Category Archives: Mortgage Information

Mortgage rate forecast for 2020: Experts predict low rates will last

The average 30-year fixed mortgage rate started 2019 at 4.68% and steadily declined before closing out the year at 3.93 percent. In 2020, rates are expected to remain mostly stable, not straying too much higher or lower from the 4% mark.

Here are responses from a range of experts predicting what will happen to mortgage rates in 2020.

Expect mortgage rates to remain low

Greg McBride, CFA, Bankrate chief financial analyst, predicts mortgage rates will stay relatively stable around 4% in 2020.

“The benchmark 30-year fixed rate mortgage will hopscotch back and forth over the 4% mark for much of 2020, remaining low enough to facilitate homebuying and providing ample refinancing opportunities on those trips below 4 percent,” he says.

Since the end of June 2019, interest rates for the 30-year fixed-rate mortgage have stayed south of the 4% mark. They hit their lowest point on Sept. 4, dropping to 3.74 percent, according to Bankrate data. These historically low rates have helped homeowners save money by refinancing and made it easier for folks to afford to buy a house.

read more at: https://www.bakersfield.com/ap/news/natalie-campisi-mortgage-rate-forecast-for-experts-predict-low-rates/article_e8d24523-a035-5686-9c25-fb91cc46de5e.html

Mortgage debt hits new high

Mortgage debt has increased to $9.44 trillion according to the latest Quarterly Report on Household Debt and Credit from the New York Federal Reserve. Household debt in total increased by $92 billion (0.7%) to $13.95 trillion in Q3 2019. This is the 21st consecutive quarter with an increase, and the total is now $1.3 trillion higher, in nominal terms, than the previous peak of $12.68 trillion in the third quarter of 2008.

Mortgage balances—the largest component of household debt—rose by $31 billion in the third quarter to $9.44 trillion. Balances on home equity lines of credit (HELOC), which have been declining since 2009, fell by $3 billion this quarter, bringing the aggregate outstanding balance to $396 billion.

“New credit extensions were strong in the third quarter of 2019, with auto loan originations reaching near-record highs and mortgage originations increasing significantly year-over-year,” said Donghoon Lee, research officer at the New York Fed. “The data suggest that households are taking advantage of a low-interest rate environment to secure credit.”

Credit standards tightened slightly in the third quarter of 2019, with the median credit score of newly originating mortgage borrowers rising to 765, a 6-point increase from the previous quarter.

The New York Fed also notes that flows into delinquency among mortgage loans were mostly unchanged from the previous quarter, and foreclosures remain very low by historical standards. Approximately 65,000 individuals had a new foreclosure notation added to their credit reports between July 1- September 30, 2019. As of June 2018, CoreLogic notes that the national share of mortgages that were in some stage of delinquency was 4% in June 2019—a 0.3 percentage point decline, compared to last year’s 4.3%.

The share of mortgages that are delinquent more than 90 days fell from 1.2% to 0.9%, and the percentage of mortgages that were more than 120 days delinquent dropped to 1% from 1.4% in June 2018.

read at: https://dsnews.com/daily-dose/11-14-2019/mortgage-debt-hits-new-highs

Getting a mortgage for the self-employed just got easier

If you’re one of the millions of Americans who are self-employed or earn money on the side through freelance, contract or “gig” work, you may know the drill firsthand: Applying for a mortgage can be an intrusive ordeal.

Compared with people who have W-2 forms or pay stubs to verify their income, you encounter a much more time-consuming process. Lenders want to see your full tax returns for a couple of years — the whole box of stuff, not just an electronic transcript from the IRS. They need hard documentation of any income you’re claiming to qualify for the loan. And even if you can document your sideline pay, it might not be steady enough or ongoing long enough to be eligible under mortgage-industry rules.

You’re likely to get hit with a lot of questions: How come you reported less on your tax returns than what you’re claiming as your income on your loan application? You may also get charged more in fees, take longer to get approved, and end up with a slightly higher interest rate on your loan.

 

Lenders do this because self-employed earnings for mortgage eligibility purposes can be squishy, and there’s a lot riding on accuracy. If they approve a loan that turns out to be based on inflated or ineligible self-employment income, they can be hit with severe penalties. If they sold your mortgage to an investor, which is commonplace, they could be forced to buy it back.

 

But major improvements are underway: As of earlier this month, the two largest sources of mortgage money in the U.S. — investors Freddie Mac and Fannie Mae — have deployed remarkable new technology that automates underwriting for applicants who are self-employed or have significant side income. Applications that previously would have taken days to analyze and verify may now take just minutes, thanks to the use of “optical character recognition” (OCR) technology that reads tax returns, identifies what qualifies as eligible income, and integrates it into both companies’ electronic underwriting systems. Dallas-based tech company LoanBeam supplies the OCR solution in both cases. Freddie Mac notified its thousands of lenders of the change March 6; Fannie Mae introduced its program in December.

 

Instead of an underwriter having to plow through wads of tax documents, lenders can now upload the paperwork directly to LoanBeam, where it will be scanned and analyzed within minutes, saving time and money for borrowers and lenders alike. Andy Higginbotham, a Freddie Mac senior vice president, told me the new system “takes three to five days out of the process,” can cut hundreds of dollars in costs, and slashes risk for the lender. If Freddie’s automated underwriting system approves the application with the LoanBeam-verified income, Freddie will not hold the lender responsible for inaccuracies that pop up later. Fannie Mae’s system does the same.

 

The move to automation could have wide impacts. In 2016, the Bureau of Labor Statistics reported that there were approximately 15 million self-employed individuals in 2015, one of every 10 people in the workforce. A tax-preparation industry estimate indicated that more than one-third of workers earned income from “gig-economy” sources in 2015 — such as driving for Lyft or renting out a house via Airbnb — and that the total will exceed 40 percent by 2020.

read more at: https://www.courant.com/consumer/hc-hre-harney-column-20190317-20190315-pv6znyqvpngozpnrqsqy6n3nri-story.html

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