Are you planning to sell your Ocean City home without the services of a real estate agent? If that’s the case you had better start a cram course in financing. How much money will you want down? How will you determine the prospect’s credit history? How much cash should you get with the offer? Will you accept a second mortgage? Have you been in close contact with financial instituions, the FHA or the VA?

Can you advise a prospect where to get mortgage funds and walk them through the process? Who will pay what closing costs?

On the other hand, real estate agents know that many sales are lost for want of proper financing. We also know the the intricate methods and sources of financing.

Honestly, the best way to market your home-probably your most valuable asset-in the professional way. It must make financial sense. Over 90% of all home sales are handled by people in the real estate profession.

What do you need to know when you apply for a mortgage loan?  Here are some invaluable tips from Paul Soule with Coldwell Banker Mortgage.  He shares from his extensive personal experience, and from a very relevant article from Forbes.

“Much has been said and written in recent years about the tightening of standards in the mortgage industry. And some that has been written has been over-exaggerated when it comes to the availability of mortgage loans. Standards have tightened and in many ways returned to a place we never should have left as an industry. Overall however, a loan that qualifies still gets approved and settles.

What has changed dramatically is the rigors of loan processing. Documentation requirements are now as extreme as they ever have been in my 19 years in the business. The attached article explains why lenders are asking for so much paperwork to process a loan these days and what borrowers should do in response.

We don’t simply tell borrowers we need things because “We said so” and do educate them about the rationale behind what we need to get them approved. At the same time, we do often encounter resistance to provide the necessary items we need for a loan commitment. The attached article is a good piece for your buyer clients to read so they can better understand the processing/underwriting standards and requirements in today’s industry.

It also supports the notion that working with a seasoned/experienced loan officer who knows how to originate, process and underwrite a loan file will help smooth the process dramatically”.

Paul Soule

Senior Mortgage Advisor

Mortgage Rates on the Rise, But Still Near Historic Lows

October 13, 2011 (www.bankrate.com) Via Paul Soule, Coldwell Banker Home Loans.

Mortgage rates climbed this week after investors became less pessimistic about the financial crisis in Europe and the employment market in the United States. But rates remain near all-time lows and are expected to stay at those levels at the expense of the economy

If you missed the boat on locking a rate when rates reached another record low last week, there’s no need to lose sleep over this week’s increase. It is unlikely rates will continue to rise, and some economists say they expect them to stay low for months to come.

The upward trend is not expected to last. The rate on 30-year fixed mortgages isn’t expected to rise beyond 4.5 percent until late 2012, according to the MBA’s forecast. Of course, a shift in the economy or any major event that affects the global markets could change that projection in minutes.

A year ago, the MBA predicted $996 billion in home loans would be originated this year. The forecast has been changed to $1.2 trillion. Next year, the association predicts origination of about $900 billion in mortgage loans, a 25 percent decline compared to this year. At the peak, in 2003, lenders originated $4 trillion in home loans.

Potential changes to HARP, the Home Affordable Refinance Program, or any other government measure that makes it easier for underwater borrowers to refinance could increase refinance volume.

NATIONAL RATE SURVEY RESULTS
Oct 13th, 2011 (Bankrate.com)

30-year Conventional:
4.37% — with avg. points: 0.40 pts

15-year Conventional:
3.59% — with avg. points: 0.40 pts

30-year FHA:
4.09% — with avg. points: 0.40 pts

5-year Conventional ARM:
3.26% — with avg. points: 0.40 pts

Bin Laden’s Death and European Debt Crisis = Good News for Mortgage Rates
May 5, 2011

One factor that may contribute to keeping rates low for now is the fear of potential retaliation from terrorist groups after the death of Osama bin Laden. The United States kept its official threat level unchanged after the al-Qaida leader was killed in a U.S. raid in Pakistan this week, but security at many airports and subways was heightened.

While the killing of bin Laden itself did not have a direct and immediate impact on rates, the threat of potential retaliation is likely to affect rates,
Any unexpected event, especially terrorism threats, tends to have a very deep impact on rates. It’s bad for the stock markets and good for the bond markets, and that normally leads to lower rates.

That’s because during times of political uncertainty, nervous investors tend to pull money out of riskier investments, such as the stock market, and seek safer investments such as Treasury bonds. The higher demand for bonds causes yields to drop. Mortgage rates normally follow bond yields.

Another international event that may influence mortgage rates in the United States is the Greek debt crisis,
Greece story is having the biggest impact, in driving investors into the U.S. bond market.
Greece received a bailout of $160 billion last year but continues to struggle with its debt, which represents about 150 percent of its gross domestic product.
Ireland and Portugal also are in deep financial trouble.

While the U.S. economy is bad, the U.S. debt is still perceived as a much safer investment than the debt of some European countries, Findlay says.

NATIONAL RATE SURVEY RESULTS
May 5, 2011 (Bankrate.com)

30-year Conventional:
4.88% — with avg. points: 0.35 pts

15-year Conventional:
4.05% — with avg. points: 0.35 pts

30-year FHA:
4.74% — with avg. points: 0.35 pts

5-year Conventional ARM:
3.56% — with avg. points: 0.35 pts

Thank you BankRate and Paul Soule of Coldwell Banker Home Loans.

The latest mortgage information shows that interest rates were up slightly this past week.  Still very affordable rates.  They remain at near historic lows.  Here’s what’s driving our rates as shared with us by Paul Soule, Senior Mortgage Advisor with PHH Home Loans in Ocean City, Maryland.

March 24, 2011

Inflation Concerns Hurts Bond Demand

Freddie Mac’s latest survey reports a slight increase in mortgage rates this week. Concerns about inflation and political unrest drove investors away from bonds, pushing prices down and rates higher.

This week, the 30-Year fixed-rate mortgage (FRM) edged up to an average 4.81 percent , compared to last week when it was at 4.76 percent. Last year at this time, the 30-year FRM averaged 4.99 percent.

The 15-year FRM this week averaged 4.04 percent, up from last week when it averaged 3.97 percent. A year ago at this time, the 15-year FRM averaged 4.34 percent.

The 5-year Treasury-indexed hybrid ARM also moved higher,  averaging 3.62 percent this week, compared to last week when it averaged 3.57 percent. A year ago, the 5-year ARM stood at 4.14 percent.

Similarly, the 1-year Treasury-indexed ARM rose to an average 3.21 percent, up from last week when it averaged 3.17 percent. At this time last year, the 1-year ARM averaged 4.2 percent.

Frank Nothaft, chief economist for Freddie Mac, cited inflation as a leading cause for the increases, explaining, “Mortgage rates were up this week compared to last, but still remain at relatively low levels. The rate uptick was related to higher than anticipated inflation data for February and ongoing geopolitical concerns. The 12-month growth rate in the consumer price index rose 2.1 percent in February, compared to 1.6 percent in January; however, most of the increase was due to food and energy prices, which tend to be volatile. The core index rose 1.1 percent, slightly up from 1.0 percent in January. “

Nothaft also commented on the broader housing picture. He said, “The housing market recovery experienced a setback during the start of this year. Existing home sales fell 9.6 percent from January to February and were down 2.8 percent from February 2010.  Sales of new homes declined for the second consecutive month in February to record lows dating back to 1963. Even new construction on one-family homes fell 11.8 percent in February to the third slowest pace since 1959.”

Thirty-Year Back to 5 Percent

Freddie Mac’s latest survey reports longer-term rates eased a bit this week as was expected when Treasury yields fell slightly.

The 30-year fixed-rate mortgage (FRM) averaged 5.0 percent for the week, down from last week when it averaged 5.05 percent. Last year at this time, the 30-year FRM averaged 4.93 percent.

The 15-year FRM also eased this week, averaging 4.27 percent compared to last week when it averaged 4.29 percent. A year ago at this time, the 15-year FRM was at 4.33 percent.

The 5-year Treasury-indexed hybrid ARM averaged 3.87 percent this week,  down from last week when it averaged 3.92 percent. A year ago, the 5-year ARM averaged 4.12 percent.

The 1-year Treasury-indexed ARM bucked the trend, averaging 3.39 percent this week, up from last week when it averaged 3.35 percent. At this time last year, the 1-year ARM averaged 4.23 percent.

Frank Nothaft, Freddie Mac’s chief economist, commented on the current rate picture and the housing market. He said, “Fixed mortgage rates eased slightly this week and continue to be very affordable. Prior to 2009, interest rates for 30-year fixed-rate mortgages had never been at 5 percent since our survey began in April 1971. In both 1981 and 1982, the rates were over three times as high as they are today.”

Nothaft added, “The housing market is struggling to regain traction despite still historically low rates. New construction on one-family homes dipped slightly in January to an annualized pace of 413,000 units, which was the fewest number since May 2009. In addition, homebuilder confidence didn’t improve for the third consecutive month in February and remains near record lows, according the NAHB/Wells Fargo Housing Market Index”

Thx again to Paul Soule from Coldwell Banker Home Loans.

The Housing Market Update – The Economic Calendar

Market Summary

With Egypt dominating the news, some significant items of interest to the housing market might have escaped notice. Unfortunately, some of them were on the unpleasant side. Mortgage rates took an upward move across the board with the 30-year breaking the 5% barrier for the first time since the week of May 6th of last year. According to Frank Nothaft, Freddie Mac’s chief economist, a jump in long-term bond yields was the culprit and came about as a result of “positive economic data reports.” Among the positive news was an unexpected drop in the unemployment rate from 9.4% to 9.0%. Several analysts cast some doubt on those figures, claiming they were misleading because many who were unemployed had simply given up looking thus skewing the figure lower. In fact, jobless claims did fall considerably below the forecast level. This week might see a slight fall back  in  rates (maybe) since long-term bond yields

Date    Release                                   Previous

Feb 15 Retail Sales (Jan)                      +0.6%
Feb 16 Building Permits (Jan)                 635K
Feb 16 Housing Starts (Jan)                    529K
Feb 16 Producer Prices (Jan)                +1.1%
Feb 16 Industrial Production (Jan)          +0.8%
Feb 17 Consumer Prices (Jan)              +0.5%
Feb 17 Leading Econ. Indicators (Jan)   +0.1%
Feb 22 C-S Home Prices (Dec)             -1.59%
Feb 23 Existing Home Sales (Jan)         5.280M
Feb 24 New Home Sales (Jan)                 329K
Feb 24 Durable Goods Orders (Jan)       -2.5%

Freddie Mac Survey Rates*

Wk/End        30YR      15YR     5/1ARM     1YR

Feb 10          5.05%     4.29%     3.92%      3.35%
Feb  3           4.81%     4.08%     3.69%      3.26%
Jan 27           4.80%     4.09%     3.70%      3.26%
Yr. Ago         4.97%     4.34%     4.19%      4.33%
* Does not include points

did ease a bit at the end of last week. Any drop would be slight. On a more positive note, consumer sentiment rose a bit in January and folks charged a lot more than expected in December. It was the third straight month in which consumer debt rose. Consumer spending accounts for about 70% of the economy, so an increase is looked upon as positive. There were two other positives. The service industry rose in January at the fastest pace in almost six years. That spells jobs. Finally, productivity was up by 3.6% for last year, the best since 2002. That helps keeps costs and prices down and lowers the probability of inflation.

Market Analysis

The much-awaited White House plan for Fannie and Freddie was released last Friday and drew very mixed reactions. One news outlet called the two GSEs “toast” while other analysts see any major changes taking quite a while to become reality. Taking a politically cautious route, the Obama Administration wants to  “responsibly wind down”

Housing Market Trends

Category                      Dec 10    Nov 10    Yr.Ago

Housing Starts                .529       .553           .576
Building Permits             .635       .544           .681
New Home Sales            .329                   .280           .356
Existing Home Sales    5.280      4.700        5.440
Pvt. Resid. Const.($B)      -           235.7        249.0
(In millions annualized)

the two GSEs in order not to “too dramatically” limit access to or increase the cost of mortgage money for most Americans but at the same time not crowd out private capital. One message is clear; Fannie and Freddie’s days are numbered. It’s a question of how many. Over on Capitol Hill, the Chairman of the House GSE Subcommittee, Rep. Scott Garrett, is looking for “immediate steps” Congress can take to reign in Fannie and Freddie. Garrett did seem to imply he wasn’t planning to push for a dramatic demise of the two companies. A five-year phase out seems to have some support.

Go Figure, if You Can

Two economists, two views. NAR’s Lawrence Yun sees banks more willing to lend now that they’ve built up cash reserves. The WSJ looked at a 5.05% rate and says it threatens a fragile housing market.

Thank you to Paul Soule of Coldwell Banker Home Loans for providing this information.

With the economy in the news every day, more attention is being focused on the Federal Reserve than ever before.

The Federal Reserve is made up of twelve Federal Reserve Banks, overseen by the Board of Governors.  The Board of Governors is located in Washington, DC and is comprised of just seven members, who are appointed by the President and confirmed by the Senate.

The main responsibilities of the Fed include:

• Researching US national and regional economies
• Providing financial services to depository institutions, the US government, and foreign official institutions
• Supervising and regulating banking institutions to ensure the safety of the nation’s financial system and protect the credit rights of consumers
• Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable  prices, and moderate long-term interest rates
• Communicating information about the economy via publications, speeches, seminars and websites; including the statement given by the Federal Chairman, following the eight formal meetings that take place about every six weeks throughout the year.  At these meetings, the Fed has the opportunity to make changes to the Federal Funds Rate, and make their decision by reviewing economic and financial conditions.  They can also make adjustments to the Fed Funds Rate outside of these meetings.

Overall, the Fed’s main responsibility is to keep the economy growing at a steady pace by keeping inflation stable and rates moderate.  When inflation is low and stable, businesses and households can spend, knowing that their purchasing power can remain strong.

So many buyers are taking advantage of interest rates at historic lows, either by re-structuring debt with a refinance or purchasing a new home or condominium.  However, the recent economic issues have created even tougher guidelines and credit requirements and there are some things that consumers must be aware of when applying for a loan.

A leading credit expert, Linda Ferrari, developed the top 10 credit don’ts during the loan process, to help you understand the loan transaction and those things that can unknowingly wreak havoc on your credit report.

1.    Don’t do anything that will cause a red flag to be raised by the scoring system

2.    Don’t apply for new credit of any kind

3.    Don’t pay off collections or charge offs

4.    Don’t max out or over charge on your credit card accounts

5.    Don’t consolidate your debt onto 1 or 2 credit cards

6.    Don’t close credit card accounts

7.    Don’t pay late

8.    Don’t allow any accounts to run past due-even one day!

9.    Don’t dispute anything on your credit report

10.Don’t lose contact with your mortgage and real estate professionals

A prepared educated borrower is a successful borrower!

June Market Report