Dennis' Mortgage Blog

May 27th, 2016 10:08 AM



Question of the week: We are looking at purchasing a property with solar panels, are there any concerns we should have?

Answer: This is a question I answered early last summer and friend and local real estate agaent Julaine suggested I cover it again. Good idea Julaine, for those who missed last summer’s review of buying a home with solar panels, or newer readers of the Weekly Rate & Market Update here is some useful information. With more and more families putting solar panels on their homes this issue is arising more frequently in home sales. Back to our answer….

Yes, there are concerns you should have, unless you are paying cash for the property.

The residential solar power industry has been prolific in marketing, seemingly every commercial break on the radio, every other piece of junk, I mean bulk, mail you receive, door to door salesmen, phone solicitors are pushing their product: solar panels that will eliminate your electric bill and pay for themselves.

What is not part of their sales pitches is that depending on how you acquire your panels, are you buying them or leasing them?

If you buy the panels then there is no issue with your mortgage. Just make sure the seller of the property can provide you proof that they own the panels and there is no separate lien on them—or if they did take out a loan to buy the panels the loan is either paid through the sale if attached to the property, or is a personal loan and the panels are in no way encumbered.

Most solar companies however are not pushing selling the panels but rather leasing them. Should there be leased panels on the home you are buying this triggers a strict set of guidelines that must be followed before your mortgage application will be approved. Here are the guidelines as paraphrased from the guidelines issued by Fannie Mae regarding leased solar panels.

The solar panels cannot be included in the value of the home for the appraisal. Some sellers have their properties with leased panels on the home priced as if the panels were part of the property, since they are leased they are not considered as part of the property and therefore no value is given—similar to an unpermitted room.

The lease must be underwritten by the lender and any part of the payment that is not part of a power purchasing agreement must be including in debt-to-income (DTI) calculations. The lease must indicate that the solar panels are removable without causing damage to the property, any damage that does occur as a result of the panels being removed is the responsibility of the equipment’s owner and the owner is obligated to repair any damages and return the property to its original condition.

Your insurance company also becomes involved as the owner of the solar panels cannot be named as a loss payee on your homeowner’s policy. If the solar company requires the panels to be insured the policy must be separate from your homeowner’s policy. As well your policy cannot exclude from coverage tort liability you may have due to the solar contract nor coverage for any losses to the property because of the panels. The solar company that owns the panels must have a general liability policy covering damage to the property as a result of faulty installation, malfunction or other defects—even if not covered by the warranty.

If the lender forecloses then the lease must be able to be terminated by the lender and the solar company remove the panels, or if the lender does not want the panels removed then the lease transfers to the lender at no cost or the lender is able to enter a new lease under the same or better terms. Any lease must also be assignable to whoever purchases the property from the lender post-foreclosure.


If you own a home with leased solar panels then I strongly advise that you read all the conditions of the lease sooner rather than later. Too often consumers build a trust with salesmen and then skip through the fine print on contracts as the salesman give his summary of the clauses—which may not be entirely accurate or entirely disclose the clauses. Even if you have no intent on selling your home in the near future, if you have leased solar panels the lease my impact your ability to sell your home when the time comes and the sooner you know all the impacts of your solar lease on any potential sale the better prepared you will be.

If you are considering purchasing a home with solar panels and there is a lease put in your offer an opportunity to review and approve the lease as one of your contingencies, similar to an appraisal or property inspection contingency. If you do not approve the lease then you can cancel the contract and have your earnest money deposit returned.

Solar power is a tremendous resource, especially here in Southern California, and something Leslie and I have considered for some time. We have not made the commitment however due to the cost to purchase the panels for our home, and we will not lease the panels in part because of the issues listed above. If you are considering putting on panels thoroughly review the lease to make sure you are going to be able the sell the home with the buyer using a mortgage in the future, otherwise you will incur expenses to either get out of the lease early, or have to take a reduced price.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Boom! That was the sound of the new home sales in May as the market exploded with the most sales in one month since January 2008 with an annualized rate of 619,000 homes sold. For perspective the next highest month of sales was February 2015 with 545,000 sales. Quite a difference. The news is mortgage rate unfriendly as higher home sales can demonstrate a strengthening economy. However many feel that economic growth we have experienced is primarily being supported by new and existing home sales which would dampen the impact on rates.

Durable Goods Orders were mixed in April. Total orders were very strong, which is good news for the economy, however “core capital goods” which are gauge to business investment dropped for the third straight month and fifth of the last sixth—not a good omen for economic expansion or future employment growth. The news had not as much impact on rates as it should have if the growth in the headline number was supported by growth in all sectors.

The first revision to the first quarter GDP did not improve the soft growth initially reported. Real GDP was revised up from 0.5% growth to 0.8%, good that the revision was up and not down but 0.8% is no reason to celebrate. The price index was revised down 0.1% to only 0.6% growth year over year. This data does not give much support to a Fed rate increase next month.

Rates for Friday May 27, 2016: Mortgage Backed Securities (MBS), which determine our rates, had a see-saw week with big moves intraday but ending each daily mostly flat. Investors are trading to secure profits as well as following the herd ahead of the next Fed announcement. When daily trading gets volatile and day to day trading is somewhat flat it signifies a possible/probable break out one way or the other—which means if you are floating you could get caught in an uprate environment very quickly. Take the risk out of your mortgage payment and lock when you can.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.50% Flat
30 year high-balance conforming 3.625% Flat
30 year FHA 3.25% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have no points and credit towards closing costs, recent rate change reduces credits



Finally, Memorial Day and I can wear my white apparel again….

Enjoy the long weekend, I will be engaged in defoliating the vast Smith Estate of by removing or trimming trees, bushes and plants. However you spend your weekend take time to give thanks for those in our history who put on the uniform to protect our liberties and freedoms.

Have a great week,


Dennis

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Posted by Dennis C. Smith on May 27th, 2016 10:08 AMLeave a Comment

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May 20th, 2016 3:18 PM


Question of the week: Can my mom payoff my car so I qualify for a mortgage?

Answer: Yes. But…..

It is not uncommon for us to have a client pay down or off a debt in order to qualify for the loan to purchase their new home. For installment loans, like auto loans, the entire debt does not always need to be paid off in full. For most loan programs if the debt is paid down to less than ten remaining payments the payment is not counted for qualifying. I.e. if you owe $10,000 on your car and the payment is $500 per month if you pay the loan down to $5000 then we will not count the $500 per month when qualifying.

Can you mom pay down this obligation for you?

Yes she can. If she does there are several steps that will have to be followed in order to ensure we get loan approval and the transaction does not go sideways.

When mom either pays your auto lender or gives you the funds to pay down/off the loan we will consider that a gift and the underwriting policies for gift funds will have to be followed.

Steps for gift funds are as follows:

• Prove mom has the money to make the gift with a copy of her statement from the account she will use to make the gift.

• Prove the money has left mom’s account, either with copy of cancelled check or transaction statement from bank.

• Prove the money was deposited in your account, or if she makes check directly to auto lender that the balance has decreased the same amount as verified leaving her account.

That takes care of the gift, now we need to verify the balance on the auto loan is below the ten month payment threshold. To do this we will have our credit company contact the lender to verify the balance and the credit company will issue us a supplemental report showing the reduced balance.

If this is possible scenario for you my suggestion is the old-fashioned KISS process (Keep It Simple Simon):

• You get gift from your mother while we are processing the loan and we use steps above to have gift verified before we submit the loan.

• You do not send the funds to the auto lender to pay down/off the account.

• We submit the loan without the auto loan being paid down/off and indicate we will do so in escrow.

• Your closing costs for your new home purchase will include the funds needed to pay down/off the loan, so you send those funds to escrow along with the balance of funds needed to close for down payment and closing costs.
Once we run your credit report and have it in the file then we cannot omit a payment due to an account being paid down/off unless we verify the source of the funds for the balance reduction. So if mom wants to be helpful make sure she knows not only how grateful you are but also that there are guidelines we have to follow so the loan approval process does not get fouled up due to her generosity.

If this is a possibility please have mom call me and I will happily go through the process and the reasons for the process to ensure her gift goes as intended: to help you buy your new home.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Consumer prices climbed in April with CPI posting a 0.4% gain from March, but strip out a 10% bump in gasoline prices and food costs and consumers spent only 0.2% more in the month. The “core” inflation number is up only 2.1% from April 2015, pretty much at the Fed’s target line of 2% price increases. The news is somewhat mortgage rate friendly and should cool off the Fed rate hawks a little bit.

Yakety-yak. I couldn’t help but think of the old Coasters song when I read the Fed minutes from their April meeting. While sounding mostly biased towards hiking rates in June at their April meeting, the voting members of the Federal Open Market Committee don’t seem to have a lot of economic data domestically or globally to support a rate hike next month. Despite the data the refrain of yakety-yak from the board members gave a sharp bump to rates when the minutes were released on Wednesday.

Rates for Friday May 20, 2016: With the big move on the Fed news we saw rates bounce off the lows of last week. There is some upward pressure on rates as investors maneuver ahead of a possible hike next month from the Fed. We may see rates climb another 0.125% over the next few weeks. Or not if the Fed and investors look at the economic data. It is always a good idea to lock through your escrow period, those who took that advice last Friday are a bit better off than those who take it this Friday.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.50% Up 0.125%
30 year high-balance conforming 3.625% Up 0.125%
30 year FHA 3.25% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have no points and credit towards closing costs, recent rate change reduces credits



It used to be a technological problem was when your fax machine was out of that thermal paper that turned yellow after a month in a file, now we get issues like I have been battling where you computer turns on but won’t do anything….arghhh! That was how yesterday started and thankfully I use a desktop and laptop so have been able to continue to work, but how frustrating to learn from the IT Brainiac that whatever is messing the computer up can only be cured by wiping the disk drive and reloading everything. Another arghhh! Thankfully I have a great back up system for my files and most of our programs are cloud based so little interruption to my work flow. But still, arghhh!

Here’s hoping you have a technologically glitch free weekend, week, month, year, decade…

Have a great week,


Dennis

Posted in:General
Posted by Dennis C. Smith on May 20th, 2016 3:18 PMLeave a Comment

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May 13th, 2016 12:59 PM


Question of the week: What is escrow?

Answer: Last week we answered why you need title insurance which helped a lot of families looking to purchase their first home. This week’s question is the follow up from a first time buyer who is uncertain as to the purpose of the escrow company.

Dictionary.com defines escrow as “a contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee on the fulfillment of some condition.”

By this definition escrow is a third person with whom a contract is deposited. For a contract to be valid it needs two parties, so part of the contract is that both parties agree who will be the escrow, the holder of their contract.

In real estate, escrow is a third party that buyer and seller, or in the case of a refinance the borrower and the lender, use to transact funds from one party to the next; escrow is also referred to as the settlement agent. Given instructions agreed to by both parties, the escrow holder agrees to accept funds from the buyer, and the buyer’s lender if necessary, and then after paying costs for other services involved in the transaction, deliver the funds to the seller once all promises are fulfilled in exchange for a grant deed from the seller that is delivered to the buyer.

Escrow is neutral and has no agency contract with the buyer or seller, its agency is with the transaction. A simpler way to look at this is that the Smiths are selling their home to the Joneses. The Smiths are represented by Mary as their real estate agent and the Joneses are represented by Joe as their real estate agent. Once an agreement to price and terms is made an escrow account is opened with Sally at the escrow company, at that point Sally is the agent of the transaction representing the agreement the Smiths and the Joneses made.

If the Joneses wish to make a change to the agreement, say have $3000 credited to them to off-set some repair costs discovered during their home inspection, they notify Sally at the escrow company. Sally cannot just change the terms of the transaction, she first must get consent from the Smiths for the credit. Once both parties agree to any changes then Sally can amend the transaction.

Escrow plays a vital role in real estate transactions. Large sums of money flow through escrow companies on a daily basis for purchase and refinance transactions. Escrow is not only charged with making sure the initial instructions are followed but also that neither party is able to change the transaction without the consent of the other. At closing, escrow is responsible for disbursing funds to all the parties and services involved in the transaction, refunding overages to buyers or borrowers, pay fees to termite, title, home warranty, lender and themselves, payoff any liens currently on the property such as the seller’s mortgage or tax obligation and transmit the net proceeds to the seller. After the closing escrow provides a very detailed accounting of all funds received and disbursed to all parties.

Escrow companies and officers in California can be independent of any other affiliation or may be part of a title company or owned and operated by a real estate brokerage. If the escrow company for a purchase transaction is owned by the real estate broker representing the buyer or seller this must be disclosed to all parties.

Agents and lenders cannot require that a particular escrow company be used on any transaction; buyers and sellers have the opportunity to request a specific company if they choose, though customary in our marketplace the seller, or the seller’s agent, is given the choice of this service.
A good escrow officer and company is like a good umpire in a baseball game, you don’t always know how good they are until you get a bad one; thankfully the latter are very few and far between these days.

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Slow week for economic data until today when retail sales and producer prices for April were released. Consumers were in a buying mood in April across all sectors as sales jumped 1.3% from March. The news is not positive for lower rates, but any pressure for higher rates on the monthly number is tempered somewhat by year over year sales are only up 3% from last April. The data gives a little support to a June rate hike from the Fed, but just a little.

Producer Prices remain slack, after going negative in prior month prices for wholesalers gained only 0.2% in April and are flat year over year. This is slightly positive for mortgage rates and tempers possibility for a Fed rate hike in June.

Rates for Friday May 13, 2016: Last week I mentioned that rates were soft and lenders were hanging on to some of the gains, this week they have let a little of the gains onto the rate sheet and conforming rate dips to its lowest level in four weeks, matching our twelve month low. High-balance conforming rates dip to lowest level in three years—yes three years to Friday May 3, 2013. Lock ‘em!


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.375% Down 0.125%
30 year high-balance conforming 3.50% Down 0.125%
30 year FHA 3.25% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have no points and credit towards closing costs, recent rate change reduces credits



I spent my morning assisting Poly High School by proctoring one of the twenty something AP exams that Poly students have taken this year. Seeing the kids pouring through their testing packets gave me the shivers remembering my years of testing in high school and college. Very proud of our daughter’s school and all of the Long Beach Unified School District which has a very high percentage of students across all the high schools taking and passing the Advance Placement exams in a myriad of subjects. The cumulative savings in college costs for all the students with AP scores is very significant. As well, this year LBUSD has paid for the costs for every student who wishes to take the SAT so there is no financial barrier to taking this needed exam for college admittance.

When looking for a home remember the school district and the opportunities available for your children!


Have a great week,


Dennis

Posted in:General
Posted by Dennis C. Smith on May 13th, 2016 12:59 PMLeave a Comment

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May 6th, 2016 10:46 AM



Question of the week: Why do I need title insurance?

Answer: This is a common question I have been asked my whole career and it has come up in a few conversations lately as more new home owners enter the market. Every buyer and seller in a real estate transaction sees charges for a title insurance policy, but few know what the purpose of the policy is, other that something gets insured. Is it necessary? Like all insurance, only if you need it and if you need it you will be very glad to have it; like auto or homeowner’s insurance.

Simply put title policies insure that things are what they seem. If you buy a home the title policy is insuring that you are the rightful owner, that no one can come along later and claim ownership of your property. If you are a lender making a loan secured by real property the title policy insures that your lien has a certain priority on title and that the only liens against title are documented and disclosed. Title insurance covers any title issues that occur up to the date deeds are recorded when the policy goes into effect, it does not cover any issues that occur after your transaction, those are covered by the next policy when you sell or refinance.

Throughout the years I have heard many complaints about the need for title insurance and the cost relative to what is being provided. A common complaint is that most title policies insure the work that title companies have performed before, so why charge so much. Another complaint is that title policy claims are so rare that the fee, or premium, should be lower. Like the excellent driver who has no tickets or accidents on his record, most homeowners, particularly in areas where the housing stock is older and has transferred several times over the years with each transaction requiring a new title policy, the purchaser of title insurance wonders why the expense for insurance that likely will never be used. Then the excellent driver with the perfect record gets in a bad accident caused by an uninsured driver; how glad is he that he has quality auto insurance and has kept up the premiums? Similarly the homeowner that suddenly faces a title challenge is glad to have paid the title premium at closing.

When title insurance companies do pay claims they are usually very hefty, think tens or hundreds of thousands of dollars. Because of this most of the revenue title insurance companies collect do not go to paying claims, in fact the industry average is that only about 5% of premium revenue goes to claims compared with approximately 70% for auto insurance. Title insurance companies spend the bulk of their premium revenue on loss prevention, i.e. research.

What if the owner of your current home purchased the property eight years ago from a seller who had a lien against the property that was recorded improperly in the county records and that lender stepped forward to collect on your home and possibly force the sale? What if you purchased your home from a seller with an IRS tax lien that was unpaid? How about an estate that sold a property that was later challenged by an heir as being improper and a judge agrees? Each of these could be a very legitimate claim against a title policy that could lead to a very large payout for the title company.

Even more challenging for title companies today are bank foreclosures and short-sales. Lenders that hold seconds are finding out that some properties are transferring without their consent to pay off and are coming back to the enforce their liens as unsatisfied. In such instances the title company that insured the sale and that all liens are satisfied would have to make restitution to the lien holder.

Title policy claims are rare because of the loss prevention that is performed by the title company during the escrow or settlement period to investigate the property, seller, liens against title and other factors that may lead to a claim down the road. Unfortunately you will not know if the title company, in particular the title officer, did a good job investigating the title until you find someone making a claim against your title. This is why it is critical to have a title officer who is experienced and knowledgeable. Over the years I have had perhaps three or four clients with a title claim. Easements for shared driveways, a piece of vacant land included in a sale that maybe wasn’t, power lines, even fences, have been issues that have cropped up.

Far more prevalent in recent years, especially when most sales were controlled by banks as sale was either foreclosure or short sale, are title issues that are discovered and corrected during escrow. Divorce settlement with a recalcitrant spouse, estate issues, private party second from a prior seller are other issues that pop up during escrow that require the title company to sort through the various filings and legal issues to determine if clear title can be conveyed or not. Your title policy premium pays for all the work done by the title company prior to closing so they can insure you are getting what you think you are getting, clear title. And if you don’t it is their obligation to pay to correct any claims that may arise later.

Are you absolutely certain there are no forgeries on deeds, unpaid liens, easements improperly recorded or illegal confiscations of title on your property?

Aren’t you glad you have title insurance?

Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

It’s the first Friday of the month, which means not only is it the monthly First Friday’s event on Atlantic Avenue in the Bixby Knolls section of Long Beach, but more importantly for the rest of the nation the day when employment data is released. Following up on the disappointing GDP numbers from last week the Labor Department’s April jobs’ report did not meet expectations for job growth. Adding only 160,000 jobs nationwide combined with the lackluster growth in the 1st quarter, the economy could be defined as between moribund and sluggish. The jobs report was rate friendly.

Rates for Friday May 6, 2016: Rates are soft but not moving down as expected. We are in one of those markets where lenders are holding onto some of the market gains to hedge against a sudden change in the market. If the soft environment continues into next week we may see rates dip a bit more, “may” being key word. Market is also poised to see a bump in rates with investors taking profits and moving back into stocks when those markets rise again. Be cautious, lock when you can through the end of your escrow period.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.500% Flat
30 year high-balance conforming 3.625% Flat
30 year FHA 3.25% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have no points and credit towards closing costs, recent rate change reduces credits



Milestone week in the Smith household as we managed to be alerted to a very good value on a used car that we purchased. Subsequently the new to the family vehicle was driven to school by our daughter, opening a new window of anxiousness for Dad as he watched her drive away. Our most important job as parents is to ensure our kids are able to become independent and support themselves and their families and contribute to their communities—driving and the independence it brings is pretty important in that process. Thankfully she is rule-follower and cautious in her time behind the wheel.

For those so inclined enjoy your mint juleps tomorrow!

Have a great week,


Dennis

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Posted by Dennis C. Smith on May 6th, 2016 10:46 AMLeave a Comment

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April 29th, 2016 12:09 PM


Question of the week: If you run a credit report will it mess up my score?

Answer: This is a very common question for us to hear from clients during conversations for preapproving and determining options for refinances. Because there is so much misinformation regarding credit scores some people are over cautious for any credit report being pulled. As a result they are resistant to our obtaining all the necessary information we need to provide accurate and complete information.

My standard response is that I don’t have to pull a credit report if you do not want me to but I cannot provide a pre-approval letter for your offer until I do.

This can often lead to, “well I just got a free credit report on line, can you use that?”

No.

When we pull a credit report it is through a company that is approved with Fannie Mae, Freddie Mac and HUD. As a result the reports are accepted as accurate for showing the applicant’s credit history and outstanding obligations. The report we receive is a “tri-merge” report, meaning it combines reports from TransUnion, Equifax and Experian and provides the credit scores from all three bureaus.

When preapproving a loan, either for a purchase or refinance, we upload this credit report along with the other information from the application package to the Automated Underwriting System (AUS) for either Fannie Mae (Desktop Underwriter) or Freddie Mac (Loan Prospector). The report that is part of our file is then read by the AUS and used for determining if the loan can be approved as long as all the evidence for income, assets and property match the information we uploaded.

Without having our credit report in our system to upload into the AUS for Fannie or Freddie a loan cannot be preapproved, therefore I need to pull my own credit report for your file.

Regarding the impact on your credit scores, our inquiry has zero to minimal impact depending on your history. The models used to determine credit scores have built in a tolerance for multiple inquiries for different lenders in the mortgage and auto loan industries. This is because it is not unusual for someone looking to buy a car or home to speak with more than one lender and each will want to obtain their own credit report. As a result if you have spoken to two other lenders within the past week or two and then call me and rightly decide you want me to work with you on your new mortgage application, when I pull my credit report your credit score should be the same as the score with the first lender you spoke with a week or so before.

Inquiries that will have a negative impact on your credit scores are for consumer, or revolving debt for credit cards and department store cards. If you have multiple inquiries from different credit card companies and/or department stores it appears you are seeking credit from anywhere. This type of behavior is seen as a negative and will impact your score.

When you call or come in to get prequalified or preapproved to purchase your new home or to refinance your existing mortgage be prepared to have me ask you for social security numbers and dates of birth, I will need a credit report and this is the information I will need.


Have a question? Ask me!

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Last week while I was away was a fairly light week for economic data. This week, however, had a fair amount of big news. The overall news shows a dormant economy with consumers leading the dormancy as indicated by consumer oriented data. Consumer confidence slipped in April from March with lower expectations for the future component dragging the report down. This is good news for lower rates.

The first assessment of first quarter Gross Domestic Product shows a slowdown from the last quarter of 2015 with economic growth at only 0.5%. What growth there was occurred due to consumer spending, however that spending dropped from the end of 2015, with the decline due to reduced purchase of durable goods. Prices also slowed from 4th quarter 2015. The GDP report is also good news for lower rates.

Tripling down on consumer driven data was the personal income and outlays report for March. On the income side the news was positive with wages increasing 0.4% for the month following increases in January and February. The other shoe in the report though is the slowdown in consumer spending, up only 0.1% from February. With consumers earning more but not spending as much indicates they are saving their increased earnings, or using it to pay down debt, but not buying goods and services. This is positive for lower rates as well.

With the data presented this week indicating a reluctant consumer it is not surprising that the minutes released on the recent Federal Reserve meeting in which no increase in the Fed Funds interest rate was made. In the minutes the Fed states that our economy “appears to have slowed.” With consumer spending making up 65-70% of our economy slower increases in personal consumption of goods and services results in slower economic growth. The data points to a reduced chance of a Fed increase at its next meeting in June.

Rates for Friday April 29, 2016: While I did not put out the Weekly Rate & Market update last Friday I did record rates for the chart and they were up 0.125% from the prior week---mostly due to profit taking. This week’s news has softened rates, with high-balance rate dropping to prior week’s rate but conforming hanging onto to last week’s pop up though weakening. Looking forward rates will continue to move in tight range based mostly on technical trading. While we may see some drift down any such move will not be significant nor worth the risk of trying to catch such a drift. Lock while you can at these low rates.


FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.375% Flat
30 year high-balance conforming 3.625% Flat
30 year FHA 3.25% *** Flat
30 year FHA high-balance 3.25% *** Flat

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have no points and credit towards closing costs, recent rate change reduces credits




The Weekly Rate & Market Update was on hiatus last week as I was in Tulsa for services for a family member I considered to be an uncle, Glenn Wright. The best story teller I will ever know, going places in Tulsa was like travelling with Santa Claus—he knew everyone and their story. When you met Glenn he was truly interested in you, where you are from, your family, what your family is doing. You can know someone for many years, then introduce them to Glenn and learn more about this person in ten minutes of him getting to know this person than you had known.

The saying goes that the value of our lives is measured by the friends we have in our lives—Glenn was a very high value man and will be missed.

This week meet someone new, or meet someone you already know in more depth, this will enrich your life and their’s.

Have a great week,


Dennis

Posted in:General
Posted by Dennis C. Smith on April 29th, 2016 12:09 PMLeave a Comment

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