Since April 9th, we have seen another step significant increase on mortgage rates, that seem too have cooled off in the last couple of days. But mainly due to technical and not due to relief.
Up until April 9th, we had been trading in a pretty good channel, with rates stabilizing after they rose so much beginning in January. This was mainly due to concerns about a couple of items. War, which always caused investors to put their money into the safety of bonds. And in this case it was concerns about N. Korea and Syria. At this point in time, it seems N. Korea is totally off the table, with everyone making happy now.
That puts the eyes on Syria, which seems to have not much happening, although this could change in a moments notice, as Israel isn’t happy with Iran & Russia being in Syria.
These two “non news” items, are causing people to move away from Bonds and into Commodities and Stocks.
Inflation is our next item, and we have been seeing quite a bit of inflationary news, especially when it comes to oil. Oil has been on a tear, and with the US economy still dependent on oil, the increase in oil prices is causing prices of everything to increase, thus inflation. And Bonds HATE inflation.
We also have a MAJOR inflation report coming out on the 30th, the PCE or Personal Consumption Expenditures, a monthly report that the Federal Reserve really looks at for their policy. A hot report, and the Fed will start worrying about inflation a little more, thus bonds are going to sell off, and thus mortgage rates are going higher.
Up until Wednesday, we anticipate 30 Year mortgage to finally get to the 5.0% mark, but in the last couple of day, with the market being WAYYYY oversold, investors have sunk a little money into the bonds, and thus they have simmered, for the time being.
There is no reason to think rates will stay here, we are still anticipating 5.0% in the next few weeks, and 6.0% by mid to late summer.
Idaho Housing income increased
Well some pretty good news, IHA has increased the income limits on ALL of their programs. This is going to allow more people to take advantage of IHA’s 1st time home buyer programs and Down Payment Assistance programs.
The basic income rate was increased from $90,000 to $110,000.
Then on some of their speciality programs, income has been increased to $70,300 in Ada County and $84,360 in Canyon County for a 1-2 person Household, all the way up to $80,845 in Ada County and $98,420 in Canyon county for a 3+ household. You can check out more info about the limits and Down Payment Assistance at the link here!
Mortgage Insurance rates drop
And in more good news, all of the National Mortgage Insurance companies are dropping their Mortgage Insurance rates, beginning June 4th. This is pretty good news as it will lower the monthly payment for people who are not putting more than 20% down.
And don’t forget, you don’t have to keep Private Mortgage Insurance on your loan for extended periods of time, you can get it removed early, check out this web page that I have set up to explain how to remove MI. Might be a good idea to call past clients and see if they can get MI removed!! REMOVE MI link Here
VA & Realtor Transaction Fees
As did Rural Development a few months ago, the Veterans Administration has clarified that a Buyer CAN NOT pay for a Realtor’s Transaction Coordinator Fee. And could have never been charged for it. If a Veteran HAD been charged in the past for it, the Realtor needs to refund that fee back to the borrower. A complete list of fees a VA borrower can and cannot pay is here: VA Allowable Fees Link
Lately we have been seeing some crazy sources of Earnest Money. Earnest Money needs to come from legitimate, source and seasonable assets, of the borrower’s own funds, some of the funds that are not eligible include:
- Money from Drug Proceeds.
- Money from non-interested parties, such as a room mate or girlfriend.
- Money take from a Credit Card.
- Money from a Fiancé, although we can get gift letter documentation.
- Money from Family, although we can get gift letter documentation.
- Money from employment not claimed on Tax Returns.
- Money from sale of personal items, such as a car, mattress, pin-ball machine.
- Bounce check or check only cleared because it came from overdraft account.
In the case of money from Parents/Fiancé we would need to get proof that the money that was given to our borrowers, came from legitimate sources and the Giftor would need to provide us documentation of that source, so once again, the Fiancé could not sell drugs, and then “gift” that money to our borrower.
I would highly recommend that when you accept an earnest money check, you ask if they have the funds, and where the funds came from. Keep in mind, if the borrower doesn’t have the funds or the funds are not legit, there is a “Promissory Note” with in the Idaho Real Estate Forms that can assist you.