Getting spanked for paying your bills

 Credit Scoring  Comments Off on Getting spanked for paying your bills
Feb 262015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Before you use your tax refund to pay down your credit cards, here’s something to consider. Your financially responsible action just might hurt your financial situation.

I’ve seen this happen before, and it’s really frustrating. You’ve been carrying a large credit card balance, slowly paying it down, padding the bank’s pocket with your interest payments. You get a nice tax refund and decide to be financially responsible. You use it to pay off half the card balance, thinking it will boost your credit score. Instead, you get a letter from the bank saying they’ve cut your credit limit to just a couple hundred dollars more than your new balance. You’ve done nothing for your credit score because the card still appears to be maxed out, and you’ve lost spending power. What a deal!

So, what can you do? You can try to contact the bank and explain why your financial situation has improved. It may reinstate the limit. It might raise it, but it probably will do nothing.

Protecting military from foreclosure

 Regulations, Residential Mortgage  Comments Off on Protecting military from foreclosure
Feb 252015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Those fighting for our country need to know the Servicemembers’ Civil Relief Act (SCRA). This law provides some important financial protections for our military.

One of those protections was set to expire at the end of last year, but Congress extended it to make it permanent. The measure prohibits lenders from foreclosing for one year following the servicemember’s return from active duty. The measure is particularly important to reservists and National Guard members who have to give up full-time jobs to honor their commitments to our country. One important point: The service member must have taken out the mortgage prior to starting active duty.

I’ve provided a link to information about the Act at the end of my blog.

Click here to visit the the Veteran’s Administration’s Web page about the SCRA.

Rate update: Greece sent to timeout corner

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Greece sent to timeout corner
Feb 242015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Mortgage rates regained some upward momentum last week when it appeared that Greece and the EU had agreed to extend its bailout. However, is that really what happened? Actually, Greece was put in timeout to work on a list of reforms that EU countries must approve in order to extend the bailout. As that reality sank in over the weekend, rate markets began to reverse.

Even if the EU eventually agrees to extend the bailout, they’re only kicking the can down the road. Greece still shows no intention of living within its means.

Eurodrama shares the spotlight this week with Fed head Yellen’s two days of Congressional testimony. The Fed meeting minutes last week showed the Fed is concerned about deflation and overseas events. However, we’ve had a strong Jan jobs report since the meeting. Markets will parse Yellen’s words in search of signs the Fed may hike rates sooner than expected.

Rate update: Eurodrama still rules

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Eurodrama still rules
Feb 182015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Mortgage rates jumped to start the week when markets thought Europe was having a kumbayah moment. But the momentum faded as markets realized that the happy headlines were masking serious differences between Greece and EU officials. It didn’t hurt that the Federal Reserve meeting minutes, released today, reinforced what the Fed said in Jan, that it’s concerned about events overseas and falling inflation.

But back to Europe. The EU has given Greece ’til the end of the week to agree to an extension of its current bailout agreement. Greece’s new government will lose face if it agrees, but it may flush the Grecian economy if it doesn’t agree. Something has to give. Some analysts think the differences between the two are more a matter of semantics and expect an extension soon.

If they agree to an extension, it’s likely to keep some upward pressure on rates short term. However, an extension would only delay dealing with Greece’s insolvency and, thus, would change little about the current reality. That would leave rates adrift again, waiting for the next big headline.

And that may come next week with Fed head Janet Yellen’s semi-annual testimony before Congress.

FHA ends policy of charging extra interest

 Loan Programs, Residential Mortgage  Comments Off on FHA ends policy of charging extra interest
Feb 132015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

For loans that closed after 1/20 of this year, FHA is ending its policy of charging a full month of interest when you pay off the loan. Here’s how this has worked in the past. With other loan programs, when a homeowner sells a home, the seller pays interest up until the date of closing. However, sellers with FHA loans had to pay interest through the end of the month of sale. Thus, if the sale closed at the beginning of the month, the seller could lose several hundred dollars, even though the FHA loan had been repaid in full. As a result, home sellers with FHA mortgages often scrambled to close their sales at month end to limit the amount of extra cost.

With the change, the FHA loan program falls in line with the rest of the industry and, more importantly, comes into compliance with recent government regulations.

It’s important to remember that the change applies only to new loans, those that closed after 1/20 of this year. For loans from previous years, the old rule still applies.

Qualifying for a mortgage with student loans

 Loan Guidelines, Residential Mortgage  Comments Off on Qualifying for a mortgage with student loans
Feb 122015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you have student loans, qualifying for a mortgage just got easier. Fannie Mae and USDA both have updated loan guidelines to reduce the loan payments that we must count when qualifying you.

For loans in deferment, the new guidelines cut the percentage of the loan balance we must use when calculating your total monthly debt from 2% to 1%. This is a big deal because it reduces the impact of student loan debt by 50%. Further, if the actual payment is less than the 1% calculation, the guidelines state that we can use that lower payment, but only if it fully amortizes the loan.

Unfortunately, if the lower payment is due to an income-based or graduated repayment plan, we have to use the 1% fixed amount. Under these payment plans, the monthly payment may rise, which means the current payment may not provide an accurate estimate of the loan’s impact on your finances.

While USDA already has implemented the new guidelines, the changes won’t apply to conventional loans until 4/1.

Rate update: Greek tragedy may dictate US mortgage rates

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Greek tragedy may dictate US mortgage rates
Feb 112015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Is the rate rally over? Rates zoomed up after last Friday’s jobs report beat expectations and showed that wages increased at the fastest pace in a long time. As I pointed out last week, that’s been a big missing in our recovery. Real hourly earnings have been stagnant since the reported end of the recession.

So, if you’re applying for a mortgage, how should you react? Well, first of all, one month does not define a new trend. Wages declined in Dec, so Jan’s increase basically put us back on the previous trend. Unless other economic reports confirm rising wages, markets are likely to forget the increase soon.

Of more consequence to rate markets is the ongoing Greek tragedy. Eurodrama has been largely responsible for our recent low rates. Greece recently elected a new government, and its officials want to shed the country of EU-forced austerity. EU officials meet this week to discuss the situation. A reduction in drama would be bad for rates. Should it appear that Greece will leave the EU, rates could head down again.

Rate update: Could income growth spook rate rally

 Interest Rates  Comments Off on Rate update: Could income growth spook rate rally
Feb 022015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Mortgage rates last week dropped to their lowest levels since early May of 2013. The question now is can we hold onto the gains.

Most of the recent rally can be attributed to the slow train wreck occurring in Europe, and that doesn’t appear likely to change soon. Chinese data this morning showed its economy continues to slow, and recent US data has been lackluster. All of this typically would support low rates.

One thing that could change this outlook would be an indication of improving US personal income. While the economy has been adding jobs, wages on average are stuck in neutral. Today’s personal income report showed slow growth. Friday brings the monthly jobs report. Should that report also indicate wage growth, rate markets may get a little nervous, and our rate rally could stall.