by Tyler Osby on July 20, 2010
It’s the Perfect Time to Be a Home Buyer
Builder confidence in the housing market slipped this month, according to the National Association of Homebuilders’. They release a monthly Housing Market Index. Confidence slipping is really good news for a home buyer.
The Housing Market Index is actually a weighted composite of 3 separate surveys. One measures current single-family sales; one measures projected single-family sales; and one measures traffic of prospective buyers.
All three surveys produced were down in July:
- Single-Family Sales : From 17 (June) to 15 (July)
- Single-Family Project : From 22 (June) to 21 (July)
- Buyer Foot Traffic : From 13 (June) to 10 (July)
The HMI’s July reading of 14 puts confidence at its lowest point since April 2009.
Sellers are Fighting Over Potential Buyers
For home buyers in Iowa , a drop in builder confidence could create an opportunity for negotiation. That means deals for home buyers.
Remember, it wasn’t too long ago that most builders were flush with home inventory, unable to find willing buyers. To help move product at that time, builders dropped prices and offered incentives including free upgrades. If confidence continues to sag going forward, home purchase deals of that nature may return — especially as the foreclosure market gets larger. The rules of supply and demand at work!
See, in the past, builders’ main competition for buyers were the existing home sellers. Today, builders compete with the existing home sellers and the banks with REO.
In other (much more simple terms) it’s a terrific time to be a home buyer. Sellers are fighting for you. It’s no wonder sellers have little leverage anymore. Couple that with all-time low mortgage rates and affordability for homes is at an all-time high.
If you’re planning to buy a home later this year, you may want to consider moving up your time frame. The market looks ripe for good deals this summer. And, with interest rates as low as they are, your total cost to own a home doesn’t seem to be getting cheaper either. If you’re interested in getting pre-approved, please contact me! I’d be happy to help you out. All of my contact information is on the right of this page.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on July 19, 2010
Rates Have Very Little Room to Move Lower
The news for this week:
- Monday : National Association of Home Builders Index
- Tuesday : Building Permits and Housing Starts
- Thursday : Existing Home Sales
Strength in any, or all three, of these housing-related reports should push mortgage rates higher on higher hopes for the economy. Weakness, on the other hand, should have the opposite effect, although I really can’t see rates falling lower than where they current are. It’s really unbelievable how low they’ve stayed.
Yea, things have stayed pretty low for the past month. Momentum is in effect and refinance activity is soaring. That said, it doesn’t mean that rates won’t rise — they could absolutely. It just takes a change in market sentiment. And that could happen quickly.
Mortgage rates are artificially right now so even the slightest jolt could cause them to spike. It would be similar to what happened in June 2009 when rates rose 1.125% in just 10 days’ time. Therefore, if you’re shopping for a mortgage and like the rate you’ve been quoted, consider locking in as soon as possible.
There’s very little room for rates to fall further but a lot of room for rates to rise. Make sure you’re on the right side of that bet. If you haven’t yet locked in your interest rate, let me know! I’d be happy to help out. My contact information is on the right hand side of this post.
You Can Stay Updated!
I’ll be following things as they happen with live mortgage bond quotes and do what I can to keep everyone informed with live updates through Twitter.
As a Consumer, How Do You Keep Posted on the News?
I’ll do my best to keep you posted throughout the week via Twitter. If you’re interested in finding out more about what effects mortgage rates and which direction they’re headed, feel free to follow me!
Work With Mortgage Professionals In The Advice Business
It’s important to recognize that advice is extremely valuable when looking for a mortgage. The right advice can literally save you thousands of dollars, while the wrong advice can cost you the same. Some mortgage professionals really don’t know what mortgage rates are based on, period. If you want to get the best deal, having a professional that can give you that type of advice is extremely important.
Why Am I Posting A Calendar?
I provide this weekly news update because too often when we’re shopping around, we ask the wrong questions. The first thing you’ve got to have your antenna up on is economic news if you want to have any idea what direction rates are moving.
So You Say, What Are Mortgage Rates Currently?
I get this question all too often. If I’m being fair.. and honest (which is my policy). I would be doing you a huge disservice to just quote a rate.
Truth be told, there are literally 27 different factors that go into a custom rate quote. There are also thousands of programs (constantly changing as well). It’s extremely important that you are educated on what is available and most importantly what is the best mortgage plan for you to personally implement.
It’s natural to have a list of questions. I’d love to help work through them with you and educate you on what you need to know about the mortgage process. I can help with everything from how to pre-qualified to what to do after closing (where I will continue working for you)!
It’s what we do, and it would be my honor to add you to our list of raving fan clients. If you’re currently looking for a mortgage loan or know someone that might have questions about one, please have them contact me. I’d be happy to assist them. It’s literally what I love doing! I promise to take great care.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on July 19, 2010
Good News for Rate Shoppers
Mortgage markets improved for the 5th straight week last week as consumer confidence waned and inflation data tamed. Most investors ignored the news that 19 of 23 reporting S&P 500 companies beat their respective earnings estimates and sold off on stocks.
There’s some concern about a potential economic slowdown for the months ahead and honestly, it may be with good reason.
Despite an improving jobs situation and booming retail sales, households are becoming less optimistic about the future and so is the Federal Reserve. In its post-meeting minutes released last week, the Fed revised its U.S. growth estimates downward for 2010 and 2011.
Because of the weakness, conforming mortgage rates fell again last week, extending the current rally in rates to 16 weeks. Mortgage rates are lower than at any time in measured history. Yep. That good.
Specifically, What Did Those Reports Say?
Each week, I put up an economic calendar of news coming out that following week. Here’s the what actually happened with those reports last week:
What Impacts Mortgage Rates?
If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:
- Economic News. (Like the calendar above).
- International News. (major events, pending legislation, war related news, etc).
- Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).
What Are Rates Based On?
It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing, Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.
Looking For Mortgage Rates?
If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote. Each scenario is different (there are 27 different factors a mortgage rate is determined by). If you or someone you currently know are looking for a mortgage, I’m here to help!
Information without obligation. That’s my policy. If you like what you hear, my team and I would love to help you out with your mortgage! Our contact information is on the top right hand side of this page!
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on July 15, 2010
New Foreclosure Numbers Present Investment Opportunities in Iowa
Well, 313,841 foreclosure filings were done in June (according to foreclosure-tracking firm RealtyTrac). That new figure represents a 3 percent drop from May and 7 percent drop from June of last year (!). However, foreclosure filings remain relatively high nationwide.
June marks the 16th straight month the filings topped 300,000. That translates into 1 in every 411 U.S. homes received some form of notice last month with foreclosure density varying wildly from state-to-state.
Like everything else in real estate, it seems, foreclosures are a local phenomenon. Location matters.
The states with the highest foreclosures per capita were:
- Nevada : 1 foreclosure filing per 88 homes
- Florida : 1 foreclosure filing per 171 homes
- Arizona : 1 foreclosure filing per 189 homes
The states with the lowest foreclosures per capita were:
- Vermont : 1 foreclosure filing per 26,051 homes
- West Virgina : 1 foreclosure filing per 8,058 homes
- South Dakota : 1 foreclosure filing per 6,528 homes
Buying a Foreclosure Can Be Costly
Overall, 40 states beat the national Foreclosure Per Capita average and 10 states fell below. The volume of REO though, is creating interesting buying opportunities for first-timer buyers, move-up buyers, and real estate investors in the Des Moines Area.
Homes bought from banks are usually less expensive than non-foreclosure homes. This is one of the major reasons why distressed sales account for roughly 30 percent of all home resales. Less expensive, though, doesn’t always mean “cheaper”. Foreclosed homes are often sold as-is and may be defective or otherwise uninhabitable.
Making repairs to get these homes into “living condition” can be costly.
Therefore, if you’re buying a foreclosed home, make sure you know what you’re buying before you make your bid. Have a certified professional inspect the home to check for damage, and consider enlisting the help of a real estate agent to assist with negotiations and management of the contract.
The process of buying a foreclosed home is different from buying a typical resale. Make sure you do your homework.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
by Tyler Osby on July 14, 2010
Not Just Rate, Closing Costs Too
Conforming mortgage rates may be posting all-time lows this week, but that doesn’t mean you’ll be eligible for them. You may have already called your loan officer and found this out the hard way. Please let me help you see why.
It’s because of a federally mandated mortgage-pricing scheme known as “loan-level pricing adjustments”.
In effect since April 2009, loan-level pricing adjustments are changes to a loan’s base rate and/or fee structure based on that loan’s risk to Wall Street. It’s similar to auto insurance pricing adjustment in that a sports car, all things equal, will cost more to insure than a comparably-priced minivan.
More risk, more cost. Make sense?
So, What is Considered Risk?
- Credit Score (i.e. the borrower’s FICO is below 740). Yes, seriously. It starts at 740.
- Property Type (i.e. the subject property is a multi-unit home)
- Occupancy (i.e. the subject property is an investment home)
- Structure (i.e. there is a subordinate/junior lien on title)
- Equity (i.e. mortgage insurance is required by the lender)
On top of that, loan-level pricing adjustments are cumulative.
A 3-unit investment home will face larger adjustments than an owner-occupied 3-unit home, for example. It’s these adjustments that explain why you may not be eligible for the rates you see advertised online and in the newspapers. Your particular loan may be subject to this risk-based pricing that raises your mortgage rate and closing costs. So it’s really important to get a custom rate quote from lenders. Not just a “best case scenario”.
The government’s loan-level pricing adjustment schedule is public information. See what your lender and how your loan quote is made at the Fannie Mae website. Or, if you find the charts confusing, just call or email me. I do this stuff every day and I’d be happy to help you get things going. All of my contact information is off to the right hand side of this article.
Tyler Osby is an active loan officer. You can ask him questions by emailing him at tyler@tylerosbyteam.com or calling 515-257-6729. Tyler is also on Twitter talking about the mortgage market at @TylerOsby.
Call Tyler at 515-257-6729 
