Mortgage News 

updates from lenders.

Simple Real Estate Definitions : Tax And Insurance Escrow

Posted: 08 Dec 2011 05:45 AM PST

Escrow taxes and insuranceAs a homeowner in Phoenix , your fiscal responsibility extends beyond just making mortgage payments. You must also pay your home’s real estate taxes as they come due, as well as your homeowners insurance policy premiums.

Failure to pay real estate taxes can result in foreclosure. Failure to insure your home is a breach of your mortgage loan terms.

There are two methods by which you can pay your real estate tax and homeowners insurance bills.

The first method is to pay your taxes and insurance as the bills come due, usually semi-annually. Depending on your home’s tax bill size and the cost to insure your home, these payments can feel quite large — especially if you’ve failed to budget for them properly.

The second method of paying your taxes and insurance is to give your lender the right to pay them on your behalf, a process known as “escrowing for taxes and insurance”.

When you escrow your real estate taxes and homeowners insurance, you pay a portion of your annual obligation to your lender each month, which your lender then holds in a special account for you, and disperses to your taxing entities and insurance company as needed. Lenders prefer that homeowners escrow taxes and insurance because, in doing so, the lender is assured that tax bills remain current and that homes stay insured.

Want a discount on your next mortgage rate? Tell your lender that you’re willing to escrow.

To help calculate your monthly escrow payment to your lender, do the following :

1.       Find your home’s annual real estate tax bill

2.       Find your home’s annual homeowners insurance premium

3.       Add the two figures and divide by 12 months in a year

The quotient is your monthly “escrow”; the extra payment you’ll make to your lender each month along with your regularly scheduled principal + interest payment. Then, when your tax bills and insurance premiums come due, your lender will make sure the payments are made on your behalf.

If you’re unsure whether escrowing is right for you, talk to your loan officer and/or financial planner. There are valid reasons to choose either path.



Have Mortgage Rates Bottomed Out?

Posted: 07 Dec 2011 05:45 AM PST

Mortgage Rates Bottomed Out?

Mortgage rates have troughed. Or, so it seems.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is 4.00 percent nationwide — roughly the same rate as it’s been for 5 weeks. 

During that times, rates have ranged between 3.97 and 4.02 percent with an accompanying 0.7 discount points, plus “typical” closing costs. Closing costs vary by state and 1 discount point is equal to 1 percent of your loan size.

In other words, to get the weekly, published Freddie Mac rate, borrowers in AZ should expect to pay a complete set of fees to their respective lenders. The larger the loan, the higher the costs. “Low-fee” and “no-fee” loans are available, too — typically in exchange for a slightly rate.

A breakdown of the Freddie Mac survey shows that interest rates and discount points vary by region. Typically, states in the West Region offer the lowest rates but with the highest costs. East Region states work in reverse; rates are often highest but the accompanying points are fewest.

The most recent mortgage rate breakdown by region shows :

§ Northeast Region : 4.00% with 0.7 discount points 

§ West Region : 3.96% with 0.8 discount points

§ Southeast Region : 4.06% with 0.9 discount points

§ North Central Region : 3.97% with 0.7 discount points

§ Southwest Region : 4.04% with 0.7 discount points

What’s most notable, though, is that in all 4 regions, rates are well below their 2011 highs. Since mid-April, mortgage rates have been in descent, dropping for 5 consecutive months before reaching to their current, “rock-bottom” levels in early-November.

Since then, however, rates have idled and the forces that combined to make rates low throughout Scottsdale are subsiding. The U.S. economy is showing signs of a rebirth; the Eurozone is edging closer to solvency; and the housing market is recovering.

So, if you’ve been wondering whether now is a good time to refinance, or whether higher rates will harm home affordability, the answer is yes. Get in touch with your loan officer to review your home loan options because, looking ahead to 2012, mortgage rates look poised to rise.



Fed Minutes Suggest New Economic Stimulus Next Week

Posted: 06 Dec 2011 05:45 AM PST

FOMC minutesThe Federal Open Market Committee released its November 2011 meeting minutes, revealing a Fed split on whether new stimulus is needed for the U.S. economy.

The Fed Minutes is published 8 times annually, three weeks after each scheduled Federal Open Market Committee meeting. It’s the official record of the meeting’s policy-shaping debates and dialogues.

The Fed Minutes is the lengthier companion piece to the FOMC’s more well-known, post-meeting press release.

As compared to press release which is concise and focused at 492 words, the Fed Minutes is comprehensive and broad, totalling 7,682 words over 11 pages, complete with charts.

The November minutes reveal Fed opinions on a variety of economic issues :

§ On employment : Unemployment will gradually decline through 2014

§ On housing : The market remains depressed. Foreclosures are “holding back” growth.

§ On rates : The Fed Funds Rate should remain low until mid-2013

There was also discussion about the government’s revamped HARP program, and how it should help more homeowners get access to low mortgage rates. The Fed sees this as a positive for housing, and for the economy.

There was little in November’s Fed Minutes to surprise Wall Street, however, the Fed did discuss the possibility of new market stimulus, a topic Wall Street expects the FOMC to address next week at its last scheduled meeting of 2011.

Should the Fed introduce new market stimulus next week, and should it arrive in the form of additional mortgage bond purchases, expect for mortgage rates to fall across AZ and nationwide. If the Fed declines new stimulus, mortgage rates should rise.

The FOMC meets Tuesday, December 13, 2012.



What’s Ahead For Mortgage Rates This Week : December 5, 2011

Posted: 05 Dec 2011 05:45 AM PST

Non-farm payrolls Dec 2009 - Nov 2011Mortgage markets made little change last week for the fifth time in as many weeks.

As Wall Street watched both the Eurozone and the U.S. regain their respective footing, expectations for a new Fed-led stimulus increased, which prevented mortgage rates from rising.

According to Freddie Mac, the average 30-year fixed rate conforming mortgage rose just 2 basis points last week to 4.00% nationwide with an accompanying 0.7 discount points

1 discount point is equal to 1 percent of your loan size.

For every $100,000 borrowed at 4.00 percent, therefore, today’s Arizona mortgage applicant should expect to pay $700 in “points”. Mortgage rates for “zero-point loans” are higher than Freddie Mac’s published, average value.

This week, with few economic releases set for release, last week’s big stories should carry over into the current one — the biggest of which was a worldwide, coordinated central bank effort to increase system liquidity.

The European Central Bank, Bank of England and U.S. Federal Reserve were joined by the central banks of Japan, Canada and Switzerland in the effort. Stock markets rallied on the news.

Another of last week’s big stories was the sharp drop in the U.S. Unemployment Rate.

After hovering near nine percent since April, the Unemployment Rate broke out of range, dropping to to 8.6% in November. This is the lowest national Unemployment Rate since March 2009, a milestone achieved via the combination of new jobs created (+192,000 in November with revisions) plus a smaller U.S. workforce.

The U.S. economy has added 1.9 million jobs in the last 14 months.

Lastly, last week’s New Home Sales and Pending Home Sales Index releases support the growing belief that the U.S. housing market is in recovery. Both reports showed strong growth for October, corroborating what home builders have been saying — the housing market is improving and buyer ranks are growing.

Home supplies are lower in many U.S. markets.

This week, rate shoppers in Mesa should be on alert. Market momentum changes quickly, and rates are currently anchored by the expectation of new Federal Reserve stimulus. The Fed meets December 13, 2011. As that date approaches, expectations could change, causing rates to rise.

Mortgage rates remain near all-time lows. It’s a good time to lock a rate with your lender.






December 05, 2011


Ryan Nelson
Branch Manager
1750 E. Northrop Blvd. Suite 230
Chandler, AZ 85286
Direct - 480.270.4899
Fax - 480.237.5413


Hello Lisa,

Back in January, analysts predicted mortgage rates would rise by the end of the year. Yet, the opposite has happened – with rates reaching their lowest levels in recent months. And it looks like interest rates will remain low in the weeks to come.

It's a great time for your clients to purchase real estate. Please let me know what I can do to help. It's always a pleasure to be of assistance.


Ryan Nelson







Central Banks Provide More Aid



Average 30 yr fixed rate

Stocks (Weekly)


September Pending Home Sales rose 10% from August

ISM Manufacturing rose to the highest level since June

Consumer Confidence jumped to the highest level since July

The Fed's Yellen suggested that the Fed has room to ease further


This week: -0.01%


Dow: 12,100 +900




Last week: +0.01%


NASDAQ: 2,650 +150



Last week, the effects on mortgage rates from increased optimism about Europe and stronger than expected US economic data were offset by increased expectations for additional Fed purchases of mortgage-backed securities (MBS). As a result, mortgage rates ended the week with little change.

Global actions taken last week increased optimism that the European debt situation will improve. On Wednesday, major central banks around the world announced a joint program to lower the borrowing costs for banks. This will increase liquidity and decrease the risk of failures. China also lowered rates for the first time in three years. It appears that central bankers in Europe and China are becoming more willing to risk higher future inflation to spur economic growth. In addition, comments from the head of the European Central Bank (ECB) and from the leader of Germany suggested that if euro zone governments reach agreement on a 'new fiscal compact' to better control their budgets, then the ECB may provide more aid.

Capping off a week of generally stronger than expected economic data, Friday's Employment report also exceeded expectations in nearly every area. Against a consensus forecast of 130K, the economy added 120K jobs in November, but revisions to prior months added an additional 72K jobs. The big surprise came from the Unemployment Rate. Expected to remain unchanged at 9.0%, the Unemployment Rate dropped sharply to 8.6%, the lowest level since March 2009. The news was not quite as impressive as the headline number might suggest, though, as a good portion of the decline resulted from a decrease in the labor force participation rate, meaning that many people stopped looking for work.


This week will be a light one for economic data. ISM Services and Factory Orders will be released on Monday. The Trade Balance and Consumer Sentiment will come out on Friday. In addition, investors will be eager to hear the results from Friday's euro zone summit.





Central Banks Aid European Banks



Average 30 yr fixed rate

Stocks (Weekly)


August Retail Sales were flat from July

In July, employers posted the most job openings since August 2008

It was reported that China is in talks to purchase Italian bonds

Oil prices rose above $90 per barrel to the highest level since August 3


This week: +0.10%


Dow: 11,450 +450




Last week: -0.02%


NASDAQ: 2,600 +125



Investors grew a little less concerned about Europe during last week, which was favorable for the stock market but negative for mortgage rates. Last week's inflation data also was unfavorable for mortgage rates, and rates ended the week a little higher. This movement differs from Freddie Mac's highly publicized weekly average rate which reported that a new low was reached for the week ending September 15. The reason is simply that the Freddie Mac survey is conducted early in the week and does not reflect the change in rates which takes place later in the week.

On Thursday, five major central banks, including the European Central Bank (ECB) and the US Fed, announced that they will offer a lending facility for European banks seeking short-term liquidity. This aid reduced concerns about the region and encouraged investors to shift to riskier assets. In typical fashion, the stock market was a major beneficiary, while bonds markets suffered losses.

Inflation is on the rise. The August Consumer Price Index (CPI) rose more than expected from July and was 3.8% higher than one year ago. Core CPI, which excludes food and energy, was up 2.0% from one year ago. Late in 2010, Core CPI was increasing at just a 0.8% annual rate. The August Core Producer Price Index (PPI) was up an even higher 2.5% from one year ago. With a highly anticipated FOMC meeting next week, Fed officials must factor in higher inflation levels as they consider additional stimulus measures.


A Simple Explanation Of The Federal Reserve Statement (September 21, 2011 Edition)

Posted: 21 Sep 2011 11:38 AM PDT

Putting the FOMC statement in plain EnglishWednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 — the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn’t been 3 FOMC dissenters since 1992.

In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:

1.       Economic growth “remains slow”

2.       Unemployment rates “remain elevated”

3.       The housing sector “remains depressed”

The Fed also said that there are “significant downside risks” to the economic outlook, tied to strains in the global financial markets.  

The news wasn’t all bad, however.

The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013″. This means that Prime Rate — the rate to which credit card rates and lines of credits are often tied — should remain unchanged at 3.250 for at least another 2 years.

Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in AZ are improving, but note that Wall Street sentiment can shift quickly — especially in a market that’s as uncertain as this one.

If today’s mortgage rates and payments fit your household budget, consider locking in a rate. Rates can change swiftly.

The FOMC’s next meeting is a 2-day affair, scheduled for November 1-2, 2011.


Building Permits Rising Nationwide; Housing Starts To Follow

Posted: 23 Sep 2011 05:47 AM PDT

Housing Starts 2009-2011Single-Family Housing Starts fell for the second consecutive month, dropping to a seasonally-adjusted, annualized 417,000 units in August 2011.

A “Housing Start” is defined as a home on which ground has broken.

We shouldn’t put too much faith in the findings, however. Although housing starts were lower last month, as noted by the Census Bureau, the margin of error in the August Housing Starts report exceeded the actual result.

From the official report:

§ August’s Published Results : -1.4% from July 

§ August’s Margin of Error : ±10.3% from July

Therefore, August’s Housing Starts may have actually increased by up to +8.9% from July, or it may have dropped as much as -11.7%. We won’t know for sure until several months from now, after the Census Bureau has gathered more housing data.

One thing is certain, though — the long-term trend in Housing Starts is “flat”. There has been little change in new home construction since last summer.

The same can’t be said for Building Permits.

Considered a pre-cursor to Housing Starts, Single Family Building Permits climbed 2.5 percent with a minuscule Margin of Error of ±0.9 percent.

As is common in real estate, results varied by region:

§ Northeast : +3.3 percent from July

§ Midwest : +6.3 percent from July

§ South : -1.3 percent from July

§ West : +11.3 percent from July

When permits are issued, 86 percent of them begin break ground within 60 days. Therefore, expect Housing Starts and new home inventory to rebound in the months ahead.

For now, housing remains steady. And, with mortgage rates at all-time lows, homebuyer purchasing power in an around Scottsdale is higher than it’s been in history. If you’re in the process of shopping for a home, talk with your lender to plan your mortgage budget.





What’s Ahead For Mortgage Rates This Week : August 22, 2011

Posted: 22 Aug 2011 05:48 AM PDT

Eurozone concerns aid mortgage ratesMortgage markets improved again last week, pushing mortgage rates in AZ to an all-time low; lower than the lows set last November, even.

Last week’s low mortgage rate drivers are primarily European. Joining the debt concerns that have dogged Europe since March, a fresh wave of doubt has surfaced about the health of some Eurozone banks. The fears sparked a new wave of safe haven buying.

Global equities were socked last week and the Dow Jones Industrial Average fell for the 4th straight week. For home buyers in Phoenix , though, the timing may be perfect. As stock markets lose, bond markets gain and when bond markets gain, mortgage rates drop.

According to government-group Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 4.17% last week with 0.7 points. This is the lowest rate-and-points combination in history.

The 5-year ARM fell to 3.08 with 0.5 points.

As mortgage rates fall, though, be wary of trying to “time the market”. It’s impossible to know when rates have bottomed and mortgage rates tend to spike without notice. That’s what happened in May 2010. And then again in November 2010. And then a third time in April 2011.

When rates rise, they could tack on 0.500% or more overnight.

This week, there is a lot that can move mortgage rates. With housing data set for Tuesday release, the Eurozone stories still unfolding, and three Treasury auctions planned, it’s best to be ready for locking.

If you’re floating a mortgage rate or still shopping, consider locking your rate as soon as possible. Rates trended higher to close out last week and will be riding that momentum forward. Rates are lower than they’ve been in history.

Take advantage of it.

Thank you Mark, you can reach Mark at