Free “grant” money for your down payment?

You may have ben hearing recently about a few lenders’ new loan programs that give you a “Grant” for a down payment. They advertise 3% or 5% “cash” that you can use for your down payment or closing costs.

 

Ever heard that saying, “If it sounds too good to be true, it probably isn’t?"

Although there are limited government programs from time to time that have provided real benefits to first time home buyers, many offerings are just marketing smoke and mirrors. What these lenders do is increase the interest rate higher than the market rate to provide this “Grant”. You, as the buyer, end up paying far more than your “grant” benefit in added interest over the term of the loan, many times paying up to 3 times the original grant amount in extra fees and interest. Since the rate is also above market, your house payment will be higher, and you will qualify for a lower amount than a regular FHA or Conventional loan.

Before you buy, research your options and calculate the real cost of home ownership—many times it may be a more prudent decision to just save up a modest down payment and get a regular Conventional or FHA loan.  Be informed in your financial decisions, as a home purchase will most likely be the largest investment you will make in your lifetime.

We at Mortgage First want to guide you to the right loan for the long term and help you make financially sound decisions. Our goal is to guide you to your best option for the long term and refer your friends and family to us with the confidence that we will point them in the right direction. That is how we have done business in Salem for the last 25 years, and will continue to do so for many more!

 Keywords: NHF grant, down payment grant, CHF grant

How Recent Government Activity is Affecting Mortgage Interest Rates

Mortgage rates typically are tied more to the yields on the 10-year Treasury note more than any other indicator. With the government in flux as the shutdown happened and ended, mortgage rates are also changing.
Overall, mortgage rates have decreased because of a lack of confidence in the government’s ability to get its finances under control.
Although rates spiked in September when the Fed hinted that they would not be purchasing as many bonds, they quickly released an announcement that they would actually be maintaining their current purchasing habits.

The Time Is Ripe For Homeowners
Since then, mortgage interest rates have been dropping back down to their previous levels. With 30-year and 15-year fixed mortgage rates continuing at very low levels, the time is ripe for homeowners to purchase or refinance.
In the day following the reopening of the government, mortgage rates continued at their low levels, which surprised some economists. The stock market went down and yields on the 10-year Treasury note also decreased, which both suggest a lack of confidence in the government.
Despite their ability to come to an agreement, investors and economists note that it is just a temporary fix, and there will likely be another showdown looming. Rates may remain low for a little while, but as the government begins releasing more economic data, mortgage interest rates could increase if the data shows growth in the economy.

Expected Increase Of Government Loan Applications
The government shutdown did have an effect on the volume of applications for government mortgages, like FHA and VA loans. Both reached a six-year low, largely because there were no staff on hand to answer questions over the phone and the offices were running on skeleton crews.
As the offices are back up and running again, buyers are expected to increase their volume of applications because those who had been delaying their applications now need to get the ball rolling on their home purchases.
Amidst all of the uncertainty, one thing is quite clear. It’s unlikely that interest rates will drop significantly lower than they are now, so buyers looking to get a mortgage and homeowners looking to refinance may be best off locking a rate soon rather than waiting.

Fed Meeting Minutes Release Hope Of A Stronger Economy With New Measures

The Federal Reserve’s Federal Open Market Committee released its customary after-meeting statement on Wednesday. In the context of meeting its dual mandate of stabilizing pricing and achieving maximum employment, the FOMC statement indicated that although the economy has improved in areas including household spending and labor market conditions, the national unemployment rate remains high and the housing market recovery has slowed.

Fed Says Fiscal Policy Restraining Economic Growth
The FOMC statement said that current fiscal policy and ”retrenchment” is restraining economic growth as evidenced by failure to achieve benchmarks set by FOMC as indicators of a healthy economy. Benchmarks include a national unemployment rate no higher than 6.5% and achieving an inflation rate of 2%.
September’s unemployment rate was 7.2% and inflation has run consistently below the FOMC objective. Not to be confused with the FOMC statement’s references to monetary policy, the term fiscal policy refers to the government’s policy on budgets.

Committee Sees “Moderate“ Economic Growth, Seeks Improvement
While the Fed cited ”moderate economic growth,” the FOMC statement clearly indicated that the committee is not ready to alter its current policy of quantitative easing and estimates that it will maintain the target federal funds rate at between 0% and 0.25% for a considerable time after the QE bond-buying program is phased out.  
The Federal Reserve currently purchases $40 billion per month in mortgage-backed securities and $45 billion in Treasury securities as part of its QE program. The Fed will also continue its existing policy of reinvesting principal payments it receives on holdings of agency debt and MBS, as well as selling maturing Treasury securities at auction.
These activities are part of FOMC’s strategy for supporting low mortgage rates and mortgage markets while making ”broader financial conditions more accommodative.” The Fed expects these measures to assist with a stronger economic recovery and stabilizing inflation at the Fed’s target rate.

Fed To Continue Monitoring Economic, Financial Developments 
FOMC reasserted its position that any decision to alter current QE policy is not solely subject to economic benchmarks, but will be based on the Committee’s close review of labor market conditions, inflation pressures, and financial developments.
FOMC commented in its statement that it will continue to review economic and financial conditions in the “coming months” and will decide when to taper its monthly asset purchase according to what is learned.
This suggests that changes to the present QE policy are not anticipated for several months, and that the effects of QE combined with dampened speculation may help with keeping mortgage rates lower.

This news sent interest rates down today!

 

 

The Fed has decided to keep mortgage interest rates low! This exciting and unexpected news came today, read more here on CNN Money: Federal Reserve Says No Taper

 

Now may be the time to look into buying or refinancing!

 

 

 

Should I wait for mortgage rates to go back down?

Mortgage rates are like the stock market-- there is no sure way to predict if they will go up or down. There are a lot of opinions out there, so ultimately, you have to decide for yourself if you want to jump on a rate, or wait it out.

To put things in perspective though... Take a look at this graph of mortgage rates over the last 100+ years.

Keep this graph in mind, despite the "doom and gloom" messages on the news today that mortgage rates are going back up.

 

Despite slight increases, we are still in an era of record lows!

Call 503-588-3511 or email us today to shop our rates.

q & a: What is an assumable loan?

 

 

: What does it mean when a loan is "assumable?"

Oregon Department of Veterans' Affairs program pricing change

Effective immediately the Oregon Department of Veterans’ Affairs (ODVA) has increased the available interest rate options for 15 to 30 year fixed rate ORVET home purchase loans.

Even though rates have increased, the ODVA program is still a very competitively priced option for Oregon veterans.

·       3.99% on 30yr fixed rate with NO origination fee.

APR of 4.003% if $400,000 sales price and 20% down ($80,000)

·       3.75% on 30yr fixed rate with an origination fee of 1.375%.

APR of 3.876% if $400,000 sales price and 20% down ($80,000)

·       3.25% on 20yr fixed rate with an origination fee of 1.375%.

APR of 3.422% if $400,000 sales price and 20% down ($80,000)

All rates are subject to change. Call us today for more information!

q&a du jour: How do I "shop around" for a mortgage?

 

 

: I've seen a lot of ads for great mortgage rates online, but they seem a little too good to be true... what's the catch? How do I go about "comparison shopping" for a mortgage rate, anyway?