In his semi-annual testimony to Congress, Fed Chief Bernanke described the economic outlook as “unusually uncertain”. According to Bernanke, this is the worst labor market since the Great Depression, and it is recovering more slowly than expected. Still, the Fed forecasts modest economic growth in 2010 with low inflation. Important for mortgage rates, Bernanke expressed reluctance to provide further monetary stimulus, unless the economy falters badly. He suggested that the upside of additional Fed actions may be limited, while the downside is that it would raise future inflation expectations. 

 This weeks economic calender consists of new homes sales on 7.26, Durable Orders and Beige Book on 7.28, and GDP (most important data) as well as Chicago PMI on 7.30. 

Conforming Limits:

1 unit $417,000;   2 unit $533,850;    3 unit $645,300;    4 unit $801950                              

These rates do not reference a specific loan program; rather, they reflect general market conditions, which are subject to change at any time. 

Credit risk pricing and how it impacts your interest rate/discount points (cost to buy rate down): 

• Rates change daily – Mortgage loan interest rates and discount points are driven by the prices of Mortgage Backed Securities.
• Credit (fico) Scores – Lenders look at your mid credit score (typically 3 credit bureaus) to determine you credit risk.  A+ credit would be 740 and above.  From there they are categorized in 20 point increments (720-739, 700-719, 680-699, 660-679, 640-659, 620-640, no fico)
• Loan to value – Typically the lower the loan to value (LTV), the lower the risk.  Loan to values of 60% or less are considered the lowest risk
• Transaction type – The risk level from low to high – Purchase, rate and term refinance, and cash-out refinance.
• Transaction type continued – The risk level from the low to high – Primary residence, second home and investment property
• Property type – Single family residence, PUD, condo then 2-4 unit properties.
• Escrow account – If your LTV is 80% or lower, then you have the option to waive escrows (taxes and insurance included in monthly payment), but it can affect your discount points.

THERE ARE NUMEROUS LOAN PRODUCTS AVAILABLE:  

  Conforming – Loans designed for primary, second and investment properties.  There are restrictions in regards to loan amount (SFR is typically 417,000, but in some areas it may be higher). 

  Non-Conforming – .  Typical loan amounts above 417,000.00. 

  FHA- 30 year amortized loan.  3.5% down required by the borrower (can be gifted by an acceptable source). 

  VA- Guaranteed by the federal government based on the amount of entitlement to the veteran in conjunction with the loan amount.

Weak Economic Growth helps mortgage rates.

Conforming Limits:

1 unit $417,000;   2 unit $533,850;    3 unit $645,300;    4 unit $801950                              

These rates do not reference a specific loan program; rather, they reflect general market conditions, which are subject to change at any time.

 Credit risk pricing and how it impacts your interest rate/discount points (cost to buy rate down):

 Rates change daily – Mortgage loan interest rates and discount points are driven by the prices of Mortgage Backed Securities.

• Credit (fico) Scores – Lenders look at your mid credit score (typically 3 credit bureaus) to determine you credit risk.  A+ credit would be 740 and above.  From there they are categorized in 20 point increments (720-739, 700-719, 680-699, 660-679, 640-659, 620-640, no fico)
• Loan to value – Typically the lower the loan to value (LTV), the lower the risk.  Loan to values of 60% or less are considered the lowest risk
• Transaction type – The risk level from low to high – Purchase, rate and term refinance, and cash-out refinance.
• Transaction type continued – The risk level from the low to high – Primary residence, second home and investment property
• Property type – Single family residence, PUD, condo then 2-4 unit properties.
• Escrow account – If your LTV is 80% or lower, then you have the option to waive escrows (taxes and insurance included in monthly payment), but it can affect your discount points.

THERE ARE NUMEROUS LOAN PRODUCTS AVAILABLE:

 Conforming – Loans designed for primary, second and investment properties.  There are restrictions in regards to loan amount (SFR is typically 417,000, but in some areas it may be higher).

Non-Conforming – .  Typical loan amounts above 417,000.00.

FHA- 30 year amortized loan.  3.5% down required by the borrower (can be gifted by an acceptable source).

VA- Guaranteed by the federal government based on the amount of entitlement to the veteran in conjunction with the loan amount.

Rural Housing- Must be in rural housing area.  100% financing based on appraised value.  Adjustable household income cannot exceed the maximum allowable income limits (currently suspended).

All-in-One Construction –   one time close for both conforming and non-conforming.

 Other products available

 ANY QUESTIONS REGARDING THIS INFORMATION PLEASE CONTACT:

Jim Hungerford at 971-226-8403

Mortgage news last week:

There were several factors that week that had a negative impact on mortgage rates.  As a result rates climbed.

The Fed’s have purchased almost $1.25 trillion of MBS since the start of 2009.  Their intent is to sell there MBS holdings once the economy is strong enough.

This weeks economic news:

The biggest news will be this Friday, Employment report.  Personal income will be released today, Chicago PMI on Wednesday, ISM manufacturing on Thursday.

Mortgage market is doing well.

30-yr rates are back near 5%, depending on if the borrowers wants to pay discount points or not.   Most economist feel rates are not going to go much lower.  If they do, it will be becasue the economy is not doing well.

 In last week’s announcement the Fed made it clear that they would likely keep rates low until the economy starts to pick up some steam. And for now, credit, housing, and unemployment are still major issues.