USDA is back in action

Government just approved an addition 18 billion in Guaranteed Housing Funds which will provide funding until the end of the fiscal year 2010.
Also.......

The House has passed legislation that will allow the USDA program to continue and sustain itself (so it won't run out of funds again and leave us Lenders, Realtors, and Buyers in flux). To do this they are are changing the 1 time funding fee from 2.25% to 3.5%. The funding fee will still be financed in the same way the current funding fee is.

Before this can go into effect the legislation has to go through the Senete and signed by the President himself.

I have added a tracker to my blog so you can follow whats happening in Washington.

How are FICO scores calculated?

Scores can range from 300-850 and is a statistical calculation which is based upon payment history (35%), credit utilization (30%), length of history (15%), credit type (10%), and recent credit checks (10%). Items stick around for seven years; bankruptcy for ten. Maxing out a card, a 30-day late payment, debt settlement, foreclosure (150 point ding) or bankruptcy (150-200 point hit) all negatively impact FICO. Sometimes folks wonder about whether or not a short sale hurts your credit score as much as a foreclosure, and apparently it depends on whether the borrower stays current on their payments and how the lender reports the sale (try for "debt repaid in full").

Market Update

The event that we all have been dreading and anxiously trying to forecast for has happened........... The Fed has officially bailed from the purchase of Mortgage Backed Securities. As of today bonds are down 91 basis points and rates are up by .25%. It looks like without the support of the Fed prices will reflect more realistic market conditions and not those we have seen in the past 15 months. Volatility levels will by high in the months to follow. The market never moves in a straight line but the trend is for higher rates.

If you are still in the market to purchase or refinance a home make sure you work with a loan officer that has a good grasp and knowledge of the market because it looks like we are in for a bumpy ride.

Do you need the $8,000 tax credit to use for your down payment....

First time homebuyers who qualify for the tax credit but don't have the money available for the FHA 3.5% down payment could be eligible for a the Utah Housing Equity Now program. See the attached information from Utah Housing to see if this will help you.
http://b2b.utahhousingcorp.org/PDF/EQNborrower.pdf

Are rates going to drop.........

No one knows for sure. Being able to predict that is like being able to say who is going to win the world series in January. There is one thing that is certain and that is that rates are volitle. So what should you do if you are shopping for a mortgage or still need to refinance? Following these tips will help you get the best rate possible.

1. Get your paperwork together. Rates move quickly and if paperwork has already been started on your file you can move quicker and take advantage of a low rate. Typical items required would be paystubs, W-2's, tax returns and bank statements.

2. Make sure your credit is ok. Check your credit report and fix any problems ASAP! Even small things can mean a difference in your rate and eligability for a mortgage. If there is a discrepincy work with your mortgage professional to get it corrected. Doing it on your own can be a lengthy and frustrating process. The credit company I work with can fix an error and get a re-score in as little as 5 business days (intead of the 60+days through the 3 different major agencies.....and you have to repeat the process 3 times).

3. Decide what rate makes sense for you and don't hesitate to lock if it becomes available. Once you determin what rate you need to get it is a smart to stick to that decision. Many people want to gamble that rates will go lower but that plan can backfire. Many borrowers that hold out for another .125% never get that rate and miss out on their original target rate.

 Yes rates could fall and create another record low. The stock market could have another meltdown, or another major bank may collapse, or the country make sink even deeper into recession. These factors could cause rates to go down but are things things you want to hope for? You could save a couple hundred dollars a month on your mortgage but it might cost you 50K in your 401K. The best thing that we can hope for is that the government can keep rates low and stable enough for the housing market to make a positive move on the road to recovery.

Bottom line.....rates are low now. Make sure you are able to take advantage.

Mortgage rates ended their 3 day losing streak.

Consumer confidence is at a 10 month low due to pessimism regarding the outlook of the labor market. Following the release of the report stocks sold off and the bond market rallied.
Investors are uncertain what will happen when the Fed ends their support of purchasing mortgage backed securities. This is scheduled to happen the end of March. One reporter referred to it as the Fed taking off the training wheels on the housing market. Check out the link on my twitter page regarding this. It is an interesting commentary from experts that was aired on CNBC.

Should I lock in my loan?

Day to day (sometimes even hour to hour) mortgage rates fluctuate. So when asked this question I think the important thing to look at is the big picture. Mortgage rates are currently priced at aggressive levels. The forecast for the months to come is that mortgage rates WILL move higher. This is based on current and forecasted market conditions. One of the biggest factors is the statement that the Fed will not extend their mortgage backed security program after March 31st. The governments purchase of mortgage backed securities has been the driving factor in keeping rates low. The current rates offered are "artificially" low. They are driven lower by government assistance and not current market conditions.
While floating a loan day to day may result in a small reduction of closing costs the risk of a rates raising is high.

Mortgage Rates	Feb 5, 2010		Feb 8, 2010
Conventional 30 year	4.875%	↔	4.875%
Conventional 15 year	4.250%	↑	4.375%
FHA/VA	5.000%	↔	5.000%
USDA	5.000%	↔	5.000%
Utah Housing	4.750%	↔	4.750%