Mortgage rates moved lower today--somewhat significantly relative to recent examples--ultimately hitting the best levels in more than a week for most lenders. Trump's tariff announcement served as a catalyst for market movement in both stocks and bonds (which underlie mortgage rates). Investors currently view the proposed tariffs as something that would do more harm than good for the overall economy. Economic growth generally corresponds with rising rates, so anything that calls it into question can have the opposite effect.
It's too early, at the point, to know if the tariff-related news will be a big deal for rates apart from today's headline shock value. What we do know is that rates are officially putting up their best fight so far this year when it comes to pushing back against the dominant trend (the one that's carried average mortgage rates more than half a point higher). While many lenders aren't in much better territory than Monday morning, lenders who released updated rate sheets this afternoon are in the best shape in more than 2 weeks. We haven't been able to say "2 week lows" since early December.
Loan Originator Perspective
Bond markets posted modest gains today, but still remained below Monday's levels. We may be establishing a new range here, which would certainly beat rates continuing higher. I'm not ready to contemplate floating deals yet, since there's no apparent motivation for yields to fall, but at least we're not posting daily sell-offs either. Ted Rood, Senior Originator
We might actually have 2 green days in a row in the bond market. It has been a while. Bonds have still not broken any important levels, so i continue to favor locking. I would wait until as late as possible as reprices for the better are a possibility. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
Consumers may be one step closer to a higher credit score.
A recent report by the Consumer Financial Protection Bureau outlined a number of problems it found with the big three consumer reporting companies along with suggested reforms that could help consumers improve the accuracy of their own credit reports as well as those all-important three-digit scores.
The watchdog agency said Equifax, Experian and TransUnion had insufficient quality control systems and did not conduct reasonable investigations when consumers disputed something in their files.
The government also laid out a number of ways to improve the accuracy and operation of the credit scoring companies to prevent or fix the errors in the reports that lenders use to assess borrowers' creditworthiness and set rates. For starters, the agency advocated stricter identity-matching criteria and updating records more frequently.
Incorrect information on a credit report is the top issue reported by consumers filing a complaint, according to the CFPB.
"Equifax, Experian and TransUnion continually seek ways to ensure the data they maintain on their consumer credit files is accurate and current," Eric Ellman, interim president and CEO of the Consumer Data Industry Association, which represents the three major credit reporting companies, said in a statement to CNBC.
To that end, improved standards to new and existing public records in their databases will be implemented on July 1, the CDIA said. And as part of this change, some civil debts and tax liens will be excluded, which means some credit scores will edge higher.
Removing that negative information could boost scores for roughly 12 million consumers by up to 40 points or more, according to The Wall Street Journal citing FICO data. Analyses conducted by the credit reporting companies, along with FICO and VantageScore, showed more modest credit scoring impacts.
Credit reporting and scores play a key role in Americans' daily life. The process can determine the interest a consumer is going to pay for credit cards, car loans and mortgages — or whether they will get a loan at all.
This report comes on the heels of an enforcement action against Equifax and TransUnion and their subsidiaries, announced in January. The CFPB said then that the companies deceived consumers about the value of the scores the companies sold them.
As part of that action, the companies must pay more than $17.6 million in restitution to customers, plus $5.5 million in penalties to the government.
"Finally, after decades of problems and complaints, supervision by the CFPB has resulted in the big three credit reporting companies starting to fix, or to develop, systems to promote accurate reporting and properly correct errors," National Consumer Law Center staff attorney Chi Chi Wu said in a statement.
"This is an important first step, but it is a work in progress and could be stopped dead in its tracks if the CFPB loses its supervision powers or is otherwise hampered in its mission," she added.
The CFPB has come under fire by the Trump administration with the White House and congressional Republicans exploring ways to fire CFPB director Richard Cordray if not abolish the office altogether.
In this most recent report, the CFPB may also be trying to tout the ways they are helping consumers, said Bill Hardekopf, credit card expert and CEO of Lowcards.com. "The bottom line is, while there may be some politicking, consumers can benefit by some of those suggestions."
If the CFPB reforms fix the deficiencies in those companies' operations, consumers will benefit to the tune of potentially billions of dollars, the National Consumer Law Center said.
While winter time usually means a decline in home sales, California just saw its first increase in home sales between December and January since 2012, a sign that the Golden State could be in for a strong housing year.
The data comes courtesy of a new report from the California Association of Realtors, which shows that closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 420,100 units in January.
That’s up 2.1% from the 411,430 level in December 2016, and up 4.4% when compared with home sales in January 2016 of a revised 402,220.
Another positive sign for California is a decrease in median sales price, which might not normally be a harbinger of good things to come in real estate, but in this case, the decline is lower than normal.
According to the CAR report, the median price of an existing, single-family detached California home fell 3.8% from a revised $508,870 in December to $489,580 in January.
That also marked the first time in since March 2016 that California’s median sales price fell below half a million dollars.
But as CAR’s report notes, the decline from December to January is smaller than normal, which indicates health in the market.
“Since 2011, price declines from December to January have usually ranged from -11.7% to as little as -4.6%, but January's 3.8% monthly smaller price decline suggests that price pressure remains relatively robust and could translate into additional price growth as the spring and summer home-buying seasons near,” CAR’s report states.
CAR President Geoff McIntosh suggests that the high prices in markets like San Francisco is driving buyers to seek lower priced options in nearby cities.
“California's housing market continues to be defined by the higher-priced, coastal markets and the less expensive, inland areas that still offer access to major employment centers,” McIntosh said.
“For example, eroding affordability and tight housing inventory are pushing buyers away from the core Bay Area markets of San Francisco, San Mateo, and Santa Clara and into less expensive bedroom communities, such as Contra Costa, Napa, and Solano,” McIntosh continued. “In Southern California, an influx of buyers from coastal employment areas into the Inland Empire drove healthy year-over-year sales in Riverside and San Bernardino.”
While the current market conditions look promising for California, CAR’s senior vice president and chief economist, Leslie Appleton-Young, notes that rising interest rates could hamper the state’s housing economy.
“January's sales increase was likely boosted by rising interest rates, which have risen sharply since the election and have given buyers an incentive to get off the sidelines and close escrow before rates go higher,” Appleton-Young said. “Yet, future anticipated rate hikes will increase the cost of homebuying and could have an adverse effect on affordability and future home sales.”
Despite the regulations imposed by the Truth-in-Lending/RESPA Integrated Disclosure (TRID) rules and disclosure forms in October 2015, some homebuyers still say their final closing costs caught them by surprise. Some appear to have been unaware that closing costs were even required.
ClosingCorp, a provider of real estate closing cost data and technology, has released results of a new on-line survey that explored whether TRID has helped consumers better understand the closing costs associated with purchasing a home. The survey, commission by ClosingCorp and conducted by Wilson Perkins Allen Opinion Research, was conducted in early January, among 1,000 adults nationwide who had purchased a home during the 12 months ended on January 1, 2017.
When asked what surprised them about their closing costs, 31 percent of homebuyers were not surprised at all about their closing costs because their loan estimates and closing fees matched. However, 35 percent expressed surprise that their costs/fees were higher than expected while 17 percent said they hadn't expected they would be required at all. (sidenote: how does that even happen?!)
The top five closing costs that most surprised homebuyers were:
1. Mortgage insurance (24 percent)
2. Bank fee/points (23 percent)
3. Taxes (22 percent)
4. Title insurance (21 percent)
5. Appraisal fees (20 percent) and fees paid by the buyer vs. seller (20 percent).
Fifty-eight percent of respondents said their initial loan estimate had changed or been revised prior to closing. Sixty-seven percent of those saying their estimates were changed were residents of the Northeast and 63 percent of had home values between $500,000 and $1 million.
Buyers said the fee estimates most frequently changed were closing costs (12 percent), insurance costs (6 percent) and taxes (5 percent).
The most common reason homebuyers cited for revisions to their closing costs was changes to the loan based on what they qualified for (31 percent). Other reasons given were inaccuracies in the estimate (27 percent) and a change to the loan because of a homebuyer request (23 percent.)
The majority of respondents, 72 percent, said their loan estimates and closing disclosures were delivered electronically. ClosingCorp pointed out that was also the percentage of all respondents falling into the Millennial age group.
Half of all homebuyers said they selected had picked the title company involved in their closing. Of those who did not, 35 percent said their real estate agent had selected it for them. The report said this suggests that agents, as the homebuyers "first touch point," have a lot of influence on their customers.
Bob Jennings, chief executive officer of ClosingCorp said, "As more and more Millennials become first-time homebuyers, TRID or Know Before You Owe has made it easier for them to understand the costs and fees they'll face at closing. Yet there are still surprises during the closing process. Lenders and realtors need to keep educating borrowers on the costs and fees associated with closing to alleviate surprises."
"In addition, our survey shows that 52 percent of lenders were 'off' on their initial loan estimates, so there's significant room for improvement. Using automated fee technology can help prevent lenders from under- or over-estimating closing costs and mitigate the risk of costly variance issues post-closing."
Fourth of July weekend
ended a six-day drop in rates we hope continues Tuesday into the month. 3.75%
became 3.5% for conventional loans and FHA/VA start at 3.25%. What does it mean
if you’re buying a home? 3.625% Fannie/Conventional might give you .875% (or $3,500
paid of your closing costs on a $400,000 loan amount). Not bad.
FHA and Veterans can
expect all closing costs paid at 3.625%--zero down for Vets, 3.5% for FHA
buyers. Something to jump on now there are a few more homes joining the
inventory in So. California.
While I have a buyer
looking with her agent for four months now, Diana Arnold’s Inland Empire buyers always get
their home within the first to second offer. In the eight years I’ve worked
with her, Diana and I have not lost one home or loan for her buyers. Don’t
forget first-time buyer programs like MCC, a tax credit that pays you back in cash
on tax refund, 20% of your annual mortgage interest. The best program out there
to help qualify for a little higher payment, offset that car payment or just
help your monthly budget!—Anne E James is CEO/Broker of Reliance Mortgage
Service and can be reached at 562-619-2058 or firstname.lastname@example.org. Anne has been in
the mortgage lending business for 25 years.
You know those movies where the two lovers look into each other’s eyes and the music tells you that volumes are being spoken without any words?
Yeah, well, that ain’t the way it works when you’re house hunting. Words — lots of them — are your friends, so start talking with your agent early and often.
So what’s the best way to communicate with your real estate team to ensure home-seeking success?
1. Sit down with your agent NOW
You do have an agent, right?
Especially in competitive markets, you’ll find yourself at a disadvantage if you don’t have someone watching the market and working your case every single day.
This person is your adviser and advocate throughout the process. Make sure “good communication skills” is one of the criteria you bring to bear on your choice of agent.
Meet face to face as soon as possible to form a bond, to lay out your needs and budget, and to learn about the many steps involved in a successful real estate purchase. These are things you don’t want to be hearing about on the fly.
2. Get your expectations set early
Whether you’re buying or renting, tell your agent to give you the facts of the market right between the eyes. This isn’t the time to sugarcoat realities.
Ask her for recent data on list price-to-sale ratios to prepare yourself to make over-asking offers if necessary. Ask about ways to compete on things other than price — doing a pre-offer inspection, for example, so as to waive the inspection contingency. Learn about the need for speed, if any.
“I prep my rental clients that it’s a game of hours around here,” says Boston-area agent Deb Cantrell. “He who hesitates loses, so we always go in ready to sign.”
3. Don’t be shy, be honest
Your agent can’t do her job without accurate information about you.
Don’t hold back on your likes and dislikes, your financial situation (clarified by early contact with your banker or mortgage broker), and your reactions to the properties you see.
Create boards on Trulia and add properties you like and don’t like (even if they’re out of your price range) and invite your agent to collaborate. Everyone talks about personal style in a unique way, so it can be helpful to show, not tell, when it comes to what you want.
This is no time to be polite, so say what you think at open houses and private showings (though privately to your agent, not within earshot of other buyers, listing agents, or sellers).
Each opinion and observation that you voice tightens the focus of your search and offers clarity into what you’re after.
4. Establish a foolproof way to connect
When properties move quickly, every minute can count.
Tell your agent in order of preference the way you want to be reached (email, text, call), and whether you should be hit by all means at once if there is a hot property.
“I like to create a red phone like in Batman,” says John Bigelow, a veteran real estate pro in Cambridge, MA. “I invite my clients to reach out to me at any time day or night in a fashion that suits them, through a channel I reliably check.”
5. Be systematic
Avoid flailing about. Make sure your agent and you have a search methodology in place so that forward motion can occur.
I like the “benchmark” approach: At the end of every showing(s), I ask my client to rank the property against others we’ve seen, always searching for the one place that’s come closest to “right.”
Next time we go out, that home will be the benchmark against which new places are judged.
Properties will topple properties, a certain discipline is brought to bear, and your search will develop a rigor and logic of your own making.
6. You are not a loser
If you’re continually seeing properties at your price point that just don’t satisfy, don’t feel like you’ve somehow failed.
The market is the market, and sometimes you have to adjust your sights. Compromise comes along the four vectors of real estate: size, condition, location, and price.
If price can’t change, talk candidly to your agent about adjusting one (or more) of the three others.
If price can’t change, talk candidly to your agent about adjusting one (or more) of the three others
Credit Enhancement Service: Rapid FICO Improvement * A True Grant that requires no repayment with an option for 3% or 5% downpayment *NOT a First-Time Buyer program only, must be primary residence * 620 minimum FICO Score (Need help with credit? Call now! * Income Limit is 115% of Hud Median Income ($78,000 in L.A, San Bernardino & Riverside.; $97,000 in Orange County *Seller may pay 6% of closing costs *FHA or VA loans What We Promise Free Loan Scenario AnswersFast Loan Pre-ApprovalsClosing in less than 30 daysFree Credit Report education Seasoned Loan Processing-Only your Loan Officer, Processor works with Underwriter. We are 'Hands-On'Anne E James NMLS 254859 BRE 00919139Anne@RelianceFundingCA.com http://www.RelianceMortgageservice.com14831 E Whittier Blvd. Ste 204 Whittier CA 90605
What We Promise Free Loan Scenario AnswersFast Loan Pre-ApprovalsClosing in less than 30 daysFree Credit Report education Seasoned Loan Processing-Only your Loan Officer, Processor works with Underwriter. We are 'Hands-On'Anne E James NMLS 254859 BRE 00919139Anne@RelianceFundingCA.com http://www.RelianceMortgageservice.com14831 E Whittier Blvd. Ste 204 Whittier CA 90605