Street of Dreams - Not just for the rich.

Since late October, the "Street of Dreams" as been open in Gilbert, AZ.  The last "Street of Dreams" in AZ was back in 2007 and so there has been pent up demand for homes like these.  They range from $1.7MM - $2.7MM in price and are absolutely exquisite.  Everything from two story waterfalls to kid-size chess sets on a balcony over looking the San Tan Mountains.  From garages with car lifts to chandeliers that hang from ceiling to floor: these homes show not only what a design team can do for these amazing estates, but what is possible in custom construction.

As part of Homeowners Financial Group USA, LLC, we have supported the Street of Dreams through the entire event and are ready and able to help make the dream become that reality.  With financing options for borrowers who don't want to use their cash to make the purchase, we can take care of everything from your lot purchase all the way through to completion.  Or if you find the home you love, we can finance the end purchase as well.  For a few years construction lending took a back seat while we worked through the mortgage crisis of 2008-2010, but in AZ where you can still find land to build on - custom home construction lending is making a come back.  The process is never easy, but if you want to build that dream home, instead of going to the cookie cutter lender down the street, then you have found  

Ultimately, you have to make the decision to come out and tour these amazing homes.  If it isn't your price range, no worries.  They have great ideas for those DIY'ers that want to renovate or rehab that bathroom or kitchen.  And if you are so inclined maybe on a smaller scale you want to buy a home and do some rehab but finance it (we have the option for that too). 

Don't miss out.  The event runs throughout November until December 1 and it costs $12 for general admission tickets.  If anything, it's a great couple of hours dreaming about putting yourself into that new home and seeing what is possible.

Here is the website for Whitewing Estates - they still have lots for sale.

Happy Dreaming!

Government Shutdown - Impacting Mortgages

With the prolonged government shutdown, and it appearing as though it won't be resolved for the next few days, here are some helpful tips as we work through the shutdown.

·         FHA and VA are the most commonly affected programs as they are funded by the government.  However, there is no change to the ability to complete VA or FHA loans due to the government shut down.  Both departments will continue to operate and since most of what is needed is automatic, there should be little noticed as a result of the shutdown. 

o   Word of Caution – if the file has a “hair” on it or is difficult and an UW needs to speak to a live FHA person or get a specific answer from FHA – this is where it could take a bit longer.  Normally they return calls and answer questions in 24-48 hours, with the shutdown and running a “skeleton” crew for FHA, then plan for longer time.

o   I would give the deals an extra week or so to close if the government shutdown continues.

·         4506T – Tax Transcripts and SSA Form

o   The 4506T is an internal item completed for all loans but the lenders rely on the IRS to get these back.  Again, with the shutdown, we have waived the need to have the transcripts for loans with note dates after 09/26 until the government shutdown has ended. The SSA Form also impacts loans.  Most often there are no issues when a lender pulls the SSN from a borrower.  In the event that there is a discrepancy or verification is needed on the borrower from the Social Security Administration, due to the shutdown, this loan scenario would not be able to close.  This has to do with the fact that the lender doesn't want to complete a loan to the wrong person and the SSA form helps verify the identity of the borrowers on the transaction.

 

·         Rural Development

o   Due to a lapse in appropriations for Rural Development as of October 1, Rural Development has initiated the process of orderly shutdown of nonessential operations.  You can view USDA’s plans for a lapse in appropriations at http://www.whitehouse.gov/omb/contingency-plans.

·         Market Changes

o   The longer the shutdown continues the greater impact will be felt in the market.  As we approach the debt ceiling deadline of 10/17/2013, the markets continue to be influenced by this prolonged stalemate.  Ultimately a decision will be made and when it does, that decision will have an influencing factor on the mortgage market.

 

How are Mortgage Interest Rates determined?

What drives mortgage interest rates?  In a very general sense, mortgage rates are determined by the overall economic environment.  Since 2008, and the Great Recession, we have seen a steady drop in the mortgage interest rates for consumers.  As the overall economy has begun to see some improvement, we have started to see those borrowing costs increase.  But what contributes to these changes?

1. Inflationary Pressure - When inflation is likely to occur, the future value of the money that is lent now will be worth less.  Inflation, on average since the creation of the FED, is somewhere between 3%-5% per year.  The greater the rise in inflation, the higher the mortgage rates will be.  Since April of 2013, we have continued to see the inflation rate increase.  Inflation isn't bad though as it points to a healthier economy. 
2. Bond Prices - As Bond prices drop, the rates increase and alternatively, as bond prices rise, mortgage rates decrease.  Since most loans are paid off via refinance or other method within 7-10 years, most lenders base their mortgage rates (even the 30 YR Fixed rates) on the 10 YR Treasury.  The higher the Yield the higher the mortgage rates to make the investor money (who owns the note).  We have seen yields increase from low's in April 2013 of 1.636% - since then it has raised to as high as 2.98%.  This change has increased rates from the low - mid 3% range on a 30 YR fixed to a higher rate of the upper 4% range.
3. Employment Data, Jobs Reports, Fed Monetary Policy - As the overall economy improves mortgage rates for home loans will continue to go up as well.  Some of the key factors to watch are employment data.  How many people file for unemployment - the more unemployed the slower the economy will grow.  How many new jobs are being created - again, the more new jobs, the less unemployed and the healthier the economy.  What is the FED doing with the FED funds rate, their quantitative easing policy, etc.?  As the overnight FED funds rate stays low, rates will do the same.  If they pull bank on their bond purchases, which keeps prices up, mortgage rates will increase as well.

Mortgage rates have many varying factors as to the overall picture of average rates.  The factors not discussed are the specific client factors that impact rates.  These include credit score, down payment, type of mortgage loan, etc.  All of these will also influence mortgage rates, however, they will be in about the range of what the economy is dictating.

While this is very rudimentary, it gives an idea of what types of economic factors to watch when determining interest rates.