Mortgage Rates declined in first week of 2017, Job Hiring fell in December, ISM Service Index hit 57.2

January 05, 2017

For the first time in nine weeks, mortgage rates declined in the first week of 2017. Freddie Mac reported that the 30-year fixed mortgage rate fell to 4.20% for the week ending January 5, 2017 with 0.5 in points and fees. Freddie Mac said that this is the first time since 2014 that mortgage rates opened the year above 4%. Last year this time, the rate was 3.97%.

Private sector job hiring fell in December from November signaling that job growth is strong but is slowing. ADP reported that private payrolls rose by 153,000 in December, below the 170,000 expected and well below the 215,000 private jobs created in November. The report comes ahead of the government Jobs Report for December where it is expected that employers added 175,000 jobs total in the private and public sectors.

The service sector of the economy grew in December for the 83rd consecutive month, according to a survey out of the Institute of Supply Management (ISM). The ISM Service Index hit 57.2 last month, above the 56.6 expected and matching the 57.2 in November. A reading above 50 indicates expansion in the service sector and a reading below 50 indicates contraction. A spokesperson from the ISM said that a majority of those surveyed are mostly positive about business conditions and the overall economy.

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WHAT HAPPENED IN THE BOND MARKET YESTERDAY?

March 20, 2014

A surprise from Fed Chair Yellen (see below) caused a large decline in MBS prices this afternoon. No economic data was released today. The Dow is down 110 points. Tomorrow, Jobless Claims, Existing Home Sales, Leading Indicators, and Philly Fed will be released.

As widely expected, the Fed scaled back its bond purchases by $10 billion to $55 billion per month. Fed officials have long maintained that they expect that the fed funds rate will remain near zero for a “considerable period” of time following the end of the Fed’s bond purchases. The big surprise today came during Janet Yellen’s first press conference as Fed Chair, when she defined the meaning of a “considerable period” as about six months. According to Yellen, if the Fed’s economic outlook does not change significantly, the bond purchases are expected to end in the fall of this year. This would place the first fed funds rate hike in the spring of next year. Before today’s comments, the market consensus was for the first rate hike to take place during the fall of next year. The Fed statement also removed the 6.5% Unemployment Rate threshold as a potential trigger for raising the fed funds rate. Instead, the Fed will use a wide range of labor market and inflation indicators to  determine when to begin to raise rates. Basically, the Fed’s targets are 2.0% core inflation and “full employment”. With the February Core Consumer Price Index (CPI) at an annual rate of just 1.6%, inflation is well below the Fed’s target, and most signs suggest that considerable slack remains in the labor market. Still, Fed officials expect increases in the fed funds rate to take place sooner than previously expected.

 Information provided by “Larry Baer and Market Alert, Inc” via Lynette Conley, Account Executive, Premier Lending

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Protecting Your Credit During Divorce

December 17, 2013

By Roy Sperr, President
Equity Source Mortgage, Inc.

ROGERS, MN– When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.

Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

If you have questions about your situation, please feel free to contact Roy or Shawn at 763-657-2000.

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Repairing credit key to Coon Rapids woman’s fresh start after divorce

December 16, 2013

By Molly Guthrey
mguthrey@pioneerpress.com
Posted: 12/15/2013 12:01:00 AM CST

Athena Degel

A divorce prompted a Coon Rapids woman’s fresh start.

Starting over isn’t always easy.

“It was very scary at first, to be on my own,” says Athena Degel, 39, an administrative assistant from Coon Rapids. “Renting my own apartment, trying to have two kids in daycare, making a car payment. After I sold my stock, took out a 401(k) loan and sold my engagement and wedding rings, I made just enough money to buy one tank of gas a month and some groceries.”

The divorce, which took place during the Great Recession of 2009, had other financial consequences, too.

“In the divorce, we put our house up for sale,” Degel says. “We had bought the house at a high point in the market, in 2006. A short sale was our best option, because we were so upside down on our mortgage. The short sale went through at a $100,000 loss.”

A short sale — where the seller comes up short when paying off the mortgage to the bank — damages a credit score.

“That was my biggest hurdle,” Degel says. “You can’t buy a house for three years. You just have to wait.”

The single mom used that time to heal. That included getting her financial house in order: She worked on repairing her credit history with the help of Shawn Hunter at Equity Source Mortgage.

“Because of him, I was able to close on my new house on Sept. 3,” Degel says.

This fresh start feels different — and it’s not just because she has a new love in her life and is engaged to be married.

“The thrill hasn’t worn off,” Degel says. “I was able to buy my own place. I have my own life. I’ve learned a lot about myself. It’s a new me.”

Share your own turning point with Molly Guthrey atmguthrey@pioneer press.com or 651-228-5505.

TOP 10 TIPS FOR TROUBLED HOMEBUYERS AND OWNERS

1. Fix your credit score. Credit scores are mainly driven by momentum, and small changes in behavior can make a big impact. Before applying for a mortgage, know which way your credit score is going, and what you can do to get it to go in the right direction.

2. Find an expert to help with the fix. If there are events in your credit history that need fixing, fine, but know it takes time, commitment and sound advice from trusted advisers. Experts can point you in the right direction.

3. Hold off on big purchases. Your debt-to-income ratio is one of the core qualifiers in getting a mortgage. If it’s too high, you may not qualify for a low rate or any rate at all. So if you’re thinking about buying a home, hold off on large-ticket purchases. An additional $100 a month payment could reduce your buying power by as much as $10,000.

4. Watch for credit disputes. Credit disputes are not only for the credit challenged. Some people have no idea there are disputes on their reports, yet those disputes could prevent them from getting a home. If you do have to dispute something on your credit report, make sure that the dispute is solved and removed from the report. Otherwise, it could appear as a negative on your credit and detract institutions from providing you a mortgage. Fannie Mae and Freddie Mac have had even tighter dispute resolution requirements for several years. These policies came about due to the positive impact on credit scores when a consumer enters a dispute on a derogatory account. Most credit-scoring models remove disputed accounts from the credit-score calculation, perhaps creating an artificially high score and exposing the lender to added risk. The FHA stated it also found a correlation between credit disputes and mortgage defaults in its loan-performance evaluations.

5. Know the difference between consumer credit monitoring and actual credit reports. Consumer credit monitoring is a different world than the credit reports available to professionals. These systems are very effective for fraud prevention but do not rely solely on the scores you see. In most cases, those scores are significantly higher than your score. Consumer Reports Webwatch recommends consumers not familiar with credit reports consider each separately and incrementally. Consumers are better off obtaining the one free report per year they are entitled to by law from annualcreditreport.com and purchasing credit scores from that site for as little as $8 each if desired.

6. Monitor interest rates and know what they mean to your payments. As the economy continues to improve, interest rates have gone up. Higher rates reduce buying power because the cost of the money is higher. Borrowers may have to settle for less. On a $200,000 loan, a 1 percent increase in interest rates represents a little more than $120 per month on the payment.

7. Learn about other options if you are underwater on your mortgage. If you’re upside down on your home mortgage loan (i.e. loan-to-value) and have been turned down on a refinance, there are options. First, find out who services your loan. A mortgage professional can talk to you about mortgage insurance, buy-back provisions, negative equity and government programs, such as principal-reduction alternatives recently designed to help homeowners.

8. Know what you’re qualified for. Some loans offer “no money down” options, but it’s hard to get a loan today without bringing money to the table. Still there are special programs out there. Some communities have a pool of money to attract potential buyers to buy distressed or foreclosed properties. But not everyone qualifies or is familiar with the fine print in the programs. Find out what you’re qualified for.

9. Choose a broker wisely. Whomever you choose to broker your mortgage, make sure that person really knows how to read and analyze a tax return, understand current guidelines and know credit requirements. That ability can often make or break you qualifying for a mortgage.

10. Don’t give up hope. If you can’t qualify for a mortgage today, that doesn’t mean you can’t take steps, change your spending habits, improve your credit and buy a home in the future. It might take some time, but it can happen. Make sure you find a mortgage professional who will be your advocate and partner to guide you through the process.

Source: Roy Sperr, Equity Source Mortgage

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