Thursday, January 29, 2015

Free, No Cost, No Obligation Mortgage Consultation

Do you want to find out if you qualify to buy a home? Have you had past credit issues and wonder if you are now ready to buy a home? Free, no cost, no obligation consultation.

Thursday, January 22, 2015

FHA Announces Mortgage Insurance Reduction

This announcement paves the way for some homeowners to reduce their monthly mortgage payment. It also helps those seeking to purchase a home with an FHA loan by requiring less mortgage insurance.

Monday, January 19, 2015

When To Rent, When To Buy

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. Here are some terms and information that might help answer your questions.
Price of home
Purchase price of the home you wish to buy.

Cash on hand
Cash you have for the down payment and closing costs.

Interest rate
The current interest rate you expect to receive on your mortgage.

Term in years
The number of years over which you will repay this loan.

Property tax rate
Your property tax rate. 1% for a $100,000 home equals $1,000 per year in property taxes.

Home insurance rate
Your homeowner's insurance rate. 0.5% for a $100,000 home equals $500 per year for homeowner's insurance.

Loan origination rate
The percentage the lending institution charges for its origination fee. 1% for a $100,000 home equals $1,000.

Points paid
The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.

Other closing costs
Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.

Association and maintenance fees
Any association fees you are required to pay per month with the ownership of this home. Also include any other maintenance costs you expect to incur with the ownership of this home that you are not paying while you continue to rent.

Total for down payment
Total funds remaining for down payment.

Mortgage amount
Total amount of loan.

Monthly rent payment
Amount you currently pay for rent per month.

After-tax investment return
The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home.
The actual rate of return is largely dependent on the type of investments you select. For example, from December 1999 to December 2009, the average annual compounded rate of return for the S&P 500 was -0.6%, including reinvestment of dividends. From January 1970 to December 2009, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Income tax rate
Your current marginal income tax rate.

Expected inflation rate
What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2009. The CPI for 2009 was -1.0%, as reported by the Minneapolis Federal Reserve. Inflation rate is used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.

Home appreciates at
Annual appreciation you expect in the home you are purchasing.

Future sales commission
The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.

House payment
Total of principal, interest, taxes and insurance (PITI) paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.

Initial tax savings
The value of the tax deduction you receive on your mortgage's interest and home's property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250. (At a tax rate of 25%).

Initial principal payment
Total of principal paid per month on your mortgage.

Net house payment
Your initial house payment minus the value of the tax deduction and principal payment.

Net home price
Net selling price of your home after subtracting any sales commissions.

Monthly PI
Monthly principal and interest payment.

Monthly PMI
Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.

Tuesday, January 13, 2015

203K Mortgage

Mike gives an overview as to why a 203K mortgage can be extremely beneficial to a home buyer. See more at

Saturday, January 10, 2015

A Welcomed Boost

The recent stock market plunge related to dropping oil prices got a welcome boost with the release on Wednesday of the Federal Open Market Committee’s minutes from their last meeting.  The Fed commitment to make sure that the U.S. economy keeps growing, combined with foreign governments making in their own commitments to do whatever is necessary to help their respective countries avoid a return to a recession, gave investors much to cheer about on Wednesday and Thursday.

The Fed has acknowledged that there is a chance they may have to move up their plan for raising interest rates if the economy gets a significant boost from the lower oil prices.  However, the Fed reiterated to their commitment to make sure anything they do will not stifle economic growth.  With the price of oil having declined just about 50% in less than 2 months, consumers are seeing a lot of savings coming their way both at the pump and their home heating bills. This savings has the potential to spur economic growth significantly in the coming months.

Typically an announcement from the Fed about raising interest rates would be enough to scare investors and tank the market for a couple of days.  However with this latest announcement the exact opposite happened.  Investors see the Fed’s comments as optimistic about the economic future in the U.S. which means that the stocks could start riding a bull market into 2015.  No one knows for sure what is going to happen with the price of oil, but it seems likely that prices will not rise significantly in the coming months.

On the housing front good news was released on Tuesday that will make homeownership more affordable.  President Obama announced that the Federal Housing Administration will be lowering the cost of their insurance by .50%.  This is will result in a significant savings to purchasers.

This reduction comes on the heels of last week’s announcements by Fannie Mae and Freddie Mac regarding their new 97% financing programs.  The combination of the launch of all of these programs will make purchasing a home more affordable and attainable for many more first time buyers.

In order for housing to truly recover, first time buyers must enter the market.  These program announcements will increases a buyer’s purchasing power, and or make home ownership more affordable as more of a borrowers mortgage payment can go towards the purchase price of a home versus insurance for the loan.  Homebuilders, real estate professionals and the lending community all applauded these new initiatives.

With the stock market tumbling over the last week due to concerns about oil prices, mortgage rates have also dropped significantly.  With the national average of the 30 year fixed hovering around 3.80%, this also creates more affordability for purchasers to enter the market.

Next week’s potential market moving reports:

·        Wednesday January 14th - MBA Applications & Retail Sales
·        Thursday January 15th – First Time Jobless Claims & Producer Price Index
·        Friday January 16th – Consumer Price Index, Industrial Production & Consumer Sentiment

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, January 7, 2015

Obama to Cut FHA Mortgage Insurance Premiums to Boost Homeownership

In an effort to expand homeownership among lower-income buyers, President Barack Obama plans to cut mortgage-insurance premiums charged by a government agency.
The annual fees the Federal Housing Administration charges to guarantee mortgages will be cut by 0.5 percentage point, to 0.85 percent of the loan balance, Julian Castro, secretary of the Department of Housing and Urban Development, said today during a conference call with reporters. Under the new premium structure, FHA estimates that 2 million borrowers will be able to save an average of $900 annually over the next three years if they purchase or refinance homes.
Shares of private insurers that compete with the FHA fell on the news, which Obama plans to discuss during a visit to Phoenix tomorrow.
“We believe this is striking a very good balance between being fiscally responsible and also enhancing homeownership opportunities,” Castro said.

Sunday, January 4, 2015

It Appears 2015 Is Starting Off Very Happy For Consumers

A very Happy New Year to you, and based upon many things happening in the economy, it appears that 2015 will start off to be very happy for consumers.  Oil prices continue to plunge, inflation remains very much in control, the labor markets are improving, mortgage rates remain historically low, and consumer confidence is very strong.  All of these factors coming together at the same time have the potential to give a nice lift to the economy in the first quarter of 2015.

Despite the fact that the Case-Shiller House Price Index for October continued to show that home value appreciation is stalling, many people feel that in the coming months housing will begin a strong turnaround.  With mortgage rates remaining low, a mild start to winter, and the previously mentioned lowering fuel costs, this has the potential to give a nice boost to the housing market.

The S&P Case-Shiller HPI reported for the month of October that home prices declined 0.1%.  Values continue to remain above the same time last year by 4.5%.  It is likely that the November and December reports will show similar stagnant home value appreciation as October.  However, given where we are with the positive influences on the economy today, these forthcoming reports are likely to be outdated the same day they are released.  We have to wait and see what happens with housing market activity.  I am very optimistic for the start of 2015 related to real estate activity and price appreciation.

With the Christmas and New Year’s holidays taking place, combined with minimal news headlines to impact the markets, we have seen the stock market continue to set new records.  Given recent trends and consumer sentiment continuing to improve, we are likely to see the stock market continue to rise over the next couple of weeks barring no major domestic or international events that would derail the positive momentum.

One of the topics that keeps coming up is the discussion about will oil prices rise as quickly as they have fallen?  The consensus is that the chances of that happening are extremely slim.  There are a number of factors creating downward pressure on oil prices and none of them are likely to change anytime soon.

The first factor impacting oil prices is that despite how much they have fallen, OPEC has stated that they will not cut production.  As long as the market remains flooded with an oversupply of oil, prices will be hard pressed to rise.  Additionally, as the United States and Europe continue to focus on fuel efficiencies, the demand for oil will continue to drop.  With decreasing demand, prices will not rise.

Lastly, since the economy in China, one of the world’s greatest users of oil, is slowing, demand for oil has dropped.  Once again, with less demand, there is no pressure for prices to rise.

Next week’s potential market moving reports:

·        Tuesday January 6th – Factory Orders & ISM Non-Manufacturing Index
·        Wednesday January 7th - MBA Applications & FOMC Minutes
·        Thursday January 8th – First Time Jobless Claims
·        Friday January 9th – National Employment Situation

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Thursday, January 1, 2015

Happy New Year from Big Valley Mortgage!

May the New Year bring us more wonderful opportunities to work together. Happy New Year!