Mortgage Archives - The Georgetowner
Mortgage:Bad News Is Good News
Bad news for stocks can be good news
for mortgage rates. Spurred by slower
growth in China and unease in emerging
markets, the stock market has been in a correction
When the stock markets tank, bond markets
are often one of the safe-havens. Ten-Year
Treasury notes closely mirror movement in the
mortgage backed securities markets and often
sends mortgage rates lower. This has translated
into good news for mortgage interest rates.
Current mortgage interest rates are at the
lowest they have been for a few
months. The trend appears to be
that rates are drifting even lower.
If a borrower has locked in a
loan over the last several weeks
and the loan is not closing immediately,
they should go back to
their lender and ask if they have a
price renegotiation policy. Most banks do have
a policy which allows a one-time rate change. It
doesn’t cost anything to ask.
In recent weeks Ten-Year Treasury notes
reached a high of 3%. Currently Ten-Year
Treasury notes are around 2.72%, a drop of over
twenty-five basis points in the first part of the
year. This is a large move.
The new Dodd-Frank rules have kicked in
for the banking industry. These rules have put
further limits on the institutions and how they
must qualify a borrower for a mortgage. No
one seemed to think the rules were easy in 2013,
and now the new rules are tougher. Ratios have
been contracted to a total allowable debt ratio of
43%. Credit lines now must be counted against
a borrower even if they are untouched. A lot of
homeowners do have lines of credit which have
no balances which may be a determent to their
ability to refinance or buy a second home.
The Dodd-Frank rules pose a downside risk
for the housing market. If these regulations
restrict the supply of credit, some households
looking to purchase a home could find themselves
shut out of the market, which would
weaken demand. A lot of observers
think the Dodd-Frank rules
may slow the recovery in the housing
Time will tell if the current
downturn in the equities markets
persists or moves to the sidelines.
If it becomes sustained for a period
of time, it will tamp down economic growth
prospects for 2014. This would potentially help
keep mortgages lower.
One of the most important reports around
the corner is the employment report on February
7. Most expect a strong report in January and
revised (higher) numbers for December. The
report will be the foundation for the near term.
Bill Starrels lives in Georgetown. He specializes in
residential mortgages. He can be reached at 703-625-
7355 or bill.starrels@gmail.com NMLS#485021
Touting Local Lending, EagleBank Hits Mortgage Milestone
This September, EagleBank passed a milestone of $1 billion in mortgages. With 17 branches in the Washington metropolitan area and the bank’s 18th on the way in January, EagleBank is showing serious strength as the largest community bank in the Washington metropolitan area.
The Georgetowner discussed this milestone with EagleBank chairman Ronald Paul. Paul was a founding board member of EagleBank. It was founded in Bethesda, Md., in 1998.
“We’re the largest community bank in the metropolitan area based on deposits,” Paul said. Investing in the community is important to Paul. “We’ve been active in staying local,” he said. “And, to me, that’s an important part about business. That’s what’s going to support our economy.”
“We promoted a bill [which calls for local governments to switch deposits from national to local banks] in Montgomery County, and we have one proposed in the District,” Paul said. “For every dollar the District government deposits in EagleBank, we’ll match it with two dollars in lending in that marketplace. We’re working with Jack Evans in the District for it.”
“You know, we put money into a restaurant in Bethesda that hired 68 employees, in which a third of those were unemployed,” Paul said. “So, obviously the big banks are not going to do that. That’s why Eagle has been as successful as it is. If it weren’t for a community bank like EagleBank, that restaurant would probably have never opened. Those 30 people might still be unemployed. And that’s why it’s so important for us to be supporting these community banks.”
DC Market is Getting Hotter: Get Pre-Approved Now
Gregg Busch •
Over the last several months, I keep hearing DC realtors saying the same thing, “Buyers are wanting to buy, but there is very little inventory on the market to sell.” In desirable areas, multiple offers seem to be common once again and buyers are getting frustrated loosing out in these competitive situations. According to a report released by the national housing research firm, Metro study Report, the volume of DC metro listings on the market has dropped down to 3.6 months of supply from a peak of 11 months existing supply back in 2008. The limited home inventory in our area is likely to continue through 2012 with strong local job growth, decreasing short sales and foreclosures, and a lack of new buildings coming to market.
The best advice for someone looking to purchase is to get pre-approved. Don’t wait till you find the house of your dreams, as it may be too late. Do it up front – maybe even before finding a realtor . With the implementation this year of the Dodd Frank bill and FHA (Federal Housing Administration) tightening lending guidelines, sellers are sure to scrutinize, more than ever, a buyers’ ability to get to closing. Nobody wants to accept a contract from a wishy washer buyer, even if they may be offering a little more. Getting pre-approved lets the seller know that you are credible, with FICO scores and income that meet the strict criteria of today’s lending climate.
The benefits of getting pre-approved are many, First, it saves you time and heartache by looking in the right price range. Second, as described above, it makes you a stronger candidate when you do make an offer, thereby increasing your negotiating power.
Here are some great tips in starting the pre-approval and buying process:
1) Determine how much you can afford up front, Remember that when you hear the total monthly payment make sure you are looking at the approximate after tax payment. If your lender tells you that you can not qualify for what you want to buy think about a family member co-signing.,
2)Have a lender run your credit report to check your scores, sometimes the credit scores you get on line can vary from the scores lenders get from mortgage credit reporting companies, good credit scores are important if you want a good rate, Sometimes it can take as much as 6 months to improve your scores so act now before you start looking for a house.
3)Make sure you enough for a down payment and closing costs. Have your lender calculate what you need for cash in the bank. A rising numbers of young people struggling to buy their first home are being forced to ask their family for help with down payment and closing costs, Work out an arrangement where one day you will pay them back with interest, With FHA and conventional financing you can put down as little as 3% these days!!!!
4) Hire a real estate agent: As a buyer of a home, especially being a first time buyer, you will want to have an agent represent you on your purchase. A buyers agent that you hire will have your best interest in mind and help you in evaluating the value of the property and negotiating the best possible price and terms in making an offer. Additionally your agent can help you with the many facets of the transaction process, connect you with a reputable lender and inspector and other service people. The buyer agent is paid from the transaction by the seller. One of the best ways to select a Realtor to help you find a home is through a referral from a friend, work colleague or neighbor. Another is by going to open houses and talking to the different agents holding the various homes open.
Finally, since a full mortgage approval is taking somewhat longer these days it is to your advantage when you make an offer to shorten your financing contingency to 21 days or sooner. Being pre-approved can allow the lender to speed up the loan process and get the appraisal ordered immediately once you have a ratified sales contract. If you can accomplish a faster close date your offer will be looked at more seriously by the listing agent and seller if there are multiple offers.
Gregg Busch is a licensed mortgage loan officer and Vice President of First Savings Mortgage. Gregg has over 20 years of mortgage banking experience and can be reached at Gregg@Greggbusch.com.