Mortgage
How credit scores have an impact on a mortgage
Helping explain concepts to clients
One core value of practicing real estate is knowing as much about the home buying and selling process as possible and helping consumers to understand the process along with you.
Sometimes we discuss what seems to be simple concepts to our clients but it just doesn’t ring a bell which is when a handy infographic can help, especially on your blog as your leading prospecting tool.
A simple concept that can trip up some buyers is understanding how credit affects their buying power, so here it is, illustrated in all of its colorful glory (click to enlarge):
Mortgage
Mortgage application volume falls 8.1 percent in one week
Mortgage application volume fell last week, even accounting for the federal holiday, as certain interest rates jumped up a bit in the same period.
Mortgage application volume took a dip last week
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 25, 2013, mortgage application volume fell 8.1 percent from the week prior, including adjustments to account for the federal holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 17 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week.
The seasonally adjusted Purchase Index decreased two percent from one week earlier. The unadjusted Purchase Index decreased six percent compared with the previous week, but was two percent higher than the same week one year ago.
The refinance share of the mortgage application volume fell to 79 percent of total applications from 82 percent the previous week, continuing to hover around 80 percent where it has been for years. The adjustable-rate mortgage (ARM) share of activity increased to 4 percent of total applications. The HARP share of refinance applications increased to 26 percent from 25 percent the prior week.
The MBA reports, “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 3.67 percent, the highest level since September 2012, from 3.62 percent, with points decreasing to 0.42 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The contract interest rate for 30-year fixed mortgages has increased for six of the last seven weeks. The effective rate increased from last week.”
Current average contract interest rates
According to the MBA:
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 3.95 percent from 3.85 percent, with points increasing to 0.39 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.48 percent from 3.40 percent, with points decreasing to 0.33 from 0.53 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 2.95 percent from 2.87 percent, with points decreasing to 0.38 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs decreased to 2.60 percent from 2.61 percent, with points increasing to 0.33 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
Mortgage
Mortgage application volume surges in second week of 2013
Mortgage application volume in the second week of the year jumped, led by new mortgage applications, a healthy sign for housing and buyer interest.
Mortgage application volume jumps in January
According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 11, 2013, mortgage application volume increased 15.2 percent from one week earlier, led by a strong increase in new mortgage applications.
The Market Composite Index increased 15.2 percent on a seasonally adjusted basis from the week prior, and on an unadjusted basis, the Index increased 45 percent during the same period as the Refinance Index increased 15 percent from the previous week.
The seasonally adjusted Purchase Index increased 13 percent from one week earlier to the highest level since April 2011. The unadjusted Purchase Index increased 47 percent compared with the previous week and was 5 percent higher than the same week one year ago.
The refinance share of mortgage activity remained unchanged at 82 percent of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3 percent of total applications.
Current mortgage interest rates
According to the MBA:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) remained unchanged at 3.61 percent, with points decreasing to 0.38 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 3.88 percent from 3.78 percent, with points unchanged at 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.39 percent from 3.35 percent, with points decreasing to 0.58 from 0.69 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 2.88 percent, with points decreasing to 0.27 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 5/1 ARMs increased to 2.66 percent from 2.64 percent, with points decreasing to 0.34 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
Housing News
Fiscal cliff uncertainty means new low for mortgage rates
While mortgage rates have remained low in recent years, mortgage application volume rose last week as rates hit a new low, resulting from uncertainty over the fiscal cliff, according to the MBA.
Mortgage rates hit new low, application volume rises
According to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 7, 2012, mortgage application volume increased 6.2 percent from the previous week, with an 8.0 percent increase in refinance applications and a 1.0 percent increase in new mortgage applications.
“Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics.
“Refinance activity increased,” Fratantoni said in a statement, “with the refinance index hitting its highest level in two months, and the refinance share reaching its highest level since January 2009. Applications for purchase increased for a fifth consecutive week, and are running almost ten percent above their level at this time last year.”
The refinance share of mortgage activity increased to 84 percent of total applications from 82.0 percent the previous week, while the adjustable-rate mortgage (ARM) share of activity remained at 3.0 percent of total applications. The HARP share of refinance applications increased to 29.0 percent from 27.0 percent the prior week.
Current mortgage rates
According to the MBA:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.47 percent, the lowest rate in the history of the survey, from 3.52 percent, with points decreasing to 0.36 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.77 percent from 3.79 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.32 percent, the lowest rate in the history of the survey, from 3.34 percent, with points decreasing to 0.51 from 0.62 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85 percent, the lowest rate in the history of the survey, from 2.86 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 5/1 ARMs increased to 2.63 percent from 2.62 percent, with points decreasing to 0.34 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
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Jeff Belonger
March 24, 2011 at 4:07 pm
I think the above chart is very misleading and a disgrace. Okay, so they have a disclaimer stating that the information regarding the difference in rate was gathered from their lending partners. Well, either the people they spoke to at the mortgage companies have NO CLUE, or the person gathering the information didn’t listen correctly. And what ticks me off about information like this? The average client then thinks there is NO HOPE. Yes, you need better credit scores… but it’s not like the end of the world or that you need 700 + credit scores…
Two things that jump out… first off, the pricing penalty matrix only goes up to 740 +… you have the same penalty if you had a 740 credit score or if you had a 760 credit score. And this is a Fannie Mae guideline across the board.
Secondly, if I compare a 620 to a 740 score, there is only a difference in interest of a 1/2 percent to 5/8 of a percent… not a full percent as they described.
This kind of garbage ticks me off because it paints a very bad image. Besides, this example tells nothing about the LTV or the down payment. It just gives a loan amount and the state. It actually costs a half of a point less when putting 5% down compared to putting down 19.99 percent. If you put 20% down, it still costs 1/4 point more in fees than if you put 5% down.
Overall… I just have a problem when this information is not even close. I understand the genaric statement, that if your credit score is lower, that it could cost you more. But let’s be correct in the numbers when comparing.
MH for Movoto
March 24, 2011 at 5:12 pm
LOVE the graphics. Who knew credit could be so cute, right?