Bulls & Blogs

Rate update: Tariffs, Turkey, and Trump move rates

Interest Rates, Residential Mortgage Comments Off

Aug 282018

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

By G. Steven Bray

Watching paint dry has been more exciting this summer that watching interest rates. Even the latest impeachment bait couldn’t get rates to move out of their current range. When will the boredom end?

If history holds any clues, probably sometime in Sep. Why Sep? Well, first of all, traders will be back at their desks trying to make money. Tradeflow movement in bond markets is more likely when there are, well, traders.

One of the events that might influence tradeflows is the Federal Reserve meeting at the end of Sep. The Fed is widely expected to raise short term interest rates once again, and market watchers will carefully parse the post-meeting pronouncements to glean whether another hike is likely in Dec. A couple of Fed members recently have cautioned against a Dec hike.

Before we get to the Fed meeting, we’ll see new inflation data in addition to more headlines concerning tariffs, Turkey, and Trump – and, of course, the mid-term elections. Trade deals with China and our NAFTA partners could remove some of the risk premium currently built into rates – edging rates higher again as we’ve seen the last couple days. If the Turkish crisis proves to be contagious, a new risk-off trade could lead to lower rates. And any political developments that investors believe could imperil the current economic boom would do the same.

I realize I’m being somewhat equivocal concerning the direction of rates, and that’s because I don’t see a lot of reasons for rates to move – except in response to headlines. If you’re floating your rate right now, consider that rates still are close to their recent lows, and I think it will take more significant headlines to move rates lower than higher.

More low down payment options

Loan Programs, Residential Mortgage Comments Off

Aug 222018

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

By G. Steven Bray

Fannie Mae and Freddie Mac have 3% down conventional loan programs that target low-to-moderate income folks. We used to call these community lending programs because they’re designed to fulfill Fannie and Freddie’s mandate to provide assistance for mortgages to low and moderate income families and underserved areas. The programs go by the monikers HomeReady and HomePossible.

Unlike the programs we discussed yesterday, you don’t have to be a first-time homebuyer to qualify. However, if the buyers are first-timers, one of them must complete a homebuyer education course for the HomePossible program. For HomeReady, one must complete homebuyer education regardless of first-timer status.

The programs are income-limited. By that I mean your total income cannot exceed a limit, which can differ even within a given county. For both programs, the limit typically is set to an area’s median income. However, the programs waive the limit in disaster areas and in certain areas Fannie and Freddie consider to be underserved. Call me if you want some help determining the income limit for your area.

So, given the programs we discussed yesterday, who cares that we have another 3% down program? Three reasons:

– Conventional low down-payment programs require mortgage insurance, which can bump up your housing payment quite a bit. HomeReady and HomePossible have lower mortgage insurance rates than the other low down payment programs.

– Second, the programs’ easier guidelines may make it easier for you to qualify.

– Finally, you don’t have to be a first-time homebuyer. For HomePossible, you can’t currently own other real estate, but Freddie carves out some exceptions to that in cases of divorce or inheritance.

The programs have other features and restrictions that may make one more appropriate for you than the other. Give me a call to see what’s the best fit for your situation.

Freddie adds another low down payment option

Loan Programs, Residential Mortgage Comments Off

Aug 202018

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

By G. Steven Bray

Freddie Mac recently joined Fannie Mae in offering a 3% down conventional loan program with no income limitations. Freddie calls its program HomeOne, and like Fannie’s program, it targets first-time homebuyers.

A lot of folks hear that, first-time homebuyers, and tune out, but you may be a first-time homebuyer and not realize it. Fannie and Freddie define a first-time homebuyer as someone who hasn’t owned real estate in the last 3 years. Freddie expands that definition to allow folks who owned a home with their ex-spouse to qualify.

If you’re buying a home with another person, only one of you has to be a first-time homebuyer. And if all of you are first-time homebuyers, one must complete a homebuyer education course prior to closing. The cost is minimal, and most folks complete the course online.

The programs are limited to single-family homes and condos and have a min credit score of 620. The 3% down payment may come from your own funds or from an acceptable gift source, such as a family member. It can’t come from the seller, but the seller can contribute up to 3% of the price towards your closing costs.

With this offering, Freddie and Fannie finally have comparable low down payment programs. The two have nuanced differences, so give me a call to see if one program is more appropriate for you than the other.

Next time, we’ll look at conventional low down payment options that specifically target low-to-moderate income folks.

Rate update: Tame inflation keeps rates in summer slumber

Interest Rates, Residential Mortgage Comments Off

Aug 092018

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

By G. Steven Bray

Other than the short tantrum mortgage rates performed a couple weeks ago, the market has been in a summer slumber. And even that tantrum didn’t take rates out of the range they’ve inhabited the last few months. This week’s economic headliner could change that, but I doubt it.

Friday brings the release of the all-important Consumer Price Index (CPI), the granddaddy of inflation measures. Wholesale inflation, wage inflation, and oil prices all ticked higher earlier this year, and many analysts expected consumer inflation would follow in short order. We got a hint in that direction a couple months ago, which brought markets to attention.

However, since then, these other inflation measures have relaxed again. Wholesale inflation, released yesterday, and wage inflation, as indicated by the big jobs report last week, were flat. Oil prices, too, have flattened, and the Personal Consumption Expenditures Index, the broader inflation measure favored by the Fed, slipped back below 2%.

So, all eyes are on the CPI tomorrow. Given the weakening of the other measures, a reading that moves the index higher could make rates jump again. Unfortunately, a moderate reading probably won’t lead to much lower rates but will instead just let rates continue to slumber in their current range.