Mortgage Rates Newsletter - Market Analysis

Provided courtesy of: http://www.mortgagenewsdaily.com/reports/mortgage_rates/archive

Mortgage Rates Find Some Support
Thu, 21 Sep 2017 20:11:11 GMT - Mortgage rates have been higher almost exclusively for the past 2 weeks. Yesterday was no exception as the Federal Reserve released a rate hike forecast that was slightly more optimistic than markets were expecting. By yesterday afternoon, the average 30yr fixed mortgage rate was at its highest levels in over a month. The Fed news justified a defensive stance among prospective mortgage borrowers. When rates move initially higher following a Fed announcement, it's all too common to see that momentum continue in the following day. In today's case, we've actually seen a bit of support. Underlying bond markets were in slightly better shape vs yesterday for most of the day, thus allowing lenders to either keep mortgage rates unchanged or to bring them marginally lower. 4.0% remains the most prevalently
Mortgage Rates Highest in More Than a Month After Fed
Wed, 20 Sep 2017 21:28:23 GMT - Mortgage rates rose today following the announcement and--more importantly--the Fed's updated economic projections . The Fed holds 8 meetings a year. They release an official policy announcement after all of those. Four of the meetings are "special" and are followed not only by a policy announcement, but also by updated economic projections from Fed members. These projections include an important "dot plot" of the Fed's rate hike expectations. The so-called dots have been more important than the actual announcement on some occasions. While most of today's press coverage will focus on the fact that the Fed finally enacted its plan to shrink its balance sheet. That was widely expected, however. Investors weren't sure how the past few months of economic data and events would affect the rate hike
Rates Steady Near Recent Highs Ahead of Fed
Tue, 19 Sep 2017 21:32:57 GMT - Mortgage rates remained unchanged today, on average. This keeps them in line with their highest levels in more than a month, though admittedly, there hasn't been much upward movement since the sharpest leg of the spike ended last Wednesday. Conventional 30yr fixed rates in the "high 3's" remain available for top tier scenarios, but 4.0% is slightly more prevalent now. While there were several economic reports and seemingly important news stories today (both tend to have an effect on rates), bond markets marched to their own beat. Traders were generally getting in position for tomorrow's Fed Announcement. Two weeks ago, the order of the day had been to push rates lower heading into Hurricane Irma weekend. There's been a correction in play since then. From the long-term lows in early September
Mortgage Rates Continue Pushing Recent Highs
Mon, 18 Sep 2017 20:49:33 GMT - Mortgage rates resumed their recent uptrend today, after taking a quick break to end the week last Friday. The result is another push up to the highest levels in just over 3 weeks. The average scenario is being quoted rates that are about an eighth of a point higher compared to the lows seen in early September. The most prevalent top-tier conventional 30yr fixed rates still range from 3.875% to 4.0%, but the latter is increasingly in the spotlight. Context is important when it comes to this recent rate spike. The market movement that preceded it was arguably "too good," with rates benefiting from an unusual combination of geopolitical risk surrounding North Korea and event risk surrounding Hurricane's Harvey and Irma. It's not that markets responded to those events in unexpected ways--simply
Mortgage Rates Stabilize Ahead of Next Week's Big Fed Announcement
Fri, 15 Sep 2017 21:09:26 GMT - Mortgage rates were steady to slightly lower on average today, confirming the end of a somewhat abrupt correction from last week's 2017 lows. In other words, rates rose quickly during the first days of the week and spent the last 3 days leveling off. To put "abrupt" in context and reiterate yesterday's thoughts, the worst case scenario would be an eighth of a percentage point higher in rate from last week. That's $14/month on a $200k loan. We've certainly seen worse weeks day, but only 2 of them were in 2017. The flat momentum at the end of this week isn't too likely to stick around next week. The Fed will (probably) make a landmark announcement that confirms the start of its balance sheet reduction efforts. This means slightly less bond-buying each month, and could put upward pressure on rates
Mortgage Dictionary

Mortgage Dictionary

Is your bank or broker confusing you with big words? Do you want to sound a whole lot savvier when handling your mortgage transaction?

This mortgage glossary is a good place to hone up on your mortgage vocabulary to make sense of what can be a very confusing process.

The more you know about seemingly complicated mortgage terms, the more fear you'll instill in your bank or broker. Outsmart them early on and they'll think twice before trying to overcharge you.

Check out the ever-expanding "mortgage dictionary" below.  Be sure to click on the hyper-linked terms to get a more detailed definition where applicable:

Check out I Want a Better Mortgage for current Mortgage Rates. (iWantaBetterMortgage.Com)

1031 Exchange – a tax-deferred exchange of real estate employed to offset or even avoid capital gains tax.

Adjustable-Rate Mortgage (ARM) – a mortgage with a variable interest rate, which adjusts monthly, biannually, or annually. Option-arms and hybrid mortgages are also considered adjustable-rate mortgages.

Alt-A Mortgage – a home loan that isn't prime or subprime, but somewhere in the middle.

Amortization – the way a loan is paid off over time in installments, detailing how much goes toward interest, and how much is paid toward principal.

Annual Percentage Rate (APR) – the actual interest rate you pay on your mortgage, which factors in fees, points, and other costs associated with the loan.

Annual Percentage Yield (APY) – the annual interest rate taking into account the frequency and cost of compounding interest.

Appraisal – a comprehensive report that determines the value of your property based on a number of valuation factors.

Assumption – the act of assuming responsibility for the payment of a mortgage lien.

Balloon Mortgage – a short-term mortgage with small monthly installments and a large lump sum due at the end of the loan term. An example would be a 30 due in 15, which amortizes like a 30 year fixed, but is due 15 years earlier.

Biweekly Mortgage – a mortgage where 26 half payments, or 13 full payments, are made annually.

Bridge Loan – a short term loan taken out against one property to finance the purchase of a new property.

Buy-Down – the act of securing a lower than par interest rate by paying the bank a lender a premium.

Caps – initial, periodic, and lifetime payment caps which limit how much and how frequently an interest rate can change on an adjustable-rate mortgage.

Cash-In Refinance – a refinance transaction where borrowers bring money to the closing table to lower their mortgage balance.

Certificate of Reasonable Value (CRV) – an appraisal issued by the Veterans Administration to determine the value of a property. The loan amount may not exceed the CRV on a VA loan.

Closing – the final step in the loan process when loan documents are signed at an escrow or title company.

Closing Costs – the amount of money that must be paid to close your loan, including lender fees and third-party charges, along with taxes and transfer fees.

Conforming Loan – a loan that meets Fannie Mae and Freddie Mac guidelines, which also falls under a certain loan amount.

Construction Loan – a short-term loan given to a builder during intervals of the building process which is due upon completion of the project.

Conventional Mortgage – any mortgage loan that is not insured or guaranteed by the federal government.

Credit Report – a tool used by the bank or lender to review your credit profile and your ability to carry and repay debt.

Debt-to-Income Ratio – the ratio of monthly liabilities and housing expenses divided by the monthly gross income of the borrower.

Deed-in-Lieu of Foreclosure – a method of avoiding foreclosure by deeding your property to the lender.

Deed of Trust – a security instrument between the borrower and the lender, recorded in public records as a lien on the subject property. It differs from a mortgage in that the bank can foreclose on the property without judicial proceedings.

Deferred Interest – the amount of interest added to the principal loan balance when a borrower pays less than the interest-only note rate (see: option arms).

Delinquency – the failure to make a monthly mortgage payment on time, which can eventually lead to a notice of default, and later a foreclosure.

Discount Rate – the interest rate the Federal Reserve offers to member banks and thrifts.

Down Payment – an upfront payment made by the home buyer toward the property purchase price, usually ranging from five to 20 percent. The remainder of the sales prices makes up the mortgage loan amount.

Earnest Money – a deposit paid to the seller by the buyer as a pledge to complete a real estate transaction. If the seller accepts the offer, the deposit is held in escrow and applied to closing costs when the deal is closed.

Equal Credit Opportunity Act – a federal law that prevents lenders from discriminating applicants based on race, religion, national origin, sex, age, marital status or involvement in public assistance programs

Escrow – a third party intermediary who holds and allocates funds, including taxes and insurance in a mortgage transaction.

Federal Funds Rate – the interest rate banks charge one another for overnight use of excess reserves.

Federal Home Loan Mortgage Corporation – one of the largest financiers of conventional mortgages on the secondary market. Widely known as Freddie Mac.

Federal National Mortgage Corporation – a publicly owned, government-sponsored corporation that packages mortgages and resells them on the secondary market. Also known as Fannie Mae.

FHA Loan – a program originated during The Great Depression that allows lower income borrowers to qualify for mortgages as long as they fit certain criteria set forth by the Federal Housing Administration who insures them.

First-Time Homebuyer – typically defined as someone who has not owned another property at any time during the three years prior to the date of the purchase.

Fixed-Rate Mortgage – a mortgage with a constant interest rate that will not adjust at any point during the life of the loan.

Foreclosure – the legal process by which a bank or lender sells a property after a borrower fails to meet the repayment terms of the loan.

Good Faith Estimate – a disclosure which details your loan summary and an estimate of the charges you'll incur upon settlement.

Graduated Payment Mortgage – a negative amortization mortgage with flexible payment options that gradually increase over time until leveling off. Intended for young couples who are unable to make the full mortgage payment, but whose income will increase over time.

Hard Money Loan – a mortgage of last resort for borrowers who can't obtain financing in the standard market due to poor credit.

HARP Loan – a refinance loan offered to those with negative equity.

Hazard Insurance – insurance which protects a property owner from damages caused by fire or severe weather.

Home Equity – the value of a property less any and all existing liens. If a borrower owns a property worth $500,000 and has liens of $400,000, equity is $100,000.

Home Equity Line of Credit – a line of credit that uses the value of a property as collateral.

Impound Account – an account established by the issuing bank/lender or loan servicer to collect monthly and automatically pay a borrower's property taxes and insurance costs when payments are due.

Interest Only – paying just the interest portion of the mortgage payment each month.

Islamic Mortgage – a mortgage that avoids the payment or receipt of interest, which is prohibited under Islamic law.

Jumbo Loan – a loan amount above the conforming loan limits, which is set each year by Fannie Mae and Freddie Mac. These loans typically carry higher interest rates than conforming loans because they can't be sold to Fannie or Freddie.

Lender Credit – a credit paid by the lender to the borrower for taking an above-market interest rate.

Lender-Paid Mortgage Insurance – the lender pays for your mortgage insurance in exchange for a higher interest rate on your mortgage.

Lender Overlay – a guideline (or set of guidelines) in addition to those required by Fannie Mae, Freddie Mac, or the FHA/VA.

Lien – a claim against a property by the issuing bank or lender to secure repayment of a debt, typically in the form or a mortgage.

Loan Officer – a representative of a bank or broker who originates mortgages on their behalf.

Loan Origination – the initiation of the home loan process whereby a borrower submits their information to a bank or lender in order to obtain mortgage financing.

Loan Processor – the individual who handles all the paperwork associated with closing your loan.

Loan-to-Value – the percentage of the appraised property value that is borrowed from a bank or lender. A down payment of 20% would create a loan-to-value of 80%.

Margin – a given amount specified by the bank or lender which when added to the accompanying mortgage index sets the interest rate for an adjustable-rate mortgage.

Mortgage – a temporary loan used to finance the purchase of real property, also known as a home loan.

Mortgage Broker – an independent loan originator who works on behalf of consumers to obtain mortgage financing.  Brokers don't represent a single bank, but rather work with numerous lenders.

Mortgage Discount Points – a form of prepaid interest whereby the borrower lowers the interest rate of the mortgage at closing.

Mortgage Due Date – the date your mortgage payment is due each month during the loan's duration.

Mortgagee – the issuing bank or mortgage lender.

Mortgage Insurance – required insurance on a mortgage if the down payment is less than twenty percent and a single loan is used to finance the property.

Mortgage Lender – an institution that originates mortgage loans either to keep for interest income or sell on the secondary market.

Mortgage Payment – the cost of your loan, paid monthly.

Mortgage Rate – the interest rate associated with your mortgage.

Mortgage Rate Lock – the act of locking-in a desired interest rate on your mortgage so it cannot change. Borrowers also have the option to float their rate.

Mortgage Term – the length of your mortgage. Most are 30 years, though 15 years is also very common.

Mortgagor – the borrower or homeowner.

Negative Amortization – when a mortgage payment received is below the interest-only payment, the difference will be added onto the principal balance of the loan.

Ninja Loan – no income, no job, no asset loan. A "Ninja loan" is industry slang for a no doc loan, which doesn't require income, asset, or job verification.  NoIncomeNoJobAssets.  It's not specifically for Ninjas, unless they've got something to hide.

No Closing Cost Refinance – a refinance transaction in which the bank or broker pays all settlement costs.

Note – a written promise to repay the mortgage plus interest, which includes the name of the borrower, issuing lender, and the terms and provisions.

Option Arm – a home loan that gives borrowers four payment options, including a negative amortization payment option.

Origination Fee – a percentage of the loan amount charged by the bank or broker for completing the loan process.

Par Rate – the interest rate a borrower will qualify assuming there is no rate manipulation.

Payment Shock – a sudden, large increase in the monthly mortgage payment as a result of an adjustable-rate mortgage or through a refinance with new financing terms.

Piggyback Mortgage – a second mortgage that closes simultaneously with the first mortgage to reduce the total necessary down payment.

PITI – the monthly housing expense, expressed as principal, interest, taxes, and insurance (see: mortgage payment).

Points – stands for a percentage point of the loan amount, typically makes up the origination fee, which can be a fraction of a point to multiple points.

Pre-Approval/Pre-Qualification – processes to determine what you can afford to ensure you can obtain mortgage financing when purchasing a property.

Prepayment Penalty – if a loan is refinanced or repaid prior to a certain date as agreed upon in the loan documents, a fee will be charged by the bank or lender.

Prime Rate – the interest rate offered by commercial banks to its best corporate customers.

Principal – the balance of the liens on a property, not including interest.  What you owe on your mortgage.

Purchase Money Mortgage – a mortgage used to purchase a piece of property.

Qualified Mortgage – a home loan that meets new underwriting guidelines established by the CFPB.  Also known as a QM loan.

Quitclaim Deed – a document by which a person either disclaims interest in a property or transfers interest to another person, typically a spouse.

Refinance – the act of replacing your existing loan(s) with a new loan on the same property. There are two main types of refinancing, including a rate and term refinance and cash-out refinance.

Reverse Mortgage – a mortgage reserved for homeowners aged 62 or older who wish to tap their home equity without paying monthly mortgage payments.

Right of Rescission – a law which allows a homeowner to rescind a contract to refinance their primary residence within three days of signing loan documents.

Second Mortgage – a mortgage taken out behind a first mortgage, either concurrently or after the fact.

Seller Carryback – when a seller acts as the bank or lender and carries a second mortgage on the subject property.

Short Sale – a foreclosure alternative where a property is sold for less than the balance on the associated mortgage.

Short Refinance – a refinance transaction where the lender agrees to lower the rate and/or change the term despite the mortgage balance exceeding the property value.

Stated Income Mortgage – a mortgage in which the borrower does not have to document their income.

Streamline Refinance – an expedited refinance that requires limited underwriting, and may even forego the need for an appraisal.

Subprime Mortgage – a home loan reserved for those who have marginal credit or difficulty qualifying for a traditional loan.

Teaser Rate – the initial, discounted interest rate offered on adjustable-rate mortgages.

Title Insurance – protection against lawsuits and claims tied to the chain of title on the subject property.

Underwater Mortgage – a mortgage whose balance exceeds the value of the property.  Also known as an "upside down" mortgage.

Underwriter – the individual who decisions your mortgage by either approving, suspending, or declining it.

VA Mortgage – a mortgage offered to veterans and their families that is guaranteed by the Veterans Administration.

Yield Spread Premium – the commission mortgage brokers receive from banks and mortgage lenders by originating loans.

Zestimate – the estimated market value of a piece of property based on Zillow's algorithm

 

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