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The Mortgage Interest Rate Lock Advisory for Worcester MA for November 13, 2009

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

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.50 this morning - the same as yesterday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 101.63 - up 4/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. I expect that mortgage interest rates will be 0.125% - 0.375% better in price this morning as compared to yesterday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

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

• Goods and Services Trade Balance Report for September - the trade deficit is up significantly. The trade balance in September was -$36.5 billion, and is much more than the $30.7 billion deficit the previous month. While the report affects the value of the U.S. dollar, it's usually is not a major influence on the mortgage market or mortgage interest rates.
  
  
• Preliminary Reading of the University of Michigan's Index of Consumer Sentiment for November - consumer sentiment declined 4.6 points from 70.6 to 66.0 in October. A declining sentiment means consumers are less optimistic about their own financial situations and are less likely to make large purchases in the near future. That is helping drive prices of mortgage backed securities up and mortgage interest rates down this morning.

There are a number of economic reports scheduled for release next week. Watch for more information on Monday.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, activity in the stock markets will continue to be volatile which in will have an impact on trading of mortgage backed securities.

Yesterday, the 4.5% mortgage backed security (MBS) coupon closed at 101.50. That is within 100 basis points of the highest price that the 4.5 MBS coupon has been at this year - it was at 102.50 back on March 18th.

Currently, the 4.5 MBS coupon is within 31 basis points of the highest price in the last 3 months. The highest price of the 4.5% MBS coupon in the last 3 months was 101.94, and that was back on October 7th.

What that means to you is the pricing of the MBS coupon is not likely to go much higher.

There's not much room for MBS prices to move higher or for mortgage interest rates to move lower at the moment. If you're happy with the rate being offered to you and don't want to risk mortgage interest rates moving higher, you should apply and lock in today. While there's still some room for MBS prices to tick higher, it's better to have locked when you should have floated than it is to float when you should have locked.

If you have not yet locked in your mortgage interest rate, please proceed with caution and maintain contact with your mortgage professional. Also, give very serious consideration to applying now and locking in before mortgage interest rates get worse.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Float if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Worcester, MA.

The Mortgage Interest Rate Lock Advisory for Brewster MA for November 12 2009

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

What the Mortgage Backed Securities Market is Doing Today:

The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.12 this morning - down 3/32 from Tuesday's close.

The chart below shows today's price trend of the FNMA 30-Year 4.5% coupon:

The FNMA 30-Year 4.5% MBS coupon is currently trading at 101.28 - up 5/32 from its opening. Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and mortgage interest rates come down with it. Yesterday was "roll-over" day, so I expect that mortgage interest rates will be about the same in price this morning as compared to Tuesday.

Recent Activity in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days:

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

• There are no economic reports scheduled for release today.
  
  
• Jobless Claims - there were 502,000 new claims for unemployment last week, the lowest since January, 10,000 less than predicted, and 12,000 less than the upwardly adjusted new claims that were filed the previous week. The 4-week average declined for the 9th straight week by 4,500 to 519,750. And continuing claims for unemployment declined for the 7th straight week by 139,000 to 5.631 million. However, the decline in continuing claims is most likely attributed to the expiration of unemployment benefits. With a decreasing trend in the filing of new claims for unemployment, this suggests that the labor market is improving. However, this data is usually not considered to be very important to the mortgage market and had no impact on mortgage interest rates this morning.
  
  
• Fed's MBS Purchase Program - the results of this week's purchases of mortgage backed securities by the Feds will be released in the afternoon. As of last Thursday, the Feds have purchased over $993 billion in mortgage backed securities this year. The Feds plan on purchasing up to $1.25 trillion in mortgage backed securities through March 31st.

In other news, the Treasury will auctioning $16 billion in 30-Year Bonds today. If the Treasury auctions are met with a strong demand from investors, we should see higher prices for mortgage backed securities and lower mortgage interest rates. However, if we see a lackluster demand, we should see lower prices for mortgage backed securities and higher mortgage interest rates.

What's Happening With Mortgage Interest Rates Today:

Moderate to High Volatility. Overall, the single most important day this week will be Friday with the release of the Employment Situation Report. Activity in the stock markets will continue to be volatile which in will have an impact on trading of mortgage backed securities. If you have not yet locked in your mortgage interest rate, please proceed with caution and maintain contact with your mortgage professional.

My Mortgage Interest Rate Lock Advice for Today:

If I were considering financing/refinancing a home, I would...

• Lock if my closing was taking place within the next 7 days
• Float if my closing was taking place between 8 and 30 days
• Float if my closing was taking place between 31 and 45 days
• Float if my closing was taking place between 46 and 60 days

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers.

Get today's mortgage interest rates for your situation in Brewster, MA.

Frequently Asked Question: Can I Use My Father's VA Loan Eligibility to Buy a House?

Q: My dad has not used his VA Loan. Can he transfer that loan to me to use to buy a house?

A: No. Children of an eligible veteran are not eligible for the VA home loan benefit. However, the unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the VA home loan benefit. In addition, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, is also eligible for the VA home loan benefit.

Frequently Asked Question: Mortgage After a Bankruptcy

Q: I filed a personal Chapter 7 bankruptcy in October of 2008. The bankruptcy was discharged in January of 2009. Since then, I have gotten back on my feet and been able to save quite a bit of money. My lease on my apartment is running out and I'd looking to capitalize on the great houses available in the area. My father has a bunch of cash and net worth as well a perfect credit. My question is can I go and get a mortgage at this point with my father to cosign, or would he have to buy it himself and "rent" the property to me until I could purchase it on my own. The other mitigating factor in all this is that all the foreclosures in this area are held up in land court, and despite my discharge happening in January, the mortgage company has still not assumed my old condo and auctioned it off.

A: A person who has had a Chapter 7 bankruptcy (liquidation) must wait until at least two years have elapsed since the date of the discharge of the bankruptcy before he or she can qualify for an FHA mortgage. In addition, you must re-establish good credit and demonstrate a documented ability to responsibly manage your financial affairs. Basically, this means you can not have any late payments on any accounts since the discharge of the bankruptcy.

It is possible to get a mortgage before the two years have elapsed, but not less than 12 months, provided you can show that the bankruptcy was caused by extenuating circumstances that were beyond your control. An example of an extenuating circumstance would be you had extensive medical bills, and you were out of work during hospitalization thus unable to pay your bills due to no income. Loss of job, a failed business venture and divorce situations do not qualify as extenuating circumstances.

It appears that you will also have a foreclosure on your credit report. There is a minimum 3 year wait after a foreclosure before you can qualify for a mortgage, even if the foreclosure was included in the bankruptcy.

If you plan on having your father purchase the property, allowing you to rent it from him until such time as you are able to purchase the property directly might run you into an "identity-of-interest" situation. An identity-of-interest is defined as a sales transaction between parties with family relationships or business relationships. In these cases, the maximum you will be able to borrow or finance is 85% of the purchase price of the home (85% LTV).

However, maximum financing above 85% LTV is permissible under the following circumstances:

• A family member purchases another family member's home as a principal residence. If a property is sold from one family member to another and is not the seller's primary residence, the maximum mortgage is the lesser of either:
  - 85% of the appraised value, or
  - The appropriate LTV ratio percentage applied to the sales price, plus or minus required adjustments.
  
  
• The 85 percent limit may be waived if the family member has been a tenant in the property for at least six months immediately predating the sales contract. A lease or other written evidence must be submitted to verify occupancy.
  
  
• An employee of a builder purchases one of the builder's new homes or models as a principal residence.
• A current tenant purchases the property that he or she has rented for at least six months immediately predating the sales contract. (A lease or other written evidence must be submitted to verify occupancy.)
  
  
• A corporation transfers an employee to another location, purchases that employee's home, and then sells the home to another employee.

So long as you rent the property from your father for at least 6 months, and so long as a lease is provided along with evidence of the renting of the property (copies of canceled checks, utilities are in your name, not your father's, etc.), you will be able to finance up to 96.5% of the purchase price or value of the home.

Frequently Asked Question: Can I Get a Mortgage If I Declared Bankruptcy?

Q: Can I get a loan if I declared bankruptcy 1 year ago?

A: It depends on the type of bankruptcy.

If you had a Chapter 7 bankruptcy (liquidation), you must wait a minimum 2 years from the date of discharge before you can get a mortgage. If you have extenuating circumstances, that wait can be reduced to 1 year. An example of an extenuating circumstance would be you have extensive medical bills and were laid up without an income because of debilitating illness or injury. Loss of job, failed business ventures and divorces do not qualify as extenuating circumstances.

If you had a Chapter 13 bankruptcy (reorganization), you must have made at least 12 monthy payments and need the permission of the bankruptcy court or trustee before you can a mortgage.

In both cases, you must have reestablished credit and no late payments on any accounts since the bankruptcy.