Applications for mortgage loans slowed down with the summer ending. Adding to this slow down is potential first-time home-buyers wondering if they’ll be able to close fast enough receive the federal home ownership tax credit, which expires Dec. 1, 2009.
According to the Mortgage Bankers Association index, applications declined 8.6 percent last week on a seasonally adjusted basis. The index declined 18.3 percent compared with the previous week and fell 18.7 percent compared with the same week a year ago when the Labor Day holiday fell nearly a week earlier.
Mortgage interest rates were as follows:
- 30-year fixed-rate mortgages increased to 5.08 percent from 5.02 percent.
- 15-year fixed-rate mortgages decreased to 4.41 percent from 4.45 percent.
- 1-year ARMs decreased to 6.61 percent from 6.69 percent.
According to the National Association of Realtors, Pending home sales are up for the fifth consecutive month, and it’s been six years since a streak like this. Based on the figures from the Pending Home Sales Index, signed contracts rose 3.6 percent to 94.6 in May. In June of 2008 the figure was 88.7 percent. Some factors that are contributing to the gain are low mortgage interest rates, affordable home prices, and buyers who’ve been waiting for something to change.
Here are the regional figures from the Pending Home Sales Index:
- Northeast: rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago.
- Midwest: increased 0.8 percent to 89.9 and is 11.6 percent above June 2008.
- South: jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago.
- West: rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.
A few weeks ago I was mentioning how the rates consumers pay are tied to their credit scores and tips on how they can improve them. Well now in light of the recent stimulus package, both Fannie and Freddie are planning large fee increases by toughening their credit score and down-payment rules on April 1, 2009.
If a buyer is purchasing a duplex, the buyer could be charged a 1 percent add-on to their interest rate. Lenders will be if their not already factoring in these higher fees. Now buyers with down payments of less than 25 percent will be charged a three-quarter point add-on penalty, no matter how high their credit score is.
Those who would like to refinance and take cash out could be charged three points depending on the amount of equity they have.
Source: Washington Writers Group, Kenneth R. Harney (02/15/2009)
Since there are so many tips out there about how to improve one’s credit score, I though I would put my two cents out there. Fico scores are very important and often times determines the rate of interest you will pay on a mortgage loan, what type of financing you are able to get, and even if you can qualify for a mortgage. You can try these tips out and see what happens, or your Loan Officer can run a credit analyzer through the credit agency which will give you more specifics about what you can do regarding your specific credit situation..
First and foremost, have your Loan Officer give you a copy of your credit report…..
- To improve your credit score by 8-15 points try paying off any credit card balances that are less than $1000 and remember to leave the accounts open.
- Review your credit and look for any duplicate accounts. Have the credit agency remove any duplicates.
- Review your credit and look for multiple social security numbers. Advise your Loan Officer of any social security numbers that aren’t yours or your spouses. Have the credit agency remove them.
- Payoff any collection accounts that are less than 6 months old. This can potentially increase your credit score by 8-14 points.
- Of course during the loan process continue to make your payments on-time. Late payments can affect your credit score from 40-100 points.
- Review your credit report for any errors. Errors can be corrected with documentation and a updated credit report can be ran.
- Make sure you have at least 3 trade lines (accounts) that have been opened for at least 2 years and leave the accounts open (you can loose 7-12 points)
- Collection and charge-off accounts, even if sold to other companies, will remain on your credit until they are paid. Once paid, you may be able to have the accounts deleted. A lender may delete a late payment depending on the circumstances.
- Shopping around for another lender can cost you to loose 5+ points for each inquiry.
- Over time it can take 3 months to 1 year for on time late payments to improve your score after recent late payments, Bankruptcy, or Foreclosure.
Keep in mind these may not increase your credit score by these exact numbers, but this can give you a pretty good idea on how much of an impact a few changes can make. Again your Loan Officer can do this for you through a credit analyzer, but the cost of that will most likely be passed on to you…..
