Author Archives: Elizabeth Rose

About Elizabeth Rose

Elizabeth has over 20 years in the financial and mortgage industry. In tune with the mortgage market, she provides refreshing, unrivaled knowledge leveraging expert resources and delivering results.

“What’s Your Rate?”

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The most frequently asked question by a consumer to a mortgage professional is, “what’s your rate?”  After all, it is what we have been conditioned to ask.  Look online and you can get an instant quote as well as see published mortgage rates everywhere….but be cautious about mortgage rates advertised for the masses.
Many people don’t realize mortgage companies get their mortgage interest rates and mortgage money from the same place – mortgage backed securities and Wall Street.

Mortgage interest rates are derived from the pricing of mortgage backed securities which are traded daily, throughout the day, on Wall Street…and behave very similar to stocks.  And Bonds can move just as quickly as stocks.  Somedays it is downright volatile.  The market is constantly moving – and so goes mortgage backed securities.

Aside from the pricing of mortgage backed securities, there are many other factors that are unique to each scenario that weigh in on the mortgage interest rate.  There can be as much as three eights (3/8%) of a point difference depending on just your lock term and having (or not) an escrow account!

But YOUR mortgage interest rate?  Well, that’s personal.  Speak with a mortgage professional about your specific situation and have them run the numbers to determine which rate and closing cost structure works best for your specific transaction.

Here are some of the criteria involved in quoting a mortgage interest rate:

  • Loan Size
  • Loan to Value
  • Combined Loan to Value
  • Credit Score
  • Debt Ratio
  • Housing Ratio
  • Escrow Preference
  • Lock Term
  • Loan Type
  • Cash-out
  • Property Type
  • Occupancy Type
  • Residency Status
  • Gift Money
  • Seller Contributions
  • …And more…

So the next time you ask a mortgage professional, “what’s your rate?”,  perhaps you’ll understand their reluctance to throw a rate out there in mid air.

 

 

Memorial Madness for Mortgage Rates?

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North Dallas has enjoyed some terrific mortgage interest rates lately as mortgage backed securities have been trading in a very positive range. In fact, mortgage interest rates are at the lowest levels this year! However, they are capped off by a strong ceiling of resistance which is a huge roadblock to further improvement.

Heading into the Memorial Day holiday weekend, as with any 3 day holiday weekend, Wall Street traders are likely to slip out early for the Jersey Shore, Fire Island, or their backyard BBQ.   As a result, trading volume will likely slow which will likely cause a jump in volatility.

The mortgage backed security market is mostly driven by fundamentals, which are news items and economic reports. In the absence of fundamentals, technical factors will drive the buying and selling decisions of traders. But toss in a holiday with traders taking extended time away? Now you have an exacerbated market.

Today, both GDP and Initial Job Claims were stinky reports, giving mortgage backed securities a boost (good for rates). Tomorrow a few more economic reports are due, one being a granddaddy – Personal Consumption Expenditures. This is the Fed’s favorite gauge on inflation and if disappointing, look for the bond market to pull back and mortgage rates to increase.

Combine tomorrow’s newspaper with more traders vacationing than on the floor…could be the recipe of a Memorial Madness for mortgage rates in North Dallas.   While the volatility could move the markets in either direction, the likelihood of mortgage rates moving slightly higher is greater than rates improving. It’s the old “supply and demand” at work. With less buyers (Wall Street traders) over the next few trading days, prices will probably drop. And as prices drop, mortgage rates go up.

If you are in the market for home buying, this would be a good time to consider locking in a mortgage rate. Mortgage interest rates are in a sweet spot and super low, but eventually they will move higher.

Happy Memorial Day!

Elizabeth Rose

Housing History Sheds Some Light

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Yes, I’m still beating the drum…homeownership is a smart move for those who qualify.

Here is a cool chart that illustrates housing prices from 1991 thru 2010 and has been adjusted for inflation.

The data, broken down, reveals that purchasing a home in 1991 led to strong real property value gains. If you were a home buyer in 2000, those gains were around, but favorable markets shift to the Northeast and Mid-Northwest. Keep in mind that while we saw property values skyrocket post 2000, we also saw them fall off a cliff. This chart takes that full time period into consideration.

If you look at the chart that encompasses 19 years, it clearly demonstrates that buying real estate and holding over this length of time provides real gains for most states.

Montana clearly is the consistent “winner”…who would’ve thunk it?

As I’ve mentioned before, home affordability is at its best since 1963. Were you born yet?

If we look back 48 yeas to 1963 the average price of a home in North Texas was a whopping $18,700…can barely buy a car for that these days. Incomes were around $6,200 unless you had a college degree, then you might average $9,700….that is annual income! Had you bought that home back then, the value today based on historical home appreciation rates would be $247K.

Take that same concept and apply it to today – a home price of $200K and fast forward only 30 years, using the 48 year average home appreciation rate – you’ll have a home value of almost $1 Million. Plus you get to live there…not bad, eh? If you extend the time line out to 48 years, at the same average home appreciation rate, you’ll have a value of well over $2 Million.

If you are considering purchasing a home, this is very likely the best time to do so.

Elizabeth Rose

Questions of a Home Buyer

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Home buying workshops and Lunch & Learn’s have been around a while and are great places to learn about the home buying process. From what I’ve seen, the content is relative, educational, and helpful to the audience.

I am holding a presentation for potential  home buyers soon.  Like with all my presenting engagements, I got busy polishing up my presentation.  I wanted something new, fresh, and different.  Something that would connect and resonate with the people in the room.  So after messing around with what I had, I decided to scrap my old presentations and start from scratch.

Here is what I am thinking…while the traditional workshop is educational and provides a good bit of information…something is missing.  Something big.  Something huge.

The elephant in the room is ignored.  The elephant is that four letter word named “fear”.  It is the fear of the unknown and the “what if’s” and needs to be addressed.  It’s the questions people are afraid to ask in their outside voice, but continue to rattle around in their mind.

The battlefield of the mind is full of self doubt.  We explain away the reasons we can’t buy a home, such as:

  • I’m a single woman
  • I’m recently divorced
  • I just graduated college and started a job
  • I recently changed jobs

And if we can get past that, there are more questions such as:

  • Is this a good time in the market to buy?
  • What do I need to do to buy a house?
  • What do I need to do to get a mortgage?
  • How much can I afford?
  • Can I qualify?
  • What if I don’t?
  • Where do I start?
  • How detailed do I need to be on the application?
  • Should I pull my own credit report before I apply?
  • How much does it cost?
  • How much do I need to pay up front?
  • Does it matter where my down payment comes from?

All of this before getting out of the Lazy Boy and contacting a Mortgage Professional or a Realtor!  It’s enough to paralyze!

This powerful presentation will be chocked full of information.  In addition to answering the questions above, we willl address the current market conditions and explore the options of waiting versus acting now, plus walk thru the A-Z’s of buying a home.

This presentation is designed for:

  • Interested home buyer / shoppers who want to understand the process involved
  • Intelligent  consumers who want to explore all their options
  • First time home buyers who have heard too many horror stories to ignore
  • The contrarian who isn’t sure if buying is right for them

I’m really excited about this workshop!  The juicy details will be coming soon, so stay tuned!

It’s all about you!

Elizabeth Rose

 

 

Housing: Where Opportunity and Affordability Meet

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Earlier this week I wrote about the Home Opportunity Index and how homes are more affordable today than ever before.

The last time you could pick up a home around $176K at a mortgage interest rate in the 5’s…was in 2003. And the rate was barely in the 5’s, really more like “almost 6%”.

Eight years later the median price is back to $176K and mortgage interest rates are in the low 5’s and sometimes we even catch a glimpse of a 4-handle rate.

Sounds great, right? Homes are affordable if you use that data as the only measuring stick.

But what if you look at wages? What percent of your income will it take? Are homes really affordable?

Let’s measure it:

Just a mere 48 years ago in 1963, the median prices of a home was $18,700. .

Median income was $6,200 annually per household.

Interest rates were hovering around 6%.

The average monthly home loan payment on a home mortgage took 17% of the average monthly income.

From 1963, rates took off as did inflation. It wasn’t until 2002-2003 that the trend revisited 1963 levels and is back again now.

Today’s median income in the Dallas metroplex is 68,300 and the median priced home is 189,900. Mortgage interest rates continue to bounce along the 5% mark. This translates to an average monthly home loan payment of 14% of the average monthly income.

That’s the math! It’s all in the data. Homes ARE more affordable today!

Elizabeth Rose

The Price is Right for Buying a Home

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Turn on the television, open the newspaper, or ask any random person walking down the street and they will tell you that the housing market is flat and homes aren’t selling.

Really?  Well, the market is certainly sluggish (and perhaps flat in some areas) and there is a lot of housing inventory out there to work through (aka “choices” or “opportunities”), and very likely more housing inventory coming to the market in the coming months.  At the same time there are tons of buyers out there buying.  Yes, I said tons…as in 5.1 million of ‘em (annually).

Home Opportunity Index

Let’s put a pencil to the math….

  • Annually – 5.1 million
  • Weekly – 97,811
  • Daily – 13,973
  • Hourly – 1164*

    • *based on a 12 hour work day / 7 days a week

    Homes are selling.  People are buying.  And the price is right.

    Affordability has never been better.  The Housing Opportunity Index is at the highest level as of 4th Quarter, 2010 at a whopping 73.9%.  Take a look…

    The last time the median price home cost $176K with an interest rate in the 5’s was…2003.  Before that…well, it was more than 40 years ago that interest rates on any home, regardless of price point, was in the 5’s.

    Notice the Home Opportunity Index in the two charts above. In 2003, when interest rates were in the 5′s and prices were at $176K, the “opportunity” was at 63.7%. And in the top chart, 2010, the same home prices with interest rates in the high 4′s gives us an “opportunity” of 73.9%! Quite a difference.

    One year later, in 2004,  the prices rose 25% from $176K to $219K and the index drops over 10%.

    NAR Chief Economist Yen had this to say recently, “existing-home sales should rise around 5 to 10 percent this year.”

    The data is clear – this is the best time to purchase a home.  Will you be buying…and at what interest rate?


    Happy House Hunting!

    Elizabeth Rose

    Protect Yourself! Protect Your Credit!

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    In the movie, War of the Roses, Danny DeVito cautions, “When a couple starts keeping score, there is no winning…only degrees of losing.”   There is a lot of work involved to avoid the score keeping, not to mention to protect yourself and secure your future.  But it doesn’t have to turn into the knock-down drag-out like that between Michael Douglas and Kathleen Turner.

    Once you and your spouse have determined whom will be responsible for each account, the next step is to notify the creditor and begin to take action.  As I mentioned in my previous post, just because the divorce decree says you aren’t responsible for an account any longer…it is meaningless to the creditor.  The divorce decree does not relieve either party of financial responsibility.

    Here is a list of some typical joint accounts many married couples share and tips on what you need to do with each .

    Home Mortgage: This should be your first priority of business.  A mortgage is the strongest weighted credit reported to the credit bureaus, and it is important to safeguard your history. You have a couple of options to split the marital property – that are far better than splitting the square footage as in the movie.

    • Sell the home
    • Have one spouse refinance the home into his/her name only
    • Pay off the remaining balance from investment accounts

    Note: Don’t take your name off title if the home has not been sold, refinanced, or paid off.  If you sign a quit claim deed, you are removing yourself from an ownership position…not altering your financial responsibility.


    Car Loans: Another big monthly payment and also the second most important type of credit that appears on your credit report.  This should be your next order of business.  As with a home loan, auto loans can be handled the same way:

    • Sell the car
    • Have one spouse refinance the car into his/her name


    Credit Cards: This is where business tends to get sticky.  Most people think that as long as they close the existing cards, all is well.  Unfortunately this is where the nightmare could easily begin.  Here’s why:  while the card is no longer available for charging, it is still active until the balance is paid in full.  And if your spouse takes the financial responsibility – you have to blindly trust he or she will pay on time and protect your credit rating until the card is completely paid off.  Here are some solutions to avoid a potential ugly mess without having a War of the Roses knock-down drag- out:

    • Pay the card off with your settlement from the divorce, then close the account.
    • Sell a joint asset to pay off the debt, then close the account.
    • Apply for a separate credit card for each account and transfer the agreed upon balances to the new card.  This new card is a sole and separate account from the joint debt accounts.
    • If one of you cannot qualify,  explore having a relative co-sign on a new card, then transfer the balances.

    For any other type of accounts that don’t fit into the categories above, use the same basic rule:  pay off or transfer all the existing joint indebtedness to a separate sole account, then close the joint account.  No exceptions.

    Taking care of business will give you a little peace of mind and set you on the path for a smooth financial new beginning.  Don’t delay!

    Here’s to new beginnings…

    Elizabeth Rose

    Steps to Re-Establish and Protect Credit after a Break Up

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    Breaking up is hard to do. And going through a divorce is an overwhelming and emotional process. It may feel like there isn’t enough time or energy to accomplish everything and it isn’t uncommon for emotions take over during a divorce while smart decisions are left to chance.

    One of the most overlooked aspects of divorce is protecting your credit worthiness. You might be able to run from creditors, but you sure can’t run from a credit score. If you aren’t careful, your spouse’s handling of your once-joint accounts may haunt you. You are borrowing trouble if joint debts which existed before your divorce are not paid off, closed, or transferred. It’s foolish to think because your split is amicable problems can’t occur. In addition, many women discover that their access to credit was through their husband’s credit worthiness and they had failed to establish history in their own name.

    Here are steps you can take to protect and establish your credit:

    Protect Yourself
    Any joint accounts – mortagage, auto loans, bank loans, and credit cards – should be canceled or change to one or the other’s name. This includes credit cards for which you are listed as a secondary card member. This will safeguard your credit record.

    Something many people don’t realize is that even though your decree may state your spouse is responsible, the account must be closed and transferred to another account to release you from financial responsibility.

    Inform Institutions of Name Change
    Many divorced women decide to change their name back to their maiden name. Keep in mind, dropping your husband’s name and using your maiden name will not erase your credit history, as your credit history is attached to your social security number. If you decide to change your name, make sure to inform all financial institutions, lenders, and federal agencies about the change. Don’t forget to change your driver’s license and social security card as well. At the same time, you can inform them of your new, current address so that you can begin to build a solid credit history.

    Review Your Credit Report
    As early as possible in the divorce process, you should obtain the most recent copy of your credit report from the three main credit bureaus: Experian, Equifax and Transunion. Or you can visit the national website www.annualcreditreport.com. Make sure that everything is accurate and be certain that you understand your own individual credit and accounts and those of your spouse.

    Build Credit
    It is important to establish credit in your own name, especially if all your previous credit was joint with your husband. While the joint accounts will apply towards your credit history, accounts where you are listed as an authorized user will not. For any accounts that are your responsibility post-divorce, request the institution to transfer the outstanding balance to a new account in your name only.

    Establishing credit in your own name will help you make a come-back in the financial market and enable you to purchase a home, obtain loans and other credit accommodations based on your own merit. You will need a very good credit rating to have leverage to negotiate for better terms and lower interest rates.

    If you don’t already have credit established in your name, or if your credit history or credit score is insufficient to obtain credit, apply for a secured credit card. Here’s how it works – you put down a deposit equal to your credit limit and you can borrow against this amount just like a credit card. The financial institution will report your payment history to the credit bureaus which will help establish a history.

    Create a New Budget
    The divorce will change both the income and expense sides of your personal budget. Before you make any financial decisions, you need to establish a new personal budget. Be sure to account for current obligations as well as allocate enough for court-mandated child support or spousal support. Determine how much you can afford to spend each month and remember to be very conservative in your budgeting. You should be able to have money left at the end of the month rather than month left at the end of your money.

    Pay Bills On Time
    This may sound obvious, however during this overwhelming time as old routines and responsibilities morph into new ones, paying bills can sometimes slip thru the cracks. The most important thing you can do for your credit history is pay your bills on time. The easiest way to avoid late payments is to organize your bills by due date and set up automatic electronic payment schedules.  It takes a little time on the front end, but it sure can pay off in end.

    Nothing about divorce is easy…however the sooner you take the steps to protect your credit and develop a game plan to prepare for your new life, the better off you will be.

    You can do it!

    Elizabeth Rose