Operation Welcome Home for Veterans

You have served your country, now we hope this powerful mortgage product will serve you to make the dream of home-ownership a reality.

The Operation Welcome Home mortgage program supports veterans, active-duty military, members of the Reserves and National Guard, and Gold Star Families in achieving the dream of home ownership.

The program combines a traditional Mass Housing Mortgage loan with a deferred down payment and/or closing cost assistance loan.

Eligibility

To qualify for an Operation Welcome Home loan, you must

  • Be an active duty military member; Veteran who served honorably; member of the Reserves or National Guard; or a Gold Star Family member
  • Be a first time home buyer
  • Purchase a 1- to 3-family property in Massachusetts (including condominiums)
  • Meet income and loan limits

Program Features

  • Competitive, fixed interest rates with flexible credit and qualifying requirements
  • A deferred down payment or closing cost assistance loan option for eligible borrowers
  • Borrower or lender paid mortgage insurance options are available
  • Loans insured by MassHousing feature MIPlus™ Mortgage Payment Protection benefit, which helps repay your loan if you are deployed or lose your job, or for Reservists and National Guard Members called to active duty
  • Rehabilitation option is available
  • No Residual Income test used to qualify
  • Non-Spouse Co-Borrowers allowed
  • Projected Rental Income used to qualify
  • Payments are made directly to Mass-Housing in Boston
  • Condos follow Fannie Mae Guidelines, not FHA/VA

This program is a 97% loan at a 30 year fixed rate.  It has a second mortgage of 3% that is deferred and no payments are required.  This allows for 100% financing and has the No Mortgage Insurance option as well.

For more details about Operation Welcome Home call or email me anytime.

Bill Nickerson

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Have you lost any deals due to a Home Inspection??

We hear so many times of home sales falling apart due to home inspections or some minor repair issues.  Broken steps, missing railings, chipping or flaking paint and the list goes on.  These are typically minor issues and can be fixed quickly and affordably.

What if I told you I have the answers to your prayers and could solve this?  One of the FHA rehab loans offers a $5,000 loan that can be used in order to fix Home Inspection Items.tools  This loan is just added to purchase price, it will not affect the Loan to Value, or does it affect the appraised value.  The loan is simply to solve these minor repair issues and is added right to the base loan.  If the repairs exceed the $5,000, the loan can be converted to a full FHA 203k Rehab loan.  In many cases, it is the small stuff we sweat.

Here is a list of the items that can be repaired.

  • Gutters/downspouts: install/repair/replace
  • Insulation: ceilings/walls
  • Siding/windows/doors
  • Paint: interior and exterior
  • Kitchen: all appliances and cabinets
  • Electrical: repair or recondition all
  • Plumbing: repair or recondition all
  • Repair HVAC or other systems
  • Flooring/subflooring/tile/carpet/wood
  • Termite treatment/damage repair
  • Repairing of well and septic
  • Weatherization items/repairs/ improvements
  • Foundation repairs
  • Upgrade/repairs for health and safety
  • Mold remediation or mold removal
  • Termite treatment/damage repair

Repairs must be completed within 30 days of closing and you will need a licensed contractor for an estimate as well as to conduct the work required. The items that need to be repaired are added to the purchase and sales.  Always check with your lender, as some of these items can vary or be limited to.

For more information about these types of loans and other programs, feel free to call or email me anytime.   Bill’s email address or Phone: 978-273-3227.

Bill Nickerson

Bill Nickerson NMLS# 4194 
 
Bill’s Email
978-273-3227 
 
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You don’t have to worry about Owner Occupancy Rate!

Are you Buying or Selling a Condominium? 

Worried that you don’t meet the old rule of 50% owner occupancy rate? 

Worry no longer!!

As long as you purchasing your new condo with the intent to occupy this condo as your Primary Residence, Fannie Mae no longer requires a specific occupancy rate in order to obtain a mortgage on the property.  You can put down as little as 5% and in some cases even as low as 3% down payment. 

This rule still applies for FHA and for Mass Housing Loans, they both still require that the complex has 50% or greater of owners compared to renters. These are very important to know when shopping for a mortgage and a home.

Here is the fine print taken from the FNMA guidelines

For investment property transactions on attached units in established projects (including two- to four-unit projects), at least 50% of the total units in the project must be conveyed to principal residence or second home purchasers. This requirement does not apply if the subject mortgage is for a principal residence or second home. Financial institution-owned REO units that are for sale (not rented) are considered owner-occupied when calculating the 50% owner-occupancy ratio requirement.

Here is what Lenders are looking at

Condo Fees: No more than 15% of the total units in a project may be 60 days or more past due on their common expense assessments (also known as HOA dues). For example, a 100–unit project may not have more than 15 units that are 60 days or more past due.

10% Reserves: Lenders must review the HOA projected budget to determine that it provides for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget.

To determine whether the association has a minimum annual budgeted replacement reserve allocation of 10%, the lender must divide the annual budgeted replacement reserve allocation by the association’s annual budgeted assessment income (which includes regular common expense fees).

The traditional requirements and regulations still applyThis link will take you directly to the Fannie Mae website of guidelines.

For more information about purchasing a Condo, Single or Multi Family,  feel free to call me at 978-273-3227 or email me.

Bill Nickerson

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Higher mortgage rates affecting your Purchasing Power?

Percent DownWe have seen mortgage rates as low as 3.250% in Fall of 2016 to a high of 4.500% in 2017.  We have to readjust our purchasing power and how these rates can affect how much we can afford for a home.  This means going to your lender and having your “Pre-Approval” updated to reflect the current mortgage rate of today.  This will bring your purchase price down.

Mortgage Rates

What does this mean to you?

If you are targeting a mortgage payment of $2000.00 per month for your Principal and Interest,  a 1% increase in the mortgage rate will cost you close to $50,000 in buying power.  Here is breakdown of what a $1,500, $2,000 and $2500 per month buys you for a Mortgage comparing different mortgage rates.  Click on the links below:

$1,500 Payment     $2,000 Payment     $2,500 Payment

You can see with the increase in mortgage rates, it brings down the amount of Home you can afford.  Over the last several years, we have been spoiled with artificially low mortgage

Janet Yellen

Janet Yellen

rates. The Federal Reserve Chair Janet Yellen, has indicated that 2 to 3 additional rate hikes may be in order for 2017.  That language alone caused mortgage rates to increase this past fall.  Although these rate hikes do not directly affect mortgage rates, they will cause an increase in overall living expenses. This is the first time in 10 Years that the Federal Reserve increased rates.  Click here to learn more about mortgage rates

Economists have been warning us for the last few years, mortgage rates have to go up!  The longer you wait, the more it will cost to buy a home. Or another way to look at this, the home you could afford will drop by 10% or more.  Buy now while the mortgage rates are still low as we may not see these rates again in our lifetime!!

For more information on Mortgage Rates and Programs, feel free to call me at 978-273-3227 or email me .  To Apply Online, click here.

Bill Nickerson

Bill Nickerson

Senior Loan Officer | NMLS #4194 | Mortgage Financial

 

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Pre-Qualification vs. Pre-Approval

In Today’s Real Estate Market, it is more important than ever to have a Pre-Qualification in hand when shopping for a home that has been prepared by a reputable Lender, Bank or Credit Union.  The terminology has changed from Pre-Approval to Pre-Qualification depending upon the detail of the Approval provided.

Pre-Qualification

A mortgage loan pre-qualification is an estimate of how much house you can afford and how much money a lender would be willing to loan you.  The best time to get pre-qualified is right before you start looking at homes.  This way you can focus on looking at houses that are within your price range.  By providing a loan officer with your income, assets, debts, and a potential down payment amount, he would then be able to give you a ballpark figure of how much he thinks you could afford to pay for a monthly mortgage.  Your Credit is reviewed and your loan is submitted through an Automated Underwriting Service (AUS). There is no cost to this service and no commitment is required.  This estimate is a helpful tool to you in figuring out if buying a home is a viable option, and if so, what your price range would probably be. A pre-qualification is to give you a range of home prices and in no way is a commitment to lend on a home. The time frame for this is less than 24 hours.

Pre-Approval

Getting pre-approved means that you have a tentative written commitment from a lender for mortgage funding.  In the pre-approval process, you provide a loan officer with actual documentation of your income, assets, and debts.   The Loan Officer is submitting this as if it is an actual loan and a property has been identified.  This will be reviewed by the lenders underwriting team.  The lender will run a credit check and verify all your employment and financial information. Once the final approval comes in, the lender will give you a letter of commitment stating how much money the bank is willing to loan you for a home purchase. Having a certified pre-approval in hand when you start house hunting lets real estate agents and sellers know you are serious about buying when they see you have your mortgage funding in place.  By having your funding in place, it becomes an extreme advantage over other buyers when it comes to negotiating your home purchase as your offer will stand above the rest and you will be able to close in a much shorter time period. The timeframe for a Pre-Approval can take up to 5 Business Days.closing-costs guy

It is important to note that a pre-approval and a pre-commitment is still subject to further review as any loan is.  As variables change in lending or in the borrowers financial picture, additional items may be required. In addition to the financial commitment, the lender will also need to verify the property appraisal and title search.

Bottom Line:     

Pre-Qualification is an estimate of a price range of what you can afford by verifying credit, income and running your loan through an Automated Underwriting System such as Fannie Mae or FHA as well as others.     Pre-Approval is a verified commitment from the bank stating how much money it will loan you. Make sure your Pre-Approval is an actual commitment from the bank as opposed to a Loan Officer just doing a quick credit check.

For More Information about Loan Approvals, Loan Programs and mortgages that are best suited to your financial needs, contact me anytime at 978-273-3227 or  email me  and  you can always visit my mortgage site at www.billnickerson.com

Bill Nickerson

Apply Online

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5% Down and No Mortgage Insurance on 2, 3 and 4 Family Homes

Mortgage QuestionsDid you know that Mass Housing (MHFA) loans are a safe and affordable alternative to FHA Mortgages.  Did you know the Mortgage Insurance for FHA never goes away!  Mass Housing still offers its mortgage program that features Low Down Payments, as little as 3% down with No Mortgage Insurance!  This product provides financing (purchase or refinance) up to 97% of the appraised value of the home without the hefty mortgage insurance payments that are typically associated with low down payment programs. MHFA follows Fannie Mae Guidelines, which means the traditional loan limit is $424,100!Percent Down

This special program is available for owner occupied; one to four family properties including condominiums on both purchase and refinance transactions. With a low fixed rate, the down payment can be a gift on single family homes.  The MassHousing Mortgage with No Mortgage Insurance is a great choice for low and moderate income homebuyers.

Features:

  • As little as 3% down on single-family homes and condos
  • As little as 5% down on 2, 3 and 4-family homes
    • 3 and 4 Family require 700 Credit Score
    • 3 Family Purchase Price of $645,3000
    • 4 Family Purchase Price of $801,950
  • No mortgage insurance required
  • Income limits as high as $123,660 in many cities and towns
  • Fannie Mae loan limits apply, borrower up to $424,100
  • Approved community second mortgages allowed
  • Credit scores as low as 660 (additional conditions may apply)

Advantages:

  • Gift funds can be the source of the down payment on single family homes
  • The interest rate will never increase
  • Competitive fixed rates
  • Safe, fixed-rate limited cash-out refinance option

imagesCA0QSEZO

Call me to learn why this innovative program is an attractive alternative to an FHA mortgage!  Remember, this program allows for the same low down payment options as FHA with no mortgage insurance. 

Mortgage Financial . Bnickerson@mfsinc.com . 978-273-3227 . 10 Elm Street, Danvers MA 01923

Bill Nickerson NMLS #4194

www.billnickerson.com

 

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Federal Reserve Moves Rates!

janet-yellen

Janet Yellen

Even though this move has been widely expected, we never seem to grasp the reality of what it does.  The Fed Fund Rate has no directly tied to mortgage rates or other rates in the market, it’s how the Markets perceive the comments of The Fed.  The FOMC meeting adjourned with an announcement of a quarter point increase to key short-term interest rates, and again, this was expected and priced in to the mortgage market over the last several days.  However,  We did get some surprises  and the bond market has not responded well to them. The biggest and most impactful is that the Fed is estimating 3 or more rate hikes next year when the previous estimate was 1 or 2. That means the Fed is confident in the U.S. economy continuing to grow, making bonds less attractive. This is especially true when the Fed strongly believes that inflation will continue to strengthen. Their revised economic projections showed a slight upward revision to the GDP (1.8% to 1.9%), a downward tick in the unemployment rate (4.8% to 4.7%) and no change to core inflation (1.7%). Overall, the news has not been taken well in the stock or bond markets. The Dow is currently down 152 points while the Nasdaq is down 32 points as the rate increases are expected to restrict future economic growth and corporate earnings. The bond market is currently down 15/32 (2.52%) since the additional rate increases means the Fed feels that the economy will continue to strengthen and be able to absorb those moves. The net impact on mortgage rates is an intraday upward revision of approximately .250 of a discount at the time of this update. However, if bonds continue to slide, another increase before the end of the day is quite possible.

Nearly every lender raised rates!  Some of them multiple times.  At first that took the form of mere increases in upfront costs (i.e. the contract rate itself wasn’t moving higher), but subsequent reprices added up to an eighth of a point in rate for several lenders.  From a range of 4.125-4.25%, top tier conventional 30yr fixed quotes moved up to a range of 4.25-4.375%–well into the highest levels in more than 2 years.

To recap: This isn’t happening because the Fed hiked rates.  This is a reaction to the shift in rate hike expectations among Fed members.  The Fed has increased the amount of times they increase rates in the future.  Thus causing Wall Street to react in the Stock Markets positively and Mortgage Markets negatively.

What should you be doing?

If you are in the process of purchasing a home, Now is the time to reach out to your Loan Officer and request them to update your Pre-Approval in order to reflect the higher mortgage rates.  Rates, depending upon when the Pre-Approval was issued, could be up as high as 3/4’s to a full percent.  That equates to over $100 in a monthly payment for loans above $200,00 and in some cases even more.

 

For More Information about Mortgage Rates, Loan Approvals and mortgages that are best suited to your financial needs, contact me anytime at 978-273-3227 or  email me  and  you can always visit my mortgage site at www.billnickerson.com

Bill Nickerson

William Nickerson

PHH Mortgage PeopleApply Online

 

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FNMA (Fannie Mae) Raises Loan Limits!!

fnmaIf you remember the 90’s and the early part of the 2000’s, you expected Fannie Mae to raise its Loan Limit for residential loans. It was a sign of the times and the Housing Market was booming!  When I first started in 1991, the loan limit was $191,250.  This was the maximum conforming loan amount Fannie Mae would grant under the Fannie Mae guidelines.  Loan amounts over that were considered Jumbo Mortgages, typically higher rates and stricter guidelines.

Since 2006, the loan limit has been set at $417,000 for single family homes and condominiums.  Starting in 2017, the new Fannie Mae Loan Limit will be set at $424,100.  This will also allow Mass Housing (MHFA) to have increased loan limits as well and create more borrowing power for the consumer.

Click the link below for a printable letter from Fannie Mae with the new limits.

The Fannie Mae 2017 Loan Limits

This increase has been expected, it is also a sign that the Housing Market is moving in the right direction.  With the new increased Conforming Loan Limits, economist say this will continue to boost the economy especially with Mortgage Rates on the rise.

In a report released in early November, Black Knight Financial Services calculated that raising the conforming loan limit by $10,000 could result in 40,000 additional originations for $20 billion in loan balances.

Conforming Loan Amounts allow for several different Down Payment options and in some cases will allow for 0% down through some of the housing agencies.  Compared to Jumbo Mortgages which require 10% down or greater as well as requiring a FICO score of 700 or greater.

Conforming Loan Limits History

Please leave a comment, email or call me anytime with questions you may have about mortgage programs, rates and to get approved for a mortgage.

   NMLS# 4194  www.billnickerson.com  978-273-3227

Bill Nickerson

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The Perfect Loan File

This article came from Mark Greene contributor to Forbes Magazine.  It is very helpful to all of us so that we can truly understand what is going on in this industry and so that we can educate our buyers and sellers.

The media has it all wrong – securing mortgage approval and satisfying credit underwriting guidelines are not the difficulties plaguing mortgage consumers. It’s in meeting the rigorous documentation requirements that most people fall flat. The good news is, the fix is simple. Just scan, photocopy, fax, and deliver every aspect of your financial life. Then, shortly before closing, check everything again.closing-costs guy

Mortgage consumers who enter the mortgage approval process ready to battle their chosen mortgage lender will come out with a nightmare story to tell. As the process, requirements, and guidelines are the same for everybody, your mindset is the game-changer. Accepting the redundant documentation necessary for lender approval will make everyone’s life easier.

When I was a kid, my father occasionally issued directives that I naturally thought were superfluous, and when asked why I needed to do whatever it was he wanted me to do, his answer was often: “Because I said so.” This never seemed to address my query but always left me without a retort, and I would usually comply. This is exactly what consumers should do during the mortgage approval process. When your lender requests what seems to be over-documentation and you wonder why you need it, accept the simple edict – “because I said so.” You will find the mortgage approval process much less frustrating.

So, what’s the perfect loan? Well, it’s one that (a) pays back the lender and (b) pays back the lender on time. Underwriting the perfect loan is not the goal that mortgage lenders aspire to today.

The real goal is the perfect loan file.

Mortgage lenders have suffered staggering losses and gone out of business because of the dreaded loan repurchase. As mortgage delinquencies increased, Fannie Mae and Freddie Mac began to audit mortgage loans they had purchased and discovered substandard and fraudulent underwriting practices that violated representations and warranties made, stating these were high quality loans. Fannie and Freddie began forcing the originating lenders of these “bad” loans to buy them back. So a small correspondent mortgage lender is forced to buy back a single mortgage loan in the amount of $250,000. This becomes a $250,000 loss to a small mortgage business for a single loan, because it will never be repaid.

It doesn’t take many of these bad loan buybacks to close the doors on many small mortgage operations. The lending houses suffered billions of dollars of losses repurchasing loans from Fannie and Freddie, and began to do the same thing for loans they had purchased from smaller originators.

The small and medium sized mortgage originators that survived created underwriting guidelines and procedures to eliminate the threat of future loan repurchase losses. The answer? The perfect loan file.

shopping cartIt’s no longer necessary to have excellent credit, a big down payment and stable employment with income sufficient to support your debt service to guarantee your loan approval. However, you must have a borrower profile that meets the credit underwriting guidelines for the loan you are requesting. And, more importantly, you have to be able to hard-copy-guideline-document your profile.

Every nook and cranny of your financial life has to be corroborated, double- and triple-checked, and reviewed again before closing. This way, if the originating lender has created a loan file that is exactly consistent with published underwriting guidelines and has documented while adhering to those guidelines, the chances are that your loan will not be subject to repurchase.

Borrowers also need to prepare for processing and underwriting. Processors and underwriters are the people trained and charged with gathering (processors), all of your required-for-approval financial documents, and then approving (underwriters), your loan. You can assume these people are well trained and very experienced, as they are tasked with assembling and approving a high-quality-these-people-will-pay-us-back loan file. But just how do they go about that?

The process begins with the filter – the loan originator (a.k.a loan officer, mortgage consultant, mortgage adviser, etc.) – tasked to match the qualifications of a particular mortgage deal to the appropriate underwriting guidelines. It is the filter’s job to determine if a loan scenario is approvable and to gather the documentation to support that determination. It is here, at the beginning of the approval process, where the deal is made or broken. The rest of the approval process is just papering the file.

The filter determines whether the information provided by the borrower can be validated and documented. This is simple, since most mortgages are approved by automated underwriting engines such as Desktop Underwriter, and the automated approval generates a list of the documents needed to paper the loan file. An underwriter can, at this stage, request additional supporting documentation evidence at their discretion, as not all circumstances neatly fit into the prescribed underwriting box. If the filter creates a loan file with accurate information, then secures the documentation resulting from the automated underwriting findings, the loan will close uneventfully.

So, let’s begin with the pre-approval call. Mortgage pre-approval is typically accomplished with a telephone interview. A prospective borrower calls a mortgage rep (filter), and the questions begin. There will be lots of questions as this critical phase of the process is akin to the discovery period in a trial – you’ll need to disclose everything. Expect to answer queries on what you do for a living, how long you’ve been employed in your current field, and what your salary is. If there is a co-borrower, they will have to answer the same questions.

Every dollar in checking, savings, investments and retirement accounts, also known as assets to close, as well as gifts from relatives and non-profit grants, has to be accounted for. Essentially everything appearing on a borrower’s asset-radar-screen has to be documented and explained.

If you were previously a homeowner and sold your home in a short sale, or if you own a home now and plan to keep it as an investment or rental property, there are new and specific underwriting guidelines created just for you. In these cases, full disclosure of your credit and homeownership past can potentially eliminate unforeseen mortgage approval woes. For instance, Fannie Mae has a new underwriting guideline called “Buy-and-Bail,” for current homeowners’ planning on keeping their existing home as an investment/rental property. Properties not meeting the 30% equity test for “Buy-and-Bail” result in additional asset requirements to purchase a new home. Buyers with a short sale history may have to wait two to three years before they are eligible for mortgage financing again. Full vetting of your previous mortgage life will save you the dreaded we-have-a-problem call from your mortgage lender.

It all comes down to your proof. If the lender asks for a specific document, give them exactly what they are asking for, not what “should be OK,” – because it won’t be.  This is where the approval process tends to go off the rails, when the lender asks for specific documentation and the borrower supplies something else. Here, too, is where both sides get frustrated. So if the lender asks for a bank statement and there are 5 pages for that bank statement, send them all 5 pages, and not just the summary. If you send them the summary page and they ask again, don’t complain that the lender keeps asking for the same thing when you never sent it in the first place. This may sound elementary, but the vast majority of mortgage approval process woes stem from scenarios just like this.

The reason the mortgage approval process is now so rigorous is simple. Avoiding defaults and loan buybacks has become the primary goal of mortgage lenders.   Higher standards are reducing loan defaults, which should mean fewer foreclosures in the future. Government data shows that less than 2% of loans originated in 2009, that were resold to Freddie Mac and Fannie Mae went into default after 18 months, down from more than 22% default rates for 2007 loans.

So when your lender requests specific documents from you, give it to them just “because they said so.”

For more information about lending and financing, please contact Bill at 978-273-3227  or by email  Bill’s Email

Mortgage Document Checklist

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So Why Do Mortgage Rates Change So Much?

Have you ever called a mortgage company and received a quote and then called back the next day and the same rate was no longer available??

Mortgage companies, Banks and Credit Unions are subject to potential daily and even hourly shifts in the market. Interest rates fluctuate on the simple principal of supply and demand.   Global 1

Mortgage rates trade based on Mortgage Back Securities and The Bond Markets as well as the overall economy.  The vehicles that mortgage rates are based on are considered very conservative, stable and tend not to have the wild swings that one would find in the Stock Market.  If the Stock market begins to see large increases or decreases, Investors will shift Billions of dollars in and out of the Stock Market and move them in to the Mortgage Markets.  This will cause mortgage rates to either rise or fall.  Stock Market tanks, good news for Mortgage Rates, Stock Market rallies and rates suffer.   Investors and Traders will constantly shift funds out of the riskier stocks into the safe haven of the mortgage markets.  These shifts can occur as little as once a day or in some cases can happen multiple times during a trading day. Thus causing mortgage rates to possibly change multiple times in a day.

These markets are affected globally as well; so even after the markets are closed in US, whatever is happening in Europe, Asia and around the world will cause our markets to move one way or the other.

What drives interest rates (click here for quick facts)

Here are some of the variables that are being watched in today’s market:

  • Middle East
  • Europe and Asia’s Economy
  • Presidential Race
  • Politics
  • The US Housing Market
  • Unemployment in our Country
  • The Price of Oil and Gas
  • The “Feds” decision to move short term interest rates
  • The overall health of the US EconomyPercent Down

Any of these items can trigger a rally one way or another.  Even a simple comment at a breakfast meeting by the President, the Fed Chairman or someone in power is enough to influence the markets.

Additional Mortgage Rate and Index Information:

To help us understand why mortgage rates change, it is important to realize that there is not one interest rate, but multiple ones. Below are some of the most prevalent interest rates and indexes that also have an impact on mortgage rates:

Prime rate – This rate is often offered to a bank’s best customers. If you are shopping for a home equity line of credit, then it is important to familiarize yourself with the prime rate. HELOCs are typically based upon the prime rate -plus or minus a certain percentage.

LIBOR – Stands for London Inter-bank Offered Rates. Libor rates are based upon the rates that a select group of London Banks offer each other for inter-bank deposits. Many adjustable rate mortgage programs use the Libor index.

Treasury bill rates ”T-bills” and Treasury Notes – These are short-term and intermediate debt instruments used by our Government to finance their debt. The treasury index is based upon the auctions of U.S. Treasury bills or on the Treasury’s yield curve. Like the LIBOR index, the U.S. Treasury index is a popular index for adjustable rate mortgage products. Also, the Twelve Month Treasury Average (12 Month MTA) is a popular index which is based upon the twelve month average of the monthly yields of U.S. Treasury securities (maturing in one year). The MTA is a popular choice for option arm mortgage programs.

Treasury Bonds – Unlike T-bills and Treasury Notes, treasury bonds are long-debt instruments. These bonds are used by the U.S. Government to finance its debt.

Cost of Savings Index – often referred to as the COSI index. This index is based upon the annual average of interest rates on World Savings deposit accounts. The average is pulled on the last day of each month.

11th District Cost of Funds – Often referred to as the COFI index – The COFI index is based upon the average of the borrowing cost to member banks of the Home Loan Bank of San Francisco of the 11th District. Unless you are shopping for an option arm mortgage, it is unlikely that your loan will be affected by this rate.

Certificates of Deposit Index – Often referred to as the CODI index – this index is arrived at by calculating the average of the past twelve months rates of 3 month CD rates.

Federal Funds Rate – The fed funds target rate is the rate which federally chartered banking institutions lend balances to other depository banks overnight.

This is a lot of information to weigh each day when calculating mortgage rates.  In general, most Banks, Investors, Lenders etc. will set rates around 10:30am once most of the morning economic reports have been released and the markets have had time to react to the information.  In a calm trading day on Wall Street, these rates would be good for that imagesCA6UKL3Jday.  In a day where lots of Economic reports and World events are occurring, these rates can be reset a few times as the Markets fluctuate.  It is important to call your lender or bank often to check on these rates as they can and will change.  It also important not to follow online rate sites that may be posting Average Rates as this information can be old as well a different Financial Picture then you may have.  The Freddie Mac rates are based on closed loans from last week and an average of .7 Points of fees in the rate. This may give you a range, but not accurate enough to base your mortgage payment on or what is happening today in the markets.

Bill Nickerson has been in the Mortgage industry since 1991. Please leave a comment, email or call me anytime with questions you may have about mortgage programs, rates and to get approved for a mortgage.

   NMLS# 4194  www.billnickerson.com  978-273-3227

Bill Nickerson

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