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Refinances Are
Not Dead!
Regardless of rising rates--there
are tens of millions of Americans
who still need to refinance.
⇒ Rising home values mean that those who could not refinance in previous years might be able to do so today;
⇒ Raising a credit score may mitigate the recent increases in rates.
⇒ Approximately 50% of marriages end up in divorce. That means a steady stream of refinances, regardless of rates.
⇒ That does not include those who need to pull equity from their homes for debt consolidation or other purposes.
⇒ Even with the recent rise in rates, the 15-year mortgage is still 1/2% or more below the rate of most mortgages existing in America.
Rising rates may mean less refinances: however the market is still important and will be in the future.
What is needed to make sure
you get your share? We will address one strategy next week...
Free Webinar
Converting More Prospects in
a Rising Rate Environment
Wednesday, June 26
2:00 pm to 3:30 pm EDT
Guest Speakers:
Dave Wheeler, Credit Plus
Chad Kusner, Credit Repair Resources
Dave will give you tips on rescoring and more from a credit reporting agency perspective. Chad will help you understand who might benefit from credit repair services (not all qualify). Both will take questions.
****************************Credit Repair Resources Finally! A compliant credit repair company you can rely upon for advice and service. Credit Repair Resources was just voted the best small credit repair company in America! Owned by a Consumer Credit Attorney for maximum effectiveness as well as service. Contact: Chad Kusner,
Credit Repair Resources
888.927.7760
chad@crr760.comVisit Site For More Information
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| June 18, 2013 ⇒ What Do Higher Rates Mean?
⇒ Fannie/Freddie -- Beginning of the End?
⇒ Homeowners Insurance Confusion
⇒ FHA Jumps on Early Defaults
⇒ Helping Agents Produce More
What Do Higher Rates Mean?
We do not mean to beat a dead horse here; however the topic of higher interest rates seems to be dominating the headlines of the financial world. While these articles dissect the possible effects of higher rates on the stock markets, business performance and more, the question we would like to focus upon is -- how do higher rates affect the average individual? There is no doubt that these rates may make home and car financing more expensive -- but by how much? As of recently, rates have risen a little more than .50% from rock bottom record lows -- depending upon the date we take a reading. What does one-half of one percent cost? Using a base of $100,000, this would raise the cost of owning a home by approximately $42.00 per month. If one were financing $300,000, then the additional cost would be $125 per month. These numbers are presented before the effect of taxes is taken into account. Most homeowners can deduct the cost of interest. In this case we will assume a tax bracket of 25%, which would lower the cost of the increase to around $94.00 per month.
Another effect of the higher payment would be qualification for the home loan. Lenders limit qualification to a certain amount of one's monthly income. That ratio will vary widely based upon the details of the transaction and type of loan -- amount of downpayment, credit score, etc. However; assuming that the person is already at the "limits" of qualification, then the $125 per month would lower the qualification by approximately $25,000 of the total loan amount. This entire analysis is truly an oversimplification, yet it is important to analyze. Homes have been as affordable as they have ever been and a half-of-one percent change will not change that. Keep in mind that we are still not predicting the future of rates. Finally, what about car loans? The change in the cost of owning a car would be much, much less than owning a home. This is because car loans are much smaller than home loans, they are based upon shorter term rates which have not changed as much and are many times offered at discounts as low as 0% in new car promotions. The conclusion? At today's rates, purchasing a car or a home is still a bargain. But depending upon the future of rates, the bargain may not last forever.
 Rates rose for the sixth straight week, according to Freddie Mac. Freddie Mac announced that for the week ending June 13, 30-year fixed rates rose from 3.91% to 3.98%. The average for 15-year loans increased to 3.10%. Adjustable rates were mixed, with the average for one-year adjustables remaining at 2.58% and five-year adjustables climbing to 2.79%. A year ago 30-year fixed rates were at 3.71%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, "Fixed rates on home loans crept up further this week following a solid employment report for May. The economy added 175,000 new jobs and the number of discouraged workers fell by 780,000 to the fewest since September 2009. And although the unemployment rate ticked up to 7.6 percent, it was due to a 420,000 increase in the size of the labor force; the underemployment rate fell from 13.9 to 13.8 percent in May. With the ongoing run up in fixed rates, adjustable-rate mortgages (ARMs) are becoming more popular among homeowners looking to refinance and for home purchasers. The 30-year fixed rate this week is 0.6 percentage points above the recent low set over the week ending May 2nd. In comparison, the share of conventional applications of home loans for ARMs rose from 13% of dollar volume at the beginning of May to 17% last week, according to the Mortgage Bankers Association." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated June 14, 2013
Index
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June 13
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May
|
6-month Treasury Security
|
0.08%
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0.08%
|
1-year Treasury Security
|
0.14%
|
0.12%
|
3-year Treasury Security
|
0.55%
|
0.40%
|
5-year Treasury Security
|
1.11%
|
0.84%
|
10-year Treasury Security
|
2.19%
|
1.93%
|
12-month LIBOR
| |
0.694% (May)
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12-month MTA
| |
0.163% (May)
|
11th District Cost of Funds
| |
0.970% (Apr)
|
Prime Rate
| |
3.250%
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  The Ask The Expert Column is sponsored by NACSO. NACSO –- National Association of Credit Services Organizations -- advocates for strong industry standards, consumer protection, and ethical business practices for the credit repair industry. Click Here to read the latest NACSO Blog Article: Negotiating Collections.
Part Two of the answer to last week's question: The Last week you went over the best way to meet real estate agents. That is not my problem. I meet plenty. However, my problem is that I always get the objection, I do business with ___________. How do I overcome the objection? Daryl from Iowa
Last week I asked the questioner -- what is your plan to help this agent increase their business? That plan can't be--I will get your loans closed. It must be value added. The answer I received (as usual) was--no I don't have a plan. What sort of plan should I have? Let's address that.
The agent's goal is the same as yours--increased transactions. It makes sense that if the agent if going to help you with your goal, you must help them. One of my major synergy rules goes like this -- If your vendors are not helping you succeed, purchase from someone else. So how do you help? For one, leveraging your own contacts for them. They have a listing? Market it to your contacts. Perhaps you can also deliver information about open houses to Real estate offices (better than carrying rate sheets). Speaking about open houses, what about sitting in on some with the agent and offering to pre-qualify those who walk in. This activity will not only help sell the house, but is more likely to produce additional prospects for you and the agent. Listings can be lead machines if marketed correctly. There are many other examples I could advance--but I think you should get the picture from these examples. Dave
Do you have a reaction to this commentary or another question you would like answered? Email us at success@hershmangroup.com.
 Breaking News: A bipartisan group of U.S. senators hopes to introduce a bill in the coming weeks to overhaul the housing finance system and wind down government-run Fannie Mae and Freddie Mac, people familiar with the matter said. The plan being crafted by Senators Bob Corker, a Tennessee Republican, and Mark Warner, a Virginia Democrat, would seek to build a single entity to guarantee home loans, according to these sources. Fannie Mae and Freddie Mac, which were taken over by the government in 2008 as they teetered on the brink of insolvency, own or guarantee about half of all U.S. mortgages. Given the dominant role they play in the market, it could take years for Congress to settle on how best to replace them. A Corker-Warner bill could mark the beginning of that effort, if the senators are able to piece together a large enough political coalition. While Democrats and Republicans agree on the need to shrink the government's housing finance role, they are divided over where a new line should be drawn. "What Senators Corker and Warner are doing is laudable. They are wading into a highly partisan fight and trying to put forward an initial approach," said Jaret Seiberg, a senior policy analyst at Guggenheim Securities. Source: Reuters
The Federal Housing Administration is currently reviewing all single-family loans that default during the first 24 months, according to FHA commissioner Carol Galante. The commissioner noted the HUD inspector general has been pressing FHA to conduct reviews of all early payment defaults. “We were able put in a very robust claims review process that meets all the IG’s recommendations and more,” Galante told Senate appropriators. HUD IG David Montoya is also urging FHA to take another step and require lenders to submit a certification in filing claims on defaulted loans. FHA is required to pay claims within 30 days, which doesn’t give the agency enough time to review the loans to ensure they were properly underwritten. The certifications would require the lenders to review the loans and certify they meet all the qualifications of properly underwritten loans. “It puts the onus back on the lender,” the IG testified. The FHA commissioner said she is willing to consider certifications. The inspector general is still looking at FHA lenders that made bad loans in 2007-2009 that has resulted in billions of dollars of losses to the FHA mortgage insurance fund. Source: National Mortgage News
Many homeowners do not understand what exposures are covered under their home insurance policy, according to a new consumer survey. More than two in five Americans (41 percent) believe that a standard homeowner’s insurance policy protects against mold damage, according to new In.suranceQuotes.com survey “This misconception could prove extremely costly,” said Laura Adams, senior insurance analyst, InsuranceQuotes.com. “Mold remediation can cost tens of thousands of dollars. It’s often not covered by homeowner’s insurance, especially if it was caused by neglected maintenance such as a leaky pipe.” The survey also revealed that many homeowners are misinformed regarding personal belongings stolen from a car (73 percent aren’t aware that this type of theft is covered by homeowner’s insurance) and earthquake damage (51 percent don’t know that this is not covered by a standard homeowner’s insurance policy). Two better understood aspects of homeowner’s insurance are fire damage (90 percent of Americans know that homeowner’s insurance covers this) and lawsuits from an injured visitor (72 percent know this is covered). Just under one-quarter of homeowner’s insurance policyholders said that they chose their current provider primarily because of a recommendation from someone they trust (22 percent). A similar number (21 percent) said the most important factor was the service they received from their agent. Seventeen percent said their decision hinged on getting the lowest price. But only 1 percent of homeowners insurance purchasers said a radio or television commercial was the most important factor in their decision. Source: Insurance Journal
The green housing market continues to grow, with green projects making up 20 percent of all newly built homes last year, according to McGraw Hill Construction. Researchers predict the share will rise to 29 percent and 38 percent of new U.S. homes by 2016. "The green building market has evolved beyond the crunchy-granola, Boulder types," says David Johnston, co-author of "Toward a Zero Energy Home," who is based in Colorado. "We have mainstream builders doing this." Big homebuilders, such as KB Home and Nexus Energy, are moving energy efficiency to standard practice. The government is also providing federal tax credits to help spur demand of green home features, such as tax credits for insulation that reduces energy loss or for geothermal heat pumps. Home owners may be eligible to claim rebates from their utility company, town, or state for certain green features as well. Green homes tend to cost between 5 percent and 10 percent more than traditional homes, according to Nexus Energy Homes COO Bruce W. McIntosh. But when it comes time to sell, studies suggest home owners will likely see a boost in price. Homes in California with a green label sold for about 9 percent more than comparable homes without the green label, according to a 2012 study by professors at the University of California, Berkeley, and the University of California, Los Angeles. Source: The Wall Street Journal
Foreclosure activity continues to wane across the U.S. with 52,000 foreclosures completed in April, down 16% from 62,000 a year earlier, CoreLogic said. On a month-over-month basis, the number of finalized foreclosures remains unchanged. Last month, 1.1 million homes lingered in some stage of foreclosure – making up the nation’s foreclosure inventory. Compared to a year ago, this foreclosure pipeline is down 24% from 1.5 million in April 2012, signifying an improving housing market that is benefiting from rising prices and home sales. "The shadow of foreclosure and distress continues to fade, with the annualized sum of completed foreclosures having declined for 17 straight months," said Dr. Mark Fleming, chief economist for CoreLogic. "Six states have year-over-year declines in the foreclosure inventory of more than 40%, and in Arizona and California the year-over-year decline is more than 50%." Still, the recovery remains bifurcated with judicial foreclosure states maintaining the highest foreclosure inventory rates while judicial states continue to work through their distressed pipelines. The judicial foreclosure state of Florida recorded a 9.5% foreclosure inventory rate in April. Source: HousingWire |
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