Weekly Recap (10/25/10-10/30/10), Halloween Editionby Tim Manni
There’s nothing scarier than future uncertainty. When it comes to a mortgage and the monthly payments, the majority of borrowers like the stability that comes with a long-term, fixed-rate loan. You can eliminate the fear of an unknown future mortgage payment by choosing a fully fixed-rate mortgage.
Yet with conforming adjustable rate mortgage (ARM) interest rates hovering in the low-to-mid threes, there are more and more borrowers out there who are tempted to refinance back into an ARM. When someone asks me whether or not they should refinance back into an ARM vs a fixed-rate loan, my response is always akin to that old saying, “If the shoe fits, wear it.”
The sheer responsibility that comes with owning a home — making all your payments on time, maintaining the upkeep of the property, etc. — can be a frightening task for those who aren’t prepared. However, before the monthly payments and the lawnmowers, comes the mortgage qualification process.
If you’re in the market to buy a home, achieving the American dream isn’t going to be easy thanks to all the stringent borrowing requirements placed on homebuyers these days.
To give you the best shot at qualifying for a mortgage, Alexandra Kay, professional writer and contributor to HSH.com, offers five ways to make sure your credit score doesn’t scare away any mortgage lenders.
If you ask a borrower, “who is to blame for your HAMP denial?” They’ll likely say the servicer. If you ask the servicer, chances are they’ll say it’s the borrower’s fault. Wherever the proper blame lies, a few things are for certain: the foreclosure epidemic is steady if not rising, and failed modifications are still outnumbering permanent mods.
But as the Treasury Department reiterated this month, it’s the participating servicers who are the ones with the obligation to the borrower. If a borrower doesn’t provide the proper paperwork, then their denial is their own fault; however, “participating servicers are required to certify they tried a variety of solutions including a HAMP modification, a proprietary one, a short sale or some other option to help borrowers avoid foreclosure,” according to National Mortgage News.
Homeowners: Looking for a reason to pull the trigger on that home repair or renovation? If so, here’s a reason: federal tax credits for installing certain energy-efficient improvements expire on December 31, 2010:
The tax credit for efficiency upgrades in existing homes (Internal Revenue Code Section 25C) is available for 30 percent of the cost, up to a $1,500 limit for 2009 and 2010, for the installation of certain types of insulation, windows, roofs, water heaters, heat pumps, air conditioners and furnaces. Details on the kinds of products that qualify and instructions for obtaining the credit are available at www.nahb.org/efficiencytaxcredit.
The latest article from HSH.com, “4 Factors and 3 C’s: Mortgage Markets Past the Elections,” explores “four areas in various states of flux which need to solidify” before clarity, certainty and confidence can return to the markets. Our hope is that after the Congressional elections on November 2, we’ll get a better sense of how these four areas will change or hopefully improve our overall economic picture. As the elections grow nearer, lawmakers have come to a legislative standstill, not knowing whether their party will be in the majority come November 3.
The elections are coming at a time when our country is mired with a lack of consumer confidence because our leaders haven’t been able to provide us with much clarity about where our economy is headed in the near future.
Perhaps the midterm elections will provide a little shakeup to the economy. As economic conditions remain mostly flat, so do mortgage rates. According to the latest edition of HSH.com’s Market Trends Newsletter:
Mortgage rates are mostly as flat as the economy, and there doesn’t seem to be any strong reason form them to budge much one way other the other, at least not until we get past the forthcoming mid-term elections.
HSH’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the average rate for 30-year fixed-rate mortgages declined by four basis points (.04%), ending HSH.com’s national survey at 4.58%.