Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!
Friday’s bond market has opened in positive territory despite stronger than expected economic readings. The stock markets are showing modest gains with the Dow up 26 points and the Nasdaq up 4 points. The bond market is currently up 11/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .375 of a discount point over yesterday’s morning rates.
Today’s major news was the initial reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It was expected to show that the economy shrank at a 1.5% annual rate last quarter, but actually revealed a 1.0% decline. In addition to the stronger than expected reading for this quarter, the 1st quarter’s GDP was revised lower from down 5.5% to down 6.4%. The downward revision is not necessarily good news for bonds and mortgage rates because it is too old to influence trading. However, it does increase the size of the improvement from the 1st quarter to the 2nd quarter, which should be taken as a negative for bonds and mortgage pricing. Fortunately, traders seem to be less concerned with these results than many had expected.
The second report of the day was the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It also gave us stronger than expected results with a 0.4% increase. This means that wage and benefit costs rose slightly more than analysts had predicted. This is also negative news for the bond market because rising wages can lead to wage inflation that likely spreads to other parts of the economy. But as with the GDP reading, this data is not having much of an impact on today’s trading or rates.
Yesterday’s 7-year Treasury Note auction had mixed results. Some measurements of whether the sale went well or not showed respectable results. But other readings indicated that there was a lackluster interest in the auction. The bond market initially reacted negatively but then managed to bounce back before closing.
Next week is fairly busy with economic postings, bringing us a couple of very important reports. There is relevant data being posted four out of the five days, including Monday morning. Monday’s sole report is July’s ISM manufacturing index. This important index measures manufacturer sentiment about business conditions and is usually the first report we see each month. Look for more details on it and next week’s other events in Sunday’s weekly preview.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Massachusetts borrowers should call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Friday, July 31, 2009
$8000 Tax Credit ending soon
The $8,000 first-time buyer tax credit program ends November 30 of 2009. Just 4 months away. That means buyers need to CLOSE on their homes by NOVEMBER 30th in order to receive the tax break.
Details: The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.
The American Recovery and Reinvestment Act of 2009 replaces The Housing and Economic Recovery Act of 2008 which only offered a $7500 tax credit. Also under the previous Housing and Economic Recovery Act of 2008, Home buyers were required to repay the tax credit to the government, without interest, over 15 years or when they sell the house, if there was sufficient capital gain from the sale. If there was insufficient profit, then the remaining credit payback would have been forgiven.
What is the home buyer tax credit? It is a tax refund for 10% of a primary home’s purchase price (up to $8K). The amount not used on your 2009 tax return will be refunded directly to you.
Who is eligible to receive the credit? First-time home buyers and those who have not owned a principal residence in the last three years prior to purchase.
Do income limits apply? Yes. The full amount is given to individuals who make up to $75K and married couples who make up to $150K per year (adjusted gross annual income). The credit amount phases out between $75K and $95K for individuals; $150K and $170K for joint filers.
If you want to take advantage of the home buyer tax credit, contact me to get prequalified for a a mortgage and to discuss your plans. Keep in mind it’s typically 45-60 days to close on a traditional real estate transaction (short sales can take much longer).
Details: The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.
The American Recovery and Reinvestment Act of 2009 replaces The Housing and Economic Recovery Act of 2008 which only offered a $7500 tax credit. Also under the previous Housing and Economic Recovery Act of 2008, Home buyers were required to repay the tax credit to the government, without interest, over 15 years or when they sell the house, if there was sufficient capital gain from the sale. If there was insufficient profit, then the remaining credit payback would have been forgiven.
What is the home buyer tax credit? It is a tax refund for 10% of a primary home’s purchase price (up to $8K). The amount not used on your 2009 tax return will be refunded directly to you.
Who is eligible to receive the credit? First-time home buyers and those who have not owned a principal residence in the last three years prior to purchase.
Do income limits apply? Yes. The full amount is given to individuals who make up to $75K and married couples who make up to $150K per year (adjusted gross annual income). The credit amount phases out between $75K and $95K for individuals; $150K and $170K for joint filers.
If you want to take advantage of the home buyer tax credit, contact me to get prequalified for a a mortgage and to discuss your plans. Keep in mind it’s typically 45-60 days to close on a traditional real estate transaction (short sales can take much longer).
Thursday, July 30, 2009
Mortgage Rate Commentary 07.30.2009
Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!
Thursday’s bond market has opened in negative territory following strong stock gains and renewed fears about the amount of debt the government is selling. The stock markets are rallying around fairly positive earnings reports that have the Dow up 129 points and the Nasdaq up 35 points. The bond market is currently down 11/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point compared to yesterday’s morning rates.
Today’s only economic news was weekly unemployment claims from the Labor Department. They reported that 584,000 new claims for unemployment benefits were filed last week. This nearly matched forecasts and therefore has had no impact on this morning’s bond trading or mortgage rates.
Neither of yesterday’s afternoon events were favorable to bonds. The Fed Beige Book indicated that the economy is stabilizing in several regions of the U.S., which is bad for bonds because economic strength makes long-term securities such as mortgage-related bonds less attractive to investors. Yesterday’s 5-year Note sale did not go too well, leading many to believe there is little chance of a strong demand in today’s 7-year Note sale. If we do get another lackluster interest in today’s auction, we most likely will see further weakness in bonds this afternoon. That may cause upward revisions to mortgage rates after the results are posted at 1:00 PM ET.
There are two important releases scheduled to be posted tomorrow morning. The first is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important piece of data we get regularly. Current forecasts are estimating that the economy shrank at a 1.5% annual rate during the second quarter. A smaller decline will probably hurt bond prices, leading to higher mortgage rates tomorrow. But a larger than expected decline could fuel a bond market rally and lead to lower mortgage pricing.
The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates if it varies much from forecasts. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.3%.
I would not be surprised to see afternoon revisions to mortgage rates this afternoon and a sizable move tomorrow. If today’s auction does not show a fairly strong interest from investors, particularly international buyers, and tomorrow’s GDP reading gives us a stronger than expected reading, those changes will probably reflect higher rates. Accordingly, please proceed cautiously if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Thursday’s bond market has opened in negative territory following strong stock gains and renewed fears about the amount of debt the government is selling. The stock markets are rallying around fairly positive earnings reports that have the Dow up 129 points and the Nasdaq up 35 points. The bond market is currently down 11/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point compared to yesterday’s morning rates.
Today’s only economic news was weekly unemployment claims from the Labor Department. They reported that 584,000 new claims for unemployment benefits were filed last week. This nearly matched forecasts and therefore has had no impact on this morning’s bond trading or mortgage rates.
Neither of yesterday’s afternoon events were favorable to bonds. The Fed Beige Book indicated that the economy is stabilizing in several regions of the U.S., which is bad for bonds because economic strength makes long-term securities such as mortgage-related bonds less attractive to investors. Yesterday’s 5-year Note sale did not go too well, leading many to believe there is little chance of a strong demand in today’s 7-year Note sale. If we do get another lackluster interest in today’s auction, we most likely will see further weakness in bonds this afternoon. That may cause upward revisions to mortgage rates after the results are posted at 1:00 PM ET.
There are two important releases scheduled to be posted tomorrow morning. The first is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important piece of data we get regularly. Current forecasts are estimating that the economy shrank at a 1.5% annual rate during the second quarter. A smaller decline will probably hurt bond prices, leading to higher mortgage rates tomorrow. But a larger than expected decline could fuel a bond market rally and lead to lower mortgage pricing.
The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers’ costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates if it varies much from forecasts. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.3%.
I would not be surprised to see afternoon revisions to mortgage rates this afternoon and a sizable move tomorrow. If today’s auction does not show a fairly strong interest from investors, particularly international buyers, and tomorrow’s GDP reading gives us a stronger than expected reading, those changes will probably reflect higher rates. Accordingly, please proceed cautiously if still floating an interest rate.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Wednesday, July 29, 2009
Mortgage Rate Commentary Massachusetts 7-29-2009
Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!
Wednesday’s bond market has opened in positive ground following the release of weaker than expected economic data and another soft opening in stocks. The Dow is currently down 37 points while the Nasdaq has slid 10 points. The bond market is currently up 11/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point over yesterday’s morning rates.
The Commerce Department reported this morning that new orders for durable goods fell 2.5% last month. This was much weaker than the 0.5% decline that was expected, indicating that manufacturing activity for big-ticket items is slowing. That is good news for bonds and mortgage rates because a slowing manufacturing sector makes an economic recovery less likely anytime soon. However, a secondary reading that tracks new orders excluding the most volatile transportation-related orders showed a 1.1% increase. That was much higher than analysts were expecting, but fortunately bond traders have ignored the news.
We have an afternoon release that may affect bond trading and mortgage rates. The Federal Reserve will release its Beige Book report at 2:00 ET today. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates this afternoon as a result of this report, but the possibly does exist.
Also today is the 5-year Treasury Note auction. Results of the sale will be posted at 1:00 PM ET. If it was met with a strong demand, we may see bond prices rise and mortgage rates fall during afternoon trading. However, a lackluster interest could lead to higher mortgage rates later today.
There is no relevant monthly or quarterly economic data scheduled for release tomorrow. The Labor Department will give us last week’s unemployment figures, but this data is not considered to be of high importance because it basically tracks only a week’s worth of new claims. It is expected to show that 585,000 new claims for unemployment benefits were filed last week. The larger the number, the better the news for bonds and mortgage rates. But, unless it varies greatly from forecasts, I don’t see this news having much of an influence on bond trading or mortgage rates tomorrow.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Wednesday’s bond market has opened in positive ground following the release of weaker than expected economic data and another soft opening in stocks. The Dow is currently down 37 points while the Nasdaq has slid 10 points. The bond market is currently up 11/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point over yesterday’s morning rates.
The Commerce Department reported this morning that new orders for durable goods fell 2.5% last month. This was much weaker than the 0.5% decline that was expected, indicating that manufacturing activity for big-ticket items is slowing. That is good news for bonds and mortgage rates because a slowing manufacturing sector makes an economic recovery less likely anytime soon. However, a secondary reading that tracks new orders excluding the most volatile transportation-related orders showed a 1.1% increase. That was much higher than analysts were expecting, but fortunately bond traders have ignored the news.
We have an afternoon release that may affect bond trading and mortgage rates. The Federal Reserve will release its Beige Book report at 2:00 ET today. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates this afternoon as a result of this report, but the possibly does exist.
Also today is the 5-year Treasury Note auction. Results of the sale will be posted at 1:00 PM ET. If it was met with a strong demand, we may see bond prices rise and mortgage rates fall during afternoon trading. However, a lackluster interest could lead to higher mortgage rates later today.
There is no relevant monthly or quarterly economic data scheduled for release tomorrow. The Labor Department will give us last week’s unemployment figures, but this data is not considered to be of high importance because it basically tracks only a week’s worth of new claims. It is expected to show that 585,000 new claims for unemployment benefits were filed last week. The larger the number, the better the news for bonds and mortgage rates. But, unless it varies greatly from forecasts, I don’t see this news having much of an influence on bond trading or mortgage rates tomorrow.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Tuesday, July 28, 2009
Massachusetts Mortgage Rate Commentary 07/28/2009
Here's your Daily Commentary report compliments of Jeff Drew and Star Mortgage!
Tuesday’s bond market has opened in positive ground following early stock weakness and a weaker than expected consumer confidence reading. The stock markets are showing losses with the Dow down 34 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.
The Conference Board gave us today’s important data with the release of their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment about their personal financial situations, giving us an idea of consumer willingness to spend. It showed a reading of 46.6 that fell short of forecasts by a couple of points. This is good news for bonds and mortgage rates because a less optimistic consumer is less likely to make a large purchase in the near future, limiting economic growth.
Tomorrow brings us two reports that may influence mortgage rates. The first will come from the Commerce Department when they post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates tomorrow morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.
The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates tomorrow afternoon as a result of this report, but the possibly does exist.
Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are tomorrow’s 5-year and Thursday’s 7-year Note sales. The last auctions of the 5-year and 7-year securities were met with very good demand from investors, leading to bond strength following the sales. But there is a record amount of debt being sold this week, so we need to proceed with caution over the next few days. Results of the sales will be posted 1:00 PM ET each day. If investor interest is strong again in Wednesday and Thursday’s sales, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates during afternoon trading those days.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
Tuesday’s bond market has opened in positive ground following early stock weakness and a weaker than expected consumer confidence reading. The stock markets are showing losses with the Dow down 34 points and the Nasdaq down 6 points. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.
The Conference Board gave us today’s important data with the release of their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment about their personal financial situations, giving us an idea of consumer willingness to spend. It showed a reading of 46.6 that fell short of forecasts by a couple of points. This is good news for bonds and mortgage rates because a less optimistic consumer is less likely to make a large purchase in the near future, limiting economic growth.
Tomorrow brings us two reports that may influence mortgage rates. The first will come from the Commerce Department when they post June’s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates tomorrow morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.
The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates tomorrow afternoon as a result of this report, but the possibly does exist.
Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are tomorrow’s 5-year and Thursday’s 7-year Note sales. The last auctions of the 5-year and 7-year securities were met with very good demand from investors, leading to bond strength following the sales. But there is a record amount of debt being sold this week, so we need to proceed with caution over the next few days. Results of the sales will be posted 1:00 PM ET each day. If investor interest is strong again in Wednesday and Thursday’s sales, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates during afternoon trading those days.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...
©Mortgage Commentary 2009
* Please note that this information reflects just one opinion on the current market. If you have a mortgage rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a mortgage rate renegotiation policy. See testimonials. Call me 800-941-5616 or email me with questions: jeff@starmortgage.com
S&P Says Home Prices Improve for Fourth Straight Month
S&P Says Home Prices Improve for Fourth Straight Month
Home prices across the nation improved for their fourth consecutive month in May but remain about 17% lower than one year ago, according to the S&P Case-Shiller Home Price Index.
The 10-City and 20-City Composites are 16.8% and 17.1% lower, respectively, compared to May 2008. Historically, those are major declines, but in the current context they represent the slowest annual price drops in close to a year. Just one month before…
To view the rest of the story and see charts and graphs click here
Home prices across the nation improved for their fourth consecutive month in May but remain about 17% lower than one year ago, according to the S&P Case-Shiller Home Price Index.
The 10-City and 20-City Composites are 16.8% and 17.1% lower, respectively, compared to May 2008. Historically, those are major declines, but in the current context they represent the slowest annual price drops in close to a year. Just one month before…
To view the rest of the story and see charts and graphs click here
Monday, July 27, 2009
The Mortgage Disclosure Improvement Act
The Mortgage Disclosure Improvement Act
On July 30th, 2009 the Mortgage Disclosure Improvement Act will become effective. The underlying initiative of the MDIA is to provide ample time for a borrower who makes a written application for a home mortgage to review a Truth In Lending Disclosure in advance of incurring any expenses, excluding reasonable credit report fees. The Truth In Lending Disclosure is better know as a TIL.
The Mortgage Disclosure Improvement Act has a major impact on the timing of the TIL that can effect the closing date of residential mortgage loans. The intention of this article is to help all parties of a purchase or refinance mortgage loan transaction understand how the MDIA can affect a closing date.
No fees, other than a credit report fee, may be paid by the consumer until after the consumer has received the initial TIL. The TIL is considered received by the consumer three business days after it has been mailed, not including the day of mailing, then the appraisal fee and any other up front fees may be collected for further processing of the loan application.
This is very important for the timing of a loan closing since an application must include income and asset verification at the time of signing a loan application for a TIL to be produced. Any delay of this information up front will likely affect the time necessary to order an appraisal to make the application complete for a timely closing.
Furthermore, if the Annual Percentage Rate (better known as the APR) should change prior to closing then a new TIL must be produced and a 3 day mail time and 3 day review time must be allotted to the consumer. Under this circumstance a closing can take place on the 7th business day from mailing. Some of the factors that could effect the APR changing from the initial TIL being issued is a consumer locking a rate after the application is made, (Example maybe the borrower changes from a loan with no points to paying points to lower the rate) any rate lock extension fees should a loan not meet the closing date anticipated at the time of the initial rate lock, and any closing agent fees that may change prior to closing.
Business days are defined as Monday through Saturday excluding federal holidays. As an example lets assume a loan application is made and a TIL is produced on a Monday. Tuesday would be day 1 of the 3 day mail time required. Friday would be the first day the appraisal and any other up front fees necessary for processing the loan application can be collected.
Here is another example and why it will be very important to consider all variables when locking a rate. The application is taken at 6PM on a Friday evening. Although we may be ale to send the application that night to the lender they are most likely not working on Saturday or Sunday to receive the application and send the TIL. The earliest the TIL would be created and sent would be Monday. Leaving 3 business days for the receipt of the TIL, the earliest possible day for ordering the appraisal would be the following Friday. One week has past since the time of application.
Star Mortgage is taking a proactive approach to the MDIA by suggesting to all consumers to make application on purchase transactions as early as possible, lock in the terms of their loan as early as possible, and requiring closing agents to provide preliminary HUD settlement statements at the time of the title order being placed by Star Mortgage that will list all their fees.
Knowing that not all transactions are alike, if all parties to a purchase or refinance transaction can understand the possible timing implications; my hope is that your loans will still continue to close as smoothly as you would expect them to.
Please feel free to call Jeff Drew at Star Mortgage at 1-800-941-5616 should you need further clarification. Thank you for your continued business.
On July 30th, 2009 the Mortgage Disclosure Improvement Act will become effective. The underlying initiative of the MDIA is to provide ample time for a borrower who makes a written application for a home mortgage to review a Truth In Lending Disclosure in advance of incurring any expenses, excluding reasonable credit report fees. The Truth In Lending Disclosure is better know as a TIL.
The Mortgage Disclosure Improvement Act has a major impact on the timing of the TIL that can effect the closing date of residential mortgage loans. The intention of this article is to help all parties of a purchase or refinance mortgage loan transaction understand how the MDIA can affect a closing date.
No fees, other than a credit report fee, may be paid by the consumer until after the consumer has received the initial TIL. The TIL is considered received by the consumer three business days after it has been mailed, not including the day of mailing, then the appraisal fee and any other up front fees may be collected for further processing of the loan application.
This is very important for the timing of a loan closing since an application must include income and asset verification at the time of signing a loan application for a TIL to be produced. Any delay of this information up front will likely affect the time necessary to order an appraisal to make the application complete for a timely closing.
Furthermore, if the Annual Percentage Rate (better known as the APR) should change prior to closing then a new TIL must be produced and a 3 day mail time and 3 day review time must be allotted to the consumer. Under this circumstance a closing can take place on the 7th business day from mailing. Some of the factors that could effect the APR changing from the initial TIL being issued is a consumer locking a rate after the application is made, (Example maybe the borrower changes from a loan with no points to paying points to lower the rate) any rate lock extension fees should a loan not meet the closing date anticipated at the time of the initial rate lock, and any closing agent fees that may change prior to closing.
Business days are defined as Monday through Saturday excluding federal holidays. As an example lets assume a loan application is made and a TIL is produced on a Monday. Tuesday would be day 1 of the 3 day mail time required. Friday would be the first day the appraisal and any other up front fees necessary for processing the loan application can be collected.
Here is another example and why it will be very important to consider all variables when locking a rate. The application is taken at 6PM on a Friday evening. Although we may be ale to send the application that night to the lender they are most likely not working on Saturday or Sunday to receive the application and send the TIL. The earliest the TIL would be created and sent would be Monday. Leaving 3 business days for the receipt of the TIL, the earliest possible day for ordering the appraisal would be the following Friday. One week has past since the time of application.
Star Mortgage is taking a proactive approach to the MDIA by suggesting to all consumers to make application on purchase transactions as early as possible, lock in the terms of their loan as early as possible, and requiring closing agents to provide preliminary HUD settlement statements at the time of the title order being placed by Star Mortgage that will list all their fees.
Knowing that not all transactions are alike, if all parties to a purchase or refinance transaction can understand the possible timing implications; my hope is that your loans will still continue to close as smoothly as you would expect them to.
Please feel free to call Jeff Drew at Star Mortgage at 1-800-941-5616 should you need further clarification. Thank you for your continued business.
Subscribe to:
Posts (Atom)