Massachusetts Real Estate

Original article source: Massachusetts Real Estate Blog

As a Realtor who has been heavily involved closing Massachusetts short sales over the last five years, one of the questions that I get asked quite often from home sellers is how long will it take before I will be able to buy a home again.

Of course what people really mean is how long before I will be able to get another mortgage.

The answer to this question does not have any clear cut and dry answer. There are quite a few variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or short sale.

Going through either a short sale or a foreclosure has the potential to seriously impact ones credit.  Government entities Fannie Mae, Freddie Mac and FHA do not directly loan money to individuals but are the governing body that work with lenders to guarantee loans and free up money to provide mortgages.

Banks typically have the authority to lend to whoever they want but will generally follow the guidelines set forth by these entities. There are some lenders of course that will take greater risks with some borrowers than others.

In the link provided below the general guidelines that FHA, Fannie Mae and Freddie Mac follow when considering a loan after a short sale or foreclosure are discussed.

See Getting a mortgage after short sale and foreclosure for a complete understanding of how your credit will be impacted, as well as the time period before a borrower will be able to get financing to purchase another home under these scenarios.

The credit impact of both short sales and foreclosures are explained in depth. There is also a comparison between FHA, Fannie Mae and Freddie Mac loans. There is a lot of misinformation online about the difference in credit impact between a short sale and foreclosure.

There are many that try to paint a picture that the credit impact of a short sale is far less damaging to ones credit when that is in fact not the case. The benefit in a short sale lies more in the fact that you may be able to get a mortgage quicker in the future. Credit scoring with missed payments is nearly identical when comparing short sales and foreclosures according to MY FICO.

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About the Author: The above Real Estate information on Getting a mortgage after a short sale was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise!

For Massachusetts Real Estate information see Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service Real Estate short sales in the following towns in and around Metrowest Massachusetts: Hopkinton, Milford, Upton, Bellingham, Southboro, Westboro, Ashland, Holliston, Mendon, Northboro, Shrewsbury, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Framingham, Natick and Douglas MA.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 25 years.

Original article source: Massachusetts Real Estate Blog

Credit scores can have a dramatic effect on a borrowers ability to get the best rates for many types of financing including a home mortgage and a car loan.

If your credit score does not meet minimum standards you may not even have the ability to get a home mortgage period!

There are a number of factors that the credit bureaus use to calculate your credit score. One of the most important factors they use is your past payment history which generally accounts for 35% of your credit score.

In the mortgage article how to improve a credit score, all the various ways you can achieve and maintain a great credit score are discussed. If you pay attention to these credit scoring factors you will be well on your way to achieving an exceptional credit score.

When it comes to your home there are ways to improve a credit score with specific home finance tips.

Pay Your Mortgage On Time

It goes without saying that paying your bills on time is a must if you want to have excellent credit. Above all else you want to make absolutely certain you pay your home mortgage when it is due. As mentioned above, past credit history is a critical factor on how you be viewed by a lender when applying for financing.

There is nothing that will hit your credit harder than a missed mortgage payment. Credit scoring agencies will look at a missed mortgage payment in a far more negative light than a missed car or credit card payment. If at all possible you should always consider making your mortgage payment before other bill that are due.

To continue reading and see more of the advice for increasing a credit score visit home finance tips for increasing a credit score.

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About the Author: The above Real Estate information on Improving a credit score was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise!

For Massachusetts Real Estate information see Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service Real Estate short sales in the following towns in and around Metrowest Massachusetts: Hopkinton, Milford, Upton, Bellingham, Southboro, Westboro, Ashland, Holliston, Mendon, Northboro, Shrewsbury, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Framingham, Natick and Douglas MA.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 25 years.

  Original Source: Franklin MA Real Estate                                                                                       

Getting the best mortgage home loan for your particular needs is all about doing the proper research so you can hand pick the program that works for your situation in life. There are numerous loan programs available to savvy home buyers.

The most common loan programs are the conventional fixed rate mortgage and the adjustable rate mortgage. The fixed rate mortgage program can be further broken down by the length of time. The most common length of a fixed rate loan is either 30, 20 or 15 years.

The shorter the loan time frame, the lower the rate will be. The best loan program option generally boils down to how long you expect to remain in the home.

The case for a 30 year fixed rate mortgage

A 30 year fixed rate mortgage is the most common loan program and one that gives the borrower the security of paying one set rate for a long period of time. As a borrower you do not have to worry about your rate going up as it is fixed for the life of the loan. You can be confident knowing your payments will be manageable, and you will be knocking down the principal of the loan and building equity slowly but steadily.

The main disadvantage however, to a 30 year fixed rate mortgage is that you will pay a substantial amount of interest during the time you have the loan. There are ways to avoid the large payout in mortgage interest (see below).

The case for a 15 year fixed rate mortgage

The 15 year fixed rate mortgage has become a very popular loan product. It is easy to see why when you see how much extra you pay in interest over the life of a 30 year loan. It can actually be staggering to see just how much money the bank is making in interest! The reason many borrowers opt for the 15 year loan is two fold. When you apply for a 15 year fixed rate loan you will notice that the rate offered is always lower than a 30 year fixed rate loan. Looking at the gap between the two rates can be a serious consideration for a borrower especially as the gap grows larger. With a 15 year loan you will grow your equity in the property far more quickly and save a bundle in interest payments.

What you need to be certain of is that you will have no problem making the payments as they will be much larger given the fact the loan will be amortized over a smaller period of time. For example on a home mortgage loan of $300,000 over 30 years you will pay $1642 per month for principle and interest. The same payment on $300,000 for a 15 year fixed loan is $2301 which amounts to a difference of $659 per month. Not exactly chump change!

If you are uncertain that you can handle the jump in the amount of the payment the best thing to do is go with a 30 year fixed rate loan. You can always add extra principal to your payment each month which will in effect accomplish the same thing as having a shorter mortgage term. By adding the extra principal you will be paying down the note faster which will cause there to be less interest paid over the length of the mortgage.

There is always some discussion amongst financial experts on whether it makes sense to pay down your mortgage. The argument boils down to the fact that mortgage interest is deductible on your taxes. If you are already maxing out your tax-advantaged retirement accounts it may make sense to do so.

The case for a hybrid adjustable rate mortgage (ARM)

If you are going to be buying a home and there is near certainty that you will be moving in a short period of time then one of the hybrid adjustable rate programs may suit your needs perfectly. There are a number of adjustable rate options including a 3, 5, 7 and 10 year loan periods. With the hybrid loan, the rate is fixed for a set amount of time and does not go up until you reach the end of that period.

These hybrid loans generally have lower rates but usually not enough that you would want to use them unless you know you will be moving. The risk to you may be sizable because once the rate term expires there is a good chance that the rate could jump. If your income can not support the jump in the rate that would not be a good thing, especially if your debt load has also increased during the fixed rate period. Having some cash reserves would be an excellent consideration when going with this type of loan program.

The case for an FHA loan ( Federal Housing Association)

The FHA loan has become an exceptionally popular loan program especially amongst 1st time home buyers. The main advantage of an FHA loan is the fact you only have to come up with a down payment of 3.5%. You are also not required to pay private mortgage insurance which is typically required under a conventional loan program when you are putting under 20% down.

The FHA loan is also more flexible when it comes to a borrowers credit. For a full break down of the advantages of an FHA loan see FHA vs conventional rate mortgages. The caveat with an FHA mortgage is that you will pay an up front fee of 2.25% of the loan amount as well as .5% for the 1st five years of the loan or when your home equity hits 22%.

The rest of the mortgage terms to look out for

The other considerations when trying to determine what the best loan program for your needs should be is the amount of points and fees you will be paying. There is a direct correlation between the amount of points and closing costs you will pay for your determined interest rate. The more points you pay the lower the rate will be.

A mortgage point is equal to 1% of the loan amount. So if you are mortgaging $300,000 a point would equal $3000. The fees and closing costs also become important. If one lender is going to charge you more closing costs and fees for the same rate as another lender it might not make fiscal sense to use them. This is where comparing the cost of various loan programs becomes very important.

Mortgage rates and programs are constantly changing today. It is always in your best interests to shop around for the interest rate and program that suits your life situation!

Related Real Estate articles:

Home buying tax deductions to remember

Fixing credit report errors

Increasing your FICO credit score for best mortgage rates

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About the Author: The above Real Estate information on getting the best mortgage for your needs was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise!

For Metrowest Massachusetts Real Estate and homes see Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in and around Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Northboro, Shrewsbury, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Framingham and Douglas MA.

Click here to view Bill Gassett's Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 24 years.

The Obama Administration has announced new U.S. Department of the Treasury guidelines to enable servicers to begin modifications of eligible mortgages under the Administration's Homeowner Affordability and Stability Plan.

The release of detailed requirements for the "Making Home Affordable" program facilitates implementation of the critical provisions that will help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative effects of foreclosure such as lower property values, increased crime and higher taxes.

You can see the complete Home Affordable Loan Modification Program Guidlines here.

Here are the highlights of the loan modification program:

• Mortgages for single-family properties that are worth more than $729,750 are excluded from the provisions of this bill. For two families the amount is $934,200. For three families the amount is $1,129,250 and for four families the amount is $1,403,400.

• Interest rates can be lowered to a minimum of 2 percent and then if necessary, the term of the loan can be extended to a maximum of 40 years.

• The home must be a primary residence and verified as such with a tax return, credit report, and other documentation such as a utility bill. The home may not be investor-owned property.

• The home may not be vacant or condemned.

• Borrowers must provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to be qualified.

• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification in this program.

• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.

• Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1, 2009 or earlier.

• Eligibility is restricted to loans originated on or before January 1, 2009.

• Incentives are provided to extinguish second liens on loans modified under the program.

• Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years.

• Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

This loan modification home affordability program should stem the tide for quite a few folks who would otherwise end up in foreclosure.

I applaud the fact that the government has finally started to take some meaningful action. This new bill comes on the heels of the 1st time buyers incentive program.

While these are great steps to get the nations housing back on track, there are some that are so far in over their head that even a loan modification is not going to help.

There are still options available that can be taken to avoid foreclosure. A short sale is one of the means that may allow you to sell your home and get rid of your debt.

See these articles for further details:

Foreclosure avoiding it through a short sale

Short sales and deed in lieu of foreclosure

Massachusetts Short Sale

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About the Author: The above Real Estate information on making home affordable loan modification program was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

For Metrowest Massachusetts Real Estate and homes see Metrowest MA Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.

USDA loans (US Department of Agriculture) aka Section 502 loans are an excellent mortgage vehicle for those who do not have money to put down but have decent credit ratings. Typically a credit score over 600 will get the loan done. A score between 580-600 will come under much heavier scrutiny but will not rule out the borrower.

You heard that correctly...with a USDA loan you can do 100% financing!

These loans are typically used to help low to moderate income households purchase homes in rural areas. These loan products are backed by the Federal government.

In order to qualify for a USDA mortgage loan you can only have an income up to 115% of the median income for the area you are interested in buying a property.

The guidelines also include repayment viability based on P.I.T.I (Principle, Interest, Taxes, and Insurance) divided by gross monthly income being less than 29%. Total debt divided by gross monthly income must also be equal to or less than 41%.

One of the other great benefits of the USDA loan is that there is no mortgage insurance required. This can save the borrower quite a bit of money!

In my experience, unless you are in a heavily populated city the definition of rural is pretty loose. Many areas that you may not consider to be rural in your mind may qualify for a USDA loan. Areas that have a population under 20,000 will probably be ok in most circumstances.

It would be a good idea to check with a qualified mortgage professional to see if a USDA loan could work for you. Not all lenders work with these type of loan products as they are more paperwork intense.  

For additional information on USDA loans I would suggest visiting the USDA loan website (click here).

If you are located in Massachusetts and want to know if you qualify based on the income limits for a specific area you can visit Massachusetts USDA offices which can provide you with the local income limits based on the county that the home is located in.

If you are located in another state here is the link to the USDA State & local offices.

If you find that you do not meet the income requirements for a USDA loan you may want to think about an FHA loan. There are no income restrictions with an FHA loan and as of January 1st 2009 you will only need to have a 3.5% down payment.

I have noticed a lot of misinformation lately about the lack of mortgage money available. It seems the media loves to promote the doom and gloom of the Real Estate market. While it is true that mortgage lenders have really tightened their belt and are not lending to anyone that walks into their office, anymore there is plenty of funding available to those that have a job with a steady income and a decent credit rating. So don't assume you can not get a loan!

This is one of the best times in our history to buy a home. It is rare that we have seen an interest rate environment where rates are so attractive, combined with a significant drop in housing prices!

Once you have a mortgage loan and you are in your new home, there are tax deduction to remember when getting a home loan.

This is a handy list of items you will want to remember come tax time in April.

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The above information on USDA Loans another mortgage option for low to no down payment was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! 

For Metrowest Massachusetts Real Estate and homes see Metrowest Mass Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years.

When borrowing money to buy a home, there are certain deductions that you are afforded by the ole tax man that you should be aware of come tax time in April. The following are some of the deductions you may forget about when buying a home:

POINTS ~ Points on a home loan are tax deductable if they are used to bring down the mortgage interest rate. For those that don't know a point is 1% of the loan amount. On a $200,000 mortgage a point would equal $2000.00. You would only want to pay points on a loan if you knew your were going to be in the home for a while.

In order to understand if paying points makes sense you need to calculate the mortgage payment amount with and without points. By looking at the spread between those amounts you can determine how long you would need to be in the house before it would pay off for you.

Getting back to points, origination charges that constitute a "service fee" are not tax deductible.

PRO RATED MORTGAGE INTEREST

When you are buying a home depending on when in the month the home sale closes, the buyers pay either a small or large amount of pro-rated mortgage interest for the month in which they close. Whether it's large or small, a home buyer can write that amount off. The Final Closing/Settlement Statement will show just how much the buyer is due.

PRO RATED REAL ESTATE TAXES                                                                                                                                            

Often times a seller will send the local tax collector's office a check for Real Estate taxes prior to the closing. In many circumstances, however, the buyer pays a pro-rated portion of the taxes for the year at closing. This is one that is often forgotten.

NEW HOME CONSTRUCTION LOAN INTEREST

As long as the construction period doesn't last more than two years before you make the new home your "principal residence," you can write off the interest for that new construction loan.

PRE PAYMENT PENALTIES

Although most home loans today do not have pre-payment penalties on rare occasions you will still find one. If your loan does have a pre-payment penalty and you do pay off the loan early, these penalties are tax deductable.

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The above information on tax deductions to remember when getting a home loan was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

For Metrowest Massachusetts Real Estate and homes see Metrowest Mass Home Sales. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Metrowest Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years.

Federal Housing Administration loans (FHA) have been helping people finance homes since 1934. The Federal Housing Administration (FHA) which is part of HUD insures the loan so the lender can offer the buyer a better deal.

FHA loans in Massachusetts have become very popular and rightfully so. There are a number of reasons why the FHA loan program is being utilized by many borrowers as the preferred home loan choice.

Here is a summary of the reasons this may a good loan choice for you:

Anyone can apply and there are no income limits.

The FHA loan can be used for single or multi-family homes up to 4 units, condominiums, or manufactured homes.                                                                                                                                                                                                                                                                         

As of this writing (November 2008) the FHA minimum down payment is 3% although this will be changing in January of 2009 to 3.5%. The FHA is a perfect program for those that do not have tons of money squirreled away.

The borrowers credit score can be much lower in order to get the loan. At the moment credit scores can be as low as 580 with very few credit adjustments compared to conforming loans.                                              

Mortgage insurance is readily available and is cheaper than conventional loan programs. FHA also has a moratorium on their mortgage insurance costs which has reduced the cost for many home buyers.

The seller of a home can pay up to 6% in closing or buy down costs for a buyer.

The declining values policy is much more liberal and does not effect the mortgage unless the mortgage is utilizing the new temporary loan limits. The chart below summarizes the Massachusetts temporary loan limits.

One word of caution...The FHA program does not cover financing on a 2-4 unit condominium. So if you are looking at buying a duplex style townhome the FHA loan program would not be suitable for you.

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The above information on Massachusetts FHA Mortgage Loans was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

For Metrowest Massachusetts Real Estate and homes see Metrowest Mass Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years.

One of the considerations when applying for a home loan is when to actually lock the mortgage rate in. Of course those that do not lock right away are gambling with their future loan payment. More often than not the best time to lock a rate is right away.

The three consideration when looking at locking in your interest rate are:

* Interest Rate

* Points

* Length of the lock

Locking in on a rate does not commit the borrower to going through with the loan. The lock of the interest rate simply eliminates the risk of the borrower being open to market fluctuations. As a home buyer when your qualifications are tight the last thing you want to do is find out your rate has increased from 6% to 6 3/8%. An interest rate increase like that could be the difference between eating steak or macaroni and cheese on the weekends.

When a mortgage company or bank permits an extended lock-in period, the borrower will usually see either a higher interest rate or more points associated with the loan. The lender does this to minimize their own exposure to market risk. The borrower pays for the lender to take on this risk in the form of either a higher rate of more points.

As an example, a 30 day rate lock commitment may cost the borrower one half point, while a 60 day rate lock could be double that or one full point. If a borrower needed an extended lock period, but did not want to pay points, the lender could increase the interest rate instead. In this example, typically, a 60-day lock would have a higher interest rate than a 30 day rate lock. A point by the way is 1% of the mortgage amount. So if you are borrowing $200,000, one point would be equal to $2000.00.

Another reason why is it usually best to lock in a mortgage rate right away is that if rates do come down substantially most lenders are willing to renegotiate the rate. Why are lenders willing to do this? That's easy...they do not want to lose your business to someone else!

I know as a Realtor many times I hear my clients saying they heard that the Federal Funds rate just dropped or will be dropping and they assume that 30 year fixed rate mortgages will also be dropping. This could not be further from the truth!                                                                                            

There is a big disconnect between the Federal Funds Rate and fixed rate mortgage instruments. In fact many times when the Federal Funds Rate is dropped long term interest rates rise. The Federal Funds Rate is more closely tied to the adjustable rate mortgage. For a complete explanation of how this works see The Federal Funds Rate V.S. Fixed Rate Mortgages.

When you are getting a home loan the other important consideration you need to think about is whether to pay mortgage points or not. For an explanantion of when to pay points for a mortgage loan clink the link.

_____________________________________________________________________________________________________

The above Real Estate information regarding when to lock your mortgage interest rate was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007.

Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22 Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

Selling your home in Metrowest Massachusetts see Metrowest Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Douglas, and Framingham MA.

Click here to view Bill Gassett's Metrowest Real Estate profile

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.  

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years.

One of the biggest misconceptions in the mortgage and Real Estate industries is the fact that the when the Federal Funds Rate is dropped that it also means there will be a corresponding rate drop in 30 year fixed rate mortgages. People wake up - It does NOT! In fact many times the exact opposite occurs.

I can't even tell you the number of times I have been hearing lately people making the comment "Hey the Fed is thinking of dropping the rates again...Mortgage rates should be heading down". What can be even more shocking is when Realtors don't realize how things work either! A good Real Estate agent should have at least a basic understanding of how the mortgage market works - Many do not!

The underlying belief is that lower 30 year fixed rates stimulate sales. This of course is true but there is a disconnect between this happening when the government cuts the Federal Funds Rate.

Since January the Federal Funds Rate has been cut a number of times. In January of 2008, 30 year fixed rate mortgages stood at around 5.5%. In March they have been moving around between 6.25% and 6.5%. So since January when the Federal Funds Rate was cut longer term interest rates have moved up between 3/4% to 1%. This is the perfect illustration of why there is no connection.

The Federal Funds Rate helps determine what banks charge each other for over night loans. Long term rates (30 year fixed) are mostly tied to the ten year treasury yield which is determined by bond traders. Inflation drives long term mortgage rates.  When bond traders demand higher long term rates it drives up long term mortgage rates too.

There is a much bigger correlation between The Federal Funds Rate and short term mortgage vehicles know as adjustable rate mortgages (ARMS).

These rates tend to move closer in step to the Federal Funds Rate. The adjustable rate mortgage market is influenced by a number of measures including the one year treasury yield and the International Libor.

So the next time you hear "The Fed is dropping rates" Do not assume that 30 year fixed rates will also drop!

___________________________________________________________________________________________________________

The above information regarding the Federal Funds Rate & fixed rate mortgages was provided by Bill Gassett, the team leader for the #2 RE/MAX Team in Massachusetts in 2006.

Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of Hopkinton Massachusetts and other Metrowest towns for the last 23 Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

Selling your home in Metrowest Massachusetts see Metrowest Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Douglas, and Framingham MA.

Click here to view Bill Gassett's Metrowest Real Estate profile

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.  

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.

In Massachusetts, like many other parts of the country, the FHA and conforming loan limits were just increased. The standard Fannie Mae loan was anything under $417,000 prior to this change.

Anything over $417,000 was considered a "Jumbo" loan. Jumbo loans typically carry a higher interest rate. By increasing the loan limits is makes it easier for borrowers to get larger loans without a corresponding increase in the interest rate.

The changes will most likely take effect toward the end of this month. These new limits will be in effect for this year and could be revised again come next year.

In Middlesex and Norfolk County Massachusetts both the FHA and conforming loan limits have been raised to $523,500.

In Worcester County the FHA loan limit is $385,000 and the conforming loan limit remains at $417,000.

 The loan limits in Worcester County did not change from the standard Fannie Mae guideline. Worcester County FHA limits, however, did increase by over $100,000.

* One very important thing to be aware of is that most of Worcester County is considered a declining market which increases the minimum required down payment from 5% to 10% on conventional loans. FHA is not effected by declining markets so there is no change to the minimum amount down, making an FHA loan an attractive option! The minimum down payment on an FHA loan is 3.5% as of January 09 regardless if the market is declining or not.

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The above information regarding Massachusetts FHA and conforming loan limits was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007.

 Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of Hopkinton Massachusetts and other Metrowest towns for the last 22 Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

Selling your home in Metrowest Massachusetts see Metrowest Massachusetts Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

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Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years.