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Mortgage Rates Plummet as Stocks Tumble

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Posted by Bud Bruening

Mortgage rates plunged this week as the debt ceiling deal was overshadowed by fear of a second recession in the United States and the threat of another global financial crisis.

The benchmark 30-year fixed-rate mortgage fell 20 basis points this week, to 4.54%, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.39 discount and origination points. One year ago, the mortgage index was 4.66%; four weeks ago, it was 4.79%.

The benchmark 15-year fixed-rate mortgage fell 15 basis points, to 3.68%. The benchmark 5/1 adjustable-rate mortgage fell 11 basis points, to 3.23%.

This is the lowest rate on the 30-year fixed in more than eight months. In Bankrate’s survey from Nov. 22, 2010, the 30-year fixed was 4.58%. Prior to that, on Nov. 3, 2010, the rate was 4.42%, which ties the record low in the nearly 26-year history of Bankrate’s weekly mortgage rate survey, which was set two weeks prior, on Oct. 20, 2010.

Low rates surprise most

The sharp and rapid decline in rates surprised many mortgage experts. They expected rates to increase even after Congress reached a deal to cut spending and raise the debt ceiling.

“I don’t think anyone foresaw the fact that we were going to get the (rate) improvements that we got this week,” says Jim Sahnger, a mortgage planner for FBC Mortgage in Jupiter, Fla.

But thanks to bleak economic reports in the U.S. and the aggravating debt crisis in Europe, mortgage rates have been falling like a rock.

“Investors took a look at all of the insecurity that existed out there and they found safe haven in mortgage-backed securities and Treasuries,” Sahnger says.

Bleak economic news

The gross domestic product, or GDP, estimates released by the U.S. Department of Commerce last week have helped fuel investors’ insecurity, as the numbers show the U.S. economy is growing much more slowly than expected. The economy grew only 1.3% in the second quarter and 0.4% in the first quarter, according to the GDP report. That puts the estimated GDP growth for 2011 far from the 2.7% to 2.9% the Fed expects.

Recent data also show Americans cut back on purchasing major goods such as cars, furniture and appliances in June. Consumer spending for June dropped 0.2%.

Investors remain extremely concerned about the dire jobs market. Unemployment rates rose in more than 90 %  of U.S. cities in June. The national unemployment rate climbed to 9.2% in June, the highest level this year.

“It’s all bad news right now,” says Michael Becker, mortgage banker at WCS Funding Group in Lutherville, Md. “Everybody was focusing so much on the debt ceiling last week that economic reports were sort of brushed aside, but they have really impacted the market.”

Stock market

The stock market is on its longest losing streak since the financial crisis of 2008. Stocks fell for eight consecutive days as of Wednesday as investors pulled their money out of the stock market. “Investors are either going to invest in stocks or bonds, and nobody wanted to put money on stocks,” says Sahnger.

The flight to safety and the increased demand for Treasury bonds triggered a sharp drop in yields. When yields drop, mortgage rates normally follow the trend.

Good time to refinance

But the stock market may rebound at any time, and when that happens, rates will likely adjust, says Sahnger.

Borrowers who want to refinance should not take a chance, says David Kuiper, a mortgage planner at First Place Bank in Holland, Mich.

“In the borrowing environment, times couldn’t be any better,” Kuiper says.

Like many other mortgage professionals, he has alerted his clients of the near-record low rates. “Grab a low rate while you can,” he says.

Get the lowest mortgage rates from:

 

Bud Bruening
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
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Must-Have Mobile Apps for Home Buyers

There’s an app for nearly everything these days. The real estate market is no exception. Here are a few helpful apps for people searching for a home or those who may just be interested in the market and new technology:

App: Quick Mark

Price: FREE

Have you seen barcodes like this one all over lately?

These barcodes are everywhere including the real estate market right now. Once you download the app, you can take a picture of the barcode with your phone, and it will send you to a website. The Quick Mark barcode function is similar to clicking a link online.

App: Google Maps

Price: FREE

Google Maps comes standard on most Android phones, so you may already have it installed. The Google Maps app is especially helpful when you’re searching for a home or have lost your way while house hunting. It offers step-by-step driving directions as well as map views .

App: Suburb Scout

Price: $1.99

Suburb Scout is an app that searches for possible neighborhood nuisances like airports, sewage plants, nuclear plants, landfills, railroads, and prisons. If you’re searching for a new home, this can be a useful tool in helping you make your decision.

App: Where

Price: FREE

Where is an app that provides information on the surrounding amenities of a specific area. You can find anything from nearby news, dining, movies, events, gas prices, coupons for local businesses, and reviews. Conveniently explore the area around a home without even getting in your car.

App: Karl’s Mortgage Calculator

Price: FREE

This app is useful for determining how much your monthly house payment may be.

App: iHandy Carpenter

Price: $2.99

Do you need a plumb bob, surface level, bubble level bar, steel protractor, and/or ruler, but you don’t find yourself often carrying around a carpenter tool kit? Then this app is for you!

App: Evernote

Price: FREE

This app is great when you’re out looking at homes. There are a lot of things you need to remember about each home you look at. Evernote allows you to take notes, pictures, or even use the voice recording function so you can have all your notes handy. You can then load the information from Evernote right to your computer of laptop.

We’ve also made it convenient for you to search for homes using your smart phone. Access the mobile version of our website from your phone to view listing details and photos for homes within your search criteria.

 

 

Bud Bruening

512 E. Winchester

Murray, Utah 84017

Ph. 801.716.5246

Cell. 801.230.3107

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Market goes South as investors cringe on Debt resolution

It was an ugly, ugly session on Tuesday. Which seems strange considering Washington got its act together to pass a debt ceiling deal — with not a day to spare. August 2 was the deadline. And the bill was passed into law August 2. How’s that for cutting it close?

Stocks plunged anyway, with the S&P 500 dropping more than 2.6% in its worst one-day loss in nearly a year. And it caps an eight day 6.7% losing streak for the Dow Jones Industrial Average — the worst run since May 2010, a month which featured the “flash crash” and the panicked start to the euro zone debt crisis.

Investors are reacting to a number of big negatives: The fact the debt bill probably won’t save America’s AAA credit rating, the fact the economy is on the edge of falling into outright contraction, and the fact that the euro zone crisis is spreading like a disease into Italy and Spain.

As a result, significant technical support was taken out, clearing the way for a very nasty and dramatic market meltdown over the next few days.

Great article from MSN. I’ve been doing a lot of reading the past couple days and haven’t posted as much of my own material. More market information to come during the next few days! Keep your eyes here!

Bud Bruening
Mortgage Solutions TEAM
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
http://www.mymtgsolution.com
Utah’s Lowest Mortgage Rates

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Comment period up on 20% down guidelines

Tuesday, August 2nd, 2011, 6:43 pm
Mortgage industry trade groups sent a flurry of letters to federal regulators this week in efforts to alter the upcoming risk-retention rule before the extended comment period expired Aug. 1.

The rule, proposed in April under the Dodd-Frank Act, would require lenders to maintain 5% of the risk on all loans pooled into securities. The most heated debate revolves around the rule’s exception: the qualified residential mortgage. Among requirements such as a strict debt-to-income limit and new servicing standards, the QRM must have at least 20% down from the borrower, according to the initial proposal.

The comments could be divided into two camps: those who claim the current QRM standards would constrict a still struggling housing market and those who would like to see their businesses included in the QRM definition.

While regulators are mulling over the comments, a spokesperson for the Federal Reserve could not give a timeline for when the final rule would be published.

The Mortgage Bankers Association CEO David Stevens said the rule as it is currently written deviates from the original lawmakers’ intent. The mortgage bankers would rather eliminate the QRM, its mandatory debt-to-income thresholds, servicing standards and the down payment requirement.

“While a reasonable and affordable cash investment or LTV requirement may be warranted, the rules should not hardwire a specific amount but instead permit offsetting factors in the context of prudent underwriting,” Stevens wrote. “Higher LTV loans may pose greater risks. However, these risks can be mitigated by compensating factors such as strong credit and appropriate documentation.”

The National Association of Realtors letter complained that mortgages written outside of the QRM would carry higher interest rates and fees, choking off what little demand remains on the market.

“The proposed rule should be withdrawn, revised and republished for public comment. If not, then millions of hard-working, creditworthy consumers will not be able to achieve their dreams of owning a home,” NAR President Ron Phipps wrote.

The Mortgage Insurance Companies of America wrote in an attempt to steer private insurers somewhere into the QRM definition. The current QRM definition does not include privately insured low down payment loans.

MICA tapped Milliman, an insurance consulting firm, to perform a study. It found that mortgages underwritten with private mortgage insurance showed lower default rates. The trade group then suggested raising the QRM maximum LTV ratio from 80% to 97%.

“Congress intended for private mortgage insurance to play a role in the housing finance system within the structure of the QRM definition; and the data unequivocally supports the essential role of private MI in contributing to overall performance of low down payment mortgage loans,” MICA Executive Vice President Suzanne Hutchinson wrote.

The American Land Title Association also looked for a way into the QRM definition.

“Obtaining a title insurance commitment will provide lenders a more complete picture of the borrower’s debt by showing debts tied to the collateral’s title that cannot be found in a credit report,” ALTA wrote.

Community banks also weighed in with last minute lobbying efforts. The Independent Community Bankers of America complained risk retention “over-regulates” the market “to the point of choking off the flow of credit.”

“The serious contraction that would occur in the mortgage market would significantly limit credit availability. It’s ironic that the lenders that would remain would be those that played a role in the housing crisis through lax underwriting standards and predatory practices — while community banks that did not contribute to the disaster would be forced out,” the ICBA wrote.

Article courtesy of Jon Prior.

Bud Bruening
Mortgage Solutions TEAM
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
http://www.mymtgsolution.com
Utah’s Lowest Mortgage Rates

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77% of homeowners refinancing reduce or maintain same balance on mortgage.

freddie-300x221According to Freddie Mac, 77% of homeowners who refinances their first mortgages during the second quarter of 2011 either reduced their principle balance or maintained the same mortgage balance while taking advantage of the benefits from historically low mortgage rates.

51% ended up with the same principle balance and new loan amount while 26% lowered their principle balance according to second quarters figures from Freddie Mac. The average rate reduction for those refinancing on a 30 year fixed mortgage was about 1 percentage or an interest rate monthly payment savings of 18%. These borrowers will save about $1,550 in interest payments on a $200,000 loan during the first year of the refinances loans life according to Freddie Mac.

“Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 50 years to lock in interest savings,” said Frank Nothaft, Freddie’s vice president and chief economist.

“Over the first half of 2011, fixed-rate mortgage rates hit a low during June, with the 30-year product averaging 4.50 percent and 15-year averaging 3.68 percent over the last four weeks of June,” Freddie said in its Primary Mortgage Market Survey.

About $7.5 billion in home equity was converted to cash in the second quarter due to refinancing’s on conventional, prime-credit mortgages, the GSE added in its report. Adjusted for inflation, the total amount of equity turned to cash reached its lowest level since 1996.

Most homeowners do not realize that they can refinance and lower their mortgage rates even if they are upside down on their home. Those that are exploring these options are taking advantage of these historically low mortgage rates. If you have been on the fence about refinancing or buying, now may be the time for you. Even if you are upside down, have credit problems, have income restrictions, job gaps or other problems Americans have been faced with during this recession.

We are constantly fielding phone calls and helping people structure their finances so they can take advantage of these rates. If we can be of any assistance to you or your clients, please do not hesitate to call one of our mortgage professionals.

 

Bud Bruening
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
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Sold for $85 Million!!

 

spelling-one

One of the most expensive homes of all time, the 56,500-square foot Spelling Manor, sold for a very steep discount Thursday — $85 million — or 43% off the original asking price. The original list price was $150 Million. The buyer was 22 year old Petra Ecclestone, heir to the Formula 1 auto racing fortune. Ecclestone was represented by Rick Hilton and of Hilton & Hyland Real Estate. Lets play a game, usually a buyers agent would charge 3% in commissions on a purchase transaction. 3% of $85 Million would give you a commission check of $2.55 Million. The average 1% mortgage origination fee would bring in a paycheck of $85,000 to the loan officer. I need to change my marketing efforts! ; )

 

Bud Bruening
Mortgage Solutions TEAM
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
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Nondistressed home values are stabilizing according to CoreLogic

Stabilizing nondistressed home prices, a declining shadow inventory and stronger foreclosure auctions should lead to lower distressed sales and less downward pressure on prices, according to CoreLogic (CLGX: 15.88 -1.67%).

The report notes that while mortgage performance is improving, it is not improving nearly as much as other consumer debt performance.

Despite, a bit of positive news in the report, CoreLogic notes that negative equity will remain a strong influence on the market for an extended period of time.

In May 2011, the “excluding distressed sales” home price index only dropped 0.4% from a year ago, compared to a decline of 7.4% for the all transactions HPI.

“Another very positive sign is that even while including distressed sales, the HPI increased between March and April — the first time in more than six months — and was up again between April and May. These increases represent the resumption of seasonality in home prices and are a positive sign for the market.”

Despite the whipsaw impact of the federal homebuyer tax credit, state credits and increases in Federal Housing Administration premiums, nondistressed median existing and new prices are back to 2009 levels. On the other hand, median prices for REO and short sale transactions continue to decline and have fallen 10% since 2009, the report said.

Price discounts on distressed sales remain high, however, a major impediment to price stabilization, but the good news is that new auction filings have been down significantly since October 2010.

Residential shadow inventory — the estimated number of pending supply of distressed properties — declined to 1.7 million units in April 2011, down from 1.9 million units a year ago and down nearly 20% from its peak.

“Given that the recent declines in auction filings and current shadow inventory levels are the drivers of future distressed sales, the level of distressed sales should, all things equal, begin to decline late in 2011 and into 2012,” the report said.

CoreLogic also noted that the geographical sources of distressed properties are shifting and becoming more dispersed. As of December 2008, four of the top five largest distressed sales markets were all located in California and the top five markets averaged a distressed sale share of 68%. As of April 2011, only two of the top five markets are in California and the top five average distressed share was 56%.

Miami leads the way in REO price discounts with a 62% REO price discount, followed by Chicago (60%), Detroit (60%), St. Louis (60%) and West Palm Beach (58%).

CoreLogic also notes that depreciation in home prices during the last four years has reduced home equity by more than half to $6.1 trillion and caused a rapid increase in the number of foreclosures. Through May 2011, home prices have declined 33% on a cumulative basis since the peak in the spring of 2006.

Nearly 11 million, or 23%, of all residential properties with mortgages were in negative equity at the end of the first quarter of 2011, and the negative equity share has been fairly stable over the last year. An additional 2.4 million borrowers had less than 5% equity.

Nevada had the highest negative equity percentage with 63% of all mortgaged properties, followed by Arizona (50%), Florida (46%), Michigan (36%) and California (31%).

The average negative equity borrower was upside down by $65,000.

“Going forward, negative equity will primarily decline by a combination of foreclosures, amortization and, to a lesser extent, price increases,” the report said. “While price declines have been a large driver of negative equity, price improvements will most likely not be the antidote anytime soon. …”While the worst is over, it means many of these borrowers will be upside down for an extended period of time, which will result in a long tail of mortgage distress.”

 

Bud Bruening
Mortgage Solutions TEAM
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
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www.mymtgsolution.com

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