Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may help you.

Conventional, Conforming Mortgage Rates

By way of disclosure, the Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific to North Carolina or Texas mortgage rates. Furthermore, unique property types including non-warrantable condos and condotels may be excluded.

Email me anytime for a real-time rate quote.

Breaking Down The Predictions

Here's the group's mortgage rates predictions:

• 57% predict mortgage rates will increase
• 0% predict mortgage rates will decrease
• 43% predict mortgage rates will remain unchanged

I expect mortgage rates to increase.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching the only working mousetrap ever made than reading my analysis.

Either way, here's what I told Bankrate.com:

"Home buyers are out in force. The economy wins. Rate shoppers lose."

Purchase activity is up. Talk with your friends in real estate, talk with your friends in mortgage, talk with, really, somewhat involved in the real estate business.  Home buyers are out and they're writing contracts.

It's good news for the economy and bad news for mortgage rates.

When You Buy A Home, You Buy "Stuff", Too

To understand why housing matters to mortgage rates and the economy, just think about the last time you moved and the purchases you made.  Especially if you moved to a bigger place.

Did you buy new furniture?  What about new blinds, drapes and window dressings? A new television (or three)? Not to mention the countless trips to Home Depot for little things like air filters, light bulbs, and key copies.

All of these purchases fall under the "consumer spending" category and consumer spending accounts for 70% of the economy.

More people moving means more consumer spending. And there's a lot more people moving.

Geopolitics Can't Keep Mortgage Rates Down

Meanwhile, the Federal Reserve ends its $1.25 trillion mortgage market commitment this month and, by all accounts, mortgage rates should be rising in advance of it. Instead, they're falling.

As Greece deals with debt worries, and China deals with inflation, and the U.S. dollar gains, mortgage markets have been a sound place to invest.  The extra demand for bonds is pushing mortgage rates down. But this rally rooted in geopolitics -- not in hard data.

It can't last.  Especially with the Federal Reserve meeting next week.

There'll be no rate changes from the Fed, but look for more optimistic verbiage from the Fed with respect to the economy's current and future prospects. The Fed speaks in data and data points to recovery.

Rate Increases Will Happen Quickly

If you need a rate lock, consider taking it this week.  The timing is right and locking a rate can never be wrong.

That said, you'll probably want some help to lock at the exact right moment. Mortgage rates change all the time. Make sure you're not locking too soon. It can be the difference between saving 1/8 percent or losing it. You're going to want your loan officer to help you with timing.

Or, if it's easier for you, just send me an email with your situation and we'll get you set up with the lowest rate we can.

When home buyers opt to "escrow taxes" with a lender, there's a dollar-cost to starting that escrow account. It can add significant costs to a final HUD-1 Settlement Statement, depending on the time of year.

Defining "Escrow Your Taxes"

First, let's answer the question "What does it mean to pay taxes in escrow?"

Paying taxes in escrow is a two-sided agreement between homeowner and lender:

1. Homeowner pays 1/12 of his annual real estate tax bill to the lender each month
2. Lender holds the homeowner's payments in a reserve account, and pays the home's real estate taxes when they come due

Most lenders wants homeowners to escrow because it ensures the taxes actually get paid. As such, lenders penalize people that opt to pay their own taxes, without bank help.  The penalty is a fee and it's known as "waiving escrows".

The fee to waive escrows can be as high as 0.25 percent of your loan size, or $250 per $100,000 borrowed.

Starting Your Tax Escrow Can Be Costly

Meanwhile, seeding an escrow account can be costly, depending on the season, with the schedule dictated by the local taxing authority.  In Southeastern Ohio, we're entering the Expensive Season.

Because semi-annual tax bills due in June and July, lenders want to make sure there's enough money on-hand to pay the pending bills.  In Hamilton, Warren, Butler and Clermont counties, up to 8 months of tax reserves are required for mortgages closing in the months of May and June, and November and December.

The reserves are broken up into two parts:

1. 6 months worth to pay the semi-annual tax bill
2. 2 months worth of reserves in case tax bills increase unexpectedly

My experience is that most homeowners understand the "one-twelveth" part of paying escrows each month, as well as the reason why seeding an escrow accounts gets more costly as bills come closer to their due date.

It's the "extra 2 months of reserves" that throws folks for a curve.  Here's the explanation.

Lenders Want Your Tax Bill, Plus Some Extra

Real estate taxes tend to increase over time.  Homeowners know it, and lenders know it, too.  It's inevitable.  Therefore, instead of running the risk of holding too little tax money, lenders aim to hold too much.

This way, if-and-when tax bills rise, lenders are using your "excess" instead of their own.  And so long as taxes increase by less than 16.67% annually, the banks should never be short on your funds.

When you're planning for your closing, don't forget to budget for escrow reserves.  If you want help with your math, call or send me an email. I'll do my best to walk you through it.

Editor's Note: The chart above does not apply to refinances. Refinances in the Cincinnati area have a slightly different escrow reserve chart. The theory is the same, the withholding is different.

Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

This recent clip comes from my local paper's business section.  It exemplifies why researching mortgages can be confusing (and annoying).  We look to our newspapers to tell us the truth; to provide indisputable facts.

In this case, the paper misses the mark.

Aside from the spelling mistake in the headline (!), it looks like the local editors pulled irrelevant, stock copy written several years ago.  As we've shown here and here, the 10-year treasury note and mortgage bonds move to the beat of their own drum.

Rates for the 10-year treasury do not correlate to mortgage rates from day-to-day.

There's a reason why everyone from first-time home buyers to bona fide investors hate the mortgage process -- the media tells them one thing about mortgage rates, and in-the-game loan officers tell them something else.

The reason this happens is because mortgage rates and guidelines are fluid -- too fluid for even most loan officers to keep up.  It's why you should to question the mortgage news you read in the papers -- beat writers just can't keep up with the pace of change these days.

The best way to get your mortgage market news, therefore, is to go to the source.  Talk to loan officers and ask good questions.  Read blogs, follow twitterstreams, or whatever -- just make sure your source is someone in the business.  And, if you need some follow up, you can always call or email me.

I answer my own emails and would be happy to help.

I gave a television interview with Beejal Patel of First Business this week and we covered a lot of ground topics like housing, mortgage rates, and the FHA.

In this 5-minute spot, I answer:

• What will happen to mortgage rates after the Fed's market withdrawal?
• How will rising mortgage rates impact the housing market?
• What will happen to home prices after the tax credit expires?
• How does the jobs report relate to mortgage rates?
• What changes are coming down the pipe from the FHA?
• What are investor overlays and why do they matter to home buyers?

Like I said, we cover a lot of ground.  Thankfully, it's easy to digest.

If after watching the piece, you have some follow-up questions for me, send them via email and I'll reply back to you.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may help you.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific for Cincinnati or Chicago mortgage rates.

Email me anytime for a real-time rate quote.

Here's the group's mortgage rates predictions:

• 43% predict mortgage rates will increase
• 14% predict mortgage rates will decrease
• 43% predict mortgage rates will remain unchanged

I expect mortgage rates to decrease.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching people get punched in the face right before eating a sandwich than reading my analysis.

Either way, here's what I told Bankrate.com:

"Jobs data drags down rates."

On the first Friday of every month, at 8:30 AM ET, the U.S. government releases the Non-Farm Payrolls report, except most people don't call it that.  They call it "the jobs report".  Tomorrow is the first Friday of the month.

The jobs report has always been influential with respect to mortgage rates but, lately, it's of larger import.  This is because Wall Street believes that jobs growth is the way forward for the economy.  No jobs, no growth.

The jobs-to-growth connection is pretty straight-forward. Versus an unemployed person, an employed person is:

1. More likely to spend free cash
2. More likely to feel confident about his economic future
3. More likely to make on-time mortgage payments

Each of these points promotes economic growth and stock markets tend to improve when jobs data is strong.  This happens at the expense of bonds, of course, and mortgage rates rise.

But there's another angle, too.

Because jobs are a lagging economic indicator, net job gains imply that U.S. businesses are feeling better about their prospects for 2010 and 2011.  This, too, excites stock markets, creating even more bond market damage. That's why a blowout job number would be awful for mortgage rates Friday.

Thankfully, it won't happen.

Even though markets are officially calling for 13,000 new jobs, whispers numbers are moving the target even higher.  Therefore, the number of net new jobs would have to exceed the original estimate and then some, plus, prior revisions would have to revise higher, too.

Reviewing recent trading patterns -- over the next week -- mortgage rates have more room to fall than to rise.  Longer-term, this isn't the case, but for now, you can float safely.

That said, locking mortgages is a game of timing and to play, you'll want some help.

If you don't have a loan officer you can call up for advice, know that you can always call me. Or, send an email, whichever is easier. I handle all of my own email and I would happy to get your mortgage rate lock ready for you. The key is to make a plan that works, pick a rate that fits the plan, then wait to execute.

It's what I do best.  Plus, my bank has good, low mortgage rates. Just ask me about it.

Mortgage guidelines are in constant flux.  Or at least it seems that way.  And too often, rumors of "what's coming" take on a life of their own, spilling over into media coverage and into the minds of the homebuying public.

A classic example of this was the fabled "$15,000 homebuyer tax credit" from 2008.  It was an idea that passed the Senate and got good headlines but, ultimately, died in Congress.  Not before the news went mainstream, however.

The most recent rumor involves FHA mortgage insurance premiums.

The image above is a snippet from page 348 of the Special Topics sub-section in the Budget of the United States Government, Fiscal Year 2011.  Among other things, the text recaps the FHA's recent response to its own dwindling reserves and rising risk levels.

The FHA's new guidelines effective April 5, 2010 are highlighted, too.

Now, when the FHA passed its new guidelines (13 days ago), it said that it would petition Congress for the right to raise its mortgage insurance premiums because, by statute, the FHA doesn't have that authority.  According to the highlighted text, the FHA wants to make two changes:

1. Lower the Upfront Mortgage Insurance Premium from 2.250% to 1.000%
2. Raise the Monthly Mortgage Insurance Premium to 0.85% on most mortgages

This is where the rumors starts.  Just because the FHA asks for control over its own mortgage insurance doesn't mean that Congress will grant it. Nor does it mean that the FHA won't deviate from its original plan should Congress accede to the FHA's request.

In other words, the MIP changes are just a wish list. Reality is much different.

For now, starting April 5, 2010, the FHA increases its upfront mortgage insurance premiums to 2.25%, raises its minimum FICO score requirements to 620, and reduces its allowable seller concessions to 3 percent.

These are the facts. Homebuyers, loan officers and real estate agents should plan accordingly.

If you're buying a home and thinking of going FHA, be sure to talk to your loan officer about your personal timeline and how the new FHA guidelines may affect you.  Or, if you don't have a loan officer, send me an email and we can talk about your situation.  My bank underwrites FHA-backed mortgage in-house and our rates are low.

Plus, I love to work with my readers.

(Image Courtesy: WhiteHouse.gov; h/t Holden Lewis)

Mortgage rates regained a sense of calm last month as markets recovered from a tumultuous December.  After shedding 300 basis points to close out 2009 -- that's 3 discount points per loan, by the way -- January's pricing recovered by nearly two-thirds.

Rates eased lower day by day in the first month of 2010 and, more importantly to rate shoppers, rates were mostly steady.

On average, mortgage lenders issued just 1.4 rate sheets per day in January, or 7 per week. Mortgage rates haven't been that stable on day-to-day basis in 10 months.

But first, a definition: What is a rate sheet? A rate sheet is a mortgage lender's pricing menu.  Rate sheets lists the rate-and-fee combinations for every mortgage products under the sun, including:

• 30-year, 20-year and 15-year fixed rate mortgages
• 5-year, 7-year and 10-year adjustable rate mortgages
• All variations of jumbo and super jumbo mortgages
• The complete line of FHA and VA mortgages
• Loans for condotels and non-warrantable condos

If a lender offers it, it's on a rate sheet.

The very nature of mortgage markets means that rate sheets are in constant flux.  It's why a mortgage rate is rarely good for more than a few hours.  Similar to beef or lobster, "market price" changes all the time. You can't rely on last night's menu.

New day, new costs and if your current Good Faith Estimate and/or rate quote is older than 5-and-a-half hours, it's officially outdated. Lenders won't honor it.  It's time to start again.

Now, the good news is that rates are relatively tame.  Getting 5 hours-plus to lock a rate is a gift from the Mortgage Gods.  Unfortunately, though,the last time rates settled in like this, it was just a brief calm in a turbulent time.  Sort of like the eye of a hurricane.

From last March, you can see the "V" shape in the chart above. I suspect we're in a similar situation now.

The economy is recovering quickly, corporate earnings are booming, and the Fed is withdrawing its support for the mortgage market. Sooner or later, mortgage markets are going to sell off.  It hasn't happened yet because demand for U.S debt has been high.

But, as the global economy emerges from this generation's worst recession, investment dollars will even out between the U.S. and elsewhere and, when that does happens, it's yet one more reason for rates to jump.

You'd best be ready for it.

As a loan officer, I watch real-time mortgage market data that's not published to the papers or on TV. If you need to know what rates are doing, you need to be watching my Twitter stream, or following me on Facebook. I post regular updates and tend to alert before rate sheets change.

If you need to lock a mortgage rate, make sure you're getting my updates.

Furthermore, if you're actively rate shopping for a home in Cincinnati, Chicago, or somewhere else that I lend, make sure you ask me for a rate quote. Because I work for a self-funded bank, my rates and fees are often less than my broker peers and especially better than the correspondents.

Be sure to ask me for a rate quote by email. I love to work with my readers.

Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may help you.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages or jumbo mortgages. Nor is the survey specific to Cincinnati or Chicago.

Email me anytime for a real-time rate quote.

Here's the group's mortgage rates predictions:

• 50% predict mortgage rates will increase
• 29% predict mortgage rates will decrease
• 21% predict mortgage rates will remain unchanged

I expect mortgage rates to increase.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent learning how to suck at Facebook than reading my analysis.

Either way, here's what I told Bankrate.com:

"The reality of the Fed's mortgage market withdrawal sets in this week."

This is going to read like a recap from last week, but let's review the highlights.

When the economy hit the skids in September 2008, the government made a massive intervention.  In addition to formal stimulus from Congress, the Federal Reserve did what it could to loosen up the credit markets.

One of the Fed's most well-known programs was its commitment to buy $1.25 trillion in mortgage-backed bonds in the open market. Internal studies from the Fed say the program lowered rates by 1 percent last year.

The program ends March 31, 2010.

Now, logic dictates that if the Fed's presence had rates down 1.000 percent in 2009 -- all things equal -- the Fed's absence will have rates up by the same 1.000 percent in 2010. The question remains, "how soon until it happens?"

The Fed has been weaning markets off the program, dropping purchases to just one-third of its March 2009 peak purchase levels. And while it's been doing that, there's been fewer originations to create new supply.

For this reason, some analysts think fears of a Fed pullout are overblown; that rates won't rise by a full percent. And that viewpoint may ultimately be proved correct.

For now, though, the prudent thing to do is to treat the situation like NFL referees treat an instant replay request -- stick with the original call until you've got sufficient evidence to overturn it. Right now, that evidence doesn't exist. It won't exist until April.

Naturally, you don't have until April.  You need to know what to do right now so here it is.

Get locked.

Mortgage rates have receded from December's highs and have been sitting in a pocket for about a week. At some point, Wall Street will start pricing bond for the Fed's MBS exit and you don't want to be on the wrong side of that window.

Locking mortgages is a game of timing and, for that, you may need some help.

If you don't have a loan officer you can call up for advice, know that you can always call me. Or, send an email, whichever is easier. I handle all of my own email and I would happy to get your mortgage rate lock ready for you. The key is to be ready before the market changes and that's what I do best.

Also, my bank has good, low rates. Just ask me about it.

Recapping the FOMC statement from January 27, 2010 and what it means for mortgage rates.

A fair number of my readers are mortgage- and/or real estate-related businesses.  Consider this a public service announcement.

REtechSouth is March 25-26, 2010 in Atlanta -- 8 weeks away. It's an industry conference with hands-on learning, practical pointers, and seminar-style sessions from the brightest minds in the country.

REtechSouth draws raves because it's not a series of Glorified Sales Pitches. It's the exact opposite, in fact. REtechSouth focuses on the technologies we use in business, and how we can all get more from them.

It's not just blogging, either.

Speakers cover topics like: RPR, Web Design, IDX, WordPress, MLS Tools, Email Marketing, Facebook, Twitter, LinkedIn, Blogging, Community Building, Lead Capture, Social Capital, iPhone, Blackberry, Digital Photography, Video Marketing, Broker Tools, and Association Management Technologies.

Clearly, there's something for everybody.

Content comes in 4 forms, too.  The format is ground-breaking:

1. REtechCamp: Targeted content offered over a span of 2-plus hours to a niche audience
2. REtechLab: Hands-on environment with tables, power-strips, and WIFI for mobile learning. Free-form format with less presentation and more conversation.
3. REtechKnowledge: Group presentations meant to inspire and challenge. A peak into the minds of industry leaders and innovators.
4. REtechTraining: Group presentations meant to educate using real-life examples fro industry leaders and innovators.

When you leave Atlanta, you'll have business ideas you can implement right away, and the skillset to actually do it.

My blog-for-you company, Bring the Blog, is pleased to be a REtechSouth sponsor.

As a Spotlight Sponsor, Bring the Blog gets an exclusive discount to share with our friends. Use the code "bringtheblog" when you register online and REtechSouth will drop your prices 10 percent.  It's kind of a sweet deal.

Last year, REtechSouth sold out.  This year, it's expected to do the same.  Once sales reach 750 tickets, the event will close.  That's expected to happen within the next 4 weeks.

Atlanta is a surprisingly easy city to which to commute and the conference is held at the world-class Gwinnett Center. Please join me there March 25-26, 2010.

It'll be among the best mortgage and real estate technology conferences you attend all year.

The Federal Reserve begins a scheduled 2-day meeting today during which it which it will vote to leave the Fed Funds Rate unchanged near zero percent.  The press will report this tomorrow as "Fed Holds Rates Steady".

But, don't confuse this to mean that the Fed held mortgage rates near zero. The Fed doesn't set mortgage rates.  The Fed sets the Fed Funds Rate. The former is a long-term rate and the latter is a short-term rate.

The Fed Funds Rate and the 30-year fixed mortgage are two different animals.

The Fed Funds Rate is set by the Federal Reserve to accelerate or retard economic growth.  Mortgage rates are set by price of mortgage-backed securities at any given moment plus any applicable loan-level pricing adjustments. If the two were directly related, the chart above would be linear.

Instead, it's got more steps than the cover of Houses of the Holy.

Since 1990, the spread between the Fed Funds Rate and the 30-year fixed rate mortgage has been as narrow as 1 percent and as wide as 5 percent.  Going back even further, to 1973-74 and then again to 1980-81, there's been instances of the interest rate spread going negative; mortgage rates were below the Fed Funds Rate.

Hopefully it's clear now. Mortgage rates and the Fed Funds Rate move independently. The Fed doesn't set mortgage rates.

However, it does influence them.

As the nation's central banker, the Federal Reserve sets policies that change the U.S. economy's direction and changes in the economic happen to make a huge impact on mortgage rates.  It's one reason why mortgage rates were so volatile in 2009 -- the future of the economy was a giant glob of murk and as Wall Street did its bidding, rate shoppers got tossed along for the ride.

So, let's ignore what the Fed will or won't do tomorrow and focus instead on what the Fed says.

See, when the Fed adjourns, it issues a statement in which Bernanke & Co address the nation's economic strengths, weaknesses and threats. If the Fed's statement shows optimism for the economy in its statement, mortgage rates will rise as money flows away from the safety of the mortgage-bond market.

If the Fed's statement show pessimism, on the other hand, mortgage rates will fall.

Either way, be on alert.  The Fed statement hits at 2:15 PM ET Wednesday.

For Cincinnati home buyers and homeowners shopping for low mortgage rates, you must understand the difference between the Fed Funds Rate and a long-term mortgage rate. When you do, you're more likely to lock a mortgage rate on time as opposed to locking a mortgage rate too late.

If you've never been on the wrong side of that gamble, just ask a friend -- it stinks.

So, to get help with your rate lock, including timing it for the lowest possible rates in your local market, send me an email with your details and I'll do my best to help get you started. I answer all my own emails and my mortgage rates are very good.

If you want to know where mortgage rates are headed in the future, you may be better off ignoring the experts.

I conducted a 50-week study of the popular Bankrate.com Mortgage Rate Trend Index and it showed that the "expert consensus" on mortgage rates is wrong 3 times more often than it's right.

I am a regular Rate Trend survey participant and have been since 2006.

If you've never seen Bankrate.com's weekly Mortgage Rate Trend Index, it's an informal "future of mortgage rates" poll of loan officers around the country. It's meant to give interest rate guidance to active home buyers and would-be refinancers.

Many survey participants are high-profile and the mortgage rate question posed by Bankrate.com is a basic one:

In your opinion, will mortgage rates move up, down, or remain unchanged 35 to 45 days from now?

Well, mapping the Bankrate survey's majority opinion against Freddie Mac's published mortgage rates 35 days hence, it turns out that the experts guessed right on rates just 23.4% of the time last year.

That's seriously awful. It's less than 1 out of 4. And they're experts.

Now, to be fair, some of the participants fared better than the average including Bankrate.com host Holden Lewis and yours truly. However, predicting mortgage rates remains a huge challenge. Especially 35-45 days into the future.

A lot can change in 6 weeks and last year, a lot did. As the economy dipped and surged, Wall Street tried to come to terms with the future of the economy while Congress and the Fed made new policies to stimulate and/or retard growth, as needed.

Intervention messes with markets and mortgage rates were extremely volatile during the sample period. This is because the mortgage rate that homebuyers see is the result of literally hundreds of factors.

Lenders averaged 1 middle-of-the-day rate change per day last year. That's a lot.

Despite these caveats, though, none of it changes the fact the Bankrate.com survey was actually de-helpful to its readers last year. Homebuyers that relied on the survey for rate lock advice, in hindsight, would have been better off flipping a coin.

According to Bankrate.com, the Mortgage Rate Trend survey is among its most viewed pages on its site. Plus, the survey is syndicated to sites like Yahoo! Business and Fidelity Investments.  Clearly, a lot of Americans are using this thing for rate-locking advice.

It's too bad, really, because the advice they're getting is hardly ever right.

When you need to lock a rate, remember that predicting mortgage rates is a challenge for anybody and the farther out an expert goes on the time line, the more likely his logic will be proved wrong.  Markets and makeup change way too fast.

As a consumer, therefore, the best thing you can do is work with a loan officer that understands how markets move and why they move.  You may not get the best prediction for a rate 2 months into the future, but you'll get an excellent take on what's driving mortgage rates today -- an equally important set of information.

Then, when you can get a heads-up on when rates are rising before it actually happens, that's when you can save yourself some money.  The key is to work with a loan officer that tracks real-time mortgage market data and, more importantly, knows what to do with it.

If you're working with a Call Center-type lender, or just aren't sure whether your loan officer is up to snuff, call or send me an email. I track mortgage rates in real-time for all of my clients and I love to work with my blog readers.

Plus, my rates are really good (even if I can't predict them 45 days into the future).

It pays to know a little bit about The Mortgage Rate Game.

Whether you're buying a home in Cincinnati or refinancing one, there's multiple ways you can make a play for lower mortgage rates or fewer loan fees.

1. Have a higher credit score
2. Make a larger downpayment
3. Do your Good Faith Estimate homework

But, sometimes, the easiest way to save money on your mortgage is to pick a better closing date.

It's all about Rate Lock Commitments.

A Rate Lock Commitment is a bank's promise to honor a specific mortgage rate for a specific period of time.  It's a contract, of sorts, in which the lender says: "Provided you close on your loan in the next however-many days, we'll make sure you get your locked rate."

Now, from the bank's perspective, rate locks are scary.  This is because the bank is promising you a rate today that won't be signed for until some point in the future and banks know that the farther into the future they try to predict, the more likely they are to be wrong.

It's a dangerous game and it's why longer rate lock commitments often come with higher interest rates, higher fees, or both. Banks are hedging against "time risk" at your expense.

So the game works like this: (1) Rate locks typically come in 15-day increments, (2) The 30-day rate lock serves as the basis for all other pricing, and (3) All loans headed for Fannie Mae or Freddie Mac follows this pattern:

• 15-day rate lock : 1/8 percent lower than the 30-day rate lock
• 30-day rate lock : The basis for all other pricing
• 45-day rate lock : 1/8 percent higher than the 30-day rate lock
• 60-day rate lock : 1/4 percent higher than the 30-day rate lock

Putting this to a Real World Example, if you went into escrow this past weekend and set your closing date for the last Friday in January -- that's January 29, 2010 --  46 days from now.  You'd require, therefore, a 60-day rate lock.

A better closing date would be January 28. That 1-day difference will lower your mortgage rate by an eighth.

And the math isn't just for purchase.  It applies to refinances, too.

A refinance that can close in 30 days is going to be better priced, in general, than one that takes 45 days to close.  It's why being on the ball with your loan officer is such a big deal -- quicker to process means quicker to close. You may not be in a hurry to close, but your rate lock says otherwise.

Managing a rate lock commitment is an easy way to keep mortgage rates and loan fees down.  So, before you set your closing date, or start working on your refinance, consider time's impact your mortgage bottom line.  The shorter your rate lock commitment, the more money you'll likely save.

(Post licensed and adapted from Bring the Blog)

Foreclosure activity in most the nation's largest states dropped last month, buoying the national average lower despite 30 states faring worse than the national average.  Total foreclosure activity nationwide slipped for the 4th straight month.

Versus October, activity is down 8 percent.

A reduction in foreclosure activity is big news for housing, but the big-ger news is buried in the stats.

1. Defaults in Nevada -- the foreclosure front-line leader -- are down 33% from 2008
2. Foreclosures Per Capita are lower for the majority of states
3. Job-ravaged Ohio's foreclosures are down 9 percent from last November

Overall, November's foreclosure report is another positive signal for the housing market.  Recovery is underway.

But for homebuyers searching foreclosed properties, the window for "a deal" may be closing.  The supply of distressed property is dropping and multiple-offer situations are increasingly common.  The key, therefore, is to find a property before the next buyer and, let's face it, your real estate agent has other clients besides you.

Some homework you're better off doing yourself.  The good news is that you don't have to go far to do it.

Since foreclosures, short sales and REO have become Big Business, tens of tech firms have tried to capitalize on the need for a better system of distressed-home aggregation. So far, 3 companies have emerged as winners, each offering 24/7 access to foreclosed homes in every zip code in America with tons of searchable traits.

1. RealtyTrac (free 7-day access)
2. Foreclosure.com (free 7-day access)
3. HUDForeclosed.com (free 7-day access)

If you're considering foreclosed homes as a first-time buyer, a move-up, or even as an experienced investor, consider registering with all 3 -- each pull from a slightly different database so you may see different homes from one site to the next. It should give you a good list of homes to starting seeing with your agent when you're ready.

Foreclosures activity is slowing, but -- for now, at least -- buying opportunities are still out there. Search online and see what you find. Then, when you're ready for your pre-approval letter, call or send me an email. I'm experienced with bank-owned homes and am as comfortable with first-time buyers as with investors owning more than 4 properties.

Plus, my rates are really good.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, veterans mortgages, or jumbo mortgages. Nor is the survey specific to Cincinnati.

Email me anytime for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 57% predict mortgage rates will increase
• 14% predict mortgage rates will decrease
• 29% predict mortgage rates will remain unchanged

I expect mortgage rates to remain unchanged.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching the coolest stop-motion ad for books you've ever seen than reading my analysis.

Either way, here's what I told Bankrate.com:

"The ride will be bumpy so lock on the dips."

It's been an interesting 12 months.  The economy has reversed, housing is recovering, and the mortgage market has been run through the wringer.

At this time last year, our spirits were squashed.  Today, though, we have hope. And as the nation regains its footing from what should have been the worst economic depression on record, there's now lingering uncertainty on Wall Street about what's due for the country in the months and years ahead.

Rate shoppers be ready.

Lack of economic conviction is why mortgage rates have stayed low this year. Almost like inertia.  It's also why rates have failed to break out from a meaningful range. 4.875-5.375 percent just seems so 2009. It'll probably stick into early-2010, too.

But for the next 30 days, there's some wildcards to watch.

• Will investors go "safe haven" with their buys, or take their profits off the table?
• How will retailers fare as holiday shopping reaches a crescendo?
• Will the dollar's new strength draw interest to mortgage bonds?

It's going to be bumpy and rates will carve out a range.  Therefore, if you know you need to lock a rate, talk with your loan officer about the rate that's right for you, and then wait for it.  If you're patient and you set a reasonable rate target, you'll probably get the chance to lock it.

If you don't have a loan officer or prefer to talk with me personally about your situation, just send me an email with some notes on your mortgage.  I'll bounce back with some answers for you.  I handle my emails personally and my rates are very good.

One things is clear.  4.500 percent with roughly 1 point is the mortgage market's line-in-the-sand de l'année.

The 30-year fixed mortgage rates has troughed at that exact point 5 times in the last 13 months :

1. Late-November 2008
2. Early-January 2009
3. Mid-March 2009
4. Late-May 2009
5. Early-December 2009

It's an amazingly low rate as compared to history but what's bedeviling is that rates can't seem to break lower.  Every time markets hit the "all-time low", they bounce back higher.

The storyline is well-covered by the press.  Mortgage rates move higher, then experts predict they'll never come down again, then mortgage rates come down, then the experts say "this is the last time".

The impact on Cincinnati's homeowners is palpable.  Whenever mortgage rates rise off that floor, versus feeling an urgency to lock, they choose to wait for a fall.  And why shouldn't they?  It's a strategy that's worked very well since last year and has likely saved a lot of families a lot of money.

But just because the strategy has worked doesn't make it a good idea.  Actually, it's the opposite of a good idea, not the least of which is that it tempts the mortgage rate gods to screw you.

See, aside from mortgage rates, there's other factors that account for your final mortgage approval and none of them are within your control.  Rates may fall back to 4.500 percent at some point in the future, but when they do, you might not be able to take advantage.  Here's 9 things that could go wrong from a much longer list.

1. You could unexpectedly lose your job.  More than 7,000,000 people have been fired in the last 2 years and employment data is still net negative month-to-month. No job, no mortgage approval. Period.

2. Mortgage lenders are reducing loan-to-value limitations.  Suddenly, having a 20 equity stake in your home may not be enough to qualify.  Sometimes, you need 25 percent or more.  On jumbo loans, that number can be even higher.  Homeowners with jumbo and non-owner occupied mortgages are especially susceptible here.

3. Your home could be damaged in a storm. Weather is as unpredictable as mortgage rates and Mother Nature can be a mean one.  Just ask the folks in Chicago who expect up to 10 inches of snow in parts of the suburbs today.  The problem here is that once a state Governor requests federal aid for a storm, mortgage lenders put their closings on hold pending complete home re-inspections.  A damaged home doesn't get its new mortgage.

4. Mortgage insurance rates could rise. Private mortgage insurers lost billions in 2008 and have thrice raised premiums to even up their balance sheets.  Some are returning to profitability but it's likely that PMI rates will rise again. Higher PMI costs offset proposed monthly savings.

5. You could fall ill or get injured. Medical reasons are the second-most common trigger for home foreclosures next to income curtailment (See #1).  If illness keeps you from working, or leads to a long-term disability, your mortgage approval chances drop dramatically.  Nobody ever expects to get sick.

6. Banks could tighten lending guidelines. Well, we already know this is happening. FHA, conforming and niche lenders are still fine-tuning their respective lending models to protect against losses in 2010 and beyond.  The result: Applicants that qualify for a mortgage today may not qualify for one tomorrow.

7. Your home's value could fall. Foreclosures and "fire sales" lower the Fair Market Value of every home in the immediate area.  A home similar to yours that sells for less than yours is going to lower your home's value on paper. Lower valuations lead to higher LTVs and, often, higher mortgage rates.

8. Your credit score could fall unexpectedly. Credit scores are meant predict the likelihood of mortgage default and the model appears to have failed.  As a result, credit bureaus are making tweaks.  Carrying high balances or opening new tradelines appears to be more damaging to credit scores than it used to be.  Lower credit scores means higher mortgage rates.

9. Mortgage rates could rise, not fall. Look, nobody knows what rates will do tomorrow.  Anyone who says they do is lying.  The only thing predictable about mortgage rates is that they're unpredictable.  Take what you can, when you can.  You can always refinance again later.

And, if you want to throw a 10th reason in there for good measure, use this: It's a pain in the arse for the average person to track mortgage rates and at-work productivity can really suffer while you try.

The sooner you commit to a rate, the sooner you can move on with your life.

To get started with your approval, or just to check rates, send me an email or give me a call. I answer all my own emails and I like to work with my readers. Plus, my rates are really good.

There's an old adage in the mortgage business: "Mortgage markets take the stairs down and the elevator up."  It's supposed to mean that mortgage rates rise faster than they fall.

It turns out the saw has no teeth.

Looking at data from the last 14 months, at nearly every price change delta of consequence, mortgage price improvements outnumbered deteriorations. An "improvement" pushes mortgage rates lower.  A deterioration moves them higher.

• Daily change of 0.2500 : 18 improvements, 8 deteriorations
• Daily change of 0.3125 : 27 improvements, 20 deteriorations
• Daily change of 0.3750 : 4 improvements, 11 deteriorations
• Daily change of 0.4375 : 13 improvements, 10 deteriorations

The trend continues at the higher price change points, of which each is a huge, one-day change in pricing. A 0.500 pricing change can move mortgage rates by as much as a quarter-percent.

• Daily change of 0.5000-0.7500 : 18 improvements, 15 deteriorations
• Daily change of 0.7500-1.000 : 8 improvements, 3 deteriorations
• Daily change of greater than 1.000 : 10 improvements, 11 deteriorations

Another interesting observation is that on the days of nominal price change, the day on which pricing changed by less than 25 basis points, markets tended to worsen.  From this pattern, we can infer that traders want to move mortgage pricing higher but don't have the conviction to make it stick long-term.

Which, of course, brings us to the other well-known saying: "Don't fight the Fed."  So far this year, that saying has held true.

Mortgage rates are based on mortgage-backed securities pricing and I get my data from MBSRateWatch in real-time. If you don't subscribe but need to stay current on rates, follow me on Twitter or on Facebook.  I often post updates when markets are moving and that can mean the difference between getting a good rate and getting a bad one.

Planning to move in the next few years? Get smart about it.  Swap out the high-rate, 30-year fixed you're carrying and convert it to something more appropriate.

Refinancing to today's rate might save you 40 percent on your monthly payments.

This is not a knock on the 30-year fixed mortgage.  It's a terrific product for homeowners in want of predictability and an unchanging payment. Fixed rate mortgages are popular for good reason.

But families grow, kids go to college, and jobs relocate.

When you know you won't outlive your home's 30-year fixed rate mortgage, it's time to check your choices.  Especially with mortgage rates as low as they are right now.

Switch your fixed to an interest only ARM.

Interest only adjustable-rate mortgages aren't right for everyone, but they're ideal for soon-to-be-moving households.  Interest only ARMs drop monthly payments down as low as possible, and enable homeowners to stash more cash for pending downpayments or other purposes.

Remember -- an ARM won't adjust until after its starting "fixed rate period" ends and 5 years is the most common fixed rate period. So long as you sell your home within 60 months, therefore, your loan will never adjust. And, meanwhile, during all of the months in between, you'll be saving big bucks on your mortgage payment.

But before you rush to refinance, there's a few caveats. You have to do the refi right:

1. The loan should be a true, zero-cost refi. Have your lender pay all of your fees.
2. Don't "pad" your loan size with cash out or otherwise. Resist the urge to roll in your upcoming mortgage payment, or tax escrow population.

Furthermore, you'll want to make sure your home doesn't sell within 120 days of closing because your lender may subject you to "recapture" fees of up to 2%.

If you're selling your home in the next few years, there's no good to keep your high-cost mortgage while a suitable low-cost mortgage is available. And right now, with ARMs pricing very well, it's a good time to explore what's available.

When your life changes, your mortgage should, too.

To see what a switch to an adjustable-rate mortgage could do for your monthly mortgage, call me or send me an email. If you have a copy of your mortgage statement handy, send it along as well.

I can help you use the system to your advantage. Reach out anytime.

It pays to know a little bit about The Mortgage Rate Game.

Whether you're buying a home in Cincinnati or refinancing one, there's multiple ways you can make a play for lower mortgage rates or fewer loan fees.

1. Have a higher credit score
2. Make a larger downpayment
3. Do your Good Faith Estimate homework

But, sometimes, the easiest way to save money on your mortgage is to pick a better closing date.

It's all about Rate Lock Commitments.

A Rate Lock Commitment is a bank's promise to honor a specific mortgage rate for a specific period of time.  It's a contract, of sorts, in which the lender says: "Provided you close on your loan in the next however-many days, we'll make sure you get your locked rate."

Now, from the bank's perspective, rate locks are scary.  This is because the bank is promising you a rate today that won't be signed for until some point in the future and banks know that the farther into the future they try to predict, the more likely they are to be wrong.

It's a dangerous game and it's why longer rate lock commitments often come with higher interest rates, higher fees, or both. Banks are hedging against "time risk" at your expense.

So the game works like this: (1) Rate locks typically come in 15-day increments, (2) The 30-day rate lock serves as the basis for all other pricing, and (3) All loans headed for Fannie Mae or Freddie Mac follows this pattern:

• 15-day rate lock : 1/8 percent lower than the 30-day rate lock
• 30-day rate lock : The basis for all other pricing
• 45-day rate lock : 1/8 percent higher than the 30-day rate lock
• 60-day rate lock : 1/4 percent higher than the 30-day rate lock

Putting this to a Real World Example, if you went into escrow this past weekend and set your closing date for the last Friday in January -- that's January 29, 2010 --  46 days from now.  You'd require, therefore, a 60-day rate lock.

A better closing date would be January 28. That 1-day difference will lower your mortgage rate by an eighth.

And the math isn't just for purchase.  It applies to refinances, too.

A refinance that can close in 30 days is going to be better priced, in general, than one that takes 45 days to close.  It's why being on the ball with your loan officer is such a big deal -- quicker to process means quicker to close. You may not be in a hurry to close, but your rate lock says otherwise.

Managing a rate lock commitment is an easy way to keep mortgage rates and loan fees down.  So, before you set your closing date, or start working on your refinance, consider time's impact your mortgage bottom line.  The shorter your rate lock commitment, the more money you'll likely save.

(Post licensed and adapted from Bring the Blog)

Foreclosure activity in most the nation's largest states dropped last month, buoying the national average lower despite 30 states faring worse than the national average.  Total foreclosure activity nationwide slipped for the 4th straight month.

Versus October, activity is down 8 percent.

A reduction in foreclosure activity is big news for housing, but the big-ger news is buried in the stats.

1. Defaults in Nevada -- the foreclosure front-line leader -- are down 33% from 2008
2. Foreclosures Per Capita are lower for the majority of states
3. Job-ravaged Ohio's foreclosures are down 9 percent from last November

Overall, November's foreclosure report is another positive signal for the housing market.  Recovery is underway.

But for homebuyers searching foreclosed properties, the window for "a deal" may be closing.  The supply of distressed property is dropping and multiple-offer situations are increasingly common.  The key, therefore, is to find a property before the next buyer and, let's face it, your real estate agent has other clients besides you.

Some homework you're better off doing yourself.  The good news is that you don't have to go far to do it.

Since foreclosures, short sales and REO have become Big Business, tens of tech firms have tried to capitalize on the need for a better system of distressed-home aggregation. So far, 3 companies have emerged as winners, each offering 24/7 access to foreclosed homes in every zip code in America with tons of searchable traits.

1. RealtyTrac (free 7-day access)
2. Foreclosure.com (free 7-day access)
3. HUDForeclosed.com (free 7-day access)

If you're considering foreclosed homes as a first-time buyer, a move-up, or even as an experienced investor, consider registering with all 3 -- each pull from a slightly different database so you may see different homes from one site to the next. It should give you a good list of homes to starting seeing with your agent when you're ready.

Foreclosures activity is slowing, but -- for now, at least -- buying opportunities are still out there. Search online and see what you find. Then, when you're ready for your pre-approval letter, call or send me an email. I'm experienced with bank-owned homes and am as comfortable with first-time buyers as with investors owning more than 4 properties.

Plus, my rates are really good.

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, veterans mortgages, or jumbo mortgages. Nor is the survey specific to Cincinnati.

Email me anytime for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 57% predict mortgage rates will increase
• 14% predict mortgage rates will decrease
• 29% predict mortgage rates will remain unchanged

I expect mortgage rates to remain unchanged.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent watching the coolest stop-motion ad for books you've ever seen than reading my analysis.

Either way, here's what I told Bankrate.com:

"The ride will be bumpy so lock on the dips."

It's been an interesting 12 months.  The economy has reversed, housing is recovering, and the mortgage market has been run through the wringer.

At this time last year, our spirits were squashed.  Today, though, we have hope. And as the nation regains its footing from what should have been the worst economic depression on record, there's now lingering uncertainty on Wall Street about what's due for the country in the months and years ahead.

Rate shoppers be ready.

Lack of economic conviction is why mortgage rates have stayed low this year. Almost like inertia.  It's also why rates have failed to break out from a meaningful range. 4.875-5.375 percent just seems so 2009. It'll probably stick into early-2010, too.

But for the next 30 days, there's some wildcards to watch.

• Will investors go "safe haven" with their buys, or take their profits off the table?
• How will retailers fare as holiday shopping reaches a crescendo?
• Will the dollar's new strength draw interest to mortgage bonds?

It's going to be bumpy and rates will carve out a range.  Therefore, if you know you need to lock a rate, talk with your loan officer about the rate that's right for you, and then wait for it.  If you're patient and you set a reasonable rate target, you'll probably get the chance to lock it.

If you don't have a loan officer or prefer to talk with me personally about your situation, just send me an email with some notes on your mortgage.  I'll bounce back with some answers for you.  I handle my emails personally and my rates are very good.

One things is clear.  4.500 percent with roughly 1 point is the mortgage market's line-in-the-sand de l'année.

The 30-year fixed mortgage rates has troughed at that exact point 5 times in the last 13 months :

1. Late-November 2008
2. Early-January 2009
3. Mid-March 2009
4. Late-May 2009
5. Early-December 2009

It's an amazingly low rate as compared to history but what's bedeviling is that rates can't seem to break lower.  Every time markets hit the "all-time low", they bounce back higher.

The storyline is well-covered by the press.  Mortgage rates move higher, then experts predict they'll never come down again, then mortgage rates come down, then the experts say "this is the last time".

The impact on Cincinnati's homeowners is palpable.  Whenever mortgage rates rise off that floor, versus feeling an urgency to lock, they choose to wait for a fall.  And why shouldn't they?  It's a strategy that's worked very well since last year and has likely saved a lot of families a lot of money.

But just because the strategy has worked doesn't make it a good idea.  Actually, it's the opposite of a good idea, not the least of which is that it tempts the mortgage rate gods to screw you.

See, aside from mortgage rates, there's other factors that account for your final mortgage approval and none of them are within your control.  Rates may fall back to 4.500 percent at some point in the future, but when they do, you might not be able to take advantage.  Here's 9 things that could go wrong from a much longer list.

1. You could unexpectedly lose your job.  More than 7,000,000 people have been fired in the last 2 years and employment data is still net negative month-to-month. No job, no mortgage approval. Period.

2. Mortgage lenders are reducing loan-to-value limitations.  Suddenly, having a 20 equity stake in your home may not be enough to qualify.  Sometimes, you need 25 percent or more.  On jumbo loans, that number can be even higher.  Homeowners with jumbo and non-owner occupied mortgages are especially susceptible here.

3. Your home could be damaged in a storm. Weather is as unpredictable as mortgage rates and Mother Nature can be a mean one.  Just ask the folks in Chicago who expect up to 10 inches of snow in parts of the suburbs today.  The problem here is that once a state Governor requests federal aid for a storm, mortgage lenders put their closings on hold pending complete home re-inspections.  A damaged home doesn't get its new mortgage.

4. Mortgage insurance rates could rise. Private mortgage insurers lost billions in 2008 and have thrice raised premiums to even up their balance sheets.  Some are returning to profitability but it's likely that PMI rates will rise again. Higher PMI costs offset proposed monthly savings.

5. You could fall ill or get injured. Medical reasons are the second-most common trigger for home foreclosures next to income curtailment (See #1).  If illness keeps you from working, or leads to a long-term disability, your mortgage approval chances drop dramatically.  Nobody ever expects to get sick.

6. Banks could tighten lending guidelines. Well, we already know this is happening. FHA, conforming and niche lenders are still fine-tuning their respective lending models to protect against losses in 2010 and beyond.  The result: Applicants that qualify for a mortgage today may not qualify for one tomorrow.

7. Your home's value could fall. Foreclosures and "fire sales" lower the Fair Market Value of every home in the immediate area.  A home similar to yours that sells for less than yours is going to lower your home's value on paper. Lower valuations lead to higher LTVs and, often, higher mortgage rates.

8. Your credit score could fall unexpectedly. Credit scores are meant predict the likelihood of mortgage default and the model appears to have failed.  As a result, credit bureaus are making tweaks.  Carrying high balances or opening new tradelines appears to be more damaging to credit scores than it used to be.  Lower credit scores means higher mortgage rates.

9. Mortgage rates could rise, not fall. Look, nobody knows what rates will do tomorrow.  Anyone who says they do is lying.  The only thing predictable about mortgage rates is that they're unpredictable.  Take what you can, when you can.  You can always refinance again later.

And, if you want to throw a 10th reason in there for good measure, use this: It's a pain in the arse for the average person to track mortgage rates and at-work productivity can really suffer while you try.

The sooner you commit to a rate, the sooner you can move on with your life.

To get started with your approval, or just to check rates, send me an email or give me a call. I answer all my own emails and I like to work with my readers. Plus, my rates are really good.

There's an old adage in the mortgage business: "Mortgage markets take the stairs down and the elevator up."  It's supposed to mean that mortgage rates rise faster than they fall.

It turns out the saw has no teeth.

Looking at data from the last 14 months, at nearly every price change delta of consequence, mortgage price improvements outnumbered deteriorations. An "improvement" pushes mortgage rates lower.  A deterioration moves them higher.

• Daily change of 0.2500 : 18 improvements, 8 deteriorations
• Daily change of 0.3125 : 27 improvements, 20 deteriorations
• Daily change of 0.3750 : 4 improvements, 11 deteriorations
• Daily change of 0.4375 : 13 improvements, 10 deteriorations

The trend continues at the higher price change points, of which each is a huge, one-day change in pricing. A 0.500 pricing change can move mortgage rates by as much as a quarter-percent.

• Daily change of 0.5000-0.7500 : 18 improvements, 15 deteriorations
• Daily change of 0.7500-1.000 : 8 improvements, 3 deteriorations
• Daily change of greater than 1.000 : 10 improvements, 11 deteriorations

Another interesting observation is that on the days of nominal price change, the day on which pricing changed by less than 25 basis points, markets tended to worsen.  From this pattern, we can infer that traders want to move mortgage pricing higher but don't have the conviction to make it stick long-term.

Which, of course, brings us to the other well-known saying: "Don't fight the Fed."  So far this year, that saying has held true.

Mortgage rates are based on mortgage-backed securities pricing and I get my data from MBSRateWatch in real-time. If you don't subscribe but need to stay current on rates, follow me on Twitter or on Facebook.  I often post updates when markets are moving and that can mean the difference between getting a good rate and getting a bad one.

Planning to move in the next few years? Get smart about it.  Swap out the high-rate, 30-year fixed you're carrying and convert it to something more appropriate.

Refinancing to today's rate might save you 40 percent on your monthly payments.

This is not a knock on the 30-year fixed mortgage.  It's a terrific product for homeowners in want of predictability and an unchanging payment. Fixed rate mortgages are popular for good reason.

But families grow, kids go to college, and jobs relocate.

When you know you won't outlive your home's 30-year fixed rate mortgage, it's time to check your choices.  Especially with mortgage rates as low as they are right now.

Switch your fixed to an interest only ARM.

Interest only adjustable-rate mortgages aren't right for everyone, but they're ideal for soon-to-be-moving households.  Interest only ARMs drop monthly payments down as low as possible, and enable homeowners to stash more cash for pending downpayments or other purposes.

Remember -- an ARM won't adjust until after its starting "fixed rate period" ends and 5 years is the most common fixed rate period. So long as you sell your home within 60 months, therefore, your loan will never adjust. And, meanwhile, during all of the months in between, you'll be saving big bucks on your mortgage payment.

But before you rush to refinance, there's a few caveats. You have to do the refi right:

1. The loan should be a true, zero-cost refi. Have your lender pay all of your fees.
2. Don't "pad" your loan size with cash out or otherwise. Resist the urge to roll in your upcoming mortgage payment, or tax escrow population.

Furthermore, you'll want to make sure your home doesn't sell within 120 days of closing because your lender may subject you to "recapture" fees of up to 2%.

If you're selling your home in the next few years, there's no good to keep your high-cost mortgage while a suitable low-cost mortgage is available. And right now, with ARMs pricing very well, it's a good time to explore what's available.

When your life changes, your mortgage should, too.

To see what a switch to an adjustable-rate mortgage could do for your monthly mortgage, call me or send me an email. If you have a copy of your mortgage statement handy, send it along as well.

I can help you use the system to your advantage. Reach out anytime.

As part of the 2009 stimulus package, Congress increased the conforming mortgage loan limit from $417,000 to as high as $729,750 in high-cost part around the county.

The recently-confirmed 2010 conforming loan limits extend the stimulus.

To be classified as "high-cost", an area's median home price must exceed $365,000.  324 areas qualify nationwide and, in each of those locales, the conforming loan limit was modified to 115% of the respective region's median home price.

Neither Chicago nor Cincinnati made the list, however.  This is because lower-cost homes co-exist with higher-cost ones, acting as a median price anchor across the region.

As a result, areas are relegated to the 2010 $417,000 conforming loan limit despite the "average" home selling for much more than that.  Areas like:

• Lake County, Illinois
• Indian Hill, Cincinnati, Ohio
• Lincoln Park, Chicago, Illinois
• Hyde Park, Cincinnati, Ohio
• Streeterville, Chicago, Illinois

For these town residents, a $417,000 mortgage doesn't get the job done.  Homes routinely sell for $1 million or more and few homeowners want to make the downpayment to make up the difference.  Fannie Mae's loan limits are too small, in other words, so homeowners are forced to find other options.

With respect to those "other options", the pricing can get ugly.

Loans too large for Fannie Mae and Freddie Mac are commonly called "jumbo mortgages" or "super-jumbo mortgages", depending on their size.  From 2002-2007, jumbo mortgages were easy to get because investment banks, hedge funds and other financial firms were competing to invest in them.  This held rates low and guidelines loose.  Qualifying for a jumbo mortgage was easy.

Today, however, the story's a bit different.

If you've been shopping for jumbo mortgages at your bank, you already know -- jumbo mortgages are downright expensive.  Rates are high, fees are high, and banks are non-apologetic their product mix.

There is another way to get it done, though.

See, the terms "jumbo" and "super jumbo" -- these are words for a Conforming Mortgage World, as if Fannie Mae and Freddie Mac were the only games in town.  They're not.  On the contrary, if you can find your way off the beaten mortgage path, you'll discover a whole world of lenders who can help.

These little-known banks are "niche lenders", the banks of Main Street, America.  Different from Too-Big-To-Fail Banks, the smaller ones like to keep the loans on their books.  Without an "end investor", per se, Main Street banks have the freedom to underwrite as they see fit.

To a Main Street bank, $417,000 is just another number.

Main Street mortgage lenders do things that Fannie Mae or lenders making FHA home loans wouldn't touch:

• PMI not required above 80% loan-to-value
• Cash due at closing can be a 100% gift
• Closing within a LLC or other entity is permitted

Furthermore, the rates are amazing.

As an example, I'm currently quoting a $1,500,000, 7-year ARM at 4.125 percent (APR 4.192).  The 5-year ARM was 3.875 (APR 4.011).  Meanwhile, I tried to shop the same scenario with a Big Bank in Cincinnati for comparison's sake.  The bank wouldn't even consider the loan for me, let alone price it.

There are other examples, too.  Niche lenders do things like:

• $900,000 cash out mortgage with 10 percent equity, primary residence
• $2.0 million mortgage at 60 percent LTV, primary residence
• $3.0 million mortgage at 50 percent LTV, vacation home

Finding a Main Street-type lender isn't always easy, but it's worth the extra effort. Mortgage rates tend to be lower, downpayment requirements tend to be smaller, and the underwriting process is usually smoother. As a loan officer, I work with a lot banks like this.

If you're having trouble finding a bank to service your "large loan" or just want a second opinion, send me an email with your scenario and I'll point you in the right direction.  If I can't help you directly, I may know somebody who can.

Share on Facebook

Need a mortgage rate prediction? I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey may point you in the right direction.

The Bankrate.com survey is for conventional, conforming mortgages only. It does not apply to FHA mortgages, veterans mortgages, jumbo mortgages or payday loans. Nor is the survey specific to Cincinnati.

Email me anytime for a real-time rate quote.

Here's the group's 30-day prediction for mortgage rates:

• 45% predict mortgage rates will increase
• 0% predict mortgage rates will decrease
• 55% predict mortgage rates will remain unchanged

I expect mortgage rates to remain unchanged.

My advice not be appropriate for your individual situation and I'm not always right. Ultimately, you may find your time better spent waiting for the punch line than reading my analysis.

Either way, here's what I told Bankrate.com:

"The malls are empty and so are calls for higher rates."

Consumer spending drives the economy.  Without spending, there's no growth and, as a result, tepid retail sales reports force Wall Street to rethink its bets on U.S. economic recovery.

It's a primary reason why rates return to 5 percent again and again. The economy is back from the brink -- banks are healthier, investment is returning, household net worth is up -- but consumers continue to stand en garde. Confidence is down.

A recovery is not a recovery until consumers buy-in. Literally. And, right now, that's not happening.

Over the next 6 weeks, retail sales will be in focus. How consumers are spending their money; if consumers are spending their money.  Joblessness is a key equational part of the equation, too.

Therefore, keep an eye on your local mall for shoppers, and watch for unemployment rates. Mortgage rates will respond to both between now and January 1.  At the first sign of strength, markets will unleash rates to jump toward 6 percent.

Suddenly, the December 4 jobs report is of huge import.

For now, though, mortgage rates are low. Take advantage.  When rates finally make that break higher, the action will be fast. You won't have much time to react -- maybe 3 days to a week at most.

To stay ahead of mortgage rate changes, follow my "Float or Lock" advice on Facebook and Twitter. It's free and should help you make better decisions with your rate locks.

And if you find my advice useful, send me an email or call me so we can work together. I answer all my own emails and my rates are excellent.

Share on Facebook

Conforming mortgages are appropriately named; they "conform" to the mortgage underwriting guidelines of Fannie Mae or Freddie Mac. Mortgages meeting these criteria are securitized on Wall Street as mortgage-backed bonds.

As mortgage performance has weakened, however, lending standards have tightened.  Today's would-be borrowers are asked to document more income, deeper reserves, and higher credit scores.  One underwriting area that hasn't tightened, however, is the maximum allowable loan size.

For the 5th consecutive year , the 1-unit conforming mortgage loan limit is $417,000.

As released by the Federal Housing Finance Agency, the official 2010 conforming mortgage loan size limits are, by property type:

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950

Note, however, that maximum conforming loan limits vary by market. Counties in which "typical" home prices dwarf the conforming loan limits are declared "high-cost" areas. Each gets its own, individual conforming loan limit that ranges up to $729,750.

For example, a home in Denver, Colorado is capped conforming at $417,000 but a home in Snowmass, Colorado gets clearance up to $729,750.

Same for Mason, Ohio and Athens, Ohio.  Mason's maximum loan size is $417,000; Athens' is $432,500.

And, too bad for residents of tony Chicago neighborhoods -- Lake Forest, Lincoln Park, Hinsdale and elsewhere.

Because each of the Chicagoland counties are a melange of housing types and socioeconomic class, none have sufficiently high median sales prices to justify the High-Cost Treatment. According to the government, Lake County is not high-cost, Cook County is not high-cost, Dupage County is not high-cost, and neither are the collars.

Mortgages that exceed conforming loan limits are considered "jumbo" or "super jumbo". Excellent pricing is still available, you just have to know where to look.  And it's not at Fannie Mae.

There are 197 designated high-cost areas in the U.S. -- just 6% of the country. For the majority, your 2010 conforming loan limit is $417,000. To find your local market's loan limit and confirm it, check the Fannie Mae website.

Share on Facebook

Like in 2006, 2007 and 2008, Autumn 2009 is marked by falling leaves and falling mortgage rates.

The trend looks more like a pattern.

Based on Freddie Mac data of the last 4 years, 30-year fixed mortgage rates rise from January through August, and fall through fall. There's 6 weeks left until January.  The clock may be ticking for today's home buyers and rate shoppers.

Conforming and FHA mortgage rates are sub-5 percent right now and, by most measures, there's no good reason for it.

• The U.S. dollar is extremely weak -- usually a negative force on mortgage rates
• The price of gold reflects a healthy fear of inflation -- usually a negative force on mortgage rates
• The stock market is on a tear -- usually a negative force on mortgage rates

Furthermore, the economy is no longer in free-fall which is the scenario that dropped rates below 5 percent in the first place.  Mortgage rates are poised to rise and, when they do, they'll rise in a hurry.

See, that's the other trend in mortgage rates.  Rates rise much faster than they fall.  Just ask anyone on the wrong side of the Memorial Day Massacre about how that turned out.   As low as rates are now, we could be looking at 7 percent mortgage rates in a flash.

Timing mortgage markets is unpossible.

As a homeowners, it's easy to keep up with rate trends on a weekly basis with the newspaper or the aforementioned Freddie Mac data, but markets move faster than that.  They're minute-by-minute and ever-changing.  Unfortunately, laypersons don't get access to mortgage bond data for free.  Even the U.S. Treasury market fails as a proxy anymore.

So, to keep up with rates as best you can -- follow my feed on Twitter or fan me on Facebook. I post near-real-time mortgage market updates several times per time  and I usually post advance notice on rate changes for the worse.

You can also get a feel for what rates are doing right now by using the "Rate Offer" form at the top-right of this page. If your situation needs more than 8 fields to summarize, send me an email directly.

I answer all my own mail.

Share on Facebook