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Why Interest Rates Change Daily October 4, 2010

Despite what some people believe, mortgage-backed securities (MBS’s) are the bonds that directly dictate fixed rate mortgage interest rate pricing. The supply and demand for MBS’s is the final determiner of how fixed rate pricing is set. Just like stocks, MBS’s trade throughout the day. Large volumes of buying or selling can cause extreme fluctuations in the rate and point structure of loans available to borrowers.

Major market participants, just like individual investors, are constantly searching investment opportunities that will provide the greatest return with the least amount of acceptable risk. Investment products inherently all possess some sort of risk. For example, one risk associated with mortgage-backed securities, the bonds that directly dictate fixed rate mortgage pricing, is a fear of pre-payment. A homeowner obtains a loan for a certain duration of time at a certain interest rate. As interest rates fall, homeowners tend to refinance their homes, which leads to the early payoff of the first loan and the origination of a new loan at a lower interest rate. Investors are cognizant of this scenario and factor this risk into their demand for mortgage-backed securities. If the demand for MBS’s is strong, the prices of MBS’s increase leading to lower mortgage interest rates. However, if the demand for MBS’s weakens, mortgage interest rates rise. Continued gains in the US stock market add to the competition for investors’ funds. In addition, Treasury securities also provide competition and thus volatility.

Oftentimes stocks and bonds exhibit a general trading pattern or direction. Last year, bonds steadily increased pushing mortgage interest rates lower. Unfortunately, the recent pattern has been a wild and almost constant up and down motion resulting in a general increase in mortgage interest rates. Therefore a cautious approach to lock decisions is necessary to protect against future volatility.


The pit falls of overtime income and part-time income October 11, 2010

"They can because they think they can." Virgil

We have many borrowers that have both overtime income and part-time jobs in order to earn extra dollars for their families. This is more prevalent today as people either work more hours as head counts are held the same or a new part-time job has been added to supplement the monthly household income.

How can you use this income to qualify for your new home purchase?
  1. You must have been on the job for a minimum of 24-months to use either overtime or part-time income.
  2. Any hourly income less than 30 hours a week is considered part-time income
  3. For overtime we will take a 24-month average of your wages when calculating your qualifying mortgage income: the same for part-time income.
It is important to know that even if you do not have a 24-month history of overtime or part-time income these wages will be counted when qualifying for USDA, House Charlotte and NC Bond programs – all of these programs have maximum income limits to qualify.

Bottom-line the supplementary income counts when considering total household income however it will not be used when determining your qualifying debt/income ratio unless there is a 24-month history.

All our best for the upcoming week. 

@ The Valeo-Croy Team, we are here for you.

The Valeo-Croy Team -  (704) 366-7711

Todd Croy - NMLO license #91428
Deanna Valeo - NMLO license #91421

Accessible | Program Expertise | On-Time Closings                             
 
The Valeo-Croy Team and Cunningham and Company Mortgage Bankers are Equal Housing Lenders.

This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for Cunningham and Company to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply.   Date: 10/11/2010


Is it time to refinance or buy with a 15-YR mortgage? October 18, 2010

"Gratitude is not only the greatest of virtues, but the parent of all the others." Cice

You may have bought your home 7-years ago and have been making extra payments to get your loan balance paid down quicker. You want to pay off your home loan as fast as you can; a refinance may make sense at today’s lower 15 YR fixed mortgage rates.

As an example: if you had at $300,000 loan at 6% paid over 30-years you can have the same 15-yr fixed mortgage payment at $247,000 at 3.75% Friday’s 15-yr rate. For many this can trim years from the life of your loan. If you are buying a new home, the same $247,000 15-yr mortgage is $581/month more than the current 30-yr option. This represents almost $7,000 per year.

The keys to evaluating if reducing your payment term is the right move for you are the following:
All our best for the upcoming week. 

@ The Valeo-Croy Team, we are here for you.
  1. Consult your financial advisor, does he/she offer you a better return on your extra cash by investing it for your future retirement? Even if you are closer to retirement what can be done with $7,000 more per year?
     
  2. Are you years away from needing to have your home paid off? There is a belief that higher inflationary times are ahead. In this case future dollars will have less spending power. You may benefit from using cheaper future dollars to pay off you home than using today’s higher value dollars to do so.
     
  3. Remember that your mortgage is one of the last tax deductible payments – your true after tax cost on your loan is the interest rate x (1-tax rate) – as an example if you refinance to a 4.125% rate and had a tax rate of 30% then your real cost on your mortgage is 4.125%*(1-.3) = 2.8775%. This is very inexpensive borrowing. See bullet point 3 again.

    Let us do a case study for you and we can help you evaluate your options. We will provide a payment example tool which will allow us to compare a 15-yr, 20-yr and 30-yr mortgage option for you.
     

The Valeo-Croy Team -  (704) 366-7711

Todd Croy - NMLO license #91428
Deanna Valeo - NMLO license #91421

Accessible | Program Expertise | On-Time Closings                              
 
Facebook link: http://www.facebook.com/valeocroyteam?v=app_4949752878
The Valeo-Croy Team and Cunningham and Company Mortgage Bankers are Equal Housing Lenders.This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for Cunningham and Company to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply.   Date: 10/18/2010


NC Housing Agency releases information about the NC Foreclosure Prevention Fund October 25, 2010

"Watch your thoughts; they become words. Watch your words; they become actions.
Watch your actions; they become habits. Watch your habits; they become character.
Watch your character; it becomes your destiny." ~ Frank Outlaw

Last week the North Carolina Housing Finance Agency released to the public information about the NC Foreclosure Prevention Fund going live in 17 pilot counties and will be available in all 100 NC counties starting December 1st. As you all know, foreclosure is a huge issue across the country right now and certainly in NC.

If you know of anyone facing foreclosure, anyone who has recently lost their job, or anyone who is having trouble (or anticipates having trouble) paying their mortgage, please refer them to the website below. This program applies to anyone in NC who has a mortgage on their primary residence.
The Fund will offer assistance in helping to pay their mortgage of home owners facing foreclosure.

Struggling home owners should visit the website below or call the toll-free number to learn more about this program.

http://www.ncforeclosureprevention.gov

or call the Information call center (888)623.8631

Please help us get the word out to other realtors, mortgage servicers, bank employees, friends, and any others who may be involved in helping NC residents facing foreclosure.

All our best for the upcoming week.

@ The Valeo-Croy Team, we are here for you.

The Valeo-Croy Team - (704) 366-7711

Todd Croy - NMLO license #91428
Deanna Valeo - NMLO license #91421

Accessible | Program Expertise | On-Time Closings

Facebook link:
http://www.facebook.com/valeocroyteam?v=app_4949752878

The Valeo-Croy Team and Cunningham and Company Mortgage Bankers are Equal Housing Lenders.This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for Cunningham and Company to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply. Date: 10/25/2010