US Treasury to Sell off Mortgage Backed Securities

During the mortgage crisis, the US Department of the Treasury purchased approximately 144 billion dollars worth of mortgage backed securities to help stabalize the mortgage markets. Mortgage Backed Security prices dropped 50 basis points this morning on the news that the Treasury Department is going to systematically sell-off it’s holdings of MBS’s purchased in 2008 and 2009. It’s anticipated that the Treasury will sell approximately $10 billion per month, subject to market conditions. Stated reasons of why to sell now are due to the “stabilizing economy and market conditions”.

Traders are thinking that it could be due to US debt limit levels as well, but that has certainly not been a stated reason.
Just the anticipation of the added forthcoming supply pushed traders to a sell mode sending mortgage backed security pricing down & rates up and adds to the continued volatilty that we have seen over the past several weeks.

This will pressure mortgage rates up.  Why? because of supply and demand. Adding more securities to the market increases the supply an din order to “sell” the new mortgage backed securities they will need to offer a higher return to attract investors.

What does this mean for you? If you are considering a move, I would do it sooner than later. Rates are still below 5.0% and now is the time buy and to take advantage of these rates!

FHA increasing Mortgage Insurance Premium

FHA mortgages that are assigned FHA case numbers or after April 18, 2011 will have the Annual Mortgage Insurance Premium — often referred to as the Monthly MIP — increase by 25 basis points. Currently, the Annual MIP is .90%; this increase means that the Annual MIP will be 1.15% of the base mortgage amount.

This is important to know because it will increase the homeowner’s monthly payment.
A few conditions:
• The Upfront Mortgage Insurance Premium (UFMIP) remains 1.00%.
• The Annual MIP increase only applies to FHA loans. Fannie Mae and Freddie Mac conventional loans do not have this increase.
• This increase applies to loan terms more than 15 years in length and when the loan-to-value (LTV) ratio is greater than 95%; the Annual MIP is lower when the loan-to-value ratio is less than 95% or when clients take out a 15-year loan term (call me for details).
• HUD does not allow case numbers to be pulled prior to receipt of a fully executed purchase agreement and application.

So, what does this mean to a typical buyer. If you are buying a home with a $200,000 FHA mortgage, your montly mortgage insurance premium will go up about $42 per month. If you are buying a home with a $100,000 FHA mortgage your monthly mortgage insurance premium will go up about $21 per month. To avoid the higher MIP, you would have to have a signed purchase agreement and have your lender obtain an FHA case number prior to April 18, 2011.

If you have questions about this, or want help avoiding the increased MIP, please contact a member of the Perkins Team with RE/MAX Results at 763-591-6066 or Perkins@SuburbanHomes.com

Jobs and Homeownership ~ You can’t have one without the other

Good jobs enable people to achieve the American Dream of homeownership. Everytime a house is built, bought or sold jobs are created, lots of them…right here at home.
Home sales in the United Estates generate more than 2.5 million private sector jobs in an average year. For every two homes sold, a job is created. Every home purchased produces up to $60,000 into the economy over time for furniture, home improvements and related items. Housing accounts for more than 15% of the Gross Domestic Product, making it a key driver in our national economy. Housing has led this country out of 6 of the last eight recessions.
America needs jobs. Housing creates jobs. This is one of the many reasons home ownership matters to people, to communities and to our country. (National Association of Realtors supporting Homeownership) For more information visit HouseLogic.com

Check out the Minneapolis Housing Fair on February 26, 2011

FREE and Open to the Public!

This event will take place on February 26 from 10 AM to 3 PM. The Housing Fair is centrally located in South Minneapolis at South High School.

There will be almost 100 vendors to answer your questions and advice on home remodeling, basement finishing, kitchen and bath transformation, landscaping plus woodcraft for kids! In addition everyone will have the opportunity to connect with a broad range of community experts. Click here for directions

Mortgage Requirements

Several factors go into a mortgage companies determination as to whether they will lend you money, and how much.  As you begin the process of buying a home, it is imperative that you understand loan procedures and the factors that determine loan approval. This post gives you an overview of what lenders are looking for when reviewing your credit report and considering your for a mortgage.
What is your FICO?
A FICO score is a credit score developed by Fair Isaac & Company to help lenders determine the risk involved in lending money to any person applying for a loan. It is widely accepted by lenders as one of the most important components helping determine eligibility as well as specific amounts, rates and terms that can be offered. FICO scores range from 300-850. The higher your score, the less risk involved in lending to you. There are approximately 30 factors that influence your credit rating. Some of these factors, such as your payment history, weigh more heavily on eligibility than others. Every factor’s importance varies by person and can change individually as your credit history lengthens. Also, keep in mind your score can change daily as new credit is established or debt is paid off. All factors can be grouped into 5 main categories.
Payment History
Do you make your payments on time? Since this determines approximately 35% of your score, it is certainly in your best interest to make all payments on time! Your payment history includes credit cards, car payments, mortgages, student loans and other loan types. Other public records on file, such as a bankruptcy, will be calculated in this group as well. If you have been late on payments, information such as how recently these payments were made and how much time elapsed between the due date and pay date will also factor into your score.
Outstanding Debt
How much debt do you have? All outstanding balances for credit cards, car loans, mortgages, etc. will determine about 30% of your score. How many of these accounts have balances? For example, if you can possible pay down significantly or pay off credit card debt, you’ll be in much better shape during loan approval. Eliminating some avenues of credit can demonstrate your willingness and ability to responsibly pay back new loans.
Credit History
How long have you been establishing your credit? Specifically, how long have your current accounts been opened and how long as it been since you used each of them? This usually determines approximately 15% of your score. If no credit history exists, you should begin by establishing credit accounts and be sure to keep them spotless. The less history that exists, the less the loan amount you’ll likely be able to obtain.
Pursuit of New Credit
Each time you apply for credit, there is an inquiry into your current credit score. If you recently applied for a VISA card, Nordstrom account and car loan, you may want to hold off applying for a home loan for a few months. Each inquiry may slightly reduce your FICO score and may portray you as someone overindulging in credit. This usually accounts for approximately 10% of your total score.
Types of Credit in Use
The number of accounts (such as ATM cards, car loans, credit cards) you have determines approximately 10% of your final score.
Once your bank is aware of your FICO score they may or may not choose to share this information with you. Assuming they do share your score with you, it is important to remember the higher the score, the more likely you are to obtain a loan. Also, a higher score directly translates to lower interest rates. Over time with home loans, lower interest rates can play a significant role in the total amount you SAVE!
Other Factors That Determine Loan Approval
Now, a great FICO score will not be the only determining factor in loan approval. Some additional factors that figure into the approval process include the following:
Income
Your current income will be a significant determining factor in loan approval. Pay stubs for the previous two months as well as W-2 forms for the previous year will be requested to help determine your ability to repay the loan amount.
Employment History
Your employment history can tell a lender much about your stability. If you’re constantly switching jobs, it could raise a red flag.
Down Payment
Being able to provide a down payment can be extremely useful in the loan approval process. It means the amount borrowed will be less than the total cost to purchase the home. In some cases, depending on the amount of the down payment, your monthly payments can significantly drop.
I know that sounds like a lot of information.  Please allow me to guide you through this process and make it easy for you.  I am here to help you.  Jon Perkins 763-591-6066 Jon@SuburbanHomes.com

First Time Home Buyer Info

Quality Service
The Perkins Team is familiar with the needs of a first time homebuyer. Looking at the process for the first time, it can seem daunting. That is why it is important to establish a good working relationship with a Realtor you trust. We have been working with buyers in this area for the past 17 years. Technology has allowed us to serve our buyers better by giving them fast, up to the minute information. However, we believe that no matter how technologically advanced an agent is, it all comes back to service. We pride ourselves in providing the best of both worlds.
We hope that you will choose to work with one of the Perkins Team agents. Here are some steps to get you started:
Find an agent
Don’t be afraid to ask questions, and make sure that you select an agent that makes you feel comfortable. Ask your agent about Buyer Agency to make sure you understand how your Realtor can best represent your interests. Once you have found the home for you, your agent will help you negotiate the purchase agreement and guide you through the closing process
Get pre-approved
Starting to look for a home before finding out your financing options is a lot like putting the cart before the horse. If you have never looked at getting approved for a mortgage, you may qualify for more or less than you expected. Any time that you spent looking at homes that do not fall into you range of affordability would have been wasted. Your Realtor can recommend several loan officers that they have worked with that will have loan programs that meet your needs.
Sign up for the Buyer Instant Notification Program
This program will save time and give you the best idea of what your money can buy. See the details of the program above. When you sign up for the Buyer Instant Notification program:
· You will find out about new listings as soon as you come on the market
· You will not waste time or money driving around looking for available properties
· You will not have to guess what property prices are
· You will not have to call on yard signs
· You will not have to scan the newspaper and wonder what properties really look like
· And most importantly, you will not miss out on any listing that might meet your needs!
Sound valuable?
Sign up to have listings that meet the criteria you set emailed to you by clicking our logo on the upper right hand corner of the screen. Then send us an email with what features and amenities are important to you.

For more information about Buying your First Home, click here