent article, there is one way you can get out of credit card debt – by refinancing your home loan. There are basically four good reasons why it’s better to refinance your mortgage than to pay the high interest rates on your credit cards.

1. Your mortgage has the lowest interest rate out of all of your debt. This is true almost all of the time. Your mortgage is a secured loan, which means if you default on it – there’s something to back up the loan amount, which is your house. Credit cards are unsecured loans, and if you default on that, the bank loses the entire amount – thus making interest payments higher to compensate for that risk. By refinancing your mortgage to pay off credit card debt, you are basically swapping high interest credit card debt for lower interest mortgage debt.

2. You get more time to pay back the loan. Mortgages span across 15 to 30 years while credit cards need to be paid off by the end of the month. If you have tens of thousands of dollars in credit card debt, multiplied by the high interest rate for every month you don’t pay it off – you may be better off using the money you save from refinancing to pay off the credit card debt.

3. You will improve your credit score. Maxing out credit cards lowers your overall credit score. By refinancing into a lower rate or lower monthly payment – you can use the surplus towards paying off the mounting debt that lowers your score.

4. You are taking advantage of the currently low mortgage rates. If you bought your home over three years ago, chances are the interest rate on it is pretty high compared with today’s rates. Even if you had no credit card debt, you should look into refinancing into a lower rate to save money.

FHA Announces Help for Homeowners

Jenny Zhang — Wed, 03 Feb 2010 18:03:49 +0000

Do you have an FHA loan? Are you worried about falling behind on payments? Well good news, the Federal Housing Administration announced help for homeowners on their FHA mortgage before they become delinquent.

This new assistance is aimed at homeowners who are no longer able to make payments due to a change in their income. Homeowners need to provide documentation to show that the inability to pay their mortgage stems from losing a job, decreased hours, or a decline in business if they’re self-employed.

Another qualification outside of losing employment is if the homeowner has had a death in the family, or disability that has caused a loss of income.

So what can the FHA do to help homeowners?

The first option is to go into forebearance. This is when the lenders agree to postpone or reduce the payments for an agreed period of time. There are still the same number of payments the homeowner will have to make, but this option puts the payment schedule temporarily on hold – so the homeowner has time to get their finances in order before beginning the payments again.

The second option is for more serious cases of financial difficulty. Homeowners may qualify for a permanent payment reduction. This is done by either increasing the life of the loan, lowering the interest rate on the mortgage, or even omitting some of the principal borrowed. Any combination of the three can be done for qualified borrowers, so be sure to check with your lender and the FHA site.

With these new added measures to help FHA borrowers, FHA loans are quickly becoming the most popular loan choice for first-time home buyers. While the guidelines are more stringent to insure the borrower does not default, this type of loan does provide opportunities many other loans do not.

For example, FHA loans only require a 3.5% down payment on a home. Contrary to conventional loans, they also have a lower credit score requirement of only 620. Lastly, FHA loans offer seller concessions of up to 6% as opposed to the 3% in conventional loans.