At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country. An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ended December 12th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, dipped 3.3%, reversing a 7.3% increase for the prior week. The decline in the composite application index was driven by a 7.0% decrease in purchase applications, as compared to the prior week, which was up slightly at 1%. The refinance component of the index was unchanged for the week, as compared to the the 13.0% increase for the prior week. Mortgage application activity failed to respond to a decline in interest rates as the average interest rate for conforming loans decreased to 4.06% as compared to 4.11% for the prior week. The decline in the mortgage application index is likely driven by seasonality as mortgage activity typically slows down prior to the holiday season. (Source: Bloomberg)

What it Means for Mortgage Borrowers
The dip in mortgage application activity should not come as a surprise given the expected real estate market holiday slowdown. Interest rates continue to be low which could boost activity heading into the new year as mortgage borrowers tend to become more active in January. If you are thinking about buying a home or refinancing your existing mortgage in early 2015, now is the perfect time to review the FREEandCLEAR Home Purchase Mortgage Guide and Mortgage Refinance Guide. Making sure you are the most organized, informed and prepared borrower is the best way to find the mortgage that is right for you. Additionally, use the INTEREST RATES feature on FREEandCLEAR to keep track of rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert
www.freeandclear.com

We are happy to announce the re-launch of FREEandCLEAR! With a new home page, one of the deepest libraries of mortgage videos available online and enhanced navigation functionality, FREEandCLEAR provides mortgage consumers a wider offering of high-quality tools, resources and information to help them master the mortgage process.

Highlights of our re-launch include a redesigned home page that features popular FREEandCLEAR mortgage instructional videos as well as customized resources for different types of mortgage consumers including first-time home buyers, people looking for a home purchase mortgage and people looking to refinance.

We have also added a ton of quality video content to FREEandCLEAR including mortgage topic instructional videos, mortgage document overview videos and mortgage calculator “how-to” videos.  Our videos provide informative and engaging explanations of key mortgage concepts and break down important mortgage documents line by line, helping mortgage consumers become more educated and knowledgeable borrowers.

You can check out our welcome video on our new home page that describes everything the new FREEandCLEAR has to offer and explains how you can get the most out of our site.

As always, we put our users first when we redesigned FREEandCLEAR.  We are confident that our new site helps us realize our goal of enabling mortgage consumers to make better decisions and save money.  And remember, at FREEandCLEAR, we strive to live up to our name — our site is FREE to use and we present information in a CLEAR and useful way.  We hope that by using FREEandCLEAR you become a more informed borrower and are empowered through information and education to make the mortgage decisions that are right for you.

We would love to hear what you think of the new FREEandCLEAR so drop us line through the ASK AN EXPERT or FEEDBACK buttons at the top or button of any page.

Thank you for reviewing the new FREEandCLEAR!

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At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ended December 5th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, increased 7.3%, exactly reversing a 7.3% decline for the prior week.  The rebound in the application index was driven by a 13.0% increase in refinance applications, as compared to the prior week, which was down 13%. The purchase component of the index increased 1.0% for the week, down from the 3.0% increase for the prior week.  The boost in refinance application activity is likely the result of continued low interest rates.  Although interest rates for conforming loans increased to 4.11% as compared to 4.08% for the prior week, rates remain relatively low and existing borrowers are looking to refinance their mortgages before the new year.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The rebound in the refinance index is a positive sign after almost six weeks of flat-to-down refinance application activity.  Analysts were hoping for stronger performance from purchase application activity which has been relatively lackluster all year.  As we close out 2014 and look to 2015, borrowers may want to take advantage of attractive interest rates.  Because this is typically a slower time of year for mortgages, borrowers may experience better customer service and faster closing time from lenders.  Check out our Mortgage Refinance Calculator and Mortgage Qualification Calculator to determine if now is the right time for you to refinance your mortgage or buy a new home.  Additionally, use our INTEREST RATES feature to keep track of rates and fees for lenders in your area.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

Government regulators reduced the required down payment for certain types of mortgages, which should make it easier for first-time buyers to purchase a home.  The new regulations, announced by FannieMae, allow eligible first-time home buyers to purchase a home with a down payment of as little as 3% of the purchase price of the property, down from the previously required minimum down payment of 5%.  The new down payment regulation applies to first-time home buyers (or buyers who have not owned a home within the past three years).  Additionally, in order to qualify for the program, buyers must demonstrate the ability to repay the mortgage according to industry-standard Qualified Mortgage guidelines (basically you prove you can back back the mortgage based on your income and debt levels), meet minimum credit score requirements; and, depending on the specific mortgage program being used, buyers may have to complete a pre-purchase home buyer education course. It is important to highlight that home buyers who make a down payment of less than 20% are typically required to pay private mortgage insurance (PMI) which is an ongoing monthly fee in addition to your mortgage payment.  The reduced down payment requirement only applies to fixed rate mortgages up to 30 years in length so a borrower would not be able to use an adjustable rate mortgage or an interest only mortgage.  Previously, if a home buyer wanted to purchase a property with a down payment of less than 5%, they would have typically used the FHA Home Loan Program.  The FHA Program allows buyers to purchase a home with a down payment as little as 3.5% but requires the buyer to pay an up-front and ongoing FHA Mortgage Insurance Premium (MIP) which is typically more expensive than PMI.  Additionally, eligible military personnel and veterans can use the VA Home Loan Program that requires no down payment although the borrower is required to pay a one-time, up-front VA Funding Fee.

What it Means for Mortgage Borrowers

Although the reduced down payment requirement is only a small change, it should make it easier for more first-time home buyers to purchase a home.  Home purchases by first-time buyers are at their lowest level in almost three decades and the new regulations are designed to make home ownership more attainable for more people.  If you are thinking about purchasing a home for the first time, check out our First-Time Home Buyer Mortgage Cheat Sheet with useful information and helpful resources.  Additionally, to learn more about the new down payment programs and how they could work for you, contact your local lender by using the INTEREST RATES feature on FREEandCLEAR.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

At FREEandCLEAR, we follow the Mortgage Bankers’ Association (MBA) mortgage applications index which measures both purchase and refinance applications for mortgage lenders across the country.  An increase in the MBA applications index reflects an increase in mortgage applications while a decrease in the index reflects a decline in mortgage applications.

For the week ended November 28th, the composite mortgage application index, which includes both home purchase mortgages and refinancings, decreased 7.3% as a 13.0% decrease in refinance applications offset a 3.0% increase in purchase applications.  The increase in purchase applications exceeded analyst expectations for the holiday-shortened week and suggests that home buyers may be responding to lower interest rates and stabilizing home prices.  The decline in the refinance index continued a downward trend in refinance applications over the past month and a half.  Although interest rates continue to be attractive, refinance applications have steadily declined after an initial burst of activity when rates dropped in October. Interest rates for conforming loans continued their gradual downward trend, decreasing to 4.08%, as compared to 4.15% for the prior week.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The increase in the purchase mortgage index was a welcome and surprising development given that Thanksgiving week is typically a slow time for mortgage applications. Home buyers appear to be taking advantage of attractive interest rates and stabilizing home prices while refinancing activity seems to have dried up as the majority of qualified existing home owners have already refinanced their mortgages.  Monitor the INTEREST RATES feature on FREEandCLEAR to review rates for lenders in your area and then use our Mortgage Selector to determine the mortgage amount and program that are right for you.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

Lenders are set to implement revised lending standards that should make it easier for borrowers to obtain mortgages.  The new standards, agreed to by lenders and industry regulators in October, reduce borrower credit requirements and could also streamline the amount of time it takes to process and close a mortgage.  The new standards relax borrower credit requirements which should make it easier for home buyers with lower credit scores or minor credit issue to obtain mortgages.  For example, a lender may be more willing to provide a mortgage to a borrower with a credit score as low as 620, the minimum score for most mortgage programs according to federal regulations, whereas in the past the lender may have required a minimum credit score of 660.  Additionally, minor credit issues that do not impact the borrower’s ability to repay the mortgage, such as a one-time late payment, will become a less significant part of the mortgage process and require less time and effort for the borrower to address.  It is important to highlight that banks have discretion over how they respond to and apply the new mortgage standards so not all banks will change or relax their lending requirements.  Most industry analysts, however, expect the relaxed regulations to be a positive for mortgage borrowers, especially for individuals with less than perfect credit profiles.

What it Means for Mortgage Borrowers

The clarified and relaxed lending standards should benefit borrowers looking to buy a home or refinance their mortgages.  FREEandCLEAR provides an in-depth discussion of how your credit score impacts your ability to get a mortgage and understanding your credit profile is one of the first steps in the mortgage process.  Additionally, because the lending standards are relatively new and may vary by lender, borrowers should make sure they understand a lender’s borrower qualification and credit score requirements before they select a lender.  Borrowers can use the INTEREST RATES function on FREEandCLEAR to review a list of lenders in their area to understand how the new lending requirements apply to them.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on new home sales, which is the number of newly constructed housing units that are sold in a month.  The new home sales figure is reported separately from the existing home sales figure, which is the number of previously constructed homes that are sold in a month.  The new home sales market is smaller than the existing home sales market but it is still an important indicator for the real estate and mortgage markets.  In addition to reporting the number of housing units sold, the new home sales report also includes information on the supply of units for sale as wells as the median and average new home sales price.

The new home sales report, issued on a monthly basis, includes statistics for the prior month.  The report for November 2014 showed that new home sales in October increased slightly to an annualized 458,000 units as compared to the revised 455,000 units figure for for September.  The October figure came in below estimates as analysts had projected approximately 465,000 annualized units.  The most notable figure in the November new home sales report was the October median home sales price, which increased 16.5% to a record $305,000 as compared to a median home price of $259,000 in September, which reflected a 9.7% month-over-month decrease as compared to August.  The number of new homes available for sale, known as supply, increased slightly from 210,000 units in September to 212,000 units in October.  Although the units sold figure failed to meet expectations, the significant increase in median sales price significantly exceeded expectations. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Sluggish new home sales combined with improving but relatively flat existing home sales suggests that the real estate market while stable, is struggling to gain significant momentum.  The increase in the median new home sales price in October could be a cause for concern as rising prices may prevent potential home buyers from entering the market although the new home sales report is typically very volatile so it is important to not draw major conclusions from any single month.  Additionally, the most recent reports on existing home sales and housing price indices suggest that home prices remain relatively flat.  Low interest rates also remain a positive factor for the real estate and mortgage markets.  Use the INTEREST RATES feature on FREEandCLEAR to monitor rates for lenders in your area and check out our Mortgage Process Guide as your first step to buying a new home.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com

The National Association of Realtors pending home sales index tracks the number of existing homes that went into contract to be sold.  When a home seller and buyer agree to the price and terms of a home sale, they sign a contract that outlines the transaction details and the property is said to be “under contract.”  The home sale process is typically completed four-to-six weeks after the property goes under contract so the pending homes sales index is a leading indicator, or predictor, for the real estate market.  An increase in the index reflects an increase in existing home sales while a decrease in the index reflects a decrease in existing home sales.  It is important to point out that the index tracks existing home sales as opposed to new home sales, or homes that are recently constructed that have not been lived in previously.  When people purchase a home they typically get a mortgage so the index also forecasts future activity in the mortgage market. The pending home sales index is released on a monthly basis and provides figures for the prior month.

The pending home sales index report for November 2014 showed that pending home sales in October decreased 1.1% on a month-over-month basis (as compared to September 2014).  The small decrease in the index reverses the small increase in the index reported in the October report.  The existing home sales market does not seem to be able to gain momentum despite lower interest rates and stabilizing housing prices.  The pending homes sales report for November came in below estimates as analysts were hoping to see continued improvement following October’s positive report.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The trajectory of the housing market remains relatively stable as we close 2014 and look toward 2015.  The decline in pending home sales for October suggests that buyers continue to be somewhat reluctant to enter the real estate market and this appears to be especially true for first-time home buyers.  Attractive interest rates, however, should eventually pull prospective home buyers into the market.  First-time home buyers should review our First-Time Home Buyer Cheat Sheet to prepare for the mortgage process and use our Mortgage Qualification Calculator to determine what size mortgage they can afford before they shop for a home.

The FREEandCLEAR Mortgage Expert

www.freeandclear.com