Thursday, March 26, 2020

MMG Tips & News




Florida orders two-week delay in property tax payment deadline.



The state on Thursday ordered a two-week delay in Florida property tax payments that were due March 31.


The due date is now April 15, said state Rep. Chip LaMarca, R-Lighthouse Point, who had urged Gov. Ron DeSantis to grant an extension.


 


Source: https://www.sun-sentinel.com/coronavirus/fl-ne-florida-property-tax-payment-coronavirus-extension-20200326-2ip4tgoqfffr3eszf3tq7tqmeu-story.html



Tuesday, March 24, 2020

Rents are increasing at double the rate of inflation



 


Single-family home rents increased by 2.9% in the year to January 2020, increasing pressure on stretched household budgets.


Many would-be renters are finding it harder to rent; and there’s a knock-on effect for those who are renting while saving for a mortgage down payment.


CoreLogic says that its Single-Family Rent Index decreased slightly from the 3.2% year-over-year increase seen in January 2019. They are also well below the 4.2% peak of 2016.


“The single-family rental market benefited from low unemployment rates over the past year, resulting in an increase in rental demand,” said Molly Boesel, principal economist at CoreLogic. “However, rents are increasing at about double the rate of inflation, which has negatively impacted affordability.”


Beyond the headline stats, the index shows that it is lower-end rentals that continue to see larger increases than the high-end segment.


Properties with rent prices less than 75% of the regional median, increased 3.5% year over year in January 2020 (in January 2019, the annual increase was 3.9%).


Meanwhile, properties with rent prices greater than 125% of a region’s median rent, increased 2.6% in January 2020, down from a gain of 2.9% in January 2019.


Fastest rising rents

Phoenix, AZ, remains the metro where single-family rents are rising the fastest (6.4%). This has been the case for 14 consecutive months.


Source: Rents are increasing at double the rate of inflation



Monday, March 23, 2020

Median home price is more affordable than in the 90s says Arch MI



 


Mortgage insurer says this is the case in most states but there are exceptions.


Strong increases in home prices may be challenging for first-time buyers but affordability of median prices homes is booming in many states.


Although there are exceptions, Arch Mortgage Insurance Company (Arch MI) says that its analysis shows that in some states affordability is at its highest for at least 30 years.


This is despite a 50% increase in home prices nationally since 2012.


“This may be surprising because we tend to focus on home prices rather than affordability,” said Dr. Ralph G. DeFranco, Global Chief Economist for Arch Capital Services Inc. “Affordability accounts for the offsetting factors of low interest rates and a 28% increase in median household income since 2012. Historic norms are a more logical basis of comparison than the easier-to-recall market bottom in 2012, when prices had over-corrected below long-term fundamental values because of the foreclosure crisis.”


The analysis finds that, nationally, it takes about 29% of a median household’s income to make the monthly mortgage payment (assuming 10% down) now, compared to the 34% average in 1987–2004, which is regarded as a historically “normal” housing market.


Higher priced markets, especially California and Hawaii, are notable exceptions.


However, while larger cities have seen a slower pace of price growth, some smaller markets such as Chico, California, and Jacksonville, North Carolina, are seeing stronger price acceleration.


Risk of lower prices

The Arch MI Risk Index assesses the risk of home prices declining based on a statistical model based on nine housing market health indicators.


Currently, the risk of a decline in prices nationally in the next two years is low at just 10%; the average of the past 30 years is 20%.


The states with the highest risk of having lower home prices in two years are Colorado and Oregon, both at 24%, followed by California at 22%, Washington at 21% and Alaska at 19%.


Among the 100 largest metros, the Miami, Florida, area has the highest Risk Index value (36%), followed by Lakeland, Florida (35%); Denver, Colorado (34%); Riverside-San Bernardino-Ontario, California (30%); and Portland, Oregon (27%).


Source: Median home price is more affordable than in the 90s says Arch MI



Wednesday, March 18, 2020

How to Remove Your Name From a Joint Credit Card



 


To remove your name, you’ll need to pay off and close the joint account. Find out the steps to close a joint credit card and how it affects your credit.


A joint credit card may be a good option in a number of scenarios. Maybe you want to simplify finances with your spouse, or perhaps you’d like to help your child improve their credit. If you have a joint credit card but no longer want it because circumstances have changed, you may want to remove your name from the account. Sounds easy, right?


Not necessarily. Unlike with an authorized-user credit card, where you can easily remove yourself from the primary user’s account, you’ll need to pay off and close a joint account if you no longer want the card. And because it’s a joint account, both cardholders will need to agree to closing it.


How to Close a Joint Credit Card

Fortunately, it’s fairly easy to close a joint credit card, as long as both parties agree to terminating the account. Here are the steps you’ll need to follow.


Pay off the balance. If you have a balance on your joint credit card, your card issuer will likely require you to pay it off before you close the account. If your issuer doesn’t require this, you’ll be on the hook for your minimum payments each month until the card is paid off. Continuing to pay off the balance could be challenging if you are closing the account due to a breakup or divorce, so try to come to an agreement with the other account holder to zero-out the balance before shutting the account.

Consider a balance transfer card. If you’re unable to pay the balance in full before closing the account, you could transfer the remaining amount to a balance transfer credit card in your name. These cards offer a low or 0% introductory interest rate for a set period of time, during which you can pay off the transferred amount. You’ll be responsible for paying off the transferred balance, but if you’re concerned the other party won’t hold up their end of the deal, this move could help protect your credit. Ideally, try to come to an agreement with the other account holder to split the balance.

Redeem rewards. If your joint credit card earns rewards, take a close look at your accumulated rewards. If you’ve earned cash back or points, redeem them before you close the account. You can split them in half with the other borrower or divide them in a different way.

Call your credit card issuer. Once you pay off the balance and redeem rewards, call your credit card issuer to let them know you’re closing your joint card account and make sure you’re meeting all prerequisite terms.

Confirm closure and monitor the request. The credit card issuer may send you an email or letter that asks you to confirm your request to close the account. Follow the instructions carefully so the account can be closed as quickly as possible. Check your credit report to make sure it no longer appears there.

Can Closing a Joint Credit Card Hurt Your Credit?

If you’ve got other credit card debt, closing a joint credit card can cause your credit scores to drop. Losing the available credit on the joint account will affect your credit utilization ratio, or the amount of credit you’re using divided by the total amount available. A low utilization ratio helps credit scores, while ratios higher than 30% can hurt them. Credit utilization is the second most important factor in your FICO® Score* , behind only payment history.


Your credit score may eventually take a small hit if you’ve had the joint credit card for many years. The age of your accounts plays a role in your credit scores, with a longer credit history contributing to a better score. However, if you close the joint account in good standing, it will remain on your account for up to 10 years, so the effect will not be immediate and should be minimal if you maintain good credit habits otherwise.


The good news is that while both of your credit scores may drop initially after you close the card, they can return to what they were before, as long as you keep making timely payments and open your own credit accounts that bring up your limit.


Wrapping Things Up

In a perfect world, you’d be able to remove your name from a joint credit card and move on with your life. Since this isn’t always possible, you’ll likely have to close the account for good. Fortunately, you can do so in a relatively short time period, especially if you and the other borrower can agree on how to pay off the remaining balance.


Source: How to Remove Your Name From a Joint Credit Card



Tuesday, March 17, 2020

A little insider info!



 


BY: MATTHEW GRAHAM

What The Fed’s Emergency Rate Cut Means For Mortgage Rates

Decrease Font SizeTextIncrease Font SizeMar 15 2020, 5:45PM

There are a lot of words here. If you have a mortgage you might ever refinance (and especially if you think Sunday’s emergency Fed news means you can now get a lower rate), read every last one of them.


 


It’s extremely important for the sound functioning of the mortgage market that consumers read and understand the following: THE FED DID NOT JUST CUT YOUR MORTGAGE RATES!


I’m not a loan officer. I don’t play one on TV. I don’t benefit from the decision you make on locking a mortgage rate. I’m just a guy who watches and understands the day-to-day movement in average mortgage rates better than just about anyone. It’s one of the few things in this life I will claim to be the best at. You can take what I’m saying to the bank, literally and figuratively.


I can’t count the number of articles I’ve written or the variety of ways I’ve reported mortgage rates moving in the OPPOSITE direction as a Fed rate cut/hike, or simply staying put despite a Fed cut/hike. Here’s a recent example from March 3rd.


The extent to which consumers and especially financial news media (who should REALLY know better by now) mistakenly believe the fallacy of the Fed dictating mortgage rates is truly unfortunate. Even now, you’re reading this article and some of you will still be contacting your originators asking if you can get a lower rate. But it doesn’t work like that. I urge you to avoid buying into misinformation. Make an effort to elevate your level of understanding. Start here:


Part 1: The Fed Funds Rate Itself


The Fed funds rate doesn’t directly affect any mortgage rates apart from home equity credit lines. While it often moves in the same direction as the traditional 30yr fixed mortgage rate in the long run, there are months and even years of time when they seemingly have nothing to do with each other.


This makes sense for a few key reasons. The Fed Funds Rate is a different animal than the mortgage rate. It applies to loans with a term of up to 1 day. That’s a far cry from the average mortgage, and investors approach those loans with completely different sets of priorities. That’s why we sometimes see longer and shorter term rates move in OPPOSITE directions (which accounts for the “inverted yield curve” phenomenon that made news in 2019 when 10yr Treasury yields were lower than all of the short-term rates under 2 years, including Fed Funds).


But even if long and short term rates always moved in the same direction, there’s a more important reason that mortgage rates might not follow the Fed. The bonds that dictate mortgage rates trade thousands of times a day. Mortgage lenders themselves update their rates at least once a day. In contrast, the Fed only meets to consider changing its rate 8 times a year, barring emergencies (like today). This means mortgage rates can and do move well in advance of Fed rate changes. Indeed, the behavior of longer-term rates like mortgages can often predict the market conditions that prompt the Fed to make a move.


Bottom line: the bond market (which includes mortgages rates) has been able to react to coronavirus implications for weeks, and the fed is just getting caught up to market realities. They’re a battleship in a river, and that river has been swift. If you need more convincing on this particular point, here is a more detailed conversation.


Part 2: What About the New QE?


QE = Quantitative Easing (the term for the Fed’s large-scale bond buying programs designed to lower interest rates and encourage free flow of lending/capital).


If you’ve been reading part 1 and thinking to yourself “ok smart guy, but what about the new mortgage bond buying the Fed just announced today?” Congratulations! You understand more than 99% of the population about what matters. The Fed did indeed announce new mortgage bond buying as a part of its QE package today. This will help restore the correlation between 10yr Treasury yields and mortgage rates, but it WON’T immediately restore the normal space between the them.


While mortgage rates definitely take cues from the broader bond market (especially when markets are relatively calmer), they move for several other reasons. That caused a lot of head scratching this week as mortgage rates jumped at the fastest pace EVER while many savvy consumers were still waiting for them to drop as much as Treasury yields had dropped.


One of the biggest reasons for the mortgage vs Treasury disconnect was a massive supply glut of new mortgage debt caused by rampant refinance demand recently. After all, even if people felt like rates SHOULD BE lower, they nonetheless hit new all-time lows last Monday and successively broke 3-year lows in few weeks prior. This flood of mortgages needed to be sold to investors in order for mortgage lenders to keep lending. But investors were no match for the unprecedented spike in supply. Like any marketplaces with way too many sellers and not enough buyers, prices rapidly fell, and falling prices on mortgages equate to higher rates for consumers.


Supply must also be considered from the lender’s standpoint. Even in cases where lenders still had money to lend, the record surge in refinance demand forced them to raise rates simply to slow the flow of new business.


Supply may have been the biggest issue for the mortgage market this week, but it wasn’t the only issue. Mortgage investors were also spooked by the speed of the decline in rates heading into March. When consumers pay off their old mortgages faster than expected (because they’re refinancing), mortgage investors earn less interest. That gives them another compelling reason to pay less for mortgage debt. And again, mortgage investors paying less for mortgages = higher rates.


To add insult to injury, 10yr Treasury yields moved significantly HIGHER throughout the week. So even if mortgage rates could have overcome all of their own specific issues, their typical guidance giver was still telling them to move higher.


Bottom line: mortgage rates have had no reason to move lower this past week and every reason to move higher. The Fed’s QE (just announced) sounds like a lot at $200 bln, but in this market, it won’t even cover 2 months’ worth of new mortgage supply. It’s a token handout meant simply to ensure the mortgage market continues to function smoothly, and not nearly enough to drop us instantly back to all-time lows. It’s a tourniquet, not a panacea.


Where rates go from here will depend on where the bond market goes. To be sure, there’s a very good chance that yields will stay extremely low and move lower due to what many see as a fairly large and inevitable recession. If that increasingly looks to be the case, mortgage rates will gradually return lower, BUT–and this is the important “but”–MORTGAGE RATES AREN’T DROPPING 0.50% TODAY AND THEY’RE NOT ANYWHERE CLOSE TO 0%. They were a lot closer to 4% on Friday afternoon (many scenarios were pricing-out higher than that).


By getting back into buying mortgage debt, the Fed is giving rates a fighting chance to head back toward all-time lows. It definitely won’t happen overnight and it isn’t a guarantee.


So what should you do?


I get asked for advice on rates more and more as the years go by, but clairvoyance remains elusive. I’ve never felt it wise or responsible to offer blanket advice to people with different scenarios and different levels of risk tolerance–especially when I can’t predict the future. Tonight is as close to an exception as we’ll get. Reason being: rates rose so much last week that it took the pressure off consumers who wanted to lock a lower rate. All you could do was to wait for things to come back in a friendlier direction.


As such, I would give anyone the same guidance right now:


If you haven’t done so already, make sure your originator has what they need in order to lock your loan when the time is right. Make a game plan. Talk about where rates are now and what rate you’re looking to lock. They HAVE to have what they need from you in order to lock, and they may not have a very big window in which to pull the trigger (that window was less than a few hours wide at the all-time low rates last Monday morning).


Above all else, please don’t call them and ask if you can get a lower rate now. Don’t ask them if the Fed just cut mortgage rates to 0% or if your rate is now going to be 0.50% lower (that could happen, but it didn’t happen today). I can give you the answer right here:


You can’t get a lower rate right now just because the Fed cut rates again

If you didn’t check on Friday afternoon, rates got a lot higher than you may have realized.

You CAN, however, probably get a lower rate at some point in the coming weeks thanks to the Fed’s reinvigorated mortgage bond buying efforts

Lower rates aren’t immediate or guaranteed, so make sure your originator has what they need from you in order to lock it when and if your desired rate becomes available


Source: What The Fed’s Emergency Rate Cut Means For Mortgage Rates