Archive for June, 2015

As interest rates rise – there is a cost to waiting… by Randy Cullen

June 26th, 2015
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6-26-2015 4-31-01 PMI am often asked my opinion on what interest rates will do. My answer usually is: They will go up, go down, or stay the same – that pretty much sums it up! Locking or floating an interest rate is always the client’s decision; but lately, with the market volatility, the decision to float can be costly.  Just in the past month we have seen swings of about a half point in rates.

Our mortgage markets are affected by global events, not just national events. The reports issued about housing starts, unemployment, and job creation to name a few, provide important economic data. The financial crisis in Greece, for example, can have a greater impact on where investors put their money. Markets are trying to find that perfect balance. They often react based on fear, and then adjust for reality, making the market a hard read and the outcome uncertain.

Money is always in motion. Investors carefully consider where they can make the best yield, and sometimes the best or safest place is the cash market to wait out the volatility. You will not be able to determine where mortgage rates are headed just by looking at the stock and the bond markets. There is no direct correlation between stocks doing well and mortgage bonds taking the hit, causing higher rates; and there is no special day of the week when rates are better. If it were only that easy!

I always advise clients to lock the rate unless there are factors present that will not allow them to do so. Consumers will always find reasons to buy or refinance if it fits into their budget and makes good financial sense for their family. We have all been spoiled by a long stretch of 30 year fixed rates under 4%. The world will not end when rates go up – consumers will always just want to get in on the lowest rate that is available.

The June issue of Keeping Current Matters has a revised chart that combines the projections for interest rates from Fannie Mae, Freddie Mac, The Mortgage Bankers Association, and the National Association of Realtors. The overall average by the First Quarter of 2016 gives us a 30 year fixed rate at under 4.5% – still not bad.  As interest rates rise, buyers who have been sitting on the fence may realize that delaying their purchase no longer makes sense – there is a cost to waiting. We look forward to the opportunity to speak with clients about helping them build financial strength when buying now. Sell well!
– Randy Cullen NMLS #326128

 

What does TRID mean to you and your clients? – by Barb Crea

June 19th, 2015
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6-19-2015 2-38-02 PMMany Realtors I spoke to this week said they  didn’t know anything about TRID (TILA-  RESPA Integrated Disclosure), but  thought MAYBE they should check into it.  Others stated they had attended a TRID  seminar or two, and frankly are scared to  death! GOOD NEWS – you’ve got some extra  time!  The CFPB announced a proposal  this week to delay the TRID date from  August 1, 2015 to October 1, 2015! Many  of you are being told your closings could be  delayed by up to 10 days or more and you’re all wondering how this will make you look to your clients, and WHO will take the blame when it happens.  Missed closing dates can make it difficult to get referrals and repeat business…

 New Loan Estimate (LE):

  • Replaces the GFE and initial TIL
  • Provides clearer information so that borrowers understand the loan terms and estimates of loan and closing costs to facilitate comparison shopping
  • Must be provided to borrowers within three business days after submitting the loan application

New Closing Disclosure (CD):

  • Replaces the HUD-1 and Final TIL
  • Provides clear details about loan changes and features so that consumers can better understand the costs of the transaction
  • Must be received by borrowers at least three business days before closing the loan

The Real Estate Professional’s Role:

  • Real estate professionals play an important role by educating their clients about these changes. Helping buyers and sellers understand the risks of setting unrealistic expectations because the loan process could take longer, and helping them see the importance of providing items requested by the lender in a timely manner.
  • Clients need to be educated about the possibility of closing delays and should be wary of scheduling back-to-back closings, as there is a risk that one of the transactions may be delayed.
  • Amendments to contracts must be forwarded to Lender immediately upon receipt. The Loan Estimate (formally Good Faith Estimate) must be re-disclosed within three business days of the change.
  • Communicate early and often – those who communicate well with all parties will be the best performers.
  • Finally, real estate professionals need to help buyers and sellers understand that attempts at last minute negotiations could derail the closing; parties to the transaction should try to have all issues resolved well in advance of closing. Changes made within the three-day waiting period could cause a delay to the closing.

Change is Good – TRID is all about educating and communicating:

  • Remember – This change is beneficial to your borrowers.
  • Forms are easier to read.
  • Less confusion and scrambling at the closing.
  • Timelines make all of us perform better.

TRID involves a change of forms AND a change of processes – many of these changes are the same things we’re already doing. The major difference with TRID is the borrowers must receive the Closing Disclosure (replaces the Final TIL and HUD-1) at least three business days prior to closing. Fairway will assume the responsibility for creating, controlling and delivering the Closing Disclosures on OUR loans. We’re READY, whether it’s August 1st or October 1stclosings will NOT be delayed! For more information on TRID check out http://www.consumerfinance.gov/regulatory-implementation/tila-respa/ or call the Kate Wilson Team at (952) 853-0222 and ask for Barb Crea or Randy Cullen.  We’d be glad to answer any questions you may have. 

 As we head into this weekend, we want to wish all the Dads out there a very Happy Father’s Day!

Barb Crea, NMLS #310389

 

It’s National Homeownership Month! … by Barb Crea

June 5th, 2015
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6-4-2015 7-32-23 PM National Homeownership  Month started as a week-long  celebration of homeownership during  the Clinton administration in 1995. In  2002, President George W. Bush  proclaimed June as  National  Homeownership Month.

A recent study from The Joint Center  for Housing Studies at Harvard University revealed the top 5 things your clients feel are the most important in regards to homeownership:

  • Having a good place to raise children and provide them with a good education: From the best neighborhoods to the best school districts, even those without children at the time of purchasing their home may have this in the back of their minds as a major reason for choosing the location of the home that they purchase.
  • A physical structure where their family can feel safe: It’s no surprise that having a safe place to call home is the #2 reason.
  • More space for their family: Whether their family is expanding, or an older family member is moving in, having a home that fits their needs is a close third on the list.
  • Having control over what they do with their living space – like renovations and updates: They can paint the walls whatever color they like, or try one of those complicated wall treatments they saw on Pinterest. Maybe it’s finally adopting that puppy or kitten they’ve seen online 100 times? It’s their home to do as they choose!
  • Owning a home is a good way to build wealth that can be passed along to their family: Either way, they’re paying a mortgage – their own or their landlord’s. Rents are predicted to increase substantially in the next year. Why not help them lock in their housing expense now with an investment that will build equity?

Whether your clients are first-time or move-up buyers, there are two factors that will impact the amount of house they can afford in their price range: home prices and mortgage rates – BOTH are increasing.

INTEREST RATES have been extremely volatile of late and that will continue. This morning the official jobs data was released. The consensus for Nonfarm Payrolls was +225k and it came in at +280k with back months revised higher by over 30k. The unemployment rate was expected steady at 5.4%; it came in at 5.5%. And average hourly earnings (expected slightly higher) was +.3%. In the latest Economic & Housing Market Outlook from Freddie Mac, the 30-year mortgage rate will be 4.7% by this time next year. That translates into a $200/month INCREASED mortgage payment on a $250,000 loan amount. http://www.freddiemac.com/finance/pdf/march_2015_public_outlook.pdf Read the rest of this entry »