Foreclosures Drop 35 Percent Year-Over-Year

Foreclosure activity is much slower this year than last.

According to foreclosure-tracking firm RealtyTrac, the number of national foreclosure filings plunged 35 percent in March 2011 as compared to March 2010, a statistic that reflects a more healthy housing market and more robust outlook for 2011.

A "Foreclosure filing" is defined as any of the following : a default notice, a scheduled auction, or a bank repossessions. Foreclosures filings were down in all but 8 states last month.

Activity remains concentrated, too. More than half of all bank repossessions can be tied to just a handful of states.

In March, 6 states accounted for 51% of activity.

1. California : 15% of all repossessions
2. Florida : 9% of all repossessions
3. Arizona : 7% of all repossessions
4. Michigan : 7% of all repossessions
5. Texas : 6% of all repossessions
6. Nevada : 5% of all repossessions

At the other end of the spectrum is Vermont. With just 5 repossessions for all of March, Vermont accounted for 0.008% of repossessions nationwide.

Distressed homes remain in high demand among today's home buyers, accounting for almost 40% of all home resales. It's no wonder, either. Distresses home typically sell at a steep, 15 percent discount as compared to non-distressed properties.

Buying foreclosures can be a great "deal". However, make sure you've done your homework.

Buying homes from banks is different from buying a homes from "people". Contracts and negotiations are different, and homes are often sold with defects.

If you plan to buy a Plymouth foreclosure, therefore, make you you speak with a licensed real estate professional before submitting a bid. You can research a home online and learn a lot of the process, but when it's time to purchase, put an experienced agent on your side.

Inflation Pressures Mounting; Mortgage Rates Rising

Inflation pressures are mounting in the United States. And, Friday, the Consumer Price Index should prove it.

More commonly called "The Cost of Living Index", CPI measures cost changes in the typical items bought by American households. Among others, CPI measures goods and service in apparel and recreation; medical care and education; and housing and transportation.

The March CPI data is expected to show an increase in the cost of living for the 17th straight month -- a reading that would take CPI to an all-time high.

If you've filled your gas tank, sent a child to school, or shopped for groceries, you're likely not surprised. Household budgets have been squeezed from all angles lately. The dollar's purchasing power is waning.

This is inflation, defined. And a weaker U.S. dollar is bad for mortgage rates. 

The connection between the U.S. dollar and mortgage rates is direct. When inflation pressures rise, mortgage rates in Maple Grove tend to rise, too, because mortgage rates are based on the price of mortgage-backed bonds -- a security bought, sold and paid in U.S. dollars

Inflation, in other words, renders mortgage bonds less valuable to investors, all things equal, so investors sell them as inflation pressures grow. More sellers leads to lower prices which, in turn, causes mortgage rates to rise.

It's why March's Cost of Living data is so important to rate shoppers and home buyers. Higher levels of CPI can harm home affordability, and stretch your household budget uncomfortably.

As Memorial Day approaches, gas prices are projected to spike, offering little relief from the inflationary pressures in the economy. It's one reason why mortgage rates should trend higher over the next few months.

If you're wondering whether to lock or float your mortgage rate, consider locking in. At least today's rates are a sure thing. Tomorrow's rates could be much higher.

Get Your Applications In : FHA Mortgage Insurance Premiums Rising 0.25 Percent April 18, 2011

After this week ends, the FHA is raising mortgage insurance premiums on its new Minneapolis borrowers. It's the FHA's third such increase in the last 12 months.

Beginning with FHA Case Numbers assigned April 18, 2011, mortgage insurance premiums will be higher by 25 basis points per year, or 0.25%.

Against a $200,000 loan size, the MIP increase adds $500 to an FHA-insured borrower's annual cost of homeownership. All new FHA loans are subject to the increase -- purchases and refinances.

Existing FHA-insured homeowners across Minnesota are unaffected. Premiums do not rise for loans already made.

The FHA is increasing its mortgage insurance rates because, as a group, the FHA is insuring a much larger percentage of the U.S. housing market. 

In 2006, the FHA held a 4 percent market share. By 2010, that share ballooned to 19 percent and, today, it's estimated to be even higher.

In its official statement, the FHA says that the quarter-point MIP bump will "significantly strengthen" its reserves which are depleted because of delinquencies and defaults. By law, the FHA's capital reserves must meet certain levels. 

Therefore, to meet these requirements, the FHA is rolling out its new mortgage insurance premium schedule:

• 15-year loan term, loan-to-value > 90% : 0.50% MIP per year
• 15-year loan term, loan-to-value <= 90% : 0.25% MIP per year
• 30-year loan term, loan-to-value > 95% : 1.15% MIP per year
• 30-year loan term, loan-to-value <= 95% : 1.10% MIP per year

In order to calculate what your FHA monthly mortgage insurance premium would be, multiply your beginning loan size by your insurance premium in the chart above, then divide by 12. 

The FHA also charges a 1 percent, up-front mortgage insurance premium at closing. That figure remains unchanged.

Retail Sales Report Should Spell Higher Mortgage Rates For Wednesday

Consumer spending is alive and well, it seems -- unwelcome news for today's home buyers. 

Wednesday, the Census Bureau will release its March Retail Sales figures and the report is expected to show higher sales receipts for the 9th straight month. A strong reading like that should spell higher mortgage rates in Plymouth and nationwide.

The connection between Retail Sales and mortgage rates is fairly tight. Retail Sales are "consumer spending" and consumer spending accounts for the majority of the U.S. economy. The U.S. economy, of course, is a dominant force in setting the direction in which mortgage rates are headed.

For example, in 2010, it was a weak economy and murky outlook that helped drive mortgage rates to all-time lows. Since last year, however, the jobs market has started its recovery, monthly receipts have returned to all-time highs, and the Federal Reserve is revising growth estimates for 2011.

Not surprisingly, mortgage rates have reversed, too.

As compared to 6 months ago, conforming rates are higher by 0.750%. Home affordability across Minnesota is taking a hit. Plus, the stronger the economy appears to be, the more likely for mortgage rates to climb more.

It's why tomorrow's Retail Sales report is so important. 

If you're under contract for a home, or even evaluating the merits of a refinance, there's a lot of risk in "floating" your mortgage rate. The more prudent plan is to find a rate at which you're comfortable with the payment, and lock it in.

And you may want to take that lock sooner than you had planned -- if only to protect your monthly payments. Once tomorrow's Retail Sales report hits, it may be too late. Especially if receipts rise for the 10th straight month.

The Retail Sales report is due for release at 8:30 AM ET.

What's Ahead For Mortgage Rates This Week : April 11, 2011

Mortgage markets worsened last week as energy costs remained high, and jobs data looked strong. The safe haven buying that characterized the March mortgage market has subsided.

it's driving mortgage rates higher across Wisconsin.

Conforming and FHA mortgage rates rolled back 8 weeks worth of improvements last week and are now back to mid-February levels. The rise in rates is hurting refinance activity and home affordability.

The biggest story from last week figures to carry forward into this one -- the Federal Reserve's take on inflation.

In the minutes from its March meeting, the FOMC was shown to have discussed the possibility of raising the Fed Funds Rate ahead of schedule, and to be watching near-inflation closely. Both developments are in response to a growing economy with rising price pressures.

Mortgage rate shoppers should take note.

Inflation is a mortgage-rate killer. When inflation is present in the economy, all things equal, mortgage rates rise. Sometimes by a lot. And, usually, just the expectation of inflation is all it takes to make mortgage rates jump.

That's what we saw last week.

This week, keep a close watch on new inflation-related data set for release. This includes Tuesday's Retail Sales data, Wednesday's Producer Price Index, and Thursday's Consumer Price Index. Each release can potentially move mortgage rates although, if recent trends are an indication, expect for rates to rise.

Mortgage rates in Maple Grove remain historically low. If you're shopping for a mortgage, consider locking as soon as you can.