As we indicated with our November 10th Blog,

https://efinitygroup.blogspot.in/2016/11/if-you-currently-are-or-have-been.html

the Federal Reserve voted yesterday (Wednesday March 15th) to again raise the key interest rate one-quarter percentage point. This is just the first of three hikes we anticipate for 2017. The rate was increased one-quarter percentage point just three months ago in December 2016. This was the probable outcome following encouraging employment figures in February.

We believe this consecutive increase marks a turning point in policy. The Fed raised the rate only twice in the past decade. Wednesday’s decision quickens the pace, signaling the potential for more aggressive action as the year unfolds.


Rising rates have been top of mind for members of the housing industry, especially those of us in residential finance. Raising interest rates with the unprecidented apprecition witnessed in Texas, makes the fear of affordability a viable concern. We know in speaking with many of our potential homeowners the anticipated monthly payments on homes in various price ranges have "felt" higher. This is something which will continue to play out throughout 2017.

First-Time Homeowners and our Existing FHA Clients

Federal Housing Administration announced they will reduce the annual premiums most borrowers will pay by a quarter of a percent. The new rates are projected to save new FHA-insured homeowners an average of $500 this year said U.S. Housing and Urban Development Secretary Julián Castro.


This announcement along with Efinity's Mortgage's pledge to get our FHA borrowers into homes for only the required 3.5% down payment makes this the time to call us and get your home loan started.



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INSURANCE | INVESTMENTS | MORTGAGE


Announcement & Source: https://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2017/HUDNo_17-003

Low Interest Rate Train is Leaving the Station

If you currently are or have been considering refinancing your home loan but have put if off because life happens, your opportunity may be coming to a close. Trump's victory speech in the early hours of Wednesday included a pledge to spend on rebuilding America's infrastructure — a plan that should stir economic growth and mean substantial new debt. These comments might be what the US economy needs to get moving again after 4+ years of relatively flat growth. They are also inflationary in nature. Which is bad for borrowing rates.

This new exacerbates the fact, mortgage application volume fell 1.2 percent last week from the previous week, according to the Mortgage Bankers Association and was down nearly 11 percent in the past four weeks, as rates have already climbed from historic lows.

As of this morning (November 10, 2016), the 10-year note was yielding 2.07 percent, the highest level since Jan. 14, and the 30-year was at 2.86, also a January high in afternoon trading. It was the biggest one day jump in the 10-year yield since Aug. 11, 2011.

"Globally, rates have begun to creep upwards as investors anticipate less aggressive monetary policies from central banks, and U.S. rates are being pushed upwards in response," said Michael Fratantoni, the MBA's chief economist. "Additionally, new data shows continued positive signals regarding the job market and rising inflation, indicating that the Fed is likely to hike in December and will continue increasing rates next year."

In closing, the interest rates in the mid-3’s for government loan programs, such as FHA & VA, could be gone as quickly as months end as upward pressure on the 10yr gains momentum. If, as many expect, President-Elect Trump rolls out the trillion dollar infrastructure plan, we may very well be looking at interest rates in the upper 5% range by this time next year.

Why Wait??

Mortgage rates have been historically low for several years, but a surprising number of borrowers are still not taking advantage even though rates fell again at the start of this year. How many? Close to 7 million. After the Federal Reserve raised its target interest rate in early December, the common expectation was that mortgage rates would rise. Refinances had already dropped by nearly a third throughout 2015, as rates inched up in anticipation of the Fed's move. "Global economic shocks then sent investors looking for the safety of U.S. Treasurys, driving down yields on benchmark 10-year bonds. Mortgage interest rates began to fall in defiance of prevailing wisdom, and the "refinanceable" population grew by 30 percent in the first six weeks of 2016," said Ben Graboske, Black Knight Data & Analytics senior vice president. Mortgage interest rates dropped 30 basis points in that time. By the end of February, 6.7 million borrowers could have saved an average of $3,000 per year, representing a total of $20 billion in potential annual savings, according to an analysis by Black Knight. These borrowers have enough equity in their homes and high enough credit scores to qualify for refinances. "It's lack of awareness of the opportunity, and how to act on it," added Graboske. How much does that translate into on a monthly payment? More than 3 million borrowers could save $200 a month or more; nearly 1 million could save $400 a month or more. Mortgage refinance applications have increased in the past two months, but millions of borrowers are still sitting on the sidelines, perhaps unaware of the savings, or just too lazy to go through the process. "There are costs that come into play for sure and there is often the perception of costs," said Graboske. "Still, if you look at this population, we have 1.5 million borrowers that are sitting at almost a full point above what they could be." Black Knight broke borrowers up into rate clusters and found that about 3.4 million borrowers had active 30-year mortgages and interest rates of 4.5 percent to 4.75 percent. Of these, 1.5 million met broad-based underwriting criteria, and would be impacted when rates moved from 4 percent to 3.75 percent. When you look at the 4.25 percent to 4.5 percent rate range, 4.7 million had active 30-year mortgages, 2.1 million of which met underwriting criteria. They become "in the money" if rates drop from 3.75 percent to 3.5 percent. Mortgage rates did move slightly higher in the past week, but not enough to change most of the analysis here. Millions of borrowers are still choosing to pay more than they have to on their home loans. That opportunity is likely to vanish in coming months, should rates rise as expected. Of course, last year most expected mortgage rates would already be far higher than they are now, and that did not materialize. In closing, for many of the current mortgage products out there it may have taken you just as long to read this Blog as it would to start the refinance process. What are you really waiting for?

Learn the Facts & Myths of Reverse Mortgages

I had a lengthy conversation yesterday with one of my trusted realtors regarding Reverse Mortgages. While this is not been in Efinity Group's typical space, I was shocked at the misinformation that was understood as fact regarding this program. Similar to what we have done in the past I wanted to put something together to get the facts out there for our reading audience. Taking equity from a house is large decision for most seniors. It's not a decision that should be taken lightly. That said, a Reverse Mortgage is designed to allow seniors to improve their lives by freeing up the monthly obligations of a mortgage and whatever restrictive monthly cash flows that may present. Having access to funds to pay off credit cards, home equity loans and increasing cash flow for living expenses are a few benefits to having a reverse mortgage. Here are a list of facts and myths about reverse mortgages to help you make your decision.

Myth #1: It is the bank that owns the senior's home. Fact: When a customer has a reverse mortgage, their name will stay on the title unless a change in the title is made.

Myth #2: The bank has the right to make an elderly person leave their home. Fact: Reverse mortgages are insured and regulated by the Federal government. Any mortgage servicer has no authority to ask a senior to give up their home unless they fail to comply with the loan terms. Similar to any other mortgage, items like property taxes and homeowners insurance need to be paid and current. Texas Senior Lending wants to help customers stay in their homes as long as they can.

Myth #3: The senior’s heirs will eventually have to repay the loan if the customer passes away. Truth: A reverse mortgage is a non-recourse loan that gives the estate a year to sell the home at market value. Once the house is sold, the money from the sale will pay for the loan.

Myth #4: You will be responsible to make payments on reverse mortgage loans. Truth: Payments are due when the last living homeowner of the property permanently leaves the home.

Myth #5: Reverse mortgage proceeds are taxable and affect Social Security or Medicare. Truth: Although proceeds of a mortgage are not taxable and have no effect on your social Security or Medicare, you’re Supplemental Security Income (SSI) and Medicaid can possibly be affected. We hope some of what was provided above is beneficial.