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Mortgage rates fall to one-year low, setting the stage for a sunny spring selling season

Published: Feb 21, 2019
By Andrea Riquier

Rates for home loans fell to the lowest in over a year as investors remained concerned about economic headwinds, setting up the housing market for a strong spring season.

The 30-year fixed-rate mortgage averaged 4.35% in the February 21 week, mortgage guarantor Freddie Mac said Thursday. That was down from 4.37% in the prior week and the lowest since early February 2018. The popular product has eked out a weekly increase only once in 2019.

The 15-year adjustable-rate mortgage averaged 3.78%, down three basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.88%, down from 3.84%.

Those rates don’t include fees associated with obtaining mortgage loans.

Mortgage rates move in near lockstep with the 10-year U.S. Treasury note TMUBMUSD10Y, +1.90% although sometimes it takes the mortgage market a few days to catch up to the bond market.

See also: The average adjustable-rate mortgage is nearly $700,000. Here’s what that tells us.

Bond yields, which decline as prices rise, have been caught in “cross-currents,” in the words of Federal Reserve Chairman Jerome Powell. The dragged-out U.S.-China trade talks have helped boost the attractiveness of assets considered safe havens. And more recently, yields have declined as Federal Reserve officials increasingly speak out in favor of moderating the pace of reducing the bonds they hold on their balance sheet.

Still, investors are keeping a watchful eye on the supply of new Treasury bonds hitting the market. The massive deficits created by the 2017 tax cuts and spending increases are being financed by more bond issuance, and excess supply could erode demand – and pricing power.

For now, though, there’s more buying than selling of Treasurys – good news for borrowers. (Here’s a look at how mortgage applications increase as rates decline, from last month.)

Even if mortgage rates behave, there are plenty of headwinds arrayed against would-be home buyers. Debt consolidator Freedom Financial’s Freedom Debt Relief subsidiary recently conducted a survey of consumer attitudes toward debt and the economy.

Survey respondents said that their combined debts – student loans, credit card balances, medical debt, and more – were among the big factors keeping them from buying a house. That was true for 26% of members of Generation X, 36% of Millennials, and 35% of Gen Y-ers, those born from 1995 on.

In a reminder of the economic forces stacked against consumers, survey respondents of all ages said affordable health care was their biggest priority, followed by wage growth. Respondents listed affordable housing third, after those two considerations.

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Divorce And Mortgage: Your Options When Separating

By Dan Rafter

Divorce And Mortgage : Your Options When Separating

By Dan Rafter

Divorcing With A Mortgage Is A Common Challenge

Divorces are anything but simple.

Complicating the process are decisions about your co-owned home and mortgage.

You’re not alone in this challenge. According to the Centers for Disease Control and Prevention (CDC), more than 800,000 couples divorced in 2016, the most recent year for which data is available.

Roughly 60 percent of the U.S. population owns a home, meaning a majority of divorcing couples must make tough housing decisions.

There are time-tested options for the mortgage that will help both parties move on after separation. These options depend on factors such as home equity, credit scores, and whether one party wants to remain in the home.

Almost any situation can be remedied by one of these options.Verify your new rate (Jan 29th, 2019)

Refinance The Mortgage

The cleanest solution could be to refinance the mortgage and leave only one person’s name on the loan.

After the refinance closes, only the person whose name is on the mortgage would be responsible for making the monthly payments.

You could then take the name of the person who won’t be making the mortgage payments off the title of the home.

If necessary, use a cash-out refinance to pay out the portion of equity due the departing individual.

That’s the simplest solution, but it only works if certain conditions apply. There are at least a few issues that can stop you from completing a refinance.

Income. You might not have the income to pay the mortgage on your own. You find that the lender will not approve the loan for a single-income household. Unless you can increase your income quickly, you may have to sell the home.

Credit. Maybe your credit scores have fallen since you took out your original mortgage loan. You might no longer qualify for a refinance. You can overcome a low credit score with a rapid rescore, but success using that method is far from certain. Often, the only “fix” for a low credit score is to rebuild credit history over a long period of time.

Equity. If you recently purchased or bought the home when values were higher, your home may not have enough equity to refinance. For instance, if you have built only a few percent in equity, a refinance could be cost-prohibitive or altogether unavailable. Fortunately there are mortgage options that can help you deal with a lack of equity.Verify your new rate (Jan 29th, 2019)

Dealing With Low Home Equity In A Divorce

Certain refinance types allow you to remove a borrower despite the home’s low equity position.

HARP refinance to remove a spouse

The Home Affordable Refinance Program, or HARP, might work if you purchased your home before June 2009 and are current on payments. This loan is available only to borrowers with a Fannie Mae or Freddie Mac loan.

The remaining spouse will have to re-qualify for the loan to prove they can make the payments without the assistance of the former spouse.

Alternatively, the remaining spouse can prove he or she has been making the full mortgage payment for the past 12 consecutive months.

FHA streamline refinance

If you purchased or last refinanced your home with an FHA loan, you are permitted to refinance to remove a borrower.

However, the remaining spouse must show that he or she has been making the entire mortgage payment for the past six months. This option is best for those who have been separated for at least this long.

But it is not a ideal if you need to finalize your mortgage situation right away.

VA refinance loans during divorce

You can use a VA streamline refinance to remove a spouse after a divorce. Typically, the veteran must remain on the loan.

If the departing individual is the veteran, the remaining spouse would have to refinance into another loan type.

However, if the remaining spouse is eligible for a VA loan, he or she may opt for a VA cash-out loan. This option allows homeowners to open a loan of up to 100 percent of their home’s current value.

This feature could enable the remaining spouse to pay out the departing partner’s equity in the home according the divorce decree.

There is no shortage of refinance options in the face of divorce. But if you can’t refinance for whatever reason, then you’ll need to find another solution.Verify your new rate (Jan 29th, 2019)

Sell The Home

Selling the home is another option. You and your spouse would agree to place the home on the market and then split the profits when it sells.

You would still need to determine how mortgage payments are handled before the sale closes, but this is a short-term rather than a long-term challenge.

Again, though, this solution might not work in a divorce case.

Maybe you and your spouse have children, and you don’t want to force them to move out of the home in which they’ve grown up. Or, the real estate market in your area is a weak one, and you’re afraid you’ll lose money if you sell.

Equity is important when selling. It typically costs between seven and ten percent of your home’s value to sell. This total consists of agent fees, taxes, title insurance, and other fees.

In other words, you may have to sell a home for $220,000 even if you only owe two hundred thousand.

Otherwise you might need to come in with a check at closing of the sale.

If you can’t sell your home or refinance your mortgage loan, there is one more option. But it is not without its risks.

Keep The Home And Mortgage

If you’re not willing or able to sell or refinance your home, your other choice is to keep the home and the mortgage intact.

Both parties remain on the loan and liable for the payment.

This requires specific language in the divorce agreement about who will make the mortgage payments each month. Maybe your agreement will state that your former partner will pay the mortgage, even though you and your children will be the ones living in the home.

The agreement might state that you and your former partner will pay half of the mortgage each month.

Keep in mind that this situation can lead to missed payments if your former partner won’t or can’t abide by the divorce decree.

Say your former spouse is supposed to pay the mortgage each month, but your name remains on the loan. If your former partner misses a payment, your three-digit FICO credit score could fall by as much as 100 points.

When your name remains on the loan, your lender considers you equally responsible for making the payments each month.

Your mortgage holder will not dismiss late payments, even with a divorce decree that states your ex is responsible.

For this reason, a shared mortgage after a divorce might only work well in amicable divorces.

Protect Your Credit

You can take certain steps to protect yourself.

The divorce papers could state that your former spouse will live in the home and apply for a refinance at a certain point. When the refinance is complete it will remove your name from the mortgage. Your divorce agreement might state that your ex will keep making his or her payments until the refinance officially closes and you are no longer responsible for the mortgage.

You might provide additional protection for yourself by inserting a clause in your divorce agreement. It would say that if your ex doesn’t close the refinance during a certain period, the home that you once lived in will be put up for sale.

Remember, though, that no matter what your divorce papers say, you can never fully protect yourself from the actions of your former partner when a mortgage is involved. Even if the divorce papers include penalties, there is no guarantee that your ex will keep making those payments.

Divorcing couples who want the safest option for all parties may want to sell the home or refinance the mortgage.

What Are Current Rates For A Divorce Mortgage?

Divorce is complicated, but it does not have to be an end to your homeownership goals. Today’s low refinance rates make it more feasible to take on the entire mortgage payment for a divorcing party who wishes to stay in the home.

Check today’s rates and get a trustworthy assessment of all your options. Then make an informed decision on how you will move forward.

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NAR Survey Finds American Dream Depends on Affordability

by: Jann Swanson

Homeownership as an American dream is alive and well according to new data from the National Association of Realtors® (NAR) 2018 Housing Opportunities and Market Experience (HOME) Survey.  The survey was conducted across all 12 months of last year.  Sixty-four percent of respondents were homeowners, 27 percent were renters, and 9 percent were non-homeowners living with a family member without paying rent.

NAR just released Aspiring Home Buyers Profile, which focuses on survey responses from non-homebuyers, both those who rent and those living with a family member. Of the non-owners, 45 percent were 34 years or under, 59 percent make an income of under $50,000, and 43 percent live in suburban areas.  Across the quarters of 2018 non-homeowners were consistent in their desire to own a home in the future, with about three-quarters saying it was part of their American Dream. Nine out of ten homeowners gave that same response.

However, over the course of the year, non-owners’ perception of whether it was currently a good time to buy that home decreased from 51 percent in the first quarter to 47 percent in the fourth.  Over the same period homeowner perceptions dropped only 1 point to 72 percent.  There was little variation among non-owners by age groups, income, or city size. The single exception was in the West where the perception it was a good time to buy was lower than in all other regions.

 

 

Non-homeowners said their chief reason why they do not own a home is their inability to afford a mortgage.  The second biggest reason was that current life circumstances mitigate against it, while a smaller number said they need the flexibility of renting.

 

 

When asked what might provide the trigger for buying a home in the future, 28 to 31 percent of non-owners each quarter said an improvement in their financial situation would be the top reason that would encourage them to buy a home in the future. In each quarter, 26 to 30 percent of non-owners said a change in lifestyle – such as getting married, starting a family or retiring – would be the primary reason they would make a future home purchase.

 

 

Both homeowners and non-owners were asked about adult family or friends moving into their homes, the span of time this individual(s) lived within the household, and if they thought about moving to a new home because of the change.  Eleven percent of homeowners and 14 percent of non-owners said they had an adult, usually an adult child, move into with them.  Of those, 44 percent said that the individual intended to stay for over one year or permanently. Eighty-eight percent of those surveyed who had someone move into their home reported that their living situation remained acceptable and therefore did not warrant consideration of moving into a different home. Twelve percent said they did consider moving or ultimately did move due to their home situation changing.

Lawrence Yun, NAR chief economist, says unaffordable housing has caused a number of potential buyers to hold off on purchasing a new home. “The lack of affordable and moderately priced homes has forced non-homeowners to delay achieving that part of the American Dream. However, as the survey confirms, significant lifestyle changes like marriage or starting a family often spur non-owners to pursue home-ownership.”

“While home sales were slightly down in 2018, there is still a sizable pent-up housing demand. Economic growth, interest rates, and the supply of moderately priced-homes will dictate how well the real estate industry will do this year,” said Yun.”

NAR’s survey was conducted by random dial telephone surveys each month in 2018.  An average of 680 interviews were conducted each month.

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Mortgage rates hit a 4-month low, so what’s holding back the housing market?

By

Joe Raedle/Getty Images A for-sale sign is posted in front of a home in Miami.

Rising mortgage rates are quashing the housing market.

Sound familiar?

It’s a truism that’s been repeated frequently over the past year or so, as mortgage rates have climbed and housing market activity has faltered. The only problem is, it’s not all that straightforward. There’s a lot going on in the housing market right now, and mortgage rates may just be the easiest culprit.

See also: Here’s what mortgages will do in 2019 — from the people who usually get it wrong

First, some background: the 30-year fixed-rate mortgage averaged 4.51% in the first week of the new year, according to mortgage finance provider Freddie Mac. Throughout all of 2018, the 30-year-fixed averaged 4.55%, 56 basis points higher than in 2017.

What matters more, as MarketWatch has chronicled extensively, is the fact that the inventory of properties is slim, and prices are still rising far too fast for buyers to keep up. Nationwide, home price appreciation slowed for the third straight month in October, according to Case-Shiller’s closely-watched price index. But that meant prices were still up 4.7% compared to a year earlier. Meanwhile, even a blowout jobs December jobs report couldn’t get wages that high — they rose 3.2% compared to a year earlier.

Read: U.S. gains 312,000 jobs in 10-month high that shattered Wall Street forecasts

Americans are surprisingly attentive to price fluctuations. In the most recent home purchase sentiment survey from Fannie Mae, the net share of respondents saying that home prices would go up fell for the third straight month.

But they’re also attuned to other market movers, like Washington uncertainty, the reality that financial market gyrations are taking a bite out of their down payments, and the fact that the long economic expansion may be coming to an end sooner rather than later. In December, Fannie also found that the number of respondents saying their personal financial situation would likely get better declined, even as the number of those saying their situation would get worse increased.

“Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy,” Freddie Chief Economist Sam Khater said last week. “However, it will be interesting to see how the recent turmoil in the stock market will affect homebuying activity in the coming months.”

 

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Housing market expected to stabilize in 2019: Fannie Mae

Slower economic growth will mean more static interest rates and increasing affordability, a new study from Fannie Mae says.

Economic growth is expected to slow in 2019 leading to stabilized home sales and mortgage rates, according to Fannie Mae‘s economic and strategic research group.

A widening trade deficit and moderation of business investment growth have Fannie Mae’s team predicting that full-year gross domestic product growth (GDP) will slow to a 2.3 percent increase — down from this year’s projected 3.1 percent increase.

Consumer spending will continue to be the largest driver of growth, but in the third quarter of 2018 business investment growth slowed significantly. It could be even further impacted by higher tariffs, uncertainty around trade deals and rising interest rates.

“We expect full-year 2018 economic growth to come in at 3.1 percent — an expansion high — before slowing markedly to 2.3 percent in 2019 and 1.6 percent in 2020,” Doug Duncan, Fannie Mae’s chief economist said in a statement. “Fading fiscal policy, worsening net exports, and moderating business investment all contribute to our projection that GDP growth will begin to slow in 2019.”

Purchase mortgage originations are expected to climb in 2019, but a substantial decline in refinanced mortgages is expected, which should overall result in a small drop in total origination volume, the research team said. Stabilizing mortgage rates — along with expected strong job growth — should give more prospective homeowners a chance to adjust to the new rates, the report states.

“If mortgage rates trend sideways next year, as we anticipate, and home price appreciation continues to moderate, improving affordability should breathe some life into the housing market,” Duncan said.

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Home for the holidays: Fannie, Freddie stall foreclosure evictions

The government-sponsored enterprises are suspending eviction lockouts for the holiday season.

Though legal and administrative proceedings may advance, evictions for units owned by Fannie Mae and Freddie Mac will be halted between Dec. 17 and Jan. 2. This means while other pre- and post-foreclosure activities will not be affected, and servicers may continue to file related documentation, homeowners may remain in their houses during this period.

Foreclosures

The eviction moratorium applies to single-family and two-to-four unit properties, according to Fannie Mae.

The share of loans in the foreclosure process at the end of the third quarter was 0.99%, which is down 24 basis points from a year ago and 6 basis points from the previous quarter, according to the Mortgage Bankers Association. Mortgage delinquencies overall inched up, but a healthier economy is still keeping them low.

The suspension lockouts issued by Fannie and Freddie have also been issued in previous years to provide relief for households during the holidays.

This moratorium also comes at a time when legal proceedings, late payment fees and credit bureau reporting have been temporarily suspended for properties affected by natural disasters like the recent California wildfires.

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