Friday, February 20, 2015

What to Expect in 2015 - Mortgage Market



We are getting close to the busy season of home buying (spring/summer) so I thought now would be a great time to provide you with a little update in the mortgage market.  Purchase activity has been brisk due to limited inventory and refinancing now makes sense for many due to rates being close to 20 month lows.

Where are Interest Rates Headed?

As the economy continues to improve, interest rates should continue to rise. Below is a forecast from Fannie Mae, Freddie Mac, National Association of Realtors, and Mortgage Bankers Association for mortgage interest rates in 2015. We are halfway through Q1 2015 and so far interest rates have remained just below 4% but rates have been creeping up towards 4% in the last two weeks. 


How to Stand Out in a Multiple Offer Situation – Our Guarantee

It’s going to be another hot real estate market this year as homes-for-sale inventory is even lower than it was a year ago. If you plan on purchasing a house, you should expect competing offers. So how do you stand out without over paying?

Our closing guarantee will provide you and the seller $2,000 each if we do not close on time.  You can even assign your $2,000 to the seller to strengthen the offer.  This gives the seller an incentive to go with your offer compared to the same or similar offers.

We are a company that performs, and we put our money on the line to prove it.  No other lender that I know is willing to commit to performance like we do.  Some restrictions apply.  Please reach out to me for more information. 
 
News for First Time Homebuyers

3% Down is Back - Conventional Loans

Fannie Mae rolled out its My Community Mortgage in December of 2014. This program permits a low 3% down payment for first-time homebuyers.  Coming up with the down payment is the biggest obstacle for first-time homebuyers so it is great to see the 3% option back!  There is a slightly higher rate/fee for this program; however, first-time homebuyers are not “dinged” with a higher rate/fee for having poor credit or a small down payment.  Also, this program includes lower MI than FHA loans and the MI is cancellable.  This is a great product for first-time homebuyers that fit within the income limits.  

FHA
The Federal Housing Administration (FHA) has reduced annual mortgage insurance premiums by half of a percent. This action is projected to save more than two million FHA homeowners an average of $900 annually and will increase the purchasing power for homebuyers using an FHA loan.  Many believe FHA has made this move to stay competitive with Fannie Mae’s 3% down loan.  FHA requires at least 3.5% down but has certain guidelines that can make this program a better fit to some borrowers than Fannie Mae’s 3% down option. 

Mortgage Credit Certificate (MCC)
The MCC program provides a 20% federal income tax credit on the mortgage interest paid for that loan each year.  Using a $200,000 sales price, a borrower could save around $115 per month on an FHA loan at a 3.5% interest rate.  This program also works with conventional loans.  The MCC savings can help boost a first-time homebuyer’s purchasing power. 

The City of Portland received double the allocation of funds that it typically receives for the MCC program.  This means more first-time homebuyers will have the opportunity to take advantage of this great program.  The homebuyer must purchase an owner occupied unit in the City of Portland, proper. 


Oregon Bond Loan
This program is still around for first-time homebuyers buying in the State of Oregon.  Oregon Bond recently lowered its 30 year fixed interest rates which are now at 3.25% (Rate Advantage) and 3.75% (Cash Advantage).  The Cash Advantage program will provide 3% of the loan amount towards the buyers closing costs/prepaids helping the buyer get into the with less funds.  Gift funds are acceptable for Oregon Bond which is another great feature for buyers who are strapped on cash. 

Housing Market

On average, Oregon home values witnessed above average appreciation throughout 2014. It was a great year for homeowners as both home values and rents went up. Appreciation slowed down compared to 2013 and we expect appreciation to slow down even further in 2015, but to continue appreciating. This is a good thing as it creates a more stable market.