English: Mortgage rates historical trends

English: Mortgage rates historical trends (Photo credit: Wikipedia)

I forget sometimes that as a Realtor I am familiar with all of these topics regarding getting the best possible mortgage, but not everyone else is so here they are for you to read. As always, if you know anyone who is looking to buy or sell a home in the Tampa area please give them my name and phone number. Richard Kemper 813-777-5332                 Image


5 ways borrowers can land the best mortgage

 Given the changing mortgage landscape, here are five things borrowers can do to get the best deal:

Do your homework: The first step is to check your credit report with the three credit reporting agencies.

You can do it for free at AnnualCreditReport.com. If there are any errors, correct them. Then do what you can to improve your credit rating by paying down your debt.

Avoid borrowing to buy a car or other big-ticket item in the months before you apply for a mortgage – and, for that matter, up to the date you finally close on your new home.

You can check your credit score at MyFico.com for $19.95. Anyone with scores below 620 will find it very difficult to qualify for a mortgage; borrowers with scores over 740 qualify for the best rates. It’s a good idea to try to improve your score in the months before you apply for a mortgage, because even a 20-point improvement can make a difference in the rate you can get, according to David Stein, chief operating officer of Residential Home Funding in Parsippany, N.J.

Be ready to offer up a lot of paperwork to document your income, debts and assets. Regulators have cracked down since the housing boom free-for-all, when unqualified buyers and borrowers got or refinanced mortgages they couldn’t actually afford.

Now, borrowers need to show one month’s worth of pay stubs, two months of bank statements and two years of tax returns, according to Stein. During the housing boom, Stein said, lenders “weren’t looking at anything – now they’re looking at everything.”

Then shop around among several lenders for the best rate.

Get preapproved: Even before you start looking for a house, you should get preapproved for a mortgage. This will make you a stronger buyer, because sellers will know you have the financing in place to move forward.

In addition, getting preapproved for a mortgage amount “sets boundaries around what you can afford. Those boundaries dictate what your price range is,” said McBride.

Choose between rates: The standard loan offers a fixed interest rate for 30 years. Adjustable-rate mortgages (ARMs) offer a fixed rate for, typically, the first five or seven years; after that, the rates can rise every year. In exchange for accepting the risk that interest rates will rise, borrowers get a lower initial rate on ARMs. According to the Mortgage Bankers Association, ARMs make up about 7 percent of the current market.
But ARMs make sense only for people who know for sure that they’re going to be in the house for a limited time.

“Forget about adjustable rates altogether unless you have sufficient financial stability that you could absorb a higher monthly payment if your timetable doesn’t pan out,” McBride said.

Decide length of loan: Fifteen-year loans are more popular with refinancing homeowners than they are with first-time homebuyers because many buyers can’t afford the higher monthly payments. The reward for those higher payments is that over time, you’ll pay much less in interest by shortening the life of the loan. And 15-year mortgages come with lower rates.

Sammy Thomas, a consultant living in Ridgewood, N.J., wasn’t looking for a 15-year mortgage when he decided to refinance as rates dipped last year. But with rates on 15-year mortgages then hovering around 3 percent, he decided that was the best deal. The shorter loan also meant that he and his wife, Demi, a teacher, could live mortgage-free sooner. That was especially appealing as they plan for their retirement, said Thomas, 58. In fact, they hope to put extra money on the loan each month and have it paid off in 11 or 12 years.

Lock in your rate: Once you’ve found a good rate, consider locking it in, which you can usually do for no cost, or for a fee that is refunded at closing. It’s not worth betting that rates will fall before you close on the house.

“I rarely tell folks to try to time the bottom of the market,” Gumbinger said. “Mortgage rates almost always rise much more quickly than they fall.”

“Don’t try to guess the way rates are moving,” McBride agreed. “I’m not a fan of people rolling the dice for something as significant as what their mortgage payment is.”

Copyright © 2013 The Record (Hackensack, N.J.) Distributed by MCT Information Services.



If you are applying for a VA, FHA, or USDA loan or already in the process and just waiting for your closing date expect delays. I think we all know this, but just wanted to drive message home as I received this bit of news today which you can read. Let’s hope the government shut down does not have an adverse affect on the Tampa housing market, a market that is still soft in many ways. As always, if you need help selling or purchasing a home in the Tampa area give Richard Kemper with RE/MAX a call at 813-777-5332


FHA answers questions about shutdown’s impact

WASHINGTON – Oct. 7, 2013 – The Federal Housing Administration (FHA) says it has received a number of questions about the government shutdown and its impact on FHA loans. As a result, it issued a list of questions and answers:

Can I get an FHA case number?
Yes. Lenders will be able to obtain an FHA case number from the FHA Connection.

Will FHA endorse single-family loans during a shutdown?

FHA will be able to endorse single-family loans, with the exception of Home Equity Conversion Mortgages (HECM) and Title I loans, during the shutdown. A limited number of FHA staff will be available to endorse new loans. Due to limited staff, the time to endorse the cases may be extended.

Will FHA still be able to endorse my loan if I am not able to obtain tax returns verified by the IRS during the shutdown?
Some lenders obtain tax transcripts directly from the IRS when underwriting their FHA-insured loans. But these lenders may be unable to obtain returns directly from the IRS for the duration of the government shutdown.

Lenders may continue originating loans using FHA’s existing underwriting requirements, which have not changed. Lenders must obtain tax returns from certain borrowers in order to originate FHA-insured loans, and the borrower’s signed authorization (i.e., Forms IRS 4506, IRS 8821, or whatever form or electronic retrieval service is appropriate) for any loan for which the borrower’s tax returns are required.

Why didn’t the borrower’s name and Social Security Number pass validation with the Social Security Administration?
When the lender requests a FHA case number, the borrower’s name, date of birth, Social Security Number (SSN) and property address are entered into FHA Connection (FHAC). If the matching process with Social Security Administrations (SSA) fails, a “Case Warning for SSN Validation” will be placed on the case number.

The failure could occur because the data doesn’t match or because the SSA system went offline due to the government shutdown. SSA has limited tolerance for minor mistakes in names, birth dates and social security numbers.

Can the Social Security Number validation be run again?
Lenders can make necessary corrections and try a second time to validate with SSA. Any changes made to the borrower’s name, birth date and SSN at any time prior to insurance endorsement will trigger a validation request with SSA. If the revised data passes validation, the Case Warning for SSN Validation is removed.

However, if the failure was caused by the government shutdown, the Case Warning for SSN Validation will not be able to be removed until the government reopens. FHA will ensure that the validation process takes place and lenders will be advised of the results in FHAC as soon as possible after that happens.

Can I continue to process the loan without the Social Security Number validation?
Lenders may continue processing loans without receiving validation of the borrower’s name and SSN, but FHA will not endorse loans without this validation.

What happens if I cannot validate the borrower’s SSN?
The lender may submit a request for insurance endorsement if confident that the Case Warning was received in error as a result of a system shutdown. The lender must provide conclusive documentation to verify the Social Security number, such as a valid SSN card issued by the SSA; or an original document issued by a federal or state government agency that contains the name of the individual and the SSN of the individual, along with other identifying information to support the validity of the borrower’s name and SSN to the applicable Homeownership Center (HOC).

Lenders may not endorse any loans with Case Warnings for SSN Validation, and FHA will require the lender to submit the case binder for endorsement along with conclusive documentation to verify the SSN.

After viewing the documentation, FHA will endorse the mortgage for insurance if it believes the documentation provided complies with HUD’s regulations and the loan meets all other FHA requirements.

© 2013 Florida Realtors®