Seller concessions is a credit towards your closing cost from the seller. It allow you to pay less at closing to make buying a home more affordable. Seller concessions can reduce your closing cost significantly and help you bring less money to closing, so you don’t have to use all of your savings to purchase your home.

How much can you receive?

Conventional Loans

The limit for conventional loans depends on how much you’re putting down:

• If your down payment is less than 10%, the seller can contribute up to 3%.

• If your down payment is 10% – 25%, the seller can contribute up to 6%.

• If your down payment is more than 25%, the seller can contribute up to 9%.

• If you’re buying an investment property, the seller’s contribution is limited to 2%, no matter what your down payment is.

FHA Loans

For all FHA loans, the seller can contribute up to 6%.

USDA Loans

For USDA loans, the seller can contribute up to 6% of the buyer’s loan amount. This is the one loan type where the seller concessions are not based on the home price or appraised value. Rocket Mortgage® does not offer USDA loans at this time.

VA Loans

VA loan rules dictate that the seller can contribute up to 4%. Seller concessions on VA loans may include payments toward a buyer’s judgments and debts, as well as VA funding fees.

Aug 6 2021, 3:57PM

Rates were excellent at the beginning of the week, but that began to change on Wednesday.  We were already well on our way to 3-week highs on Thursday, and Friday made it official.

Notably, these 3-week highs are still historically low.

Friday's main source of drama was the strong jobs report from the Labor Department.  The unemployment rate dropped from 5.9% to 5.4%, easily besting expectations of 5.7%.  This was accomplished despite a 0.1% increase in Americans who considered themselves part of the labor force (a statistic that is sometimes used to offset changes in the unemployment rate).  

The jobs report is always important, but this one and the next one are particularly important.  They provide 2 key data points that will help inform the timing of the Fed's decision to decrease its bond buying amounts (aka "tapering").  This would put upward pressure on rates, all other things being equal.

One member of the Fed laid out some specific numbers before the jobs report, saying we'd need to see around a million new jobs in the next 2 reports to justify a taper announcement on September 22nd.  At 943k with another 88k of upward revisions to the previous month, this one was close enough to keep the conversation open.

There are other ways to look at the job count, however. In cumulative/outright terms, we see that the labor market still has a long way to go before getting back to the pre-covid number of jobs.

The Fed is well aware of this--as are markets.  They are prepared to taper well before that gap is closed.  All they need to see is the "substantial further progress" that continues to be mentioned in official Fed communications.  This is why the bond market reacted so readily to the data.

In terms of 10yr Treasury yields/rates (a bellwether for longer term rates like mortgages), there are two ways to look at this week's rate spike.  The first would be as a breakout from the downward trend of the past few months.

The second would be as a return to the top of the recent range.

There's no way to know which of these options will win out ahead of time.  Traders are acutely aware of the Fed's deliberations on tapering.  They're eagerly awaiting any clarification from Powell at the Jackson Hole Symposium at the end of the month, and they're far more prepared for tapering this time around than they were in 2013, when it caused a massive jump in rates.

Ultimately, the Fed's course or action b.  Data depends on many factors including an unknown path for the pandemic (and pandemic-related policies at the state and local levels). 

Bottom line, stronger data increases the risks for rates, but uncertainty about covid and its impact on the economy could push back in the other direction.  We'll get some indication of the market's leanings next week, but we'll ultimately be waiting to see how covid numbers and economic data fare when a majority of the country has returned to school.  That makes the next month or two highly charged in terms of potential volatility in rates.

Source: http://www.mortgagenewsdaily.com/consumer_rates/982566.aspx

Allows certain borrowers to save more money when refinancing

FOR IMMEDIATE RELEASE7/16/2021

Washington, D.C. – Today, to help families reduce their housing costs, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) will eliminate the Adverse Market Refinance Fee for loan deliveries effective August 1, 2021.

To allow families to save more money, lenders will no longer be required to pay the Enterprises a 50-basis point fee when they deliver refinanced mortgages. The fee was designed to cover losses projected as a result of the COVID-19 pandemic. The success of FHFA and the Enterprises' COVID-19 policies reduced the impact of the pandemic and were effective enough to warrant an early conclusion of the Adverse Market Refinance Fee. FHFA's expectation is that those lenders who were charging borrowers the fee will pass cost savings back to borrowers.

"The COVID-19 pandemic financially exacerbated America's affordable housing crisis. Eliminating the Adverse Market Refinance Fee will help families take advantage of the low-rate environment to save more money," said Acting Director Sandra L. Thompson. "Today's action furthers FHFA's priority of supporting affordable housing while simultaneously protecting the safety and soundness of the Enterprises."

The vast majority of Enterprise borrowers have successfully exited COVID-19 forbearance. In April, approximately 2 percent of single-family mortgages guaranteed by the Enterprises remained in forbearance, down from a high of approximately 5 percent in May 2020. FHFA will continue to monitor the housing finance system, making policy adjustment in coordination with the Enterprises as necessary

source: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Eliminates-Adverse-Market-Refinance-Fee.aspx

FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).

Your FICO Scores consider both positive and negative information in your credit report. The percentages in the chart reflect how important each of the categories is in determining how your FICO Scores are calculated. The importance of these categories may vary from one person to another—we'll cover that in the next section.

The importance of credit categories varies by person

Your FICO Scores are unique, just like you. They are calculated based on the five categories referenced above, but for some people, the importance of these categories can be different. For example, scores for people who have not been using credit long will be calculated differently than those with a longer credit history.

In addition, as the information in your credit report changes, so does the evaluation of these factors in determining your FICO Scores.

Your credit report and FICO Scores evolve frequently. Because of this, it's not possible to measure the exact impact of a single factor in how your FICO Score is calculated without looking at your entire report. Even the levels of importance shown in the FICO Scores chart above are for the general population and may be different for different credit profiles.

Your FICO Scores only look at information in your credit report

Your FICO Score is calculated only from the information in your credit report. However, lenders may look at many things when making a credit decision, such as your income, how long you have worked at your current job, and the kind of credit you are requesting.

• What do FICO Scores ignore?

• What's in my credit report?

What categories are considered when calculating my FICO Score?

Payment history (35%)

The first thing any lender wants to know is whether you've paid past credit accounts on time. This helps a lender figure out the amount of risk it will take on when extending credit. This is the most important factor in a FICO Score.

Learn more about payment history

Amounts owed (30%)

Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO Score. However, if you are using a lot of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of defaulting.

Learn more about amounts owed

Length of credit history (15%)

In general, having a longer credit history is positive for your FICO Scores, but is not required for a good credit score.

Your FICO Scores take into account:

• How long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts

• How long specific credit accounts have been established

• How long it has been since you used certain accounts

Learn more about length of credit history

Credit mix (10%)

FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Don't worry, it's not necessary to have one of each.

Learn more about credit mix

New credit (10%)

Research shows that opening several credit accounts in a short amount of time represents a greater risk—especially for people who don't have a long credit history.

Source: https://www.myfico.com/credit-education/whats-in-your-credit-score

Rutherford, Lawson, Watson Coleman, Katko Introduce the HELPER Act

WASHINGTON, D.C. – Today, Representatives John Rutherford (FL-04), Al Lawson (FL-05), Bonnie Watson Coleman (NJ-12), and John Katko (NY-24) introduced the Homes for Every Local Protector, Educator, and Responder (HELPER) Act. This bipartisan legislation creates a new home loan assistance program that makes homeownership more accessible to first responders, including law enforcement officers, firefighters, EMTs, paramedics and teachers, by eliminating certain costly barriers like down payments and monthly mortgage insurance premiums.

Many of our nation’s first responders and educators face financial obstacles when buying a home in today’s competitive housing market, and as a result are often unable to achieve homeownership in the same communities they serve. The HELPER Act addresses this by establishing a new home loan program under the Federal Housing Administration (FHA) that creates a process for first responders and educators to affordably purchase a home. Similar to the VA Home Loan Program, the HELPER Act eliminates the requirements for a down payment and a monthly mortgage insurance premium (MIP).

“America succeeds when we invest in those who serve our communities,” said Rep. Rutherford. “This includes our teachers, paramedics, EMTs, law enforcement officers, and firefighters. We’ve already seen the success of the VA home loan program for our servicemembers. The HELPER Act builds on this success to extend a home loan benefit to first responders and educators, offering them loan assistance to purchase a home when it might not otherwise be possible.”

The idea for the HELPER Act was conceived by Samuel P. Royer, the national director for Heroes First Home Loans and a U.S. Marine Corps veteran. “I believe that American first responders deserve the same access to affordable housing benefits that I have as a veteran,” Royer said. ”I was inspired to do something to acknowledge their sacrifices for the greater good of the country.”

“The HELPER Act will provide a more streamlined home loan program that delivers access to affordable housing for our nation’s first responders and educators,” said Rep. Lawson. “Millions of Americans have experienced the hardships of COVID-19, and our frontline workers never wavered in doing what needed to be done during these challenging times. This legislation will assist them in finding affordable housing and eliminating barriers like a down payment requirement and a monthly insurance premium requirement.”

“Throughout the COVID-19 crisis the nation has leaned on the hard work and bravery of our first responders, but they’ve been there for us all along,” said Rep. Watson Coleman. “The HELPER Act recognizes this and will allow many of them the security that comes with owning a home and allowing them the opportunity to live in the same communities in which they serve.”

“The ongoing pandemic has put a long overdue spotlight on some of America’s most important unsung heroes. From teachers, to police officers, to paramedics, EMTs, and firefighters, we saw these professionals faithfully support our nation during the pandemic, and at times put their own lives at risk to uphold their duties,” said Rep. Katko. “Unfortunately, these heroes, who make great sacrifices for our communities, often are unable to find affordable housing in the communities they serve. That’s why, I’m proud to work with Representatives John Rutherford, Al Lawson, and Bonnie Watson Coleman to introduce the Homes for Every Local Protector, Educator, and Responder (HELPER) Act. This bipartisan bill establishes a federal program modeled after the VA Home Loan Program to provide targeted financial assistance to teachers and first responders and help them become homeowners.”

source: https://rutherford.house.gov/media/press-releases/rutherford-lawson-watson-coleman-katko-introduce-helper-act

Fannie Mae and Freddie Mac (the GSEs) have provided details for their streamlined refinance programs that were originally announced by the Federal Housing Finance Agency (FHFA) last month. The programs, named "RefiNow" by Fannie Mae and "Refi Possible" by Freddie Mac, will be available starting June 5 for Fannie Mae's borrowers but not until August 30 through Freddie Mac.

The programs are designed to encourage eligible low-income borrowers to refinance and lower their interest rates and monthly mortgage payments. In its original announcement FHFA said it expected borrowers who refinanced through the initiative to save between $100 and $250 a month.

While there are process differences between the two programs, their basic outlines are the same. The no cash-out loans are available to borrowers with existing loans with the respective GSE. Participating lenders are required to provide a minimum reduction of 50 basis points in the interest rate and $50 dollar monthly savings to borrowers refinancing through the loans.

The GSE mortgage being refinanced must be secured by a single-unit owner occupied residence which is current and on which there has been no more than one missed payment over the previous 12 months and none in the previous six months. The loan must have been seasoned for 12 months, but Freddie Mac appears to limit refinancing to loans with note dates less than 121 months earlier.

The Borrower's qualifying annual income cannot exceed 80 percent of the local area median income (AMI) and can have a credit score as low as 620 and a debt-to-income ratio as high as 65 percent. The resulting loan-to-value ratio cannot exceed 97 percent (although there are exceptions where certain types of second liens are involved.)

If an appraisal is required for the new loan, the GSEs will provide a $500 credit to the lender at the time the loan is purchased, requiring that the credit be passed to the homeowner. The 50 basis point upfront market refinance fee will also be waived for loans with balances at or below $300,000.

Sheila C. Bair, Chairwoman of Fannie Mae's Board, said of the new program, "Racial and income disparities in refinance take-up rates have persisted for far too long. With this initiative, we strive to narrow the gap. We thank FHFA for its strong leadership to help all eligible homeowners reduce their monthly housing costs by taking advantage of the historically low mortgage interest rates."

BY: JANN SWANSON
http://www.mortgagenewsdaily.com/

Big Hit to Second Home and Investment Mortgages

Mar 12 2021, 3:07PM

Fannie Mae announced March 10 that they are limiting new loans secured by second homes or investment properties to 7% of the overall loans they purchase (roughly HALF their historic levels!), effective April 1.  What does this mean to borrowers seeking investment/2nd home mortgages? Turns out, it means A LOT.

While Fannie did not add any new “loan level pricing adjustments” (the fees borrowers pay for various perceived risk factors) in the announcement, many mortgage lenders added (or will soon add) substantial costs to these loans. For example, Penny Mac (who buys large numbers of Fannie/Freddie loans from originating lenders), immediately added a 2.25% cost to new 2nd home mortgages, regardless of equity. The pricing adjustment for a new investment property loan with less than 25% equity rose to a staggering 5% of the loan size ($10,000 on a $200k loan!).

While not every investor raised their pricing adjustments immediately after Fannie’s announcement, most eventually will, as they seek to avoid closing second home/investment loans they can’t be certain Fannie/Freddie will purchase (due to the 7% cap mentioned above)

Note, these are just the NEW investor pricing adjustments based on Fannie’s announcement and substantial others still apply based on credit scores, loan purpose, property type, equity, etc. As a reminder, Fannie/Freddie also added a .5% cost to all refinances over $125K last fall as the pandemic increased defaults and forbearances.

The impact for certain housing markets (such as FL condos, which historically have large %’s of second homes/investment ownership) can’t be overstated. If you’ve been considering buying a second home, it’s critical you contact your lender immediately to discuss how this announcement will affect your loan’s rates and costs.

Fortunately, loans in process that are already locked will not be subject to the new adjustments, but floating loans almost certainly will be.

Bottom line, demand for second homes and investment properties will be greatly impacted by Fannie’s policy. Expect to see far more cash buyers for these situations, and (more than likely) far fewer bidding wars as the new pricing adjustmentsraise rates and costs. Outside investors may eventually purchase more of these loans (which is FHFA’s goal), but for the moment, prepare to pay substantially higher costs, or cash for that getaway condo or rental property!

Source:http://www.mortgagenewsdaily.com/channels/community/969950.aspx
BY: TED ROOD