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Mortgage Mirror

Relief is on the way!

After the pandemic hit, the federal government passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act, which in part allowed mortgage holders to take a three-month break from making payments, since so many Americans had lost their jobs. The initial guidance from the government about the break, called forbearance, was that after the three months were up, the entire balance was due at once. The Finance Housing Federal Authority has now said that they will allow borrowers to modify these payments. What this means is that borrowers can either pay these deferred payments when they sell their property. add ...

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Re-financing in uncertain times

The Fed lowered rates three times the second half of 2019 trying to avert a potential slowdown in the economy. So far, they’ve done a good job. At the end of 2019, the unemployment rate stood at 3.5 percent and all three equity indices stood at near or all-time highs. Mortgage rates stood at near historic lows with the 30-year at 3.5 to 3.875, the 20-year at 3.375 to 3.750 and the 15-year at 3.125 to 3.375. Where are mortgage rates headed from here? According to economists from Fannie Mae and Freddie Mac, mortgage rates should slightly trend down in ...

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Strike while the economy’s cold

Mortgage rates have ticked down to their lowest level since 2016 and may be going lower. As of early September, the 30-year fixed was at 3.5 percent and the 15-year fixed was at 3.125 percent. This is all happening while the stock market is near all-time highs and unemployment is near all-time lows. Rates usually are a lot higher under these types of circumstances so why are we so low and possible heading lower? Tariffs and the trade war. The Trump administration is putting on a full court press with China trying to rebalance trade back to the U.S. This ...

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Will rates be low forever?

I started my career back in 1991, nearly 30 years ago, when rates were roughly around 10 percent. We have seen rates below 6 percent since 2001, and the current run of low rates is unprecedented in modern history. It’s been a good year for mortgages rates so far. Rates have been down as low as 3.99 percent recently for a 30-year fixed after being as high as 5 percent in November 2018. Then the housing market dwindled to a slow crawl, knocking rates back down again. The mortgage interest market is in a very strange and unique position right ...

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Underwriting guidelines begin to loosen up

Prior to the financial crisis in 2008, I would sometimes hear the phrase “If you can fog a mirror, you can get a mortgage,” meaning that if you were breathing, you would be approved. While that’s not true, there were a lot of people who shouldn’t have gotten a mortgage prior to 2008, when underwriting guidelines were most flexible. After the financial crisis, mortgage underwriting guidelines did a complete 180. They went from the easiest to the hardest that I had ever seen in my 28-year career. Fannie Mae and Freddie Mac had experienced almost $170 billion in losses and ...

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Buyer’s market may be on the comeback

Just a few short months ago, the 30-year fixed rate broke above 5 percent. Unemployment has been at a 50-year low, the U.S. consumer has been spending like there’s no tomorrow and wage inflation was at the top of the Fed range. All these were indications that mortgage rates were going to continue to march higher, possibly into the mid 5s. Then came the government shutdown, the threat of 200 billion in tariffs on China, and a 10 percent correction in the market in December, and rates in January came back down to the mid 4s. Mortgage rates play a ...

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New from Fannie Mae and Freddie Mac

Mortgage giants Fannie Mae and Freddie Mac have made buying single-family homes and small multi-unit residential properties easier with their new products: HomeReady from Fannie Mae and Home Possible from Freddie Mac. Buying a single-family home with each of these products can be done with as little as 3 percent down and the private mortgage insurance is priced as if you were putting down 10 percent, which makes the monthly payment lower. Also the minimum credit FICO score for these is down to 640, also allows borrowers who do not have perfect credit to use this product. The Freddie Mac ...

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How reverse mortgages works

  When someone takes out a regular (forward) mortgage, the borrower makes monthly payments to pay the mortgage down. With a Reverse Mortgage, if you are approved there are no monthly payments and the mortgage balance instead goes up. Why would anyone what to get a reverse mortgage? First of all, not everybody can. It’s only available to borrowers who are 62 years of age or older. How much equity you can access is based on your age and how much your home is worth. It is very popular for seniors who have limited income and have very small mortgages ...

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Keeping rate increase at bay while you shop

With mortgage rate hitting their highest level in seven years, some lenders are coming out with products that are helping to keep rate increases at bay while the borrower is shopping. This feature is called “Lock and Shop,” and it’s as simple as its name. Usually a borrower cannot lock into a rate until they have selected a property and come to an agreement on a price. The Lock and Shop feature allows you to lock into an interest rate for 60-90 days while you are shopping for a home. Once you have found a home and your offer is ...

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The Loan Estimate: Your Shopping Tool

  When shopping for a mortgage, the Loan Estimate is going to be your shopping tool. It’s a treasure trove that reveals a wide range of costs and other valuable information. The Loan Estimate or LE replaced the Good Faith Estimate or GFE a few years ago when the Fed put into place some new rules. The GFE showed the rates and closing cost but did not show other important aspects the loan. The LE is a 3-page document that clearly and simply shows the following: Loan Amount Interest Rate Monthly Payment Type of loan and amortization If there are ...

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