All Interest Rates But 1-Year ARM Hit Record Lows. McLean, VA — Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.69 percent with an average 0.7 point for the week ending June 24, 2010, down from last week when it averaged 4.75 percent. Last year at this time, the 30-year FRM averaged 5.42 percent.

The 15-year FRM this week averaged 4.13 percent with an average 0.6 point, down from last week when it averaged 4.20 percent. A year ago at this time, the 15-year FRM averaged 4.87 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.84 percent this week, with an average 0.7 point, down from last week when it averaged 3.89 percent. A year ago, the 5-year ARM averaged 4.99 percent.

The 1-year Treasury-indexed ARM averaged 3.77 percent this week with an average 0.7 point, down from last week when it averaged 3.82 percent. At this time last year, the 1-year ARM averaged 4.93 percent. This is the lowest the 1-year ARM has been since the week ending May 6, 2004 when it averaged 3.76 percent.

This is good news, because low interest rates encourage buyers of Sequim and Port Angeles homes.  With interest rates at historical lows and prices also hitting resistance bottoms, this spring is the right time to buy.  Interest rates will start to go up at some point in the not-to-distant future.

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Interest rates are beginning their assent.  One benefit of the recession has been low interest rates for the 30-year fixed rate mortgage.  In fact, we have had historically low rates not seen in 30 years, so for home buyers who have wanted to buy a home, this has presented a rare opportunity to get the lowest monthly mortgage payments possible in three decades. 

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 5.14 percent for the week ended Dec. 31, the highest since the week ending Aug. 27 and up from the previous week’s 5.05 percent, according to a survey released by Freddie Mac, the second-largest U.S. mortgage finance company.

My argument recently for home buyers is that they should buy in these winter months if they have been intending to buy a home in Sequim or Port Angeles this coming spring or summer, because they have more negotiating power with sellers right now when there are fewer buyers.  Wait until spring and as a buyer you will be competing against a lot of other buyers. 

But if you wait until spring or summer, how much higher will your monthly mortgage payment be with interest rates on the rise?  Interest rates are beginning a long slow assent.  If you look at the bigger picture of what is happening in the economy, what the federal reserve is doing to stimulate the economy, and what the Obama administration is doing with respect to fiscal policy, interest rates have nowhere to go but up.

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Ever wonder what credit issues reduce your FICO score?  We have some of the answers here with a new revelation by FICO itself.  If you’re applying for a home loan or you will be making an offer on a home in Sequim or Port Angeles, you may want to get pre-qualified.  I strongly recommend it, but here are the mistakes that reduce credit scores and by how much.  It’s interesting to note that the impact of these mistakes is different depending on your score to begin with.

Here is a convenient Credit Score Calculator, which will estimate your current credit score:

FICO Credit Score Estimator

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The Veterans Administration provides an array of opportunities for America’s veterans and their families to achieve their dreams of home ownership.

The VA does not issue home loans. Instead, it guarantees them, which provides lenders with a significant degree of protection. In turn, prospective home buyers can obtain competitive rates and loan terms, among a host of other benefits.

The VA offers several types of loans, from home construction and home loans to energy improvement. Veterans considering a VA loan must first obtain a Certificate of Eligibility (COE), a document that certifies they meet the loan program’s basic requirements.

Any military member who has served 181 days on active duty during peace time or 90 days during war time may be eligible, along with those who have served at least six years in the Reserves or National Guard. Spouses of service members killed in the line of duty may also be eligible.

Not everyone who is eligible will ultimately qualify for a loan. The VA will ultimately look at a veteran’s credit and financial history, along with several other key indicators. But veterans with poor or even no credit history can obtain a VA home loan. So can those with bankruptcy or foreclosure in their past.

VA loans offer qualified veterans a host of low-cost and even no-cost benefits. Borrowers do not have to provide a down payment on their home or make monthly payments for private mortgage insurance. Interest rates are generally lower on VA loans than on conventional loans.

For active-duty members, the interest rate cannot exceed 6 percent. Many can ultimately switch to interest-only payments, guaranteeing that lenders cannot foreclose on the mortgage. These benefits end three months after the completion of active military service.

Loan values can be up to 100 percent of a home’s value. But the VA has strict VA loan limits throughout the country. The agency recently increased the loan limit in high-cost parts of the country to $729,000.

[We thank VA Loan Expert Jay Buerck for this contribution.   Jay can be reached at jbuerck@vamcenter.com]

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Guessing what you could afford to purchase or want to know the monthly payments, or what would happen if you made extra payments?   Right now interest rates at at all time historical lows and prices are also below normal FMV in Sequim and Port Angeles.   Take advantage of four very powerful and simple online loan payment calculators on my website at:

http://www.freerealestatelaw.com/mortgage_payments_pop.html or click on this image.

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PRESIDENT’S ECONOMIC RECOVERY PACKAGE TO MAKE MORE FAMILIES ELIGIBLE FOR FHA-INSURED MORTGAGES
FHA implements temporary higher loan limits in Seattle, Tacoma, Olympia, Vancouver Bellingham, Bremerton, Tri-City and other areas to help families keep their homes

WASHINGTON – More American families will be eligible this year to purchase or refinance their homes using affordable, FHA-insured mortgages, thanks to the economic stimulus package signed into law by President Obama on Tuesday. The American Recovery and Reinvestment Act of 2009 will allow HUD’s Federal Housing Administration (FHA) to temporarily increase its loan limits and insure larger mortgages at a more affordable price in high cost areas of the country.

“This is one of many elements in the President’s stimulus package that will aid homeowners and homebuyers in dealing with the volatile mortgage market,” said HUD Secretary Shaun Donovan. “These loan limit increases will help FHA continue to provide safe, affordable mortgage products to families in all areas of the nation.”

Effective immediately, HUD will offer temporary FHA loan limits that will range from $271,050 to $729,750. The maximum amount of $729,750 will only be applicable to extremely high-cost metropolitan areas such as: New York, Los Angeles, San Francisco and Washington, D.C.

In Washington State, today’s announcement will affect loan limits in the following communities:

• In most Washington markets – including Spokane, Yakima, Walla Walla, Wenatchee and Ellensburg. – the FHA mortgage limits that took effect on January 1st, 2009 will remain in effect – on a one-family home the limit is $271,050; on a two-unit home is $347,000; on a three-unit house is $419,400; and on a four-unit house is $521,250. The higher limits also apply to cities like
• In the Seattle-Tacoma area which includes Bellevue, Everett, Seattle, Tacoma ands and King, Pierce and Snohomish counties, the FHA limit on a one-unit house will be $567,500; on a two-unit house will be $726,500; on a three-unit house will be $878,150; and on a four-unit house will be $1,091,350.
• In Bellingham and Whatcom County, the FHA limit on a one-unit house will be $375,000; on a two-unit house will be $480,050; on a three-unit house will be $580,300; and on a four-unit house will be $721,150.
• In Olympia and Thurston County, the FHA limit on a one-unit house will be $361,250; on a two-unit house will be $462,450; on a three-unit house will be $559,000; and on a four-unit house will be $694,700.
• In Vancouver and Clark and Skamania counties, the FHA limit on a one-unit house will be $418,750; on a two-unit house will be $536,050; on a three-unit house will be $648,000 ; and on a four-unit house will be$805,300.
• In Kennewick, Pasco, Richland and Benton and Franklin counties, the FHA limit on a one-unit house will be $275,000; on a two-unit house will be $352,050; on a three-unit house will be $425,550; and on a four-unit house will be $528,850.
• In the Bremerton-Kitsap County area, the FHA limit on a one-unit house will be $475,000; on a two-unit house will be $608,100; on a three-unit house will be $735,050; and on a four-unit house will be $913,450.
• In Port Angeles and Clallam County, the FHA limit on a one-unit house will be $383,750 ; on a two-unit house will be $491,250; on a three-unit house will be $593,800; and on a four-unit house will be $738,000.
• In Skagit County, the FHA limit on a one-unit house will be $373,750; on a two-unit house will be $478,450; on a three-unit house will be $578,350 ; and on a four-unit house will be $718,750.
• In the San Juan Islands, the FHA limit on a one-unit house will be $593,750; on a two-unit house will be $760,100; on a three-unit house will be $918,800; and on a four-unit house will be $1,141,850.
• In Jefferson Count, the FHA limit on a one-unit house will be $437,500; on a two-unit house will be $560,050; on a three-unit house will be $677,000; and on a four-unit house will be $841,350.

Under the American Recovery and Reinvestment Act of 2009, the revised FHA limits for 2009 are set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 and those established for 2009 under the Housing and Economic Recovery Act of 2008. Thus the new Act permits FHA to insure loans on amounts up to 125 percent of the 2007 area median house prices, when that amount is between a national minimum of $271,050 and maximum of $729,750.

The change in loan limits are applicable to all FHA-insured mortgage loans endorsed after HUD publishes the increased loan limits today, and it lasts until December 31, 2009.

Increasing loan limits will help FHA continue to provide much stability to housing markets across the country. Already, as conventional sources of mortgage credit have been contracting, FHA has been filling the void. From September to December 2008, FHA facilitated $97 billion of much-needed mortgage activity in the housing market, $35 billion of which was through FHA’s refinancing products. By focusing on 30-year fixed rate mortgages, FHA helps homeowners avoid and escape the risks associated exotic subprime mortgage products, which have resulted in rising default and foreclosure rates.

In January 2010, FHA’s maximum loan limit will return to 150 percent of the conforming loan limit. That amount will likely be $625,500, unless Congress approves additional changes.

Home Equity Conversion Mortgages

FHA’s reverse mortgage product known as the Home Equity Conversion Mortgage (HECM) will have a new national mortgage limit of $625,500, up from the previous limit of high of $417,000. As in previous years, the special exception areas of Alaska, Hawaii, Guam, and the Virgin Islands may have higher loan limits.

Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them or having to make any monthly repayments. Homeowners can select a lump-sum payment, monthly payments or tap into a line of credit. No repayment is required as long as a homeowner lives in a home with a reverse mortgage. The reverse mortgage is repaid, with interest, when a homeowner sells the home or dies.

FHA loan limits are based on the county in which the property is located. However, for properties located in metropolitan or micropolitan statistical areas, the limit is set at that of the county with the highest median home price within the metropolitan or micropolitan area.

The new temporary FHA loan limits are posted on the HUD website. Additional details on these new temporary loan limits, including FHA’s mortgagee letter and attachments.

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