The average for the 15-year fixed program equaled 3.05%, a decrease of .02% on the week.

Once again, both of these averages set new lows for 2012. The bond market is reacting to continued European economic strife (Greece in particular) and new revelations that JP Morgan Chase has absorbed enormous trading losses ($2B) on synthetic derivatives this week.

The AmeriPro Funding Home Loan Specialists Team is posting par rates for our 30-year fixed (conventional) loans at 4.0% (APR 4.186%) and 15-year at 3.375% (APR 3.701%). Our advice to clients is to float into next week as we believe the severity of these developments has not been fully digested in the mortgage bond markets.

Mortgage bond yields are generally higher in recent trading which is pushing rates lower this week.  The fundamental reasons are as follows:

• Chinese economic growth is slowing as exports to Europe and the US are in decline.
• Persistent European debt problems due to Euro borrowing to support the weak Spanish economy continuing to increase.
• The US Federal Reserve appears to be set to approve another quantitative easing which is viewed as an indictment of economic health claims that must be reversed ahead of the fall election season.
• Recent soft US jobs data.

On April 13, 2012 The AmeriPro Funding Home Loan Specialists Team is posting par rates for our 30-year fixed (conventional) loans at 4.0% (APR 4.18%) and 15-year at 3.25% (APR 3.58%).   We continue to advise refinancing candidates to take action by requesting a refinance breakeven analysis which can be found on our website at www.HLSTX.com  or by calling us direct at 832-286-1600.

Fed Chairman Bernanke’s comments early this week indicated that he may not continue to hold rates at artificially low levels ad infinitum.  This caused bond prices to fall dramatically giving up approximately 80 basis points in a matter of minutes on Tuesday.  All lenders immediately increased lending rates for the balance of the day.

On Wednesday European economic news was perceived as recessionary and mortgage bonds recovered about 50% of Tuesday’s losses. Rates have improved for borrowers to within .25% of historic lows seen earlier this year.  Our advice is to lock your loan ASAP as we believe the biggest eggs have been found.

We will be available this weekend, so if you have any questions please call us at (832) 286-1600.

Under the proposal, the upfront mortgage insurance paid on all “streamlined” FHA refinances, that is a borrower with a current FHA loan refinancing to a new FHA loan, would be reduced from the current 1.0% of their mortgage amount to .01%. This effectively reduces the up-front MI cost to zero. The annual mortgage insurance premium will drop from 1.15% to .55%.  According to FHA, the combined savings of lower rates and reduced MI premiums would save the average borrower up to $4,000 per year.

Curiously, this announcement is on the heels of a separate announcement by the FHA to increase mortgage insurance premiums on new borrowers. These rates will be rising as much as 75% on upfront mortgage insurance premiums. The new guidelines were in response to rising losses at FHA and designed to shore up capital ratios that have been below the congressionally mandated minimums for three consecutive years.

Other beneficial features of an FHA streamline refinance are potential waiver of the appraisal requirement and no verification of income or employment. This means than many borrowers who owe more than their home is worth may be able to refinance, and do so at a lower overall cost.

For a no cost quote on an FHA Streamline refinance, please give us a call at (832) 286-1601.

Over the past few years, FHA has seen its market share rise from less than 5% to 40% as credit standards tightened and down payment requirements increased. FHA still allows most borrowers to place as little as 3.5% down to purchase a home. At the same time, losses have increased. As of last October, 17% of FHA loans were in some stage of delinquency and FHA has not hit its Congressional-required minimum capital ratio of 2% since 2008. To address these issues, FHA has implemented more stringent requirements on lenders who underwrite FHA loans, increased mortgage insurance premiums, and implemented higher down payment requirements for less qualified borrowers. This additional mortgage insurance increase represents yet another step in helping FHA shore up its finances.

The increase in premiums could easily lead to borrowers buying power to decrease. On a $200,000 home purchase with the minimum required down payment of 3.5%, the change in mortgage insurance represents a $75 higher monthly payment which means a borrower could not afford the same priced house as they would be able to before April 1^st.

If these changes were not enough, FHA has also proposed decreasing the amount of allowable seller contributions from the current 6% to 3% or $6,000. While this is not yet set in stone, it appears likely that we will see borrowers have to come up with more money out of pocket.

With an April 1^st deadline looming, potential home buyers, particularly first time buyers who typically favor FHA-insured loans, are advised to get under contract as soon as possible to avoid a higher monthly payment.

Mortgage bond yields are generally lower in recent trading which pushes rates slightly higher.  The fundamental reasons are as follows:

The European Economic Union is insisting on the imposition of austerity programs designed to reduce Greek and Spanish debt.  These measures will not be easily implemented and civil unrest is likely to follow.  The result is that fixed income investors will favor US Treasuries over Euros, keeping mortgage rates low.

Additionally, the election year political environment will tend to keep bond prices higher and rates restrained to current levels.

On Feb 23, 2012 the AmeriPro Funding Home Loan Specialists team is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.0601%) and 15-year at 3.25% (APR 3.5750%).

We continue to advise refinancing candidates to take action by requesting a refinance breakeven analysis which can be found on our website here or by calling us directly at 832-286-1600.

Here is some good news:  most closing costs, and even pre-paids, can be funded with seller contributions. Seller contributions are funds that the seller agrees to put towards the buyers closing costs as part of the purchase and sale agreement. Some mortgage programs limit these contributions to around 3% of the purchase price, but others allow up to 6% seller contributions. In many cases, if negotiated properly, all costs associated with closing can be funded by the seller.

Most conventional loans require that down payment resources come from the borrowers own funds, but government loans offer more flexibility. On an FHA loan, for instance, down payment funds can come from gifts as long as the gift is from a direct relative or other person with a demonstrated financial interest in the borrower such as a co-habituating partner or employer. It is important that these funds are truly classified as a “gift” instead of a loan as borrowed funds are generally not acceptable as a down payment source.

One exception to the borrowed funds rule is a loan on assets in a 401k plan. Borrowers are allowed to use proceeds of a loan from their retirement plan for down payment purposes as long as the repayment schedule is counted in the borrower’s debt-to-income ratio. Another little known source of funds that may be used for down payment purposes is assets in an Individual Retirement Account, or IRA. First-time homebuyers, defined by the IRS as not having owned a home in the past two years, can take up to $10,000 penalty-free from an IRA to use for a down payment. Roth IRAs would have no taxation in this case since they are funded with post-tax dollars. An interesting clause in this first-time homebuyer rule is that the homebuyer need not be the owner of the IRA.  As long as the funds are used for a qualified first-time homebuyer purpose, a parent, grandparent, or other relative can use funds from their own account and gift them to their child, grandchild or other relative without the penalty.

For those borrowers with good credit scores but who fall into the low-to-moderate income thresholds established by the US Department of Housing and Urban Development, down payment assistance may be available. Keep in mind that these programs will still require some borrower contributions to cover an earnest money deposit on the sales contract as well as the cost of an appraisal and inspection. Also, funding is not always available so it is important to check with a qualified Houston mortgage lender to ensure funds availability.

One final tip if you are still tight on your down payment funds. If you anticipate receiving a refund on your 2011 tax return, you should file as soon as possible in January. The sooner your return is received and processed by the IRS, the sooner you will receive your refund from the IRS which can be used toward your down payment!

While the overwhelming majority of “no money down” programs left the mortgage financing landscape years ago, borrowers can still obtain mortgage financing without breaking the bank using some of the strategies outlined here.

On February 18^th, President Obama signed The Agricultural Rural Development, Food and Drug Administration and Related Agencies Appropriation Act of 2012. A provision in this bill reinstated the higher mortgage loan limits that expired on October 1^st.  The loan limits had been increased back in 2007 in an effort to stimulate the beleaguered housing markets. The expiration of this provision was proving particularly threatening to high cost markets where alternate mortgage financing is not readily available.

Many Democrats in Congress opposed the increase as did the Obama administration because they felt this would enable FHA to continue to gain market share at the same time the administration wanted private lending to take on a bigger role in home mortgage financing. Ultimately, both the House and Senate voted to advance the bill beyond the votes needed to override a Presidential veto.

The new loan limits for FHA now cap out at $729,750 in designated high cost markets. The loan limit in the Houston area which also includes The Woodlands, Conroe, Tomball, Spring, Katy and other parts of the metro area will remain at $271,050 for a single family property, $347,000 for a duplex, $419,525 for a three-family home, and $521,250 for a four family home. The FHA continues to provide a necessary funding source for home buyers who cannot meet the rigid underwriting requirements in effect for conventional loans and has kept the Houston housing market relatively stable. Getting pre-qualified for an FHA loan is a fairly simple process that only takes a few minutes on the phone with one of our loan officers.