Shelter Six:  Don’t Count the Mortgage Payment for Home Buyer is Selling

Conventional guidelines now allow Shelter to not count a mortgage payment for a Buyer’s current home if the home is under contract and financing contingencies have been cleared.

Shelter’s SmartEdge program allows self-employed borrowers to qualify using only one year of tax returns if the business is two or more years old.

Now that proposed tariffs with Mexico have been averted, focus has shifted to negotiations with China with talks expected to resume on June 28 at the G20 Summit.

May Retail Sales were very strong and up .5% from April.  Despite the strength in consumer spending, inflation continues to be lame and rose less than expected in May.

One of the main reasons housing has struggled recently is that home prices have risen twice as fast as inflation.  In the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate.

Measured in real, inflation-adjusted terms, home prices today are rising at a 1.8% annual rate compared to a 1.2% rate since 1975.

Rate Update

Despite the volatility in the markets over the last week, the net effect was minimal for mortgage rates, which ended up just slightly higher and still near two-year lows.

This Week

Housing Starts will be released on Tuesday and Existing Home Sales on Friday.  The Federal Reserve will also meet on Wednesday with no change in rates expected.

June 17, 2019 by · Leave a Comment

Shelter Six:  Deal with Mexico Puts Upward Pressure on Rates

The agreement reached between the U.S. and Mexico to avert higher tariffs has eased some of the tensions in the market causing both stocks and rates to push higher early this week.

Last week ended with some bad economic news as only 75K new jobs were added in May, much lower than the forecasted 180K new jobs.

Thanks to a softening economy, low inflation, and ongoing trade disputes, prevailing sentiment now points to at least one short-term rate cut by the Fed by the end of the year.

The VA has recently given updated appraisal process guidelines clarifying that a Certificate of Eligibility has to be requested before a VA appraisal can be ordered.

The guidelines also make it clear that a VA appraiser is required to make contact and schedule an appointment within two business days of receiving the order from the lender.

The VA appraiser is also required to give the lender an opportunity to provide additional comps before completing an appraisal where the value coming in lower than Sales Price.

Rate Update

Weaker than expected employment figures and dovish comments from Federal Reserve board members last week influenced mortgage rates to the lowest levels in nearly two years.

This Week

The Consumer Price Index (CPI) will come out on Wednesday and Retail Sales on Friday.  All eyes will also be on the U.S.’s ongoing negotiations with China.

June 10, 2019 by · Leave a Comment

Shelter Six:  Mortgage Rates Drop to Lowest Level in Over a Year

Inflation continues to help keep mortgage rates low.  April’s Core PCE Price Index was just 1.6% higher than a year ago and well below the Fed’s 2% target.

Tame inflation, along with uncertainty on the trade front, have contributed to falling rates and inspired the Federal Reserve to now contemplate a rate cut by the end of the year.

A sign of economic strength.  According to the Mortgage Bankers Association, the overall mortgage delinquency rate is down to 4.42%, a very low number historically.

Traditional Conventional and FHA guidelines prevent many people who have the ability to repay from buying a home and that is where Shelter’s SmartEdge program comes in.

SmartEdge is an excellent financing alternative for customers who just miss out on Conventional or FHA loans and requires only 10% down (15% for an investment property).

SmartEdge allows for a higher debt ratio, has an interest-only feature, and is particularly helpful in situations where income from one borrower is very recent or difficult to document.

Rate Update

Mortgage rates dropped last week to the lowest level in well over a year mostly due to the increased trade tensions with China and Mexico, which could slow down global economic activity.

This Week

The ISM National Manufacturing Index will be released on Monday, ISM National Services Index on Wednesday, and the Employment Report on Friday.

June 3, 2019 by · Leave a Comment

Shelter Six:  Mortgage Rates Down to Lowest Level in a Year

Due to trade tensions with China and political upheaval in Britain, money flowed out of the riskier stock market and into the safer bond market last week pushing mortgage rates to the lowest point in over a year.

Economic news was mixed over the last week with New Home Sales and Housing Starts coming in stronger than expected, while Existing Home Sales and Retail Sales came in weaker than expected.

Shelter’s new Peak 100 Conventional loan requires no money down and no PMI through a creative combination of a 97% 1st mortgage and a 4% 2nd mortgage.

The Peak 100 1st mortgage is a traditional, fully-amortizing 30-year fixed-rate loan that requires only 3% down.  The rate is about 1% higher than prevailing rates.

The Peak 100 2nd mortgage is a 30-year interest-only, fixed-rate loan that provides the 3% down payment as well as an additional 1% toward closing costs.  The rate is the same as the 1st mortgage.

The program is for single-family purchases only and allows credit scores down to 660.  Homebuyer education is required and income can’t exceed 140% of the area median income.

Rate Update

Mortgage rates fell to the lowest levels in 16 months following increased international trade tensions, political uncertainty in the U.K., and weak manufacturing data in the U.S.

This Week

Pending Home Sales and the 2nd Estimate of 1st Quarter GDP will be released on Thursday and the Core PCE Price Index on Friday.

May 27, 2019 by · Leave a Comment

Shelter Six:  100% Conventional Loan Now Available

Millennials now represent the largest generational group in the history of the U.S. with a population of nearly 84 Million.

The largest segment of Millennials will turn 30 over the next 1-2 years and are expected to dominate home purchases over the next decade.

Surprisingly, according to a recent Freddie Mac survey, many potential home buyers have misinformation regarding what it will take to buy a home.

Nearly a third of those surveyed falsely think a 20% down payment is required to buy a home and that all of the down payment needs to come from personal savings.

The reality is that there are many loan programs that require only 0-5% down and that the down payment can often come from a gift.  Real estate agents and mortgage professionals everywhere need to do a better job of getting this word out.

The Shelter Peak 100 is a Conventional purchase program that requires no money down, a 660 credit score, and income that doesn’t exceed 140% of the Area Median Income.

Rate Update

Weaker than expected economic data was modestly positive for mortgage rates last week. Headlines about the trade negotiations between the U.S. and China caused some volatility but had little net effect.

This Week

Existing Home Sales will be released on Tuesday, New Home Sales on Thursday, and Durable Orders on Friday. In addition, news about the status of the trade negotiations between the U.S. and China could influence mortgage rates.

May 20, 2019 by · Leave a Comment

Shelter Six:  Trade Tensions with China Actually Good for Rates

Trade tensions with China escalated at the end of last week with the U.S. more than doubling a tariff on Chinese imports.

China retaliated this morning by increasing tariffs on U.S. imports, and the result was a huge drop in the stock market.

Trade restrictions reduce the outlook for inflation, so any escalation in a trade war will actually be good for mortgage rates pushing them lower.

Before the drama with China, last week’s inflation news was already very good as the April Consumer Price Index increased less than expected.  Inflation continues to be a non-issue.

The Mortgage Credit Availability Index published by the Mortgage Bankers Association (MBA) indicates that credit availability has more than doubled since late 2012.

The index, however, is still only one-fifth of where it was at the height of the market in mid-2006, but the MBA expects credit availability to continue to grow as we move forward.

Rate Update

Both a lack of progress in Chinese trade talks along with weak inflation data contributed to mortgage rates falling modestly last week.

This Week

Retail Sales and Industrial Production figures are both due out on Wednesday with Housing Starts due out on Thursday.  Investors will also be watching for more news about the trade negotiations between the U.S. and China.

May 13, 2019 by · Leave a Comment

Shelter Six:  Fed Leaves Rates Unchanged

As expected, the Federal Reserve made no change to the Fed Funds Rate last week.

Inflation continues to run below the Fed’s target of 2%, which has stirred increased expectations that the Fed might actually cut rates before the year is out.

Fed Chair Powell addressed this speculation, however, by stating that Fed officials “don’t see a strong case for moving rates in either direction.”

The economy added 263K jobs in April, well above the 190K forecasted.  The Unemployment Rate unexpectedly declined from 3.8% to 3.6%, the lowest level since 1969!

Shelter has just launched a Temporary Buydown program, which allows for the reduction in the Borrower’s mortgage payment by 2% in the 1st year and 1% in the 2nd year of the loan.

This program can be invaluable for advertising listings as the Buydown fee can be paid for by the Seller.  This program is for Conventional Conforming Fixed-rate purchase loans only.

Rate Update

There was a lot of economic news last week that led to a lot of rate volatility, but the various influences were offsetting and mortgage rates ended the week nearly unchanged.

This Week

The JOLTS report will be released on Tuesday and the Consumer Price Index (CPI) on Wednesday. Investors also will be watching for news about the trade negotiations between the U.S. and China.

May 6, 2019 by · Leave a Comment

Shelter Six:  1st Quarter GDP Much Stronger Than Expected

1st Quarter GDP was up an astounding 3.2%, much stronger than expected and significantly higher than the 4th Quarter’s 2.2%.

In fact, this was the best 1st Quarter since 2015, and came despite the government shutdown and severe weather across the country.

March Existing Home Sales were disappointing and 5% lower than a year ago.

March New Home Sales, however, were stronger than expected and at the highest level since November 2016.

An industry-wide event will take place over the next couple of years as the London Interbank Offered Rate (LIBOR), the leading index for ARM’s, is scheduled to terminate at the end of 2021 and be replaced with the Secured Overnight Financing Rate (SOFR).

Shelter’s Smart Series portfolio loan program now offers a 95% option with no PMI as well as a 40-Year Fixed-Rate Interest-Only option.

Rate Update

Rates normally shoot up when strong economic news is released, but actually fell last week despite the strong GDP figures because inflation was much tamer than expected.

This Week

The Core PCE Price Index is due out on Monday, the ISM National Manufacturing Index on Wednesday, and both the ISM National Services Index and Employment figures on Friday.  The next Fed meeting also takes place on Wednesday.

April 29, 2019 by · Leave a Comment

Shelter Six:  Retail Sales Surge

March Retail Sales jumped a whopping 1.6% from February, which was far greater than forecasted and the largest monthly increase since 2017.

Retail Sales had actually declined slightly in February, so the March figures were particularly impressive.

The reason for the wide swings is probably mostly attributed to the government shutdown and the unusual volatility in the stock market at the end of last year.

Another factor is the size and pace of tax refunds.  Changes in the withholding tables have resulted in smaller refunds on average, and the IRS has been a little slower with distributions.

Home builder confidence is on the rise as the latest survey from the National Association of Home Builders was very strong relative to the weaker surveys from the end of last year.

A CNBC survey of Wall Street experts indicated that 96% do not anticipate a recession over the next year, with 70% optimistic about the economy and 30% neutral.

Rate Update

Despite unexpected strength in consumer spending, mortgage rates finished last week nearly unchanged.

This Week

Existing Home Sales will be released on Monday, New Home Sales on Tuesday, Durable Orders on Thursday, and First Quarter GDP on Friday.

April 22, 2019 by · Leave a Comment

Shelter Six:  Home Buying and Selling Optimism Explodes

The weather warms up, spring begins to bloom, and Fannie Mae’s National Housing Survey shoots up a solid 7% on the buying side and 13% on the selling side in March.

After a winter of relative consumer pessimism, Fannie Mae’s Home Purchase Sentiment Index hit a low-point in December and had risen only slightly since.

But thanks to slowing home price appreciation and falling interest rates, 56% of respondents now think it is a good time to buy and 43% think it is a good time to sell.

Inflation continues to trend lower.  Core CPI rose less than expected in March at a pace of only 2% higher than a year ago, which is its lowest level in more than a year.

Low inflation along with weak global growth, trade tensions, and Brexit concerns have all contributed to central banks in both the U.S. and Europe delaying plans to increase short-term rates.

European leaders agreed last week to postpone Brexit until October 31, which removes the immediate economic risk but does not solve the long-term problem.

Rate Update

Mortgage rates have maintained their aggressive drop in March and remain in the low 4’s.

This Week

Retail Sales will be released on Thursday and Housing Starts on Friday.  Mortgage markets will close early on Thursday and all day on Friday in observance of Good Friday.

April 15, 2019 by · Leave a Comment

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