RH Funding Co. is still doing FHA loans down to 620 score! If you believe your credit score to be between 620 and 640, now is the time to apply, before these guidelines change forever.

Courtesy of RH Funding Co Orlando – www.LendingFL.com

Bad news, rates have probably bottomed and will head higher.

Last week brought a gale of game-changing news, contradicting recovery, and a whiff of panic. This holiday-short week was news-thin, and mid-July marks the beginning of an often sleepy season for markets and the economy.
    
Panic is sometimes an excellent investment strategy, but it is a difficult frame of mind to maintain. Thus stocks soared 450 points in three days this week, shorts covering, but bond and mortgage yields held extraordinary lows, underlying worry entrenched. The 10-year T-note rose to 3.05% from 2.95% (mostly pricing down in advance of next week’s $69 billion Treasury bond sale), but mortgages stayed put in the mid-fours.

Mortgage refi applications have begun to rise, but purchase ones fell again, by 2% last week, now 42% below the end of April. There isn’t any way to know for sure, but that decline seems far greater than could be explained by the end of the tax credits and  pull-forward of demand. More likely: the tax credits masked an ongoing housing slide.
    
The most troublesome report was consumer credit: May outstandings dumped $9.1 billion, and the $1 billion gain initially reported for March-April was revised to a $14.9 contraction. A debate of sorts continues: bankers and you-deserve-it analysts insist that credit is shrinking because few will apply, and those who do are poor credits.
     
As this episode grinds on, there is no question that many people who would have borrowed two years ago, or last year, to buy something or to invest are now too concerned to do anything. And there are many others whose creditworthiness has weakened since the show stopped in 2007. However, try to tell anyone out here on a real-world sidewalk that credit is not tighter than any time in their lives, and tightening, and they’ll laugh at you.
    
Consider the newest Fannie/Freddie loan data. These GSEs and the FHA are under terrible pressure to stop lending, exerted by factions that have forever hated them (no-government types, most in the financial markets, all bankers, this’ll-teach-yas…). The foolishness of 2002-2006 should never be repeated. However, in 2007 55% of GSE mortgages went to applicants with 720+ credit scores; in 2009, 85%. In 2007, 76% of applicants put down 20% or more; in 2009, 89%.     
    
Those changes are not market movements; those are throughputs of requirements. It is one thing to be cautious. But to re-calibrate standards to tighter than ever before (‘90s, ‘80s, ‘70s…), that is credit starvation, and makes housing recovery impossible.    
    
Another issue: we are in the process of reducing the rate of home-ownership from roughly 69% of households back to something sensible, under 65%. The arithmetic alone demands a new investor-buyer for each home conversion from owner to non-owner (or wait for 15 years’ growth in new households). In 2009, GSE loans to would-be landlords were only two percent of total production. And people wonder why Mr. Market cannot absorb inventory, troubled or not, no matter how far prices fall.
    
We do not have deflation in general prices, but we are years into asset deflation and its very peculiar effects. Interest rates go to record lows, but purchasing power and theoretical affordability are cancelled by lender panic. Furious attempts to de-lever increase leverage, as assets fall in value faster than borrowers can pay down loans.
    
It may be good national policy, supported by consensus, to reduce resources allocated to housing. We may also decide to live with less credit than any time since WWII. However, to attempt such strategic change in the belly of this recession is a failure of observation, public policy, regulation, and imagination.

It’s official!  The tax credit extension has officially been passed allowing prospective home buyers that are currently in contract until  September 30th, 2010 to close.

Originally the $8000 and $6500 tax credits were set to completely expire on June 30th, 2010 but the banks have experienced such an influx of applications both for short sale requests and mortgage applications alike that have made fast closing times a thing of the past.
It is important to not however, that the extension applies only to those buyers that are already in contract.  This does not apply to new contracts placed on homes after the initial deadline of April 30, 2010.

Amazingly enough, mortgage rates are at all time historic lows, yet 2010 has yet to see the big purchase boom that should result from market conditions such as these.

Low rates in Orlando with RH Funding Co. – www.LendingFL.com

According to RealtyTrac, THEY SURE ARE!  They recently reported that foreclosed homes made up 31% of  the residential sales in the first quarter of this year.  Combine that with the fact that the average sales price of these properties was over 26% below the average sales price of properties not in foreclosure and you have yourself a buying strategy. Now throw in the mix a 30-year fixed mortgage rate under 5% and you can realistically set yourself up on easy street for life.

The bottom line – NOW is the time to buy a foreclosed property.  Don’t wait for the market to rebound or the inventory to dry up, the people that have the prudence to buy now will reap the rewards for a lifetime.

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Apply Online www.LendingFL.com

#1 Pay your bills in a timely fashion

Approximately 35% of your credit score is directly related to your ability to make payments on time.  This is very heavily weighed, especially when applying for mortgage financing.  The bank wants to know you will pay your mortgage on time every month.   They are lending you a lot of money in hopes that you pay it back, with interest.  If you don’t typically pay your current debts on time, chances are you may not qualify for a mortgage at all, let alone one with a competitive interest rate.  The more recent the delinquent account, the greater the impact it will have on your score, and ultimately your loan approval decision.

#2 Pay down your credit card debt.

Approximately 30% of your credit score is derived from your proportion of available credit in relation to the total amount of available credit.

Say you owe $3,000 on a card with a $5,000 credit limit, this would be viewed as negative on your credit report and reduce your overall credit standing/score.  If you were to pay this card to below half  (50%) of your available credit limit, you could have an immediate positive impact on your credit score.

# 3 Don’t apply for new credit or loans.

Every unnecessary inquiry (when you have your credit checked by a bank, employer, insurance company, etc.) has the possibility of lowering your credit score as much as 10 points or more.  Be careful who you give your social security number to and try to avoid applying for a mortgage on one of those sites that lenders compete on.  These are just lead portals and they sell your information to random mortgage companies that could possibly pull your credit report and lower your score dramatically.

# 4 Skip the lines at the bank.Often times, consumers go directly to the bank that they have their chacking and savings account with.  These are what is referred to as retail operations and the consumer usually pays a higher interest rate to pay for the higher overhead that banks like this incur.  Don’t rule out your local broker or mortgage lender, they may have access to rates tha aren’t even on the open market.  Pick someone you trust and allow them to do their job, it’s that simple.  Make your decision in the beginning of the process and do all of your homework at the start to avoid last minute surprises.

Rates are the lowest in history right now and they won’t be there for long.  Take advantage and get locked in to a low mortgage rate for the rest of your life, now is the time!  If you follow these simple steps, you can rest assured that the banks will be knocking down your door to finance your home.

Source: Jason L. Gonzalez – RH Funding Co. – Apply online at www.LendingFL.com

On Wednesday, The Mortgage Bankers Association said that mortgage applications are up 9% from just a week ago.  Refinance transactions alone rose 13 percent, the highest level since over a year ago.

Freddie Mac states that the average rate for a 30-year fixed loan dropped to 4.69 percent last week, the lowest average rate since they began tracking rates in 1971.

Why is this happening? Investors are reacting to the debt crisis in Europe and are putting their money into treasury bonds, a lower risk investment vehicle.   Since there are more investors, the yield on those bonds is lower which forces mortgage rates lower as well.

The bottom line – Refinance or Buy a Home Now, there may be no better time in history.

Looking for more great info?  Check out www.LendingFL.com.  Questions?  Give RH Funding Co. Orlando, a mortgage lender, a call at 888-648-0005.

FHA plans to cut maximum “seller concessions” from 6% of the sales price to 3%. Seller concessions typically can generally be applied to reoccuring and non-reoccuring closing costs, i.e loan origination, transfer taxes, appraisals, inspections, closing and escrow costs among others — though not the down payment.

When FHA officials comment on the current 6% maximum “exposes the FHA to excess risk by creating incentives to inflate appraised value.”  This is an undeniable fact.  Basically, they are insuring loans with “inflated values”.  A home is worth as much as someone is willing to pay for it.

Jose Fleming of Five Star Realty Group in Orlando, FL – “The reduction of the maximum seller contribution would be detrimental to this already sensitive real estate market.  I can understand that FHA needs to hedge their bets so to speak, but the overall effect this will have on the housing market is inevitable.”

They are looking into the possibility of a sliding scale approach.  This, to me, seems more realistic because the people that will suffer most with these changes would be those buying lower priced homes.  The reasoning behind this is that the smaller the loan amount, typically the higher the percentage the closing costs will be.  While it is realistic to expect a 3% seller concession to cover the costs of a $300,000 home purchase, it would barely cover junk fees at the local bank on a $60,000 property.

Our solution here at RH Funding Co. Orlando is to waive the fees altogether, thereby decreasing the amount of money paid out of pocket by a homebuyer.  We have special no bank closing cost loan programs geared towards the changing market.  Visit us online today at www.LendingFL.com and find out more!

Today’s payroll flop — only 20,000 real jobs created in May — will take some time to settle all the way in. Immediately: 10-year T-notes are 3.22% (from 3.36% yesterday and 3.99% six weeks ago), and mortgages right at and some below 5.00%.

The payroll report has confirmation: new unemployment has held high for five months; May retail sales look soggy (“same-store” data); auto sales flubbed in May; and housing shows every sign of a serious fade, post-tax credit. Purchase applications have hit a 13-year low; the unemployed do not apply, nor do the underwater, and the few, the brave who think they are qualified often find themselves in the “rejected” pile.

In days ahead, the entire recovery camp from government to stock-pushers has more than explaining to do. It must change its mind.

All in one furball: How can mortgage rates be so low, and home prices so low, affordability the best ever measured, yet housing defies recovery? One unifying answer: credit. Not enough, and wildly too tight.

The credit dearth is perfectly rational. At default rates like these, nobody knows what new loan is safe to make, and underwriting has been overtaken by hand-shaking, eye-glazed panic. The horrifying conundrum: new loans will inevitably produce new losses, yet without enough new loans, losses on existing ones will be greatly higher.

Underwriting rules should be based on prior loss experience. That is, any borrower characteristic that generates an outsized loss rate should be excluded. Example: credit score below a certain threshold. Early in the present disaster, in 2007 Fannie and Freddie (the Government Sponsored Enterprises “GSEs”) began proper re-calibration of underwriting, withdrawing their portion of the credit ease that led to the bubble.
     
In stage two, 2008 defaults surging further, the GSEs began to throw defensible exceptions out with the bathwater. No matter how big your down payment, no matter how much money you have, or how good your credit, or work experience, income underwriting will be 1040-or-the-highway. No exceptions. Hysterical blindness.
     
In 2009 stage three, unemployment drove some defaults to a hundred times prior worst case, and impossible to tell if an underwriting flaw caused a default, or the 75-year-record recession. GSEs began to issue rules having little to do with actual risk, tightening for the sake of tightening. The thunder of doors slamming on empty barns. The 2009 classic: if you have disputed a credit report item, the GSEs will block your closing until you prove that your dispute did not hide a debt outstanding. You prove.
     
Mortgage haiku: Every borrower looks like a concealed IED to people fried by PTSD.
     
New for 2010, Fannie’s Loan Quality Initiative demands a credit report re-run immediately before closing. Yes, once in a while a borrower will be found to have blown himself up by buying a new frig and washer-dryer on credit. Many, many, more times we’ll get a mistaken report, or an ambiguity, or an argument that will delay or kill closing. What’s the likely ratio of defaults prevented versus useless meddling? One to one hundred? One to one thousand? Ten thousand?
     
Nobody knows. Sounds tough, so do it. Another: under LQI (Life Quality Index), some creep is going to check to see if you really moved into your new primary residence. True, it is fraud to fail to do so, and misrepresented rental properties have much higher rates of default. However, heaven defend the poor souls who let sellers stay an extra month, or who engage a house-sitter while travelling, or who want to renovate before moving in. No power on or off planet will protect the new owner who has taken down part of the house to add-on and add value. The ratio of loss-prevention to pointless intrusion and punishment of technical offense?  
     
The GSEs have turned sensible and predictable mortgage closing into a field of open manholes, new ones popping open at each step. This effort at mortgage perfection — instead of rational, actuarial management of loss — has thinned the pool of eligible borrowers to the point that housing cannot recover. Not in time for the economy.

Perhaps this is why all the sink holes are appearing everywhere?!

New Treasury Department guidelines will go into effect June 1; these guidelines will require loan servicers to verify applicant’s income and financial situation before placing them into trial modification.

This will make it more difficult to get a relief from unaffordable mortgage payments, but if people make it into trial modification they are more likely to get long term assistance.

But all this paperwork has caused all sorts of problems for The President’s foreclosure rescue program, originally it was intended to last three months, the trial period allow troubled homeowners a chance to prove that they can really make the modified payments and qualify for a so called permanent modification.

New Treasury Department guidelines will go into effect June 1; these guidelines will require loan servicers to verify applicant’s income and financial situation before placing them into trial modification.

This will make it more difficult to get a relief from unaffordable mortgage payments, but if people make it into trial modification they are more likely to get long term assistance.

But all this paperwork has caused all sorts of problems for The President’s foreclosure rescue program, originally it was intended to last three months, the trial period allow troubled homeowners a chance to prove that they can really make the modified payments and qualify for a so called permanent modification.

But many homeowners have been stuck into these trial modifications for many months while they fight with officials over the documentation requirements, but financial institutions say that they are not sending the forms correctly, but the homeowners claim the servicers are losing the paper work.

Paul Koches, executive vice president at Ocwen, said many loans didn’t require much documentation when they were originated, which makes gathering the paperwork during modification process more difficult. “It puts us in a better position to determine the specific terms and conditions of the modified loans that will make it more likely that they will stick.”

But many homeowners have been stuck into these trial modifications for many months while they fight with officials over the documentation requirements, but financial institutions say that they are not sending the forms correctly, but the homeowners claim the servicers are losing the paper work.

Paul Koches, executive vice president at Ocwen, said many loans didn’t require much documentation when they were originated, which makes gathering the paperwork during modification process more difficult. “It puts us in a better position to determine the specific terms and conditions of the modified loans that will make it more likely that they will stick.”