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Monthly Archives: February 2013

Mortgage rates dip unexpectedly in third week of February

Previously on the blog, we reported that interest on fixed-rate loans would rise modestly over the next 12 months as the housing market levels out and steadily returns to good health. Even analysts at Freddie Mac, the popular government-secured loan backer, didn't anticipate that rates would go down for the foreseeable future, although borrowing conditions would continue to be favorable for potential homeowners.

Reports released on Thursday, February 28, show that those predictions were largely wrong, and new borrowers and homeowners taking advantage of mortgage refinance enjoyed average interest that was lower than the week before.

Interest rates on fixed rate loans see minor increase

Mortgage rates ticked up slightly last week to 3.56 percent, though average interest is still significantly lower than levels were a year ago. Although rates have risen somewhat steadily over the past month, the increases seem to have had no effect on home sales, as the housing market continues to show remarkable strength.

During the third week of February 2012, the average interest on a 30-year fixed-rate mortgage package was around 3.96 percent, which, at the time, was near all-time record lows. With rates almost half a percentage point less going into 2013, conditions continue to be in the borrower's favor when it comes to purchasing a new home or refinancing an existing mortgage.

Tax Deductions Exclusively Available to Homeowners

With tax season in full swing, many Americans are dreading the process of filing, out of fear that instead of a receiving tax refund they may actually end up owing the government after their documents have been processed. However, homeowners have an advantage when it comes to filing, as there are numerous deductions that are exclusively available to individuals with mortgages.

"Mortgage Interest Paid," for example, is one primary deduction that serves as a large break to many taxpayers - especially those who are relatively new to homeownership. This is because on most average 30-year fixed-rate loans, the mortgage is front-loaded with interest payments. With average interest rates where they are today, interest payments exceed the principal mortgage payments for roughly the first 10 years of a 30-year loan agreement - meaning the annual deductions have the potential to be significant.

Which Cities Have the Best Credit Ranking Nationwide

Since the onset of the Great Recession triggered tighter lending policies in response to an increase in the incidence of foreclosure nationwide, an individual's credit score has played a larger role than ever in determining mortgage approval.

Luckily for homeowners nationwide, the average FICO credit score - the standard number used by lenders to determine a borrower's credibility - has gone up over the past year according to figures from the scoring agency. This means that consumers are able to enjoy lower average interest rates than they had in years prior, while homeowners are increasingly able to refinance their loans to more agreeable terms.

NAR Finds That Housing Market is Beginning To Favor Sellers

In nearly every region of the United States, home sales and property values increased in January compared to the same month in 2012, according to new findings from the National Association of Realtors (NAR). The number of available properties also decreased over the past 12 months - a sure sign that a seller's market is quickly developing.

This is a big turnaround from conditions last year, when the housing market was still struggling with a dearth of foreclosed-upon properties and home sales were relatively stagnant.

Despite Higher Premiums, FHA Loan Still Attractive Option For Borrowers

The Federal Housing Administration (FHA), a government body which helps insure homeowners against default under the Department of Housing and Urban Development (HUD), recently announced an increase to the average Monthly Insurance Premium (MIP) it will ask of borrowers and new customers.

According to a press statement, the reason the FHA is increasing the average MIP is because of a surge in popularity that has put pressure on the capital reserves of the government entity. The FHA Loan Program offers borrowers the opportunity to purchase a mortgage without putting significant money down at signing - an initiative which has been a boon to borrowers most affected by the Great Recession.

Federal Program Helps Record Number of Homeowners Refinance in November 2012

The Federal Housing Finance Agency (FHFA), which regulates government-sponsored housing institutions, released its November 2012 Refinance Report on Tuesday, February 20. According to this document, more than 130,000 homeowners were able to take advantage of the Home Affordable Refinance Program (HARP 2.0) during the month.

So far, this was the second highest month for incidences of refinance in 2012, exceeding November by almost 40,000 homeowners.

VA Loan More Affordable For Qualified Service Members In 2013

Going into the new year, members of the U.S. armed forces are going to be enjoying a larger Basic Allowance for Housing (BAH) from the Department of Veteran Affairs (VA) that will make homeownership more affordable than in 2012.

The BAH, which is a monthly, non-taxable stipend paid to many active duty military members, is updated annually as part of the VA Loan Program. This loan is a government-secured mortgage initiative that allows qualified service members to purchase new homes without having to put significant money down upon signing.

New Data Indicates Foreclosure Crisis May Be Drawing To a Close

When the housing bubble burst back in 2007, the market became flooded with foreclosed properties, as homeowners who were overwhelmed by their debt burdens nationwide failed to maintain regular payments on their mortgages. To combat this phenomenon, the federal government enacted a series of initiatives that would allow troubled borrowers to refinance their mortgages to new terms with lower interest rates.

Finally, it appears these actions have started to pay off, as the number of foreclosure filings last month nationwide were down significantly compared to figures from a year before.

State of the Union Addresses Mortgage Refinance

During the State of the Union address on Tuesday, February 12, President Barack Obama's main focus was yet again improving the national economy. Specifically, the president discussed the recovering housing market and ways to improve conditions not just for prospective shoppers, but also for current homeowners looking to refinance their mortgages.

Early on in the speech, the president highlighted many of the great leaps forward the national housing market has experienced since the onset of the Great Recession, which was heralded by plummeting home values as borrowers were left with crippling debt burdens.