May Round Up: Rates Tick Upward

In Freddie Mac's results of its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 4.91 percent with an average 0.7 point for the week ending May 28, 2009, up from the previous week when it averaged 4.82 percent. Last year at this time, the 30-year FRM averaged 6.08 percent.

The 15-year FRM averaged 4.53 percent with an average 0.7 point, up from the previous week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.66 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.82 percent, with an average 0.6 point, up from the previous week when it averaged 4.79 percent. A year ago, the 5-year ARM averaged 5.62 percent.

One-year Treasury-indexed ARMs averaged 4.69 percent with an average 0.6 point, down from the previous week when it averaged 4.82 percent. At this time last year, the 1-year ARM averaged 5.22 percent. The 1-year ARM has not been lower since the week ending September 29, 2005, when it averaged 4.68 percent.

"Fixed-rate mortgage rates followed long-term bond yields higher this week as financial markets try to discern the state of the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "Consumer confidence rose again in May and represented the largest two-month rally since records began in 1967. According to the National Association for Business Economics, the consensus of a recent survey of 45 professional forecasters called for the recession to end in the second half of this year, but the recovery is to be more moderate than the previous survey.

"Housing continues to be a drag on the economy, however. Although single-family existing home sales rose 2.5 percent in April, inventories of homes for sale also rose to 9.6 months from 9.0 in March, according to the National Association of Realtors® (NAR). Moreover, the NAR noted that sales of distressed homes made up 45 percent of the purchases in April. Such types of sales mixed with a large supply of unsold homes keep depressing house prices. For example, a new research report from the Federal Housing Finance Agency found that sales of distressed homes accelerated the measured decline in California's home values by 5.3% from the peak in 2006 through the first quarter of 2009."

Fast Fixes Can Help Sell a Home

* It's not rocket science: Houses that look fresh and attractive sell faster than beat-up homes.
* Here are some cheap tricks from Money Magazine for boosting appeal:
* Buy a new mailbox, house numbers, doorbell, and knocker .
* Green the grass with nitrogen-rich fertilizer.
* Edge and mulch the flowerbeds.
* Replace the bathroom faucet.
* Install beadboard over dated bathroom tile.
* New paint.
* Replace switchplates and outlet covers.
* Install stone tile over existing Formica countertops.

Big Wins for Move-Up Buyers

Potential home buyers who aren’t eligible for the $8,000 first-time home buyer tax credit because they currently own a home actually have what could be an even bigger advantage - the opportunity to buy a new home that is bigger and better than they could have just a year or two before.

"Now may be an ideal time for any family looking to upgrade from their starter home to one more suited to their current or future needs," said Joe Robson, chairman of the National Association of Home Builders and a home builder from Tulsa, Okla. "Buyers are able to get more home for their money by taking advantage of current prices and interest rates, along with the bargaining power that comes from the large number of homes on the market."

Here are the top five reasons current home owners should consider upgrading to their dream home:

1. Interest rates are at historic lows, which means you can buy more house than you could a year ago - for the same monthly mortgage payment.

2. Prices have come down. Even if your current home is worth less than during the last housing market peak, your dream home is likely more affordable too.

3. There are plenty of homes on the market right now, both new construction and existing, giving you lots of choice - and negotiating power.

4. You can move in to your new home faster, as many builders either have completed homes in inventory or they can start work right away due to the production slowdown.

5. You may have outgrown your home, but it’s probably someone else’s ideal starter home. With the $8,000 tax credit expiring Nov. 30, now is the time to market your home to first-time buyers.

The current housing market offers unprecedented opportunities for first-time and move-up buyers alike.

Do You Marry the Credit Score?

Some think that the good credit will outweigh the bad credit. Or some hear that lenders average everyone's credit scores together. If Jane has an 800 credit score and John has a 400 credit, score, their combined score would be 800 + 400 = 1200 divided by two, giving a not-so-terrible-after-all score of 600. Okay, close to terrible but certainly nothing near 400.

Of course, that's not so. In either case. Good credit doesn't erase bad credit. In fact, bad credit will kill the deal altogether. And scores aren't averaged, they're examined independently and the 400 score would render the 800 score impotent.

If a spouse or joint borrower has bad credit, and the person with good credit can qualify on her own, then leave the person with bad credit off the mortgage and simply include him on the title.

Written by: Realty Times Staff

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