About Barnstable County, MA

Frequently Asked Question: Which is Better: An FHA Mortgage with 5% Down, or a Conventional Loan with 10% Down?

Q: Which is a better way to buy a home? Getting an FHA mortgage with 5% down payment and with 5% emergency backup? Or a Conventional loan with 10% down and no emergency backup?

A: Let's use an example. Let's say you want to buy a house for $100,000. For a conventional mortgage, you will put $10,000 down. For an FHA mortgage, you will put $5,000 down. So, we will compare a conventional $90,000 mortgage with a $95,000 FHA mortgage.

With FHA, you will have an Upfront Mortgage Insurance Premium (UFMIP) of 1.75% of the loan amount, but that can be rolled into the loan. So, your FHA loan will be $96,662. Both loans will have a monthly mortgage insurance premium.

Let's also assume the interest rate is the same for both mortgages at 5.0%. When you include principal and interest and monthly mortgage insurance premiums, you will pay about $34 more per month with an FHA loan as compared to the conventional loan. But, you will hold $5000 in cash reserves. Assuming that you will not earn any interest on the $5000, it will take 142 months (12 years!) to draw $34/mo off the $5000 in reserves to break even.

Additionally, with a conventional mortgage, you will need two months of PITI mortgage payments in reserves after settlement. PITI includes Principal and Interest, escrows for Taxes and Insurance, and mortgage insurance premiums. With FHA, you don't need any cash reserves. However, you will show $5000 in reserves. You will actually have an easier time getting approval for an FHA mortgage than for a conventional one. Additionally, you will have funds available for any small emergencies that may arise.

In this case, you will be better off with the FHA loan with 5% down than with a conventional loan with 10% down.

The Mortgage Interest Rate Lock Advisory for Dennis MA for February 9, 2010

Here are some of the events affecting mortgage interest rates today in Dennis, MA.

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.34 this morning - the same as yesterday's close.
  
  
• At 9:30, the 4.5% MBS coupon was trading at 100.23 - down 4/32 from its opening.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 1-9-2010 to 2-8-2010:

Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• There are no economic reports scheduled for release today.

In other news, the Treasure Dept will be auctioning $40 billion in 3-Year Notes and will post results at 1:00 PM ET. The Notes and Bonds are used to finance the massive government debt. If there is a strong demand for the Notes, we should see the bond market move higher during afternoon trading. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling of bonds could result in upward revisions to mortgage interest rates.

What's Happening With Mortgage Interest Rates Today:

Moderate Volatility. Mortgage interest rates are still at historic lows. However, because it appears that the overall economy is improving, and because the Fed continues to auction Treasury Notes to pay for the massive government debt, there's the fear of inflation. In addition, the Fed is winding down their purchases of mortgage backed securities which is slated to end on March 31st. As such, there's not much potential for lower mortgage interest rates.

If you're happy with the rate being offered to you and if you don't want to risk mortgage interest rates moving higher, then you should apply and lock in today. It's better to have locked when you should have floated than it is to float when you should have locked.

Mortgage interest rates are currently improving slightly. If you have not yet locked in your mortgage interest rate yet, please proceed with caution and maintain contact with your mortgage professional and rates can change for the worse - often without notice.

Get current mortgage interest rates for your situation in Dennis, MA.

Living by Mayflower Beach in Dennis MA
Joe Arnao, 508-503-4435, joe@mydestinationrealty.com

Living by Mayflower Beach in Dennis MA is a dream come true for anyone who has ever visited the area. The beach offers miles of sand to walk on, lie on or play. It is often, that while strolling the beach, you will see people, kids and adults tossing a football, a Frisbee, kicking a soccer ball or playing catch.

It is these family encounters that has made living by Mayflower Beach in Dennis MA, a destination for generations.  Living by Mayflower Beach in Dennis MA "forces" families to bond. Siblings play with each other. Parents play with their children and grandparents dote on their grandchildren. Living by Mayflower Beach in Dennis, MA has created countless "summer" friends that have lasted a lifetime.

Almost There!

What makes living by Mayflower Beach in Dennis, MA so special? Sand. Incredible amounts of sand.
Plus, living by Mayflower Beach in Dennis, MA, offers great a true Cape Cod lifestyle. The shops are all local. Art Galleries offering some of Cape Cod's most renowned artists. There are several outstanding restaurants offering local and creative menus. If you are a theater buff, the Dennis Playhouse offers shows that attract well known talent and keep visitors and locals coming back every year.

The Cape Cod Canal and Provincetown Monument can be seen from Mayflower Beach in Dennis, MA

Here are some of the local establishments that make living by Mayflower Beach in Dennis MA special:

• Scargo Café
• Chapin's Restaurant
• Gina's by the Sea
• The Cape Playhouse
• Winstanley- Roark Fine Arts
• Seven G's Liquor Store
• Dennis Public Market
• Cape Cod Museum of Art
• So Much More...

Anyone who is living by Mayflower Beach in Dennis, MA, whether for a summer vacation or year round, knows the natural beauty and great lifestyle is a wonderful way to live.

 If you are interested in owning a property, so that living by Mayflower Beach in Dennis MA is no longer a dream, you can search here for available properties for sale or contact us and we can help make it happen for you.

Frequently Asked Question: For a Mortgage, Is it Better to Save for the Down Payment or Pay Off Debt?

Q: What is better in the eyes of the lender - to have a smaller down payment or have less debt? I cleaned out the money I had saved for a down payment and paid down some debt, but what should I do going forward?

A: That depends. Having more money available for the down payment won't necessarily qualify you for more house. However, using available funds to pay down your debt might.

Your overall monthly debt payment is one of the factors lenders use to determine your mortgage qualification. It can also affect your credit score. By paying down your debt, it may help improve your credit scores which will allow you to qualify for better mortgage interest rates. It will also reduce your overall monthly debt obligation and may allow you to buy a more expensive house.

Lenders use two debt-to-income ratios to determine your eligibility for a mortgage amount. The first is the "housing expense" or "front-end ratio." This is the proposed monthly mortgage payment which includes principal and interest, 1/12th of your annual property taxes and homeowner's insurance premiums, and monthly mortgage insurance premiums and homeowner's association dues, if any. The "total expense" or "back-end ratio" includes the monthly housing payment or "front-end ratio" and all other monthly debt obligations.

For each loan program, lenders set a maximum debt-to-income ratio for housing and total debt. Typically, the front-end ratio can not exceed 28% of your gross monthly income, and the back-end ratio can not exceed 36%. However, many loan programs allow as much as 31% on the front end, and 41% on the back end. The back end can be as high as 45% if you have compensating factors such as good credit and a sizeable cash reserve.

If your back-end ratio is high (too much debt), it will reduce the amount of mortgage you can qualify for - and reduce the how much house you can buy.

If you don't have enough money saved for a 20% down payment, then you may be well off to apply for an FHA mortgage or a USDA Rural Development Loan. With FHA, you can put as little as 3.5% down, while you can buy a home with no money down with USDA. Another plus with USDA is there is no monthly mortgage insurance premiums.

There are limiting factors with FHA and USDA loans. With FHA, the maximum loan amount is based on the county the home is located in. You can check the FHA mortgage limits at https://entp.hud.gov/idapp/html/hicostlook.cfm.

With USDA, the home must be located in a rural area (typically a town with a population of 10,000 or less). You can check the address of a home you want to buy to see if it will qualify. And, your household income can not exceed the maximum for the area. You can check the USDA Income and Property Eligibility Site at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.

It's best to consult with an experience mortgage consultant to help you determine the how best to pay down debt to enable you to buy the home of your dreams.

The Mortgage Interest Rate Lock Advisory for Yarmouth MA for February 8, 2010

Here are some of the events affecting mortgage interest rates today in Yarmouth, MA.

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.38 this morning - the same as Friday's close.
  
  
• At 9:30, the 4.5% MBS coupon was trading at 100.31 - down 2/32 from its opening.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 1-9-2010 to 2-8-2010:

Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage interest rates will essentially be the same in price today as compared to Friday.

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• There are no economic reports scheduled for release today.

In other news, the Treasure Dept will be auctioning $81 billion in Notes and Bonds this week. The Notes and Bonds are used to finance the massive government debt, and could result in upward revisions to mortgage interest rates this week.

What's Happening With Mortgage Interest Rates Today:

Low to Moderate Volatility. Mortgage interest rates are still at historic lows. However, because it appears that the overall economy is improving, and because the Fed continues to auction Treasury Notes to pay for the massive government debt, there's the fear of inflation. In addition, the Fed is winding down their purchases of mortgage backed securities which is slated to end on March 31st. As such, there's not much potential for lower mortgage interest rates.

If you're happy with the rate being offered to you and if you don't want to risk mortgage interest rates moving higher, then you should apply and lock in today. It's better to have locked when you should have floated than it is to float when you should have locked.

Mortgage interest rates are currently improving slightly. If you have not yet locked in your mortgage interest rate yet, please proceed with caution and maintain contact with your mortgage professional and rates can change for the worse - often without notice.

Get current mortgage interest rates for your situation in Yarmouth, MA.