Author Archive

Please join me in welcoming Mike Price as the latest member of the Mortgages Unzipped community! Mike is joining Zillow in a part-time capacity and will serve as Editor for Mortgages Unzipped.  I’ve enjoyed managing the blog since it was launched in September of 2008, and I will now hand the blog editing duties and responsibilities over to Mike over the next several days.

Mike has been involved with real estate technology and marketing solutions since 1995, and he is currently the President and Founder of ML Broadcast. He has overseen a number of pioneering technologies, including some of the first searchable listing databases and early Web marketing and advertising strategies. In 1999, he served as CEO at one of the first application service providers in the industry to offer a system that allowed brokers and agents to manage almost all aspects of a transaction from listing to close. Mike has been a stalwart member of the “RE.net,” and he has exceptional blogging skills and a respected social media presence.

Mike has been a friend of Zillow for several years, and I know I speak for the entire Zillow team when I say we look forward to his involvement!

Looking back on 2009, it appears that the average 30-year fixed mortgage rate was on a roller coaster ride.  The rate dipped below 5.0% for much of January, then it spiked up and down during the spring before taking a long drop to a near all-time low of 4.56% on November 30th.   

The roller coaster is headed back up again, and this time it may be a steep climb.  The Mortgage Bankers’ Association forecasts that 30-year mortgage rates will increase through 2010 to end the year at 5.7%.  Freddie Mac predicts an even grimmer future, expecting rates to get to 6.0% in 2010.  Morgan Stanley thinks they’ll go even higher to 7.5% or 8% … levels we haven’t seen since the year 2000.   

The reason?  The Federal Reserve’s program to buy $1.25 trillion in mortgage-backed securities has kept rates at artificially low levels in 2009.  However, the program is set to end in spring of 2010.  The recent climb in rates is due to the market reacting to this reality, with mortgage-backed securities traders anticipating the run-out of Fed funds.

What does this mean for borrowers?  If you’re thinking about buying a home or refinancing your existing mortgage, now might be the time to act.  Let’s compare a hypothetical mortgage today vs. one in the near future:

A $200,000 30-year fixed loan (assuming 20% down) today, when the average 30-year fixed rate is near 5.0%, would result in a monthly P&I payment of $1074.  Looking forward, if rates really do increase to 6.0% by the end of next year, this loan would result in a monthly P&I payment of $1199 –  $125 per month more expensive than today, or $45,000 more expensive over the life of the loan. 

If you want to make this same comparison on your own existing or dream home, just use this easy mortgage calculator.  Then, if you decide it’s time to buy or refinance, you can anonymously request custom loan quotes on Zillow.

Please join me in welcoming Chris Birk as the latest contributor to Mortgages Unzipped!

Chris has written about real estate and business for newspapers and magazines for the better part of a decade. He now specializes in writing about government loan programs and educating military homebuyers for VA Mortgage Center.com. Chris also teaches journalism and media writing at a private Midwestern university. 

We look forward to reading your future posts, Chris!

Fannie Mae and Freddie Mac announced yesterday that they are suspending evictions for borrowers facing foreclosure during this holiday season.   The suspension is in effect from December 19, 2009 through January 3, 2010. Anyone living in foreclosed properties that are held by Fannie Mae or Freddie Mac will not face eviction during this timeframe.  This is true for both owner-occupiers and tenants.   

The reason for this suspension is holiday goodwill.  Michael J. Williams, President and CEO of Fannie Mae stated:

“We’re taking this step in support of struggling families who have unfortunately found themselves facing foreclosure.  No family should have to face the prospect of being evicted during the holiday season.” 

Freddie Mac CEO Ed Haldeman added:

“If the property is occupied, our attorneys will halt the eviction during this holiday moratorium.  In these extraordinary times, we want to provide a greater measure of certainty to these families during the holidays.”

In addition to this action, Fannie Mae stated that it will also support similar efforts established by the servicers it works with, such as Citigroup’s recent announcement that they are suspending foreclosures for 30 days.

Please join me in welcoming Colin Robertson as the newest contributor on Mortgages Unzipped.

Colin began his career in the mortgage industry as a loan originator for a wholesale mortgage lender and has since created a number of blogs based on his experience.  His first blog, The Truth About Mortgage, focuses on the consumer home loan process and provides industry-specific news, while The Truth About Credit Cards provides tips and tricks to ensure homeowners have pristine credit when applying for that all-important mortgage.  In his spare time, he enjoys music production, cooking, travel, cycling, and photography.

We look forward to reading your future posts, Colin!

The $8000 tax credit for first-time home buyers has been extended through April 30, 2010.  It was previously due to expire November 30, 2009.  Not only has it been extended, but it has also been expanded to include more buyers.

Details

• The $8000 tax credit for first-time homebuyers is extended for those who sign a contract by April 30, 2010 and close by June 30, 2010.
• Homebuyers who have lived in their current residence at least five years are now eligible for a new $6500 tax credit on their primary residence.
• Couples earning as much as $225,000 a year and individuals earning up to $125,000 qualify.  This is an increase from $75,000 for individuals and $150,000 for couples.
• Tax credit is limited to homes worth $800,000 or less.
• Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.
• Members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010, have an extended deadline of April 30, 2011.

How to get the credit

• Buyers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment.
• Those who want immediate refunds can amend their tax returns for 2008 to claim the credit.

Added bonus

Mortgage rates are at historically-low levels.  Combined with the tax credit, now is a great time to secure a super-low rate on a purchase loan.  Find out what rate you qualify for…anonymously…on Zillow Mortgage Marketplace.

Freddie Mac just released their quarterly Refinance Report, which shows that half of borrowers who refinanced a conventional loan during July-September 2009 lowered their mortgage rate by at least 17 percent, or 1.1 percentage points below their old rate.  The accumulated savings from all of these refinances amounts to $3 billion over the first year of the new loans.

What’s driving people to refinance their homes?  Historically low mortgage rates. 

Current mortgage rates are significantly lower than they were just a few months ago. Today’s average 30-year mortgage rate of 4.78 percent is now 77 basis points (or 14 percent) lower than it was in June, when the 30-year fixed mortgage rate was at 5.55 percent, the highest level this year.

That means that on a $200,000 loan (assuming a home value of $250,000), the monthly principal and interest payment would now be $1,046.91 versus $1,141.86 for the same loan in June, saving the borrower $94.95 per month, or $34,182.00 over the life of a 30-year loan.

If you are thinking about refinancing, now is a great time. An easy way to shop for a mortgage is through Zillow Mortgage Marketplace.

• Submit an anonymous loan request, and receive unlimited custom quotes from lenders.  On average, borrowers receive 26 quotes within seconds. 
• Sort and filter quotes by APR, rate, fees, monthly payment, lender rating, distance to the lender, or True Cost, which incorporates interest rate, fees, points, and time into one easy-to-compare number.
• Use the interactive Break-Even graph to determine how long you need to live in your home to offset the cost of refinancing.  This graph also show the cumulative savings that will occur over the life of the new loan.
• After comparing quotes side-by-side and reading lender reviews and ratings, you decide which lenders to contact…they don’t call you.

Zillow Mortgage Marketplace recently launched a unique Break-Even Point graph on every loan quote borrowers receive from lenders.  This graph helps borrowers who want to refinance determine their “break-even” point, which is when they would start saving enough from a new loan to offset the costs of refinancing.

After anonymously submitting a refinance request, borrowers are presented with custom quotes from a network of thousands of lenders.  When borrowers click on an individual quote to get more information, they can view this new graph which indicates how long they need to live in their home to offset the costs refinancing.

In addition, the graph shows the cumulative savings that would occur over the entire life of the loan.  Borrowers can use the interactive feature to scroll across the graph to see the accumulated savings in each year.

On Zillow Mortgage Marketplace, the average borrower gets 24 quotes in 6 seconds.  With the launch of this new feature, Zillow calculates and creates an interactive Break-Even Point graph on each refinance quote instantly, something that would be very difficult for borrowers to do manually.

Given the historically low mortgage rates we’ve seen this year, refinancing a mortgage is something that many homeowners are considering right now.  This new graph helps borrowers quickly and easily compare the break-even point on all the refinance quotes they receive to determine which loans make the most financial sense for them.

If you are looking to refinance and want to try it out, submit a refinance loan request — anonymously — on Zillow Mortgage Marketplace.

Refinance requests on Zillow Mortgage Marketplace are up 20% so far this month versus August.  The chart below shows that lower mortgage rates appear to be driving this spike in demand.

In an effort to continute to prop up the financial markets, the Federal Reserve’s policy-setting panel just announced that it plans to continue purchasing mortgage-backed securities into next year.  This activity should help to keep mortgage rates at low levels.

So with rates this low, now is a great time to see if it makes sense to refinance.

Despite signs of an improving housing market, homeowners continue to be under financial stress.  According to Reuters, the 30-day mortgage delinquency rate increased again in August, reaching a new all-time high.

The chart above shows significant year-over-year increases in the delinquency rate.  The August ’09 rate of 7.58% increased 55% versus the August ’08 rate of 4.89%.  Month-to-month, the rate increased 3.6% versus the July ’09 rate, which was 7.32%.

This delinquency rate is an important number to watch, as it is a leading indicator of home foreclosures and personal bankruptcies.

Looks like we’re not out of the woods yet.