Since the mortgage crisis when loans became almost impossible to obtain, Columbia SC mortgage lenders have begun to loosen standards again. This begs to ask the question, will lenders ever learn their lesson from loose lending practices?
Recently, the Federal Housing Administration (FHA) announced changes they hope will encourage banks to give more home loans to worthy but weaker borrowers.
The government has extracted billions of dollars in penalties from lenders that made mistakes on loans to borrowers who later defaulted. The errors ranged from small mistakes to ones that affected the riskiness of the Columbia SC mortgage they chose to underwrite in the first place.
Some banks, believing the penalties are too harsh relative to the errors made, have pulled back from originating a Columbia SC mortgage backed by the FHA and argue that the broad "certification" they must make when originating a Columbia SC mortgage should be limited to significant errors.
Will FHA Changes Help Those Trying to Get a Columbia SC Mortgage?
The FHA’s attempt to change the provision shows the tightrope policy makers and regulators are trying to walk. While they want to hold lenders accountable for crisis-era mistakes and retain recourse should the Columbia SC mortgage go bad, they also want the banks to extend loans to some consumers who have been largely shut out of the Columbia SC mortgage market since the crisis.
Lenders typically have pulled back on FHA lending by having more stringent requirements than what the FHA would allow. For example, even though the FHA will guarantee loans to borrowers with credit scores of as little as 580, on a scale of 300 to 850, a bank might not give a Columbia SC mortgage to borrowers with a score below 640.
Meanwhile, Columbia SC mortgage rates remain near a two-year low, even though rates inched up slightly in the past few days. Freddie Mac says the average rate on a 30-year fixed rate mortgage is now around 3.69 percent, that's up just a fraction from 3.59 percent a week ago. A year ago, 30-year rates averaged 4.28 percent.
We'll continue to monitor the FHA decisions and how they may affect (negatively or positively) getting a Columbia SC mortgage as we continue moving through the housing recovery in 2015.
In the meantime, you can get more information about news that may affect the Columbia SC mortgage market in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
Remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
We're betting you thought lower Columbia SC gas prices could only mean positive things for the economy, right?
If you're in the market for a home mortgage, Columbia SC gas prices could be having an effect on the rate you can get.
How Columbia SC Gas Prices Affect Mortgage Rates
Believe it or not, oil investments and Columbia SC gas prices (along with lots of other things) have an indirect effect on mortgage rates.
One of the strongest predictors of mortgage rates is the yield on a 10-year Treasury note. Basically if the yield is low, so are mortgage rates. The buying of bonds can represent relative safety for oil investors, and what oil prices mean for the world's economy.
Oil prices, as well as Columbia SC gas prices, continues to fall in large part because there is less demand. Less demand comes via weakening economies across the globe. The lower oil prices may also disproportionately affect countries like Russia, which are already suffering from instability. All of this leads to a flight to quality, and the safe haven is almost always the U.S. Bond Market.
With Columbia SC gas prices dropping and no one quite sure when or where they'll stop, U.S. bonds give investors a certain comfort that the oil market isn't currently providing. (Treasury bonds will always be paid off to prevent the government from losing the confidence of its investors and creditors at home and abroad.)
The problem for these investors is that everyone has the same idea. If everyone starts buying bonds, it drives down yields because the government doesn't have to offer such a high rate of return to get people to buy. This, in turn, drives down mortgage rates.
Some economists believe the benefit to the housing market is largely indirect in the form of more consumer spending, leading to job and income growth and ultimately making it easier for people to buy homes.
It should be noted that the 10-year Treasury note only affects the base mortgage rate. A number of factors go into the actual interest rate a homebuyer can get, including their credit score, the number of points paid on the mortgage and the down payment amount.
We'll keep you informed on Columbia SC gas prices and how the price you pay at the pump could affect your mortgage rate. In the meantime, you can get more information about factors that control Columbia SC mortgage rates in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
Remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
Saving up to buy a Columbia SC home might not be as much of a challenge as it used to be, now that the Federal Housing Finance Agency (FHFA) will allow some first-time homebuyers to make down payments of as little as 3 percent on Columbia SC mortgages.
Why Down Payments on Columbia SC Mortgages Are Going Lower
The goal is to make homeownership more accessible than it has been in a tight post-recession mortgage market. These low-down-payment loans apply to 30-year, fixed-rate Columbia SC mortgages guaranteed by Fannie Mae and Freddie Mac. The agency regulates Fannie and Freddie, which guarantee the majority of U.S. mortgages.
If you want to buy a Columbia SC home but don't have enough cash on hand for a down payment and closing costs, you might be able to qualify for an affordable home loan. Keep in mind lenders will require you to pay private mortgage insurance (PMI) if you pay less than 20 percent upfront, a cost homebuyers often overlook when determining how much they can pay.
One of the first things you'll want to look at before applying for any of the various types of Columbia SC mortgages is your credit score.
Credit Scores When Applying for Columbia SC Mortgages
There are a lot of different credit scores out there, and this has naturally led many consumers to ask: Which credt scores should I pay attention to, and what's my real credit score? People gravitate to the well-known FICO score, (FICO) by all accounts is the market leader in credit scores (meaning more banks use FICO scores than other scores). In fact, many refer to non-FICO scores as "FAKO" scores, but is that really an accurate assessment?
Most lenders have a baseline credit score by which they largely make their decision to approve or deny applicants for Columbia SC mortgages. The maximum credit score is 850 (though a score of 850 is rare, indeed. Only about 10% of applicants have a score over 800). Any score in the 700s or above is excellent and will get you a loan with the lowest interest rate. When you get into the 600s it starts getting dicey. A score of 680, for example, is still considered good, but when you get below 660, some lenders start saying, "No."
Most people don't realize they have more than one credit score, and just because you pay for your "Fico Score" doesn't necessarily mean you're seeing the same score a lender may be pulling and using to determine whether you qualify for any of the Columbia SC mortgages they may offer.
Your credit standing not only affects the mortgage rate you may qualify for, it also impacts how much you must pay in PMI. You can also get rid of PMI after you've built a certain amount of equity in your home, among other requirements, but it's on you to go through the process of removing PMI from your loan.
With the new directive from the FHFA, buying your first Columbia SC home may be more attainable, but the decision requires just as much careful thought as it would if you needed to put down 20 percent of the home's value to get a mortgage. Consider the overall impact on your life of buying a home, and make sure your credit is in good shape before applying for any of the many Columbia SC mortgages available from most area lenders.
Get more information about becoming a Columbia SC homebuyer and news affecting mortgage rates and qualifications in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
We post daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
Mortgage giants Fannie Mae and Freddie Mac announced recently that first-time Columbia SC homebuyers may be seeing a game changer with lower 3 percent down payment requirements. This is designed to expand credit for qualified home shoppers who may have been sidelined the last few years because of higher down-payment requirements.
A recent examination of what's holding back Columbia SC homebuyers argues that the down payment is the biggest challenge for first timers.
These loans will meet Fannie Mae's usual eligibility requirements, including underwriting, income documentation and risk management standards. These loans will require private mortgage insurance or other risk sharing, as is required on purchase loans acquired by the company with greater than 80% LTV.
Any Columbia SC homebuyers can take advantage of Fannie's loans as long as at least one co-borrower is a first-time buyer.
New Option Not Just for Columbia SC Homebuyers
Eligible homeowners who wish to refinance their Fannie Mae-owned mortgage but do not qualify under the Home Affordable Refinance Program can refinance their loan up to the 97% LTV level under a limited cash-out option.
Fannie Mae says it has implemented prudent risk management practices to ensure that loans the company acquires are appropriately underwritten, including mortgages with lower down payments. These include essentially eliminating risk-layering on purchase money loans, requiring income documentation to avoid "low-doc" or "no-doc" lending, and requiring income verification.
Fannie Mae has also worked to provide lenders with greater clarity on what circumstances would result in a loan repurchase request. Some lenders have said that uncertainty around these requests has led to them curtailing mortgage availability. This new clarity is intended to help lenders make mortgages to more creditworthy borrowers.
Similarly, Freddie Mac announced its Home Possible Advantage program, an affordable conforming, conventional mortgage with a 3% down payment to help more first-time Columbia SC homebuyers jump into the market.
Get more information about becoming a Columbia SC homebuyer and news affecting mortgage rates and qualifications in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
Don't forget, we also post tips and news daily at Twitter and Facebook. Be sure to follow us there.
According to the latest forecast from Freddie Mac's economists, Columbia SC mortgage rates are expected to hit 5 percent for a 30-year fixed rate loan in 2015.
Expect to see interest rates climb throughout 2015, with yields on the 10-year Treasury averaging about 2.9 percentage points, up from about 2.6 percentage points in 2014, and 30-year fixed Columbia SC mortgage rates mortgage gradually climbing, averaging 4.6 percent and rising to 5.0 percent by the end of next year.
Rising Columbia SC Mortgage Rates May Dampen Affordability
Meanwhile price increases are expected to slow from the 9.3 percent pace we saw in 2013, the 4.5 percent we saw this year, and 3.0 percent in 2015. Continued house price appreciation and rising Columbia SC mortgage rates will dampen homebuyer affordability.
Total housing starts in 2015 will increase by 20 percent and total home sales will increase by about 5 percent over that time period to the best sales pace in eight years.
Single-family originations will fall an additional 8 percent from 2014 to 2015 to $1.1 trillion annualized as increases in purchase-money lending are insufficient to offset a drop in refinance. Refinance is expected to make up just 23 percent of originations in 2015.
The good news for 2015 is that the U.S. economy appears well poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better. There are several reasons for the better economic performance. Governmental fiscal drag has turned into fiscal stimulus, lower energy costs support consumer spending and business investment, further easing of credit conditions for business and real estate lending support commerce and development, and more upbeat consumer and business confidence, all of which portend faster economic growth in 2015.
With that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity. All of this according to Frank Nothaft, Freddie Mac vice president and chief economist.
With the forecast of higher Columbia SC mortgage rates on the horizon, there may never be a more affordable time to buy a home than right now. Talk to us about rates, and where prices are for Columbia SC housing. We're here to help.
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