It’s official – Fed raises interest rates for second time in 3 months

The Federal Reserve just announced the first interest rate hike of 2017, and the second rate hike in three months.

The Federal Open Market Committee concluded its meeting with the announcement that the Fed will raise interest rates by 25 basis points to 1%.

The last rate hike occurred in December, when the Fed moved to raise rates from .5% to .75%.

A few months ago, some economist would have laughed at the notion the Fed would raise rates again so soon. For example, Jason Obradovich, New American Funding executive vice president of capital markets, explained that for all its intentions, the Fed probably won’t be raising rates as much as it would like in 2017.

But others predicted the Fed would raise rates more in 2017, saying the year could see up to three rate hikes.

More recently, however, the market had no doubt about the upcoming rate hike, and even say the increases is already priced into the market.

“With this increase well anticipated by most markets, Keller Williams does not expect any dramatic change in the current path of mortgage rates,” Keller Williams economist Ruben Gonzalez said. “Rates will likely continue to slowly rise this year barring a change in the economic situation.”

And indeed it’s no surprise that the market already priced in the increase as experts explained Friday’s jobs report confirmed a March rate hike. Even Fed Chair Janet Yellen herself said a rate hike would likely be appropriate in a recent speech.

One expert cautions that rising interest rates could scare some into thinking it will negatively affect the housing market, however he insists this is not the case.

“Reports have suggested, or surely will, that this rise in mortgage rates will be the demise of the housing market,” said Mark Fleming, First American Financial Corp. chief economist. “That’s just not so.”

“Yes, many existing homeowners will have a financial disincentive to sell because they would lose their lower than prevailing mortgage rates in doing so, the so-called rate lock-in effect,” Fleming said. “I have suggested that this is one of the reasons we see low inventories in most markets today, but it’s not as simple as that.”

“We don’t act rationally,” he explained. “Even economists who, of all people, should know better!”

In fact, experts say even with the rate hike, the benefits of owning a home are still clearly evident.

“Following today’s expected quarter-percent Fed Interest rate hike, the prospective homebuyer is still in a great position to purchase a home,” Stewart Title Chief Economist Ted Jones said. “Even with higher interest rates, owning a home may still be the best option for consumers versus renting if they plan on living there for three years or more.”

“With further anticipated rate hikes later this year, that shouldn’t dampen the attractiveness of owning a home,” Jones said. “However, increasing rates make the case to lock in a mortgage sooner rather than later.”

Source: Housing Wire

Why Your Credit Scores May About To Rise

Many tax liens and civil judgments soon will be taken off people’s credit reports, the latest move to omit negative information from the powerful financial scorecards.

The decision by the three major credit-reporting firms—Equifax Inc., Experian PLC and TransUnion—could help boost credit scores for millions of U.S. consumers, but could pose risks for lenders. The reports and scores often help decide how much consumers can borrow for a new house or car as well as determine their credit-card spending limit.

The unusual move by the influential firms comes partially in response to regulatory concerns. The three reporting bureaus rarely tinker with the information that goes on credit reports and that lenders consult to gauge consumers’ ability and willingness to pay back debts.

Equifax, Experian and TransUnion recently decided to remove tax-lien and civil-judgment data starting around July 1, according to the Consumer Data Industry Association, a trade group that represents them. The firms will do so if those data don’t include a complete list of at least three data points: a person’s name, address and either a social security number or date of birth.

Many liens and most judgments don’t include all three or four. This change will apply to new tax-lien and civil-judgment data that are added to credit reports as well as existing data on the reports.

The result will make many people who have these types of credit-report blemishes look more creditworthy.

The Consumer Financial Protection Bureau earlier this month released a report citing problems it found while examining credit bureaus and changes it is requiring. Issues the agency cited included improving standards for public-records data by using better identity-matching criteria and updating records more frequently.

Inaccurate information on credit reports, especially if it is negative information, can derail consumers from being able to gain access to credit and even lead to other setbacks like not being able to rent an apartment or get a job.

One in five consumers has an error in at least one of their three major credit reports, according to a 2013 Federal Trade Commission study mandated by Congress. The three credit bureaus received around eight million requests disputing information on credit reports in 2011, according to the CFPB.

In 2015, the credit-reporting firms reached a settlement with New York’s attorney general over several practices, including how they handle errors. This was followed by one with another 31 states. One more state, Mississippi, followed last year.

The state settlements already had prompted the credit-reporting firms to remove several negative data sets from reports. These included non-loan related items that were sent to collections firms, such as gym memberships, library fines and traffic tickets. The firms also will have to remove medical-debt collections that have been paid by a patient’s insurance company from credit reports by 2018.

Such changes might help borrowers and could spur additional lending, possibly boosting economic activity. But it could potentially increase risks for lenders who might not be able to accurately assess borrowers’ default risk.

Consumers with liens or judgments are twice as likely to default on loan payments, according to LexisNexis Risk Solutions, a unit of RELX Group that supplies public-record information to the big three credit bureaus and lenders.

“It’s going to make someone who has poor credit look better than they should,” said John Ulzheimer, a credit specialist and former manager at Experian and credit-score creator FICO. “Just because the lien or judgment information has been removed and someone’s score has improved doesn’t mean they’ll magically become a better credit risk.”

Removing this information from credit reports also will lead to changes in people’s credit scores. Roughly 12 million U.S. consumers, or about 6% of the total U.S. population that has FICO credit scores, will see increases in those scores as a result of this change, according to the company that created the FICO system, which is used by lenders in most U.S. consumer underwriting decisions.

For most of these consumers, the score increase will be relatively modest. FICO projects that just under 11 million people will experience a score improvement of less than 20 points. FICO scores range from 300 to 850. The higher the score, the more creditworthy a consumer generally is.

Scores are projected to rise by at least 40 points for around 700,000 consumers, according to FICO. In many cases, that can mean the difference between getting approved for credit or denied it.

Civil judgments include cases in which collection firms take borrowers to court over an unpaid debt. Ankush Tewari, senior director of credit-risk assessment at LexisNexis Risk Solutions, says that nearly all judgments will be removed and about half of tax liens will be removed from credit reports as a result of the changed approach. He says LexisNexis will continue to offer the data directly to lenders.

In addition, if public court records aren’t checked for updates on lien and judgment information at least every 90 days, they will have to be removed from credit reports.

Lenders will still be able to check public records on their own to find this information.

For more information please contact American Mortgage Corporation at 1-888-402-6097.

Source: Yahoo Finance

New Residential Construction Hits 11-Year High

In many areas of the country, there are not enough homes for sale to satisfy the number of buyers looking to purchase their dream homes. Experts have long proposed that a ramp-up in new, single-family home construction would be one of the many ways to overcome this inventory shortage.

According to a recent survey conducted by the National Association of Home Builders (NAHB) housing market confidence amongst builders reached an 11-year high last month.

What Does High Confidence Mean for the Housing Market?
In a recent interview, Rob Dietz, Chief Economist and SVP for NAHB, put it this way:

“Higher market confidence will translate into more building and more inventory in 2017. We expect single-family construction to grow 10 percent next year.”

With 2016 marking the best year in real estate sales in over a decade, a 10 percent ramp-up in single-family construction will only aid in making 2017 an even greater year.

According to the latest US Census data, sales of newly constructed homes were up 3.7% over January 2016 as they reached a seasonally adjusted annual rate of 555,000. Dietz went on to comment:

“We can expect further growth in new home sales throughout the year, spurred on by employment gains and a rise in household formations. As the supply of existing homes remains tight, more consumers will turn to new construction.”

Source: Keeping Current Matters

Mortgage rates are on the rise; now is the time to lock your rate

Mortgage rates are poised to go up. You should lock your interest rate now.

Rates on home loans edged slightly upward in Bankrate’s weekly survey. They likely are headed even higher in coming weeks because it looks like the Federal Reserve will raise short-term interest rates this month. That’s sooner than many investors had expected, and it means that it’s better to shop for a mortgage now.

Signaling a Fed hike
The Federal Reserve likes to let markets know of impending rate moves because it wants to avoid destabilizing markets. Two Fed messengers went on TV Tuesday to alert investors that the next rate hike could come as soon as March 15.

William Dudley, president of the Federal Reserve Bank of New York, told CNN: “I think the case for monetary policy tightening has become a lot more compelling.” On CNBC, Dallas Fed president Robert Kaplan said the Fed should move “sooner rather than later.”

Before those comments, many investors expected the Fed to keep rates unchanged March 15 and to raise the federal funds rate at the next scheduled meeting, May 2 and 3. But after Dudley and Kaplan spoke, the probability of a March 15 rate hike rose above 65 percent — up from 35.4 percent a day earlier. That’s according to the CME Group’s FedWatch Tool, which figures the odds by analyzing the prices of futures contracts.

Source: Bankrate

Collier County ranked No. 6 on a national list of the “Best Places to Get a Mortgage.”

Home For Sale Real Estate Sign and Beautiful New House.

SmartAsset, a New York financial technology firm, did the study and rankings, based on four factors:

overall borrowing costs;
ease of securing a mortgage;
cheap property taxes;
low annual mortgage payments.
It was the third year for the study.

“This is the first time Collier County has made the national Top 10. However, this is the third year in a row they have ranked in the Top 10 for Florida,” said A.J. Smith, personal finance expert and vice president of content at SmartAsset.

Collier County ranked eighth in Florida in 2016 and fourth in both 2015 and this year.

“Collier County’s ranking was likely helped by the fact that they outperformed the national averages in each of the study’s categories,” Smith said.

SmartAsset bases its rankings on $200,000 loan after a 20 percent down payment, Smith said.

SmartAsset looks at expected costs over the first five years of the mortgage.

The ease of getting a mortgage is determined by comparing the ratio of mortgage applications to mortgage origination’s in each county.

Annual mortgage payments are based on the average mortgage rates in each county.

Based on those criteria Collier County had a loan funding rate of more than 61 percent, five-year borrowing costs of $77,755, annual property taxes of $9,920 and an annual mortgage payment of $14,639.

With home prices rising, Collier County has a shortage of homes under $300,000, so the quoted costs for a mortgage and property taxes might differ widely from the information generated by SmartAsset. Also, the county sees a lot of cash buyers.

Florida counties were well-represented on this year’s list:

» Sumter County is the top-ranked spot to get a mortgage in the U.S., beating the national averages in every category.

» Three Panhandle counties are in the top 10 nationally: Walton, second; Okaloosa, fourth; and Santa Rosa, eighth.

» Indian River County cracked the national list at No. 10.

Lee County ranked 15th in Florida and 32nd in the U.S.

Source: Naples Daily News

Florida’s housing market off to a good start

Florida’s housing market opened this year with a bang, as new data from Florida Realtors reported more closed sales, higher median prices, increased pending sales and more new listings last month.

Florida Realtors President Maria Wells said the state’s housing market has been continuously showing positive momentum.

“While existing inventory remains tight, realtors across the state are reporting interest from both buyers and sellers – and with interest rates expected to rise over the next few months, now is certainly a good time to take action,” Wells said.

New pending sales for existing single-family homes went up by 3.8% annually in January, and pending sales for townhouse-condo units went up by 6.5%. New listings for single-family homes increased by 7.6% and new townhouse-condo listings rose by 0.9%.

“Florida’s housing markets for existing homes are off to a good start in 2017,” said Brad O’Connor, Florida Realtors’ chief economist. “Throughout much of this housing cycle, growth in single-family home sales has outpaced that of condos and townhouses, but in January – for the first time since November 2015 – this was not the case, though one month’s worth of data alone doesn’t indicate a long-term trend.”

Source: Mortgage Professional of America

Newly-built home sales show positive start to the year…

There was a 3.7 per cent rise for sales of newly-built single-family homes in January compared to a year earlier. Data from the HUD and US Census Bureau shows a seasonally-adjusted annual rate of 555,000 units.

“This increase in new home sales is in line with our forecast for a steady, gradual recovery of the housing market,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “However, the pace of growth may be hampered by supply-side headwinds, such as shortages of lots and labor.”

There were 265,000 new homes for sale in January, 5.7 months of supply at current sales pace. The median price was $312,900.

The association’s chief economist Robert Dietz says that new construction should continue to benefit from tight inventory of existing homes and the growing economy.

“We can expect further growth in new home sales throughout the year, spurred on by employment gains and a rise in household formations,” said NAHB Chief Economist Robert Dietz.

Source: NAHB

8 Tips For Refinancing As Mortgage Interest Rates Rise

So you want to refinance, but mortgage interest rates are rising. Don’t worry — you haven’t missed the boat on your refi opportunity. Mortgage rates are still historically low, and they aren’t expected to exceed 5% in 2017, according to many economists and mortgage analysts.

1. Make your move fast

Even though rates aren’t expected to shoot through the roof this year, they’ll likely stay on a steady, upward trajectory.

“If you’re thinking about refinancing, now probably is the time to do it,” says Lauren Lyons Cole, a certified financial planner and money editor at Consumer Reports, adding that rates are probably not going to be lower than they are right now.

2. Prepare in case rates drop

You’ll want to get your refinance application in as soon as possible, not only to catch low rates before they rise, but also to avoid a backup in refinance applications should rates suddenly fall, according to Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.”

“This is the biggest mistake I think people make,” Fleming says. “If you’re not in the pipeline ready to go when the interest rates start moving down, all of a sudden you have to get in the back of the line, and oftentimes you miss the dip in the rates.”

3. Make sure your credit score is in good shape

Your credit score plays a big part in the rate you can get on a mortgage. Just because low rates are out there doesn’t mean you’ll qualify for them.

Lyons Cole says that, in some cases, your credit can be easily bolstered “from the 500s up to the 700s in about three months.”

Check your credit report for errors, pay bills on time and keep a safe distance from your credit limit.

4. Use rising home prices to your advantage

Along with rates, home values are rising. Now might be a good opportunity to tap into your home’s equity through a cash-out refinance, through a home equity loan or a home equity line of credit.

5. Refinance into an ARM

Refinancing into an adjustable-rate mortgage in a rising rate environment can make sense since these loans tend to come with lower initial interest rates than fixed mortgages. They’re especially useful if you plan on staying in your home no longer than the fixed term of the loan.

6. Refinance to a shorter term

Refinancing into a shorter-term fixed-rate loan can save you money in two ways: the interest rate is lower than a 30-year fixed-rate loan, and the shorter term means you’ll save more money over the life of the loan by paying less interest.

Here’s an example: Using NerdWallet’s refinance calculator, we plugged in the numbers for a 30-year, $300,000 mortgage taken out in 2010 with a 4.75% fixed interest rate. We refinanced it to a 15-year mortgage with a 3.50% fixed interest rate. Savings equated to $52,975 over 15 years. While your original monthly payment of $1,565 would take on an extra $311 each month, you would save more money in the long run and build equity faster.

7. Pay points

Before your loan closes, you’ll have the option to pay points on your mortgage, which is paying money upfront, to permanently lower your interest rate. Fleming says that “if the additional cost makes sense, then absolutely pay points.”

8. Refinance out of an ARM, HELOC

If you’re concerned about the interest rate rising on your adjustable-rate mortgage or on your home equity line of credit, refinancing to a fixed-rate product can allow you to lock in a new rate to make your monthly payments more predictable.

Since mortgage interest rates are increasing, “anybody with a HELOC should definitely look at their options,” Fleming says.

Michael Burge is a staff writer at NerdWallet, a personal finance website.

Breaking: Fed minutes show rate hike coming soon

Federal Reserve officials expressed confidence they can raise interest rates gradually, while a hike “fairly soon” might be appropriate to avoid the risk of an overheated economy, minutes of Federal Open Market Committee’s latest meeting showed.

“Many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the committee’s maximum-employment and inflation objectives increased,” the minutes released Wednesday in Washington said.

The record of the Jan. 31-Feb. 1 gathering showed Fed officials wrestling with uncertainty on issues ranging from the Trump administration’s fiscal stimulus plans to the headwinds a rising dollar may pose. The discussion of a rate hike “fairly soon” was tempered by other comments that indicated little concern about near-term inflation risks.

Many FOMC voting members “continued to see only a modest risk of a scenario in which the unemployment rate would substantially undershoot its longer-run normal level and inflation pressures would increase significantly,” the minutes said.

A few participants “noted that continuing to remove policy accommodation in a timely manner, potentially at an upcoming meeting, would allow the committee greater flexibility in responding to subsequent changes in economic conditions.”

U.S. central bankers left the target range for their benchmark lending rate unchanged at 0.5 percent to 0.75 percent at the conclusion of the meeting. Fed Chair Janet Yellen told Congress in her semi-annual testimony last week that “a further adjustment of the federal funds rate would likely be appropriate” if the economy continues to evolve in line with their expectations.

Rate-Hike Odds
Before the minutes were released, traders are pricing in about a one-in-three chance of a rate increase when the FOMC next meets March 14-15.

So far, the data are affirming the committee’s outlook. Continued employment gains are underpinning spending. Retail sales rose 0.4 percent last month, and corporate orders for capital goods rose in December. Sentiment indicators are also up on the expectation that President Donald Trump will boost growth through fiscal measures and deregulation.

Fed officials forecast in December the economy would expand at a 2.1 percent annual rate this year, pushing the unemployment rate down to 4.5 percent.

The minutes indicated their forecasts were little changed since the end of last year, and in their discussion of risks and uncertainties, they said “some time would likely be required for the outlook to become clearer.”

Inflation is rising toward the Fed’s 2 percent target. The personal consumption expenditures price index rose 1.6 percent last year; excluding food and energy, the index rose 1.7 percent.

U.S. central bankers discussed how to cease reinvesting proceeds from their $4.45 trillion balance sheet. In the January statement the FOMC repeated that reinvestments would continue until rate normalization is “well under way.”

Fed officials didn’t advance their plans for the balance sheet, saying they’d address it in later meetings, according to the minutes.

“Participants also generally agreed that the committee should begin discussions at upcoming meetings about the economic conditions that could warrant changes in the existing policy of reinvesting proceeds from maturing Treasury securities and principal payments from agency debt and mortgage-backed securities, as well as how those changes would be implemented and communicated.”

Copyright Bloomberg 2017

How American Mortgage Corporation Gets You Approved When Other Lenders Said No

If Denied, Try, Try Again

Almost one-in-four home purchase applicants is denied, according to mortgage software company Ellie Mae. Even more homeowners are turned down when it comes to refinance applications — more than 30 percent.

Not all lenders are created equal, though. Some banks, credit unions, and mortgage brokers do things that others can’t.Many times, it’s all about finding a knowledgeable lender that thinks outside of the box.

Don’t lose hope just because you have been turned down in the past.Following are true stories of successful home buyers who got mortgage-approved with American Mortgage Corporation despite being told “no” the first time.

Turned Down Because Of Low Credit Scores

Until recently, Ted and his wife Brenda, along with their three children, had been life-long renters.They did not rent simply because they enjoyed renting. They rented because Brenda was a stay-at-home mom, and with just one income.

Their budget didn’t extend far enough to cover their monthly bills.As a result, there were times where they were forced to live off of their credit cards. A couple of late payments and a few maxed out credit cards took a toll on their credit scores.

Ted’s credit score was 577. His bank turned him down due to his less-than-perfect FICO. Fortunately, thanks to a lender’s credit analyzer program, Tim was able to get a detailed game plan on how to get his credit scores up.

Eager to become homeowners, Ted and Brenda followed American Mortgage Corporation’s instructions to the “T”. All they had to do was pay down a couple of credit cards, and transfer a balance from one card to another.

With the help of a American Mortgage Corporation, they saw immediate results. In less than one week, Tim saw his credit score jump almost 50 points!

With Ted’s credit score now at 625, Tim and Brenda went home shopping that very weekend. They found their dream home, made an offer, and moved into their new home just 30 days later.

Being denied by one lender doesn’t mean you’ll be denied by every lender. There may be a number of loan programs available that may fit your situation. You just don’t know about them yet.

Don’t give up just because you’ve been turned down. Try, try again.