No More Bubbles!

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If you can recall the housing bubble that took place around 2007, many people went after the American dream. The house with the grandiose marble staircase and the luxurious swimming pool became possible to attain because lenders were allowing consumers to borrow the money that was necessary to obtain these gilded desires. However, many lenders neglected to make sure that an individual could afford to pay the money back. Consequently, homeowners that were initially qualified to receive those loans were left in a position where they could no longer afford to repay them. This caused a ripple effect throughout out the entire financial industry and led to the collapse of certain financial institutions.

Now that the market is somewhat recovered, congress is making lenders learn from their past mistakes by implementing the Dodd-Frank Wall Street Reform and Consumer Protection act. The Consumer Financial Protection Bureau issued these new guidelines to mortgage lenders with goals of bringing down foreclosures and preventing future housing bubbles from being created or expanded. The CFPB focused specifically on Regulation Z. This deals with the Truth in Lending Act which directly impacts a consumers ability to purchase a home.

The regulation prohibits lenders from creating a loan without considering the borrowers ability to repay and enforces parts of the Dodd-Frank Act. Regulation Z also prohibits lenders from penalizing borrowers who pay off their loans early and makes lenders retain information that they have been following through on the new guidelines for three years.

Now potential homeowners will receive honest feedback regarding their financial stability and the kind of home they will be able to afford with their loan. Lenders have to make a thorough assessment of a homebuyers' financial income, debt to income ratio and any assets that they may have to determine their ability to repay the loan. For more information about the Dodd-Frank regulations visit the Consumer Financial Protection Bureau website at www.consumerfinance.gov

Source: The Consumer Financial Protection Bureau

Unsure about how to navigate today's unpredictable real estate market? Let us help you make an informed decision and deal with any concerns you have about purchasing the home of your dreams.

Mynor and Associates

Keller Williams Capitol Properties

License 611201301-473-1622

For Sale by Agent/Broker

Mortgage Rates Drop Again

The average rates on fixed mortgages fell again this week and they remain near historic lows, a trend that has supported a recovery in housing, the AP reported today. This decline was preceded by a slight uptick in rates caused by a strengthening economy. Details of the article:

Freddie Mac said Thursday that the average rate for the 30-year loan fell to 3.54 percent from 3.63 percent last week. That's near the 3.31 percent reached in November, which was the lowest on records dating to 1971. The average rate on the 30-year loan has been below 4 percent now for a full year.

Kathy Orton, a real estate blogger for The Washington Post, quotes Frank E. Nothaft, Freddie Mac vice president and chief economist, on the reasons rates continue to stay so low:

Low and stable inflation is placing downward pressure on fixed mortgage rates. Annual growth in the consumer price index has remained at or below 2 percent for the past four months, and for the producer price index even lower. This, in part, is why the Federal Reserve monetary policy committee on March 20th lowered the upper end of its inflation forecast for 2013. In addition, our March outlook calls for 30-year fixed mortgage rates to remain below 4 percent throughout this year.

These near record low mortgage rates are fueling home sales and refinancing, which in turn is boosting the economy. All of this is just in time for the spring home-buying season.

As always, please contact me, Mynor Herrera, for expert advice on everything real estate. I am licensed in D.C., Md., and Va., and I specialize in Bethesda and Chevy Chase, as well as the subdivisions of Rosemary Hills, Rock Creek Forest, East Bethesda and Whitehall Condominium.

Mortgage rates inch up in response to good economic data

Mortgage rates have begun to inch up as a result of continued signs of a strengthening economic recovery. Jeff Clabaugh of the Washington Business Journal reports:

Freddie Mac says a 30-year fixed-rate mortgage averaged 3.63 percent in the week ending March 14, up from 3.52 percent last week. A 15-year fix averaged 2.79 percent, up from 2.76 percent. A one-year adjustable-rate mortgage rose to 2.64 percent from an average 2.63 percent last week. "Fixed mortgage rates rose this week on signs of job growth and consumer spending," said Freddie Mac (OTC: FMCC) Chief Economist Frank Nothaft.

Kathy Orton, The Washington Post's real estate blogger, notes Nothaft gave last week's strong job growth report and consumer spending for the rise in the rates. “The economy added 236,000 new workers in February, which helped push down the unemployment rate to 7.7 percent,” Nothaft said in a statement. “This helped offset the effects of the payroll tax holiday expiration and led to a 1.1 percent increase in retail sales, which was well above the market consensus forecast.”

If you would like to discuss, call me, Mynor Herrera, for expert advice on everything real estate. I am licensed in Washington, D.C., Maryland, and Virginia, and I specialize in Bethesda and Chevy Chase, as well as the subdivisions of Rosemary Hills, Rock Creek Forest, East Bethesda and Whitehall Condominium.

Pay Off Your Mortgage Faster

I met up with a couple of clients recently from Rock Creek Forest and Rosemary Hills, and the conversation quickly went towards the super low interest rates. While the low rates certainly provided these home owners with a great opportunity to refinance, they wondered what else they could do to pay off their mortgages sooner.

With this conversation in mind, I decided that the information I've posted below would be beneficial for all of my home owners from Whitehall Condominiums to East Bethesda to home owners across the country. So enjoy! I hope it helps you achieve financial freedom sooner than you expected!

BTW If you ever know of anyone looking to buy or sell a home, I'm never too busy for your referral!

Annual Percentage Rate – Knowledge is Power

Buying or refinancing a property in Chevy Chase, Bethesda, or the surrounding areas? Understanding the Annual Percentage Rate (A.P.R.) will give you the power to buy smarter.  A recent article on the New York Times website offers great information on how a lender’s A.P.R. compares to their regular interest rate and which one to focus on when buying.

The A.P.R. is believed to provide a better overview of what you’ll pay each month, but according to some mortgage experts it’s really not a true cost of credit. Often it includes costs such as origination fees, loan processing fees, and factors in the cost of points—the money you shell out to pay down the regular interest rate. As these upfront costs increase, so does your A.P.R., to the tune of half a percentage point or more over the basic interest rate.

It’s also important to know that the A.P.R. doesn’t include third-party costs you’ll have to pay for credit checks, surveys, inspection, and title insurance. It also does not capture total costs for adjustable-rate mortgages.

And if you’re going to sell or refinance your property in five to seven years after purchase, you shouldn’t necessarily choose your loan based on the lowest A.P.R. quoted. Here’s why. The A.P.R. for a thirty-year loan spreads interest out over the whole 30 years. But if you sell after five years, you’ve only spread the financing over those five years, so the A.P.R. is actually higher. You really need to crunch the numbers ahead of time.

There is a new Consumer Financial Protection Bureau that will look into mandating an “all-in” definition of finance charges when calculating the A.P.R. But until that happens, use all the information you can get about how a lender ends up with the A.P.R. number they quote to you. Then you’ll be able to make the best deal for your budget.

Contact me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas! I also specialize in Bethesda and Chevy Chase, as well as the sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.