Did you know? Rates now lower than June 2013

Graphic courtesy of S&P Dow Jones Indices

Home values leveling off after a year of strong gains

Here's some news that may not have been expected six months ago: Mortgage interest rates are currently lower in June 2014 than they were in June 2013, averaging at 4.14 percent for a 30-year fixed.

As we have seen in the last couple of months, the number of homes selling on the market has dropped off, and subsequently, fast-increasing home prices have finally tapered (see graphic above). All of this shows that the economy has not officially recovered as much as many believed a year ago.

After last year's rapid rate and value run-up, economists now predict a much more tortoise-like pace, either up or down for the rest of 2014. Slower growth would more closely match steady but slow increases in wages and overall personal wealth - a healthier sign for a stable economy.

As home prices stabilize and interest rates remain in historic low 4-percent ranges, the time is ripe to buy or refinance. Let us know any way we can assist in your home purchase or refinancing process at 877-939-0339.

Market getting better, but still not good enough

Yellen: Not time to raise rates yet

While some economic indicators such as recent falling unemployment rates signal market improvement, Fed chief Janet Yellen maintains that it's not enough to start raising interest rates.

Despite forecasts of a resurgent housing market in 2014, the reality is that sharply rising home prices, high debt and stagnant wages have prevented a full-blown housing recovery. By late June, the Mortgage Brokers Association flipped its predictions of a housing boom on its head and now instead forecasts a decline by the end of the year. A sluggish housing market reveals there are still chinks in the U.S. economic armor.

As has been previously mentioned on this blog, a big chunk of typical first-time homebuyers are missing: 20- and 30-somethings. With student loan debt at all-time highs and a shortage of well-paying jobs, millennials today are putting off buying homes - either out of desire or necessity. Due to this combination of factors, first-time homebuyers remain well below historic "average" levels, market analysts say.

However, if you are looking to buy your first home or just a new home, don't give up! There are many mortgage programs that can help you finance your home, and remember that at Vertex, we can utilize a lender-paid credit to cover all, or nearly all, of your closing costs. This is a feature that sets Vertex apart from other mortgage brokers. Please contact one of our licensed Loan Officers to get more information on what kind of new home you can afford.

Learn to speak the 'mortgagese' lingo

For a first-time homebuyer, navigating the mortgage process can be difficult enough - especially if you've never heard of half the terms thrown around by your real estate agent or loan officer. They want your bank statements, credit history, W-2s and 1040 tax returns, and that's not even getting into your DTI, LTV, PMI and PITI.

But once you understand the terminology used to determine your loan approval, you will be more empowered to make the best choice for you. As a brief refresher for the acronyms mentioned above, get familiar with the following terms:

• DTI: Your debt-to-income ratio is a critical number that can make or break your loan eligibility. As of January 2014, the DTI rate is generally capped at monthly debt payments making up a maximum of 43% of your monthly income. If your DTI exceeds 43 percent, you will likely need to focus on reducing your overall debt before refinancing or purchasing a new home.
• LTV: Your loan-to-value ratio is another important figure determining what interest rates you can qualify for and even what loan programs you may want to sign up for. As a general rule, a loan amount totaling 80 percent or less of your home's value is a goal to strive for. If you don't have 20 percent equity in what your home is worth, you can look into programs such as FHA to qualify for a mortgage. Vertex Loan Officers can see if you're qualified for VA, FHA, Conventional and other loan programs.
• PMI: Private mortgage insurance is often used for borrowers whose LTV is greater than 80 percent. In many cases, you can still qualify for a loan if you're willing to pay an additional monthly mortgage insurance on top of your base mortgage payment. Once you've paid down the loan enough and gained more equity, you can refinance to get rid of PMI payments. (Hint: Vertex LOs would be happy to help you refinance and eliminate your PMI!)
• PITI: The basis of all mortgage payment calculations combines your principal, interest, taxes and insurance. Your lender will want assurance that you can safely cover the PITI payment each month given your monthly income and assets presented, in case you lose some of that income. Paying your property taxes and homeowner's insurance is mandatory and can be "escrowed," or rolled into your monthly mortgage payment, or paid separately.

For more definitions of common mortgage forms - also including GFE, TIL and RESPA - check out this slide show: http://realestate.msn.com/17-mortgage-terms-defined#1. As always, if you have questions on what any of this or other terminology means, feel free to contact a Loan Advisor or Processor at Vertex.

U.S. jobs market surges ahead

Graph courtesy of CNN.com

 

The May jobs report released Friday was full of promising news: An additional 217,000 jobs were added to the market and unemployment stayed steady at 6.3 percent. More importantly, job growth tallies show that all 8.7 million jobs lost during the recession have been replaced - although not necessarily the same type of jobs.

While this doesn't cover every economic benchmark, it's a sign of positive changes nonetheless. The stock market responded well to the jobs report and has continued to rally and reach new record highs with consistent frequency.

Despite the steady job gains, however, analysts point out that growth still has not matched population growth and thus, more improvement is needed for real market strength. Because of this fact and a few other sticking points, mortgage interest rates remain at very low levels.

If the economy continues picking up speed over the coming months, interest rates could start creeping up again. If you missed out on the opportunity to lock in a low interest rate in the past year, it is an excellent time to "strike while the iron's hot" and take advantage of today's very competitive rates. Call a Vertex loan officer to get more info at 877-939-0339.