HomeLoans Blog

Senate leaders have come to a basic agreement to extend and to expand the Home Buyer Tax Credit - no longer the First Time Home Buyer tax credit.

The new deadline would be April 30 and would be loosened to require only sales be under contract.

Additionally, the expansion would now include many existing home buyers - those who have owned the home over 5 years.

On the rate front - the good economic news - increased GDP first time in 2 years and the drop in unemployment - combined to push rates back up from the week's lows.

Today the data on Personal Income and Consumption did not seem to vary much from expectations. That should mean rates will show little movement. We will see.

The good news that GDP showed a bigger than expected jump is good for the general economy, but it did not help rates.

Jobs and employment remain concerns, but the sudden shift in GDP is very good for the economy.

Rates will tend to increase with this good news, but the rates are still at historical lows.

Consumer Confidence slipped below 50% level today, largely from concerns about unemployment. Housing prices showed the lowest drop since 2008, but most feel the housing improvement is a product of the First Time Home Buyer tax credit, and there may yet be further price reductions.

Overall, we may have some rate drops today and tomorrow, before the personal income and consumption, advanced GDP, and new unemployment figures come out later. 

Rates are ending the week with an increasing trend. The big news today is that home sales increased month over month. The big reason of course is the First Time Home Buyer tax credit.

This credit will likely prove to be bad for the housing market.

• ineffective in creating new home buyers
• costly price to pay many who were already decided to purchase
• borrowing from future buyers may cause a later slump in sales
• tax fraud is already a problem

The jump in home sales included 45% first time buyers and 29% distressed sales.

At the same time home prices declined accoriding the this week's FHFA Home Price Indes and some experts look to next year for more price declines.

We need programs to qualify more buyers. That is the bottom line.

Having enough funds to close a purchase is one of the real stumbling blocks for people who want to buy a home.

Down payments for most loan programs are at least 3.5%. VA and Rural Development programs do not require down payments for qualified buyers and properties.

FHA though, which is probably the most popular home purchase program in today's market does require at least a 3.5% down payment.

The good news with FHA is that they will allow you to use a gift for the down payment.

The gift can come from a relative or your employer. Other gift sources are allowed. If you think a gift for the downpayment will help get you into that new home, call to discuss how and FHA loan may be right for you.

People continue to get upset over the massive bonus being paid to the financial wizards who caused this financial meltdown. It does seem insane the amount of money these wizards continue to make while so many are unemployed, foreclosed, out of business, and bankrupt as a result of the financial risks taken.

This time is reports of the Goldman Sachs bonuses.

The PPI dropped this morning a little unexpectantly by .6%. This might typically cause some mortgage rate improvement, but since energy prices caused the bulk of the drop, and they are already now going back up, the bond market may not respond much to this bit of unexpected news.

The market may look more to comments today by the Philadelphia Fed President Plosser.

For those who are watching interest rates, this week will be full of Federal Reserve watching. Every day this week one of the Fed Presidents is scheduled to speak.

Today Chairman Bernanke talked about the US budget deficit and the troubling global trade imbalance. It may be a good sign that he is starting a focus on the deficit, now over $1.4 trillion. It may mean that he is confident the economy is turning.

Analysts expect that new housing starts will show an up turn tomorrow.

The news may give interest rates some upward pressure, but they held steady today.

Prospective homebuyers are finding more and more that credit is preventing them from obtaining loan approval. As I work with buyers, more and more, I find that they have paid for credit repair without success. In some cases the efforts at credit repair have actually done more harm.

There are different levels of credit restoration, but they all should be done with an understanding of the goal.

Consumers must understand what credit repair can and cannot accomplish. Simply paying collections will most likely not result in a credit score improvement.

Further, for many consumers, improving the credit score should not be the only focus.

Credit is becoming more and more important. The right advice is critical.  We help numerous clients weekly qualify for home loan approval. Our approach is ethical, effective, and thoroughly explained. Call to set an appointment to review your credit.

Interest rates have finally made a strong move back down. Today there were three separate rate reprices to the better. It has taken some time, but maybe we can expect that rates will be more inline with the fundamentals of the economy.

Over the last several weeks, investors had kept funds out of the bond market because of a general uncertainty about any investment that has an element of risk.

Perhaps now we can expect rate movement to be governed by more normal concerns associated with economic reporting.

Upcoming we look to Friday's report on employment. My hope is to be able to return to blog posts about other mortgage matters and let rate fluctuations move in line with normal market ups and downs.