Friday, January 31, 2014

Bet on the market, or bet on the Super Bowl?

Market predictions can be a risky gamble, even riskier than betting on a tight Super Bowl spread (GO BRONCOS). The Federal Reserve decided this week to continue reducing its monthly purchase of bonds another $10 billion to $65 billion a month. This was expected to cause a slight spike in interest rates, but it's actually done the opposite due to stock market woes, which proves that predicting how markets will behave is sometimes anyone's guess.

With interest rates remaining low and home values as high as they have been in several years, this is a prime time to lock in a loan. The year 2013 was a great year for a rebounding of the housing market in nearly every major metro area. As shown in this story and interactive graph, 20 of the biggest metro markets in the country all experienced strong overall growth, despite a light dip late in the year. Combine high property values with low interest rates, and you could save a lot by refinancing your home loan at this time.

Whether property values will continue increasing in 2014 (and interest rates will keep dropping) is probably more difficult than prognosticating the outcome of Super Bowl XLVIII. There are too many factors at stake to successfully predict what will happen next. But like they say, there's no time like the take advantage of opportunities right at your fingertips.

Friday, January 24, 2014

Word is bond: How the market hits close to home

Call it the domino effect: Due to global currency concerns, the U.S. stock market had a rough week. Investors lost confidence in several developing nations, including Argentina, Turkey, South Africa and China, causing currency values to drop and, consequently, U.S. stocks to tumble.

How does all this affect your mortgage? More so than you might realize. When stocks suffer, as a tradeoff money flows instead to the bond market. And when bond prices go up, home loan rates go down. Thus, mortgage rates got a little more attractive this week. See how it comes full circle?

What remains to be seen is how the Fed will decide to adjust its monthly purchases of bonds and treasuries; currently the government is buying $75 billion a month in mortgage bonds and treasuries, down from $85 billion a month last year. This stimulus program has helped jumpstart the housing market and keep mortgage rates at historic low levels.

The Fed is meeting next week to determine how much - and when - to taper its bond buying. Global concerns could very likely help keep mortgage rates low longer. How the markets could play out for the rest of the year, however, is anyone's guess.

Tuesday, January 14, 2014

Transparency in the modern lending era

CFPB director Richard Cordray visits 'The Daily Show'

For more of the Cordray interview segment, visit here
Earlier this month, we touched on mortgage regulations put in place last Friday by the Consumer Financial Protection Bureau, a new department created by the U.S. government to act as watchdogs over the financial lending sector. What exactly this means may still be a murky "alphabet soup" mystery to the average citizen.

To clarify, bureau director Richard Cordray explains its mission and responsibilities in the clip above. While the majority of lenders and brokers may already be offering clear-cut, fair deals to borrowers, the bureau aims to eliminate any unfair or fraudulent practices.

Some CFPB goals for the mortgage industry, as outlined by Cordray:
  • Checking out the numbers to make sure all approved loans succeed
  • Being upfront about "teaser" rates and term agreements
  • No surprises or false advertising
  • No debt traps
  • Enforcement of faulty or predatory lenders
  • Restoring any undue losses to borrowers
At Vertex, the implementation of CFPB rules has been seamless as we have always firmly believed in these fair lending practices. It is always our goal to make sure you, the borrower, are 100% clear in your loan agreement and work to make the process as smooth and transparent as possible. Should you have any questions about new rules or our policies, please do not hesitate to reach us at 303-407-0200.

Friday, January 3, 2014

New year, new lending requirements

photo credit:

By now, you may have heard about new rules going into effect Jan. 10, 2014, tightening lending requirements for homeowners. The goal of the rules, put into place by the Consumer Financial Protection Bureau, is to ensure all borrowers applying for loans are capable of keeping up with loan payments, which in turn enables banks to continue lending money with confidence.

For context, however: The new regulations are similar to rules that already have been in place for a couple of years now. This won't be a dealbreaker for the vast majority of homeowners today. For example, one change is that a borrower's debt-to-income ratio must drop from a maximum 45% to 43%. Meaning, the total amount of your monthly debt payments, whether due to mortgages, credit cards, or student loans, cannot be greater than 43% of your monthly income.

If these changes mean you have to wait a little longer before refinancing or making a new home purchase, don't fret - the last thing you want is to get stuck with a mortgage you can't afford. The goal of tightening lending standards is ultimately to prevent that from happening.

Check here for tips to consider in 2014 and stay tuned to the Vertex blog for more information on coming changes.