Karl's Mortgage and Related Info Site

Mortgage Rate Update

FHA Loans Facilitate Home Ownership

The Federal Housing Administration (FHA) program first began in 1934 in an effort to encourage home ownership despite the difficult economic times of the era. The program enables consumers who may not qualify for a standard loan to obtain the financing they need to purchase a home without income limitations.

FHA loans differ from typical loans in that they are insured by the Federal Housing Administration, which is a part of the Department of Housing and Urban Development (HUD). Because this insurance reduces the lender's risk on the loan, lenders have greater flexibility with regard to approving loans. For example, FHA loans are not credit-score driven, so a client may be able to obtain a loan despite having had credit problems or even a bankruptcy in the past.

FHA loans also provide added flexibility when it comes to closing costs and the down payment. Many of the closing costs can be incorporated into the loan, and a down payment of just 3.5% of the purchase price is required. The down payment may be obtained as a gift from a family member.  FHA loans are processed just like any other loan, and they provide a wonderful opportunity for consumers who are seeking to achieve home ownership!

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 7th January, 2010:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Karl Peidl
Pleasant Valley Home Mortgage Corp.
305 Harper Drive, Suite 3
Moorestown, NJ 08057

856-252-1224

kpeidl@pvhmconline.com

www.karlpeidl.com

What Lenders Look for in Home Loan Applications

 

Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. My team and I have a streamlined loan process to help you get your ducks in a row prior to this review. A grand slam loan package is in perfect order and answers all the important questions up front. We know what the lenders are looking for, based on long-term relationships with them and extensive knowledge of guidelines for a multitude of loan programs that are available today.

What is the lender looking for when they review the loan application?

The lender wants to know about your personal financial picture, including savings and credit history and your employment stability. The co-borrower's history is also taken into consideration. The lender also considers the loan amount and appraised value of the home you are looking to purchase. Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.

What can I do on my end to make it easier?

Before taking out a home loan it helps to establish a consistent record of paying your bills on time. If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner.

We can help you evaluate your debt-to-income ratio to determine what mortgage payment will be comfortable and affordable for you on a monthly basis. Aim for having enough savings to cover your down payment, closing costs if necessary, and two month's expenses in case of emergency. We'll help you find a program that works for you.

If I just started a new job six months ago, can I still apply for a loan?

A stable employment history is important, but the lender does take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are normal in your field, there are loan programs that can work with your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.

Consistency is the key word in the lender's mind. But know that lenders have developed many different loan structures to meet the needs of the general public. When your grandparents bought their first home, they probably put 50% down and made a lump sum payment when the note was due. Times have changed, and so have loan programs. My team and I stay on top of current mortgage trends. We monitor rates daily and have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.

Call me directly for a free consultation.

Karl Peidl
Pleasant Valley Home Mortgage Corp.
305 Harper Drive, Suite 3
Moorestown, NJ 08057

856-252-1224

kpeidl@pvhmconline.com

www.karlpeidl.com

 

Related Topics:

Shopping For The Right Mortgage

How Purchase Loans Are Made

How Much Money Should You Borrow

Mortgage Rate Update
High Credit Score = Low Mortgage Rate

Credit scoring was developed in the 1960s as a means to determine whether or not consumers were likely to repay their loans. The score ranges from 350 to 850 with a higher score being extremely favorable. Essentially, a high credit score translates into lower interest rates for the borrower.

There are five factors that comprise the credit score. Payment history accounts for 35% of the score; outstanding credit balances have a 30% impact; credit history makes up 15%, type of credit factors at 10%; and inquiries influence the score by 10%. This gives the lender a snapshot of an individual's sense of financial responsibility and ability to pay back loans.

There are many quick tricks to improve the credit score, and I can provide borrowers with more information on this subject. If necessary, I guide them to a reliable resource for credit remediation. If a borrower has to pay a higher interest rate to close a loan, the tarnished credit rating will begin to improve once mortgage payments are made on time and in full. If that is the case, my team and I will be on the watch to alert the borrower when an opportunity arises to refinance and get a lower interest rate.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 31st December, 2009:

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Choosing the Right Real Estate Agent

Choosing the right person to represent you in negotiating your home purchase is a major decision. Whenever you see the designation of REALTOR® (with a registered trademark) you can rest assured that person is a member of the NATIONAL ASSOCIATION OF REALTORS® (NAR), and has a commitment to meeting the standards of the organization. My team and I have a network of professionals that have done a great job for our clients in the past, and we can provide you with a referral to a qualified representative, and pre-approval to shop as a cash buyer.

How will you know which REALTOR® is right for you?

Seek to work with an experienced Real Estate professional that works with buyers on a regular basis. A real pro will go the extra mile to show you that they will look out for your best interest and gain your respect. Sincerity is a key word here. This type of Real Estate Agent will act promptly to get you information about their team and their methods of doing business, along with quotes and references from past clients.

Once you set an appointment to meet with a Real Estate Agent and his/her team, they should be rolling out the red carpet for you. You should have a personal introduction to each person you are expected to have contact with throughout the buying process. They should go out of their way to establish a long-term relationship with you, rather than thinking of you as a one-time transaction.

An experienced buyer's representative will ask many questions regarding your goals rather than tell you what they think you want to hear. He/she will also take your finances into consideration so that they can help you make the purchase you qualify for. They will seek to exceed your expectations in every way by having a system in place that provides complete customer satisfaction.

What can an experienced REALTOR® do for you?

An experienced professional will have access to the computerized Multiple Listing Service (MLS), which changes daily. He or she can provide you with new listings to consider as they become available, and will also include important demographics and market value information on the area you are seeking to buy a home. This person will serve as a strong negotiator on your behalf and provide guidance every step of the way. In the long run, using a trained professional will save you time and money. It is important to let your Real Estate Agent know what your goals are so he/she can eliminate the listings that do not meet your criteria.

Likewise, it is equally important to let my team know what your goals are so we can provide you with financing that fits your current and long-term goals. Our job is not just to close a loan for you, but to help you build a strong financial future by assisting you with managing that debt in the future. We use an extensive database system that allows us to run reports and determine when refinancing is appropriate and beneficial.

Call me directly for help finding a qualified REALTOR® you can trust.

Karl Peidl
Pleasant Valley Home Mortgage Corp.
305 Harper Drive, Suite 3
Moorestown, NJ 08057
856-252-1224

kpeidl@pvhmconline.com

www.karlpeidl.com

 

 

Last week mortgage pricing held steady under 5% for a 30-year Conforming Fixed Rate after jumping mid-week prior to the FOMC Statement that was the most upbeat review of conditions in well over a year. The FOMC noted that "economic activity continues to pick up and the deterioration in the labor market is abating." They are still committed to leaving rates low for "an extended period of time", but do feel confident enough to stay on schedule with the sunsetting of a number of financial market support programs.. ie purchasing MBS which is scheduled to end at the end of March.

At the same time the Fed and all other economic indicators are pointing to a robust recovery yet. which will likely keep mortgage pricing from jumping outside of our 60-day forecast levels anytime soon.

The Week Ahead:

This holiday-shortened trading week brings us the release of six monthly or quarterly economic reports. Only a couple of the reports being released are considered to be of high importance to the markets. With the Christmas holiday falling during the week we can expect very thin trading, meaning that we may see a larger reaction than normal to some news because there will be fewer traders working and less transactions being made.

Overall, we are expecting to see some movement in the markets and mortgage rates, but nothing drastic unless we get some surprising results from the week's data. The bond market will close early Thursday (2:00 ET) and will be closed all day Friday in observance of the Christmas Day holiday. This means that firms that trade bonds will likely be keeping only a skeleton staff the latter part of the week and raises the possibility of a stronger reaction to surprises in the economic data than we normally would see. Accordingly, proceed cautiously and stay close to your Loan Officer this week if still floating an interest rate and closing in the immediate future.

MONDAY:  There is no relevant economic news scheduled for release today, so look for the stock markets to help drive bond trading and mortgage rates.

TUESDAY: Two of the week's reports are scheduled for posting Tuesday. The first is the final revision to the 3rd Quarter GDP. We don't think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month's first revision showed that the economy expanded at a 2.8% annual pace during the quarter and this month's revision is expected to show the same. A significant upward revision would be considered bad news for bonds, but since this data is quite aged at this point I don't think it will have much of an impact on mortgage rates Tuesday.

The second report of the day is November's Existing Home Sales report. This release will come from the National Association of Realtors while Wednesday's New Home Sales data is a Commerce Department report. Both give us a measurement of housing sector strength and mortgage credit demand, however, neither are considered to be of high importance. And both o f the reports are expected to show a small increase in sales. Weaker than expected readings would be considered positive for bonds and mortgage rates because they hint at a weakening housing market, but unless the actual reading varies greatly from forecasts the results will probably have little or no impact on mortgage rates.

WEDNESDAY: Wednesday brings us the release of three reports. The first is November's Personal Income and Outlays data. It will give us an important measurement of consumer ability to spend and current spending habits. Since consumer spending makes up two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.5% increase in income and a 0.7% increase in spending. If this report reveals weaker than expected readings, we should see the bond market improve and mortgage rates drop slightly Wednesday morning.
The second report of the day comes late morning when the revised University of Michigan Index of Consumer Sentiment for December is posted. Current forecasts are calling for a small upward revision from the preliminary reading of 73.4. This is fairly important because rising consumer confidence indicates that consumers may be more apt to make large purchases in the near future. An unexpected upward revision could lead to slightly higher mortgage rates Wednesday.

The last report of the day is November's New Home Sales. It is this week's least important report and is unlikely to influence mortgage rates.

THURSDAY: November's Durable Goods Orders will be posted early Thursday morning. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years. Analysts are expecting the report to show a 0.5% increase in new order s. A decline in orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should drive mortgage rates lower. However, a larger than expected rise in orders could lead to mortgage rates moving higher early Thursday morning.


Two-Month Rate Forecast:
With rates at multi-year or near historic and all-time lows, it's tough to expect that they have considerable space to decline much from here, especially in the face of a modestly improving economic climate and an improving corporate earnings picture.

It appears low mortgage rates will be with us at least until the Fed's MBS purchase program comes to an end in March 2010 as scheduled. There are many speculating that the Fed may find a way to extend this program in some form to continue to support housing as it appears to be just getting legs under it. Low market rates in general will be with us for "an extended period of time" as committed by the Fed and Ben Bernanke. While there are discussions around possible exit strategies, none of the members seem to feel that any immediate or urgent action must be taken anytime soon relative to market rates.

We expect mortgage rates to likely wander in a range from about 4.75% to 5.25% on the Conv. 30-year fixed, but to be choppy in that range as the stock and bond markets search for new trend lines. 

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