The FHA home loan guidelines should see significant changes in 2010.  Look for credit score and down-payment requirements to rise.  FHA rates for January 4th, 2009 are down as the conforming thirty-year fixed mortgage rate is right at 5%.  The conforming fifteen year fixed mortgage rate is at 4.45% and the conforming 5/1 ARM is up slightly to 4.14%.  The 10 year treasury rate yield has pulled back slightly today which is a strong indicator that mortgage rates are going to be stable to down.  It will be interesting to see how FHA mortgage rates and the 10 year treasury rate yield move over this first week of January.

Tennessee mortgage rates remain attractive for borrowers looking to purchase a home with an FHA loan in the South.  Qualified Tennessee mortgage applicants may qualify for 30-year fixed rate FHA loan at 4.875%.  15 Year home loan terms are available at 4.5%.  FHA refinance transactions remain the hot ticket for borrower looking to lock into a low fixed rate loan.  Tennessee home mortgage loans continue to be a vital component in rebuilding the Southern housing sector and the affordable mortgage rates make refinancing and new home financing very appealing. Congress just passed the bill that makes the 2009 FHA loan limits available in 2010.  For specific loan restrictions see the Tennessee FHA Loan Limits online.

The latest Zillow Mortgage Rate report indicated that Pennsylvania mortgage rates had increased slightly from 4.87% to 4.88%. FHA mortgage rates ranged from the lowest rate of 4.71% in New Mexico to the highest rate of 5.13% Wyoming. Presently, Pennsylvania mortgage loan application volumes have increased at a rapid pace because borrowers want to lock in while mortgage rates are low.   FHA presents a good opportunity for many of the struggling homeowners in the state to refinance into a fixed rate loan that they are happy with.

According to a recent Nationwide Mortgage article, brokers indicated that Ohio, North Carolina, Tennessee and Virginia mortgage rates had dipped below 5 percent on 30-year FHA mortgages. The mortgage industry report indicated that the low FHA mortgage rates may be a huge blessing for distressed borrowers seeking fixed rate mortgage refinancing because their home loan rate was schedule to rest into an adjustable rate they could not afford.  Read the original article, North Carolina Mortgage Rate Report online.

An industry group lowered their forecast for 2009 home loan originations by more than 25% as higher FHA mortgage rates stifle mortgage refinancing activity.  The Mortgage Bankers Association estimates that lenders will make $2.03 trillion in new home loans this year, down by more than $700 billion from its forecast in March.  The Washington-based group attributed $84 billion to reduce mortgage lending on home purchases.  The rest of the decline would be from fewer FHA refinance loans and “very low” volumes on an affordability loan program overseen by mortgage agencies FHA, Fannie Mae and Freddie Mac, MBA said in a statement.

FHA mortgage rates have risen from record lows since the MBA’s prior forecast as have Treasury yields, which spiked amid a flood of debt issuance needed to fund federal rescue programs.

In March, the MBA boosted its forecast of mortgage originations by more than $800 billion but reversed most of that expected increase with Monday’s revision.  Average 30-year loan rates have slipped from recent peaks but at 5.38 % last week remain well above the record low 4.78 % set in April, Freddie Mac reported on Thursday.  The higher mortgage rates have quelled home refinancing demand.  The MBA’s index of mortgage refinancing applications in the week ended June 5 sank to 2,605.7 after hovering between about 5,100 and 6,800 from the March 20 week through the end of April.

Estimates of home loans moving through the Home Affordable Refinance Program, using Fannie and Freddie, have also fallen short.  According to Jay Brinkmann, MBA’s chief economist, “While generally accepted estimates were that around 1.5 to 2 million borrowers might avail themselves of this FHA loan program, with many more potentially eligible, to date only about 13,000 loans have been completed according to press reports.”

Though the FHA home loans created under this program should increase, volume is unlikely to come near forecasts, he said.  FHA home purchase loans are also expected to be less than expected in March. Falling prices mean lower loan sizes, and homes bought in foreclosure and by investors are often done for cash, the trade group said.

The MBA expects total existing home sales in 2009 to drop 1.2 % from last year to 4.8 million units. New home sales will slump about 27 % to 352,000 units, the group said.”Median home prices for new and existing homes will likely continue to fall, dropping by about 10 % from 2008 levels, but leveling off in 2010 as the economy improves,” Brinkmann said.

Mortgage buyer, Freddie Mac, announced that FHA rates dropped to 4.98% from 5.03 % a week earlier.  The interest rate drop was just short of the record low 4.96 % touched the week of January 15th. Bloomberg reported that the average U.S. rate on a thirty-year fixed mortgage fell this week as the Federal Reserve announced it would double purchases of mortgage debt as part of its effort to lower rates and lure homebuyers to the market.

The Federal Reserve announced yesterday that it plans to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds. Falling real estate and stock prices, record home-loan defaults and job losses have cut demand for new and existing homes in the U.S.  The nation’s jobless rate rose to 8.1 % in February as employers reduced payrolls by 651,000, according to the Labor Department.

Home loan delinquencies jumped to a seasonally adjusted 7.88 % of all loans in the fourth quarter, the highest in records going back to 1972, the Mortgage Bankers Association said March 5^th home loans in foreclosure rose to 3.30 %, also an all-time high.

FHA mortgage rates remain very attractive for borrowers who do not have much home equity left.  Qualifying for a home loan that is fixed for 30 years is still a great day for home financing.  FHA home loans enable borrowers with less than perfect credit qualify for home refinancing. Gone are the days of the zero down home loans that enable homeowners to consolidate credit card debt or take out a cash out second mortgage that homebuyers would have to quickly refinance. 

FHA continues to offer great 1^st time homebuyer programs with new home financing requiring only 3.5 percent down. FHA mortgage lenders remain optimistic that Hope for Homeowners may help some of their borrowers prevent foreclosure. Home financing guru, Jason Cardiff said, whether its FHA or a loan modification, homeowners need to get up and do something to stop foreclosure.  Cardiff continued, “Lenders are offering loan workouts like we’ve never seen before, so contact a mortgage lender to refinance or seek counsel from a law firm that has a good track record of loan modifications with your mortgage lender.”

Federal Rate Cut Lead to Lowest Mortgage Rates Ever

The Federal Reserve cut the federal funds interest rate on Tuesday The Fed cuts the benchmark interest rate to nearly zero, and CNBC’s Diana Olick said this might help lower mortgage rates. Susan Wachter, a professor of real estate, finance and city and regional planning at the Wharton School of the University of Pennsylvania, said cutting the interest rate will help change the housing market and move toward a bottom on housing prices, although it may take a while for banks to start originating much need mortgage loans. Olick added that to get those cheap rates, buyers must have impeccable credit and money to put down on the home loan.

FHA home loans will be the only opportunity for non-prime refinancing, but even the FHA loan guidelines are tighter in 2009.  HUD requires 2 full URAR appraisals for FHA cash out refinance loans that exceeds 85% loan to value.  Borrowers can still use FHA loans for cash refinancing up to 95%, but two appraisals slows the process down and increases the closing costs as well.  Many FHA lenders are reporting minimum credit score requirements implemented for higher risk FHA home mortgages.  FHA mortgage rates for purchase or refinance are being reported with fixed rates as low as 4.5% on thirty year home mortgages.

Metro Housing of Flint is a non-profit agency. If you’re about to refinance, they suggest waiting until Wednesday before locking in your mortgage rates. “It’s going to be an impact day, and you’re going to see the interest rates hover and loan officers remain excited because of the significant amounts opportunity for home refinancing. It’s going to be a big day,” Crews predicted. If you have bad credit, or if your mortgage balance is greater than what your house is actually worth, qualifying for a refinance loan will be impossible.  Mortgage rates are low, but lending guidelines are tighter than ever.  Mortgage refinancing can be tricky, but not impossible. “Every time there’s a strategy. What happens is we don’t want to do the strategy, and we want to do it now, but we have to take the steps and get there,” Crews advised. 

To ease the confusion, Metro Housing is offering free seminars titled “Know Your Loan, Save Your Home.”  “We need to know what your rates are. We need to be able to look at your credit, and what the recapture period is. Then we can figure out what products can get you back to a safe place,” Crews explained.  If mortgage rates drop again on Wednesday, there’s no way of knowing just how long they will remain that low. Metro Housing’s best advice is to get your act together now, before you miss your opportunity and it’s too late.  “Know your mortgage. If you don’t take action, it will pass you by,” Crews said.

Why the Fed Meeting Matters so Much…

Former Dallas Fed President Gerald O’Driscoll talks about what to expect from the next Federal Reserve meeting.