Is Your Glass Half Full or Half Empty?

A psychologist walked around a room while teaching stress management to an audience. Half FullAs she raised a glass of water, everyone expected they’d be asked the “half empty or half full” question. Instead, with a smile on her face, she inquired: “How heavy is this glass of water?”

Answers called out ranged from 8 oz. to 20 oz.

She replied, “The absolute weight doesn’t matter. It depends on how long I hold it. If I hold it for a minute, it’s not a problem. If I hold it for an hour, I’ll have an ache in my arm. If I hold it for a day, my arm will feel numb and paralyzed. In each case, the weight of the glass doesn’t change, but the longer I hold it, the heavier it becomes.”

She continued, “The stresses and worries in life are like that glass of water. Think about them for a while and nothing happens. Think about them a bit longer and they begin to hurt. And if you think about them all day long, you will feel paralyzed – incapable of doing anything.”

Remember to put the glass down…

I found this on the internet of course, and could not find a source to give credit.  It was a very clear message and wanted to share it.  Enjoy!  ~Bill

 

Bill Nickerson has been in the Mortgage Industry since 1991.  Feel free to contact him at 978-273-3227 or email at bill@billnickerson.com

Bill Nickerson
Old School Selfie

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
  • Italy!
  • Europe and Asia’s Economy
  • Comments by the President
  • 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

The true costs of Renting vs. Owning

There’s more to comparing the costs of renting and owning than the dollar cost of payments.

Even with numbers like these, some still say renting is better:

“Investing in a home is riskier than renting.”

No risk, no reward. Besides, even studies conducted by the Federal Reserve show that owning can provide a net worth that is from several to hundreds of times higher than that of renters.

“Home values have dropped in recent years.”

Which is one reason why ownership may now be less expensive than renting. As well, recent price trends in many areas have reversed, and values are once again on the rise.

“The tax deductions aren’t worth it.”

Some people benefit from claiming deductions for mortgage interest and real estate taxes. Others find a standard deduction more valuable. Even if you exclude the tax benefit, the real cost of owning can still be less than renting.

Equity for you or equity for your landlord?

With more or less equal payments, owning will always have an advantage in that you’re paying down principal and earning equity in your own home rather than the landlord’s.

Still renting and want to explore the path to ownership? Reach out, and we’ll be happy to help.

Factors used: $500,000 purchase price, 20% down, $400,000 30-yr. fixed loan at 4%/4.25% APR. Principal & Interest payment = $1909.66, taxes = $520.83/Mo. (1.25% of value), insurance = $120.83/Mo. ($2.90 per $1000 of loan amount) & maintenance = $208.33/Mo. (0.5% of value). Tax deductibility at 28%. Tax savings, principal paid and appreciation averaged over a 5-year period. Always consult with your tax adviser for tax advice specific to your situation. This is not a Good Faith Estimate nor an offer to lend. Rates, prices, taxes, insurance, etc., are subject to change at any time. APR calculations are based on closing costs of 3% of the loan amount. Actual fees can be less.

Bill Nickerson NMLS #4194 | Email | 978.273.3227

William J. Nickerson

The True Meaning of National Doughnut Day

National Doughnut Day started in 1938  as a fund raiser for Chicago’s Salvation Army. Their goal was to help the needy during the Great Depression, and to honor The Salvation Army “Lassies” of World War I, who served doughnuts to soldiers in the First World War.

Donut DolliesSoon after the US entrance into World War I in 1917, The Salvation Army sent a fact-finding mission to France. The mission concluded that the needs of US enlisted men could be met by canteens/social centers termed “huts” that could serve baked goods, provide writing supplies and stamps, and provide a clothes-mending service. Typically, 6 staff members per hut would include four female volunteers who could “mother” the boys. These huts were established by The Salvation Army in the United States near army training centers.

imagesCAF9AO38About 250 Salvation Army volunteers went to France. Because of the difficulties of providing freshly baked goods from huts established in abandoned buildings near to the front lines, the two Salvation Army volunteers (Ensign Margaret Sheldon and Adjutant Helen Purviance) came up with the idea of providing doughnuts. These are reported to have been an “instant hit”, and “soon many soldiers were visiting The Salvation Army huts”.  Often, the doughnuts were cooked in oil inside a metal helmet of an American Soldier.  Salvation Army Lassies were the only women outside of military personnel allowed to visit the front lines.  Lt. Colonel Helen Purviance is considered the Salvation Army’s “first doughnut girl”.

Google “Doughnut Dollies” and click on Images.  Doughnut Dollies Served doughnuts right up until the Vietnam War.

Soon, these workers became known by the servicemen as “Doughnut Dollies”.

images                       When receiving your free doughnut today, remember the true meaning of why you are receiving this today.

Enjoy!!!

Bill Nickerson~~Doughnut Connoisseur as well as Mortgage Professional

Donut Dollies 2Bill Nickerson NMLS#4194

 

Don’t lose that bid!!

In the housing market, the best deal doesn’t always come with the lowest price.


Price vs. Payments – If you’re financing your purchase, you’ll probably never come close to paying the actual price. You’re making a comparatively small down payment and then paying interest on the loan until you refinance or sell. Yes, you will have a higher payment if you pay more for the home, but an extra $10,000 of mortgage money can add less than $50 per month on a low-rate, 30-year loan.

Relative Prices – Our natural tendency to pay as little as possible is not as meaningful for an investment, such as a home, as it is for a consumable. In this case, what you pay now can affect your sales price later. There may be little difference in total earnings if you pay less and sell for less or pay more and sell for more.

Influencing Value – For appraisers, the last sale or “comp” in an area sets the value for similar homes. Whatever you pay helps to establish what your home and comparable properties are considered to be worth.

Setting the Trend – If you pay less for your home than was paid for the last similar home, you may be contributing to a downward price trend, which can be difficult to reverse. Conversely, helping to maintain a trend of price appreciation can end up paying you back many times over.

One Chance – No two homes are ever exactly the same. Even when structure matches, your land, your view, your address and your immediate neighbors will always be different. You truly may have only one chance at just the right house. Industry professionals have all seen buyers lose out on what they really wanted. We don’t want that to happen to you. Nor do we want you to pay more tomorrow for something less than what you could have had today as a result of increasing prices and rates.

Reach out, and we’ll be happy to help you weigh your options for the home you would really love to own today.

Bill Nickerson   NMLS #4194  | 978.273.3227 | Email: bill@billnickerson.com | Web: http://www.billnickerson.com

Winter, it’s only a state of mind.

Providing Residential Mortgages since 1991

The Dreaded Blank Page

Having your bank account statements in order and avoiding the deposit traps will help assure a smooth mortgage application and approval process. Follow these simple steps and remember, if you have a question, just ask me!!

  • Document the source and purpose of deposits not clearly identifiable as being from your employer. If a deposit does not match up with your pay-stub, we will need to show where it came from.                                                                    
  • Make copies of all checks and deposit slips and keep them together in case they’re requested.
  • Track transfers, too. We’ll need statements for both accounts involved. If it is a gift from a family member, please consult with us for the proper process to follow.
  • Don’t deposit currency and checks together, as this will be hard to document. It’s best not to make cash deposits unless you can clearly document the source of the funds.

Following these steps will make it easy to prove that funds going into your account are not borrowed. Even private loans have corresponding payments, so underwriters have to be certain to account for all debts.

The Dreaded Blank Page of the Bank Statement

You may be tempted to throw away a numbered page on your statement if it is blank or contains an advertisement. Unfortunately, if the other pages are marked 5 of 8, 6 of 8, etc., the underwriter can’t be sure a missing page 8 of 8 had no important information.

To be sure there’s no delay in processing your loan application, please save and provide ALL numbered pages of your bank and other asset statements, even if they’re blank.

Your Down Payment and Reserves must be in an account

Mattress Money or any “cash on hand” is not acceptable. All funds must be “seasoned,” which means your money needs to be in an institutional account (bank, credit union, brokerage, etc.). You will need to provide all pages of up to three months of consecutive statements for proof these funds are yours.

Gift Funds are OK with a signed “gift letter” (a form we provide) and evidence of the donor’s ability (a statement showing sufficient funds). Later, we’ll need copies of the check, deposit slip and account statement to show the transfer into your account.

Assets Being Sold, such as a car, boat, collectible or anything of value you are selling, require proof of ownership (such as a registration or title) and evidence of value (blue book value or appraisal). After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds to your account.

Other Examples include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings. Be prepared to show the source of funds, evidence of transfer into your account and any supporting documentation of value, terms, service provided, etc.

TIP: If you have time and want to minimize paperwork, consolidate all funds into one account at least two or three months prior to closing. Save any and all evidence of transfers and deposits and keep activity to a minimum.

Never hesitate to ask questions when you’re unsure about what will work and what will not.  Mortgage Guidelines are updated and changing constantly.

 

 

Bill Nickerson

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

 

Still Writing Checks to the Landlord?

Home loan payments are now often less than rent payments!

If you don’t intend to stay in your home long, need extra mobility or are unsure about your employment prospects, renting probably makes good sense for you. But if you’re planning to stick around, owning may prove to be more rewarding. Here are five good reasons:

  • Rates are near historic lows, and prices are still well below the past peaks. This unusual combination places the real cost of purchasing a home near a 50-year low.
  • Buying builds equity. On most mortgage loans, you pay down the principal balance with each payment. This typically starts at about $100 per month for every $100,000 of loan balance and increases each month through the entire life of the loan. To make a fair comparison, be sure to subtract principal paid from a home loan payment vs. the cost of renting the same property.
  • Home values rise over time. Increases are not guaranteed; however, if we use the last 50 years as a guide, values have typically risen at a pace above inflation.
  • Homeownership often brings tax benefits. Deductions for home mortgage interest and real estate taxes save many homeowners thousands every year. Others still find taking the standard deduction more beneficial. Always consult your tax pro for advice.
  • It’s more than just the money. Families become rooted in a neighborhood, school district and community. Homeowners have the freedom to choose paint colors and make modifications. Pets are welcomed. Intangibles like these often formulate the most valuable returns.

Housing is a precious commodity that we all need every day. It’s your choice to rent or to own, yet buying a home for yourself usually beats buying one for your landlord.

Looking for more information when it comes to Renting vs Owning?  Click here for a detailed breakdown. The true costs of Renting vs. Owning 

If you want to learn more or find out what you might be able to afford, reach out. We’re always happy to help.

Bill Nickerson | NMLS #4194 | Mortgage Financial | 10 Elm Street, Danvers MA  http://www.billnickerson.com  | bnickerson@mfsinc.com | 978-273-3227

Using Gift Funds for your Mortgage?

Getting Gift Funds for the purchase of your new home?  Whether the funds are for the down payment, reserves or even closing costs, here is what you need to know.

The “Donor” of the gift must be a family member, fiancé or domestic partner. They must prove they have the ability to provide you with the gift by providing a copy of their bank statement, a copy of the canceled gift check and/or a signed letter from their bank saying the funds are available.

The “Gift Letter” is a form we will provide. The donor will need to complete it with basic information and a signed statement that the funds are a gift with no expectation of repayment.

The “Transfer” must be documented carefully. Make a copy of the gift check and deposit slip or of confirmation of the wire transfer. Deposit the gift in the account you’re already using for verification of funds to close. DO NOT combine this deposit with any other incidental deposits. Provide either an online update or the next account statement to show that the deposit cleared into the account.

Some programs allow for the entire down payment to be in the form of a gift. Others may require that you have at least 3 or 5% of the purchase price from your own funds. As these rules can vary or change at any time, never hesitate to consult with us for the specifics as they relate to your transaction.

While the documentation requirements may seem excessive at times, please remember that the underwriters are simply following the rules to assure that your down payment is not borrowed and that any allowable gift funds are coming from acceptable sources.

Always call or email with any questions you may have.  The more information you have, the easier your purchase transaction will be.

Bill Nickerson

A Commitment Letter to shop for a home

As you know, lending guidelines are like the weather in New England. Wait 5 minutes and they could change! With that introduction, why would you bring your clients out to see homes without having a full commitment letter from the Lender? Not a Pre-Approval… Not a Pre-Qualification letter, but a full commitment letter from US to your Client.

With our Advance Approval, this gives you the security of knowing you have a commitment letter even before you start your search for a home.

Once your client has the necessary income and asset documentation, our in-house underwriters (yes, as in all loans are written and funded in our Tewksbury office) will issue a commitment letter within 48 hours.

With Mortgage Financials Advance Approval, this removes all the stress from the transaction, allowing your clients to focus on purchasing the home of their dreams.

No Surprises, No Last minute conditions.  As always, we can close loans in under 30 days!

Mortgage Financial | Senior Loan Officer | NMLS #4194 | Phone: (978) 273-3227 | bnickerson@mfsinc.com | http://www.mfsinc.com/bnickerson |
PMC Bill
Bill Nickerson
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