It also reiterated plans to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is “picking up following its severe downturn” and that financial markets have “improved further”.

It’s the second consecutive post-FOMC statement in which the Fed appears somewhat optimistic — a signal that the recession will end soon, or has already ended.

That said, the economy still has some soft spots and the Fed made a point to single them out.  Each poses a distinct threat to economic recovery.

1. Ongoing job losses
2. Sluggish income growth
3. Tight credit conditions

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to honor its $1.25 trillion commitment to the mortgage bond market.

However, the FOMC changed its timeframe on the mortgage-backed bond buys, extending its deadline to March 2010.  This move should help the Fed keep mortgage rates in the Dayton, Ohio area from rising too high as the economic expansion takes hold.

Market reaction to the Fed’s press release is positive.  After an early day sell-off that drove rates higher by about a quarter-percent, most of the pressure is easing.  Pricing is worse on the day overall, but well off its lows.

The FOMC’s next scheduled meeting is November 3-4, 2009.

Mortgage rates in Dayton and the nation are on the move…

Since Memorial Day, conforming mortgage rates have jumped by more than 1.125 percent, adding thousands of dollars to the annual cost of home buying a home in Dayton or any of the surrounding areas.  That is really not what we need in today’s challenging market.

To the casual observer, the moves may seem random or just more of the up and down we may have come to expect.  There’s a reason this is happening, however.

• It starts with inflation.
• As an economic force, inflation erodes the value of the U.S. Dollar.  Left unchecked, it drives up the Cost of Living as each dollar “buys less” at the supermarket, gas station, or anywhere else.
• But with respect to mortgage rates and what you will have to pay when you buy a home in the Dayton Ohio area, inflation’s impact is more immediate.  Because inflation devalues the dollar over the long-term, it renders long-term mortgage bonds a less attractive investment for traders.
• If bond investors are repaid in U.S. Dollars, after all, it would make the investment worth less if the dollar is in an inflationary free fall.
• Stay with me here… I know it is boring but if you are thinking of buying a home in Dayton or even selling a home in Dayton Ohio metro area this is stuff that impacts what you can afford to buy and or what your home may be worth…
• Therefore, in situations when inflation is likely to present, we find that traders often sell out of their mortgage bond positions which, in turn, drives down the bond prices.  Then, because bond yields move in the opposite direction of bond prices, rising rates are the inevitable result.

Lately, Wall Street is fearing inflation for a number of reasons:

1. Job losses are slowing, adding to consumer spending expectations
2. Gas prices have risen 41 days in a row
3. The federal government is increasing the money supply

These 3 factors — plus a few others — are all coming to a head around the same time and traders are getting defensive with their portfolios.  As a result, they’re selling their mortgage bond positions and it’s driving mortgage rates higher for Dayton, Ohio home buyers.

Rates may continue to trek toward 7 percent through July and August, or they may retreat toward 5 percent.  We can’t know for sure.  What we can know, though, is that volatility in rates should continue until the economic picture gets more clear. That could be next week, or next year.

For now, be ready to lock at a moment’s notice.  Mortgage rates are changing quickly.

So, if your loan officer says you may want to lock… consider the risks of not doing just that…

Beginning March 7th there is new buying power in Dayton Ohio Real Estate.  The Department of Housing and Urban Development, HUD, has authorized the raising of loan limits to $271,050 to $729,750 in high cost areas.  Dayton Ohio Mortgage Brokers should all be able to offer these new limits to potential buyers.

Robert C Weaver Federal Building that houses HUD in DC

Dayton Ohio Mortgage Brokers See Increased Dayton FHA Mortgage Limits

The new loan limits will effect all counties surrounding Dayton Ohio.  Dayton Ohio Mortgage Brokers are now able to offer the following new Dayton FHA Mortgage limits for these areas:

• Montgomery County – $271,050
• Greene County – $271,050
• Butler – $337,500
• Warren County – $337,500

These counties will include these neighborhoods: Centerville, Springboro, Washington Township, Dayton, Kettering, Oakwood, Bellbrook, Sugarcreek, Beavercreek, Fairborn, Franklin, Middletown, Waynesville, Xenia and several more.  For a complete list of Counties in Ohio visit Hud’s website.

For more information on several of these communities you can visit: Dayton Ohio Communities.

What does this mean for Dayton Ohio Real Estate?

This temporary increase in the Dayton FHA Mortgage limits should enable Dayton Ohio Mortgage Brokers to offer more stable loans to borrowers.  It will help to provide economic stability to Dayton Ohio residents and also hope to bring some much needed relief to the Dayton Ohio Real Estate Market.  This should inject much needed liquidity into the Dayton Ohio Real Estate market.

    “Is the lender required to honor a pre-approval?  My lender pulled credit and said everything was great.  Now two weeks later after all of the vendor work they are saying my credit doesn’t qualify based on the same report they originally pulled.  They claimed to have missed something before.  What should I do?” 

Read: Dayton Ohio Mortgage Broker Terms: Revealed for more in depth definitions.

This is a huge issue in the Dayton Ohio Mortgage Broker industry and frankly it drives me crazy.  Which brings me to the pressing issue: 

What is the difference between a Pre-Approval and Pre-Qualification?

If you are starting your Dayton Ohio home search you must know the difference.  Not having the correct information can cost you thousands.

What is a Dayton Ohio Mortgage Brokers Pre-Approval?

A written commitment from the lender after reviewing income, debts, assets, employment history and any other resources that could help prove the credit worthiness of the client.  A pre-approval is basically underwriting a file without a property address.  The final approval is pending an appraisal, title search and no change in the borrowers income, assets, employment, etc.  As a Dayton Ohio Mortgage Broker when I issue a pre-approval I do the following things to ensure that the loan will close:

1. Ask about the sources of income to make sure that they can be verified
2. Pull a tri-merge credit report
3. Run the file through an automated underwriting system
4. Ask for proof of assets to ensure they are from an acceptable source

As a Dayton Ohio Mortgage Broker I would suggest that you always go the extra step to get a pre-approval, not a pre-qualification.  Read the following article from the National Association of Realtors as to why a pre-approved buyer has a leg up on the competition.

To calculate your mortgage payment click on the calculator below!!!

What is a Dayton Ohio Mortgage Broker Pre-Qualification?

You may have hear the term “not worth the paper it is written on”, that is a perfect example of what a pre-qualification from a Dayton Ohio Mortgage Broker is.  Unfortunately over the past several years Dayton Ohio Mortgage Brokers have gotten into trouble with breezing through a loan application and not asking the right questions and putting buyers into a position where they can’t complete the purchase because of financing. 

Buyer beware of a Dayton Ohio Mortgage Broker that seems unsure of how to read your credit report or calculate your income.  A pre-qualification consists of similar questions as a pre-approval but will be lacking a tri-merge credit report, automated underwriting findings and a complete loan application.

Why does a Pre-Qualified Buyer hold all the cards in Dayton Ohio?

With a larger number of homes on the market a pre-qualified buyers offer will be taken more seriously by a seller.  The good homes are still getting multiple offers after several days on the market, no seller wants to accept an offer from a buyer without a pre-approval letter.  A pre-approval letter will help you determine if you are searching for homes in the right price range.  There are good deals to be had and pre-approved buyers will have them.  See The Best Deal in Dayton Ohio Real Estate to find your next great deal or your first one!!!

For a FREE Pre-Approval please e-mail me at Laura@MarkRyanGroup.com. 

Mortgage Broker Terms in Dayton Ohio:

Adjustable Rate Mortgage- A Mortgage that permits the lender to periodically adjust the interest rate so that the rate reflects fluctuations in the cost of money.  Also referred to as an ARM.

Amortization Schedule-  A table or chart that shows the periodic payments, interest and principal requirements, and unpaid loan balance for each period of the life of the loan.

Dayton Ohio Mortgage Brokers will provide you with:

• Choices
• Convenience
• Knowledge

Actually according to National Association of Mortgage Brokers, NAMB, brokers originated over 50% of all loans in 2004.  In more recent years the numbers are closer to 65% says Bankrate.com.  A bank only has the ability pick from their own loan programs while Dayton Ohio Mortgage brokers can pick from hundreds of bank programs, from hundreds of banks, even local banks.  Dayton Ohio Mortgage Brokers have made it possible for so many more families to own Dayton Ohio Real Estate.  Take a look at Dayton Ohio Real Estate Market Update: Total market overview to see the state of Dayton Ohio Real Estate.

Dayton Ohio Mortgage Brokers get wholesale rates?

Most people think that means that since Dayton Ohio Mortgage Brokers are playing the “middle man” that means that the borrower pays higher fees.  That is simply not true.  Dayton Ohio Mortgage Brokers typically gets better rates from the local bank than you can for a few reasons:

This past
month the Federal Reserve has cut rates by 1.25%. Most people think this means that now is a
great time to refinance your Dayton Ohio Mortgage or invest in Dayton Ohio Real
Estate.

Dayton Ohio Mortgage Rates hit 3 year low:

Unfortunately the federal funds
rate does not directly affect the 30 year fixed rate mortgage on your Dayton Ohio
home. Although changes in it, especially
unexpected ones, can impact Dayton Ohio Mortgage rates temporarily. For example when the Fed made an emergency
.75% rate cut the Dayton Ohio mortgage rates hit a 3 year low… for
about 6 hours.

Dayton Ohio Mortgage Rates vs. Fed Funds Rate:

The federal funds rate is actually the overnight lending rate. Sounds simple right? Many people automatically think that if the Fed drops the rate than Dayton Ohio Mortgage Rates are dropping. WRONG! The Fed fund rate influences short term rates and I am not talking about adjustable rate mortgages (5 and 7 year arms). The fed funds rate affects certain types of Dayton Ohio Mortgages such as home equity loans, credit cards and other short term loans like car and persornal loans. It can also effect CD’s, savings account rates and money market accounts but will not have a direct affect on Dayton Ohio mortgage rates.

The 10 year bond and Dayton Ohio Mortgages:

Dayton Ohio Mortgage
Rates follow the US treasury bond rate, particularly the 10 year bond. Dayton Ohio Mortgages track US Treasury bonds
quite well. There is no direct
relationship but if you compare the two side by side you will see a correlation. See the cart below from HSH.com.

For the most part you can count on a few things:

1. Dayton
   Ohio Mortgage Rates tend to follow the 10 year Treasury Bond.
2. Unless
   the Federal Reserve does something un-expected your Dayton Ohio Mortgage rates
   will not be affected.
3. If
   inflation is anticipated by anyone with some credibility Dayton Ohio
   Mortgage Rates will rise.
4. So if you are counting on a FED rate cut to save you from foreclosure, it won’t help… a Short Sale may be what you need. Read Short sale steps: how to avoid foreclosure.

If you want to know more about the Dayton Ohio Real Estate market you can read about it at: Dayton Ohio Real Estate Market Update: Total Market Overview . Some other things that you can look for when it comes to the Dayton Ohio Mortgage Rates are first time home buyers loans and some HUD incentives especially for Ohio Home buyers.