Mortgage Rates Newsletter - Market Analysis

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

Mortgage Rates Recover Slightly
Tue, 22 Oct 2019 21:41:50 GMT - Mortgage rates recovered just a bit today after hitting the highest levels in more than a month yesterday. The inspiration for much of the recent upward pressure on rates can be traced to progress in Britain's attempt to exit the European Union (aka "Brexit"). It's not that Brexit is bad for interest rates. In fact, it's definitely been a positive influence off and on for nearly 4 years now. Rather, it's the manner in which Brexit is accomplished that matters to global bond markets, and thus, to interest rates. To be clear, European markets have seen the biggest effects, but there is some spillover in the US. The most important consideration at present is whether or not the UK will leave the EU with or without a deal. A so-called "no deal" Brexit would be the better option for fans of low interest
Here's Why Rates Were Flat This Week (And Why That Should Change)
Fri, 18 Oct 2019 22:17:29 GMT - Mortgage rates were flat today. In fact, they were very close to being flat on the week for that matter! This is a reflection of the bond markets current set of concerns, which really came into focus late last week with Thursday's Brexit-related news and Friday's trade deal updates. Brexit refers to the UK's attempts to exit the EU. As esoteric of a concern as that may seem, it's something that the bond market (and hence, interest rates) quite clearly cares about. Last Thursday's unexpected progress between Boris Johnson and Northern Ireland's Prime Minister sent rates screaming higher at their fastest pace in months. I could also argue that much of the damage that seemed to have been done by Friday's US/China trade news was instead follow-through momentum from Thursday's Brexit-inspired move
Mortgage Rates Face Volatility Thanks to an Old Friend
Thu, 17 Oct 2019 20:24:14 GMT - Mortgage rates didn't do much today, but risks are increasing that movement will be more brisk in the coming business days. Blame European politics--specifically: Brexit. This isn't the mortgage rates' world first go-round with the U.K.'s lengthy process of exiting the European Union (aka "Brexit"). In fact, Brexit was the single biggest factor that helped drive rates down to the long-term lows seen in 2016. For most lenders, those rates were close enough to the all-time lows seen in 2012. The fact that they were available in the middle of the summer homebuying season only made things better for the housing market. Thanks Brexit! More than 3 years later and the U.K. is set to run into yet another deadline for its divorce from the EU. This one has been on the radar for months, but it's been
Mortgage Rates Little-Changed Near Recent Highs
Wed, 16 Oct 2019 22:30:17 GMT - Mortgage rates improved modestly today, depending on the lender. Some lenders moved rates higher yesterday due to deterioration in the bond market. Others simply planned to adjust for market conditions this morning. If we look at the last 3 days altogether, however, it's easier to characterize rates as being right in line with the highest levels in nearly a month. Volatility remains a risk in the near-term future, but not for conventional reasons. Normally, economic data and Fed policy would be responsible for the biggest moves in the bond market that underlies mortgage rates. At the moment, however, geopolitical risks and US/China trade policy updates can have an impact that's just as big. There was fresh evidence of this today when Brexit-related updates offset the influence of a key piece
Mortgage Rates Turn Higher After a Strong Start
Tue, 15 Oct 2019 20:58:52 GMT - Mortgage rates ended higher for the 4th straight business day on Tuesday, but that wasn't necessarily destined to be the case this morning. After last week's US/China trade announcements put upward pressure on rates heading into the 3-day weekend, some of the positivity was backtracked over the weekend. This pushed stock prices and bond yields (aka "rates") lower to start the day, but the rate recovery didn't last long. As news came in about improved odds for a Brexit deal, European bonds began losing ground quickly. This, along with a strong performance in US stock markets, put pressure on US bonds throughout the morning (pressure on bonds = higher rates). By the end of the day, most mortgage lenders had reissued rates that were closer to last Friday's . Tomorrow brings the week's only major
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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