Ask The Michelle Cannon Team

@mcannonteamView My ProfileView Housing TrendsYouTube ChannelFollow MeFollow Me
(832) 818-6621

Client Experience Rating    4.94/5.0       Based on 51 Surveys   View Rating Detail
Contact The Michelle Cannon Team For All of Your Real Estate Needs!
        EMAIL ME        25511 Budde Rd #1603, The Woodlands, TX 77380     Phone: (281) 936-0005     Fax: (281) 936-0450
Welcome to the Michelle Cannon Team blog, we specialize in the Northwest area of Houston including Spring, The Woodlands, and Cypress. Our team is ranked in the top 200 RE/MAX teams in the state of Texas!

It is getting easier for some buyers to land a house with less money up front.

More lenders are lowering down-payment requirements, allowing borrowers to commit 3%—or even less—of a home’s purchase price to get a mortgage. Most had been requiring down payments of 20% or more since the recession began, with a few exceptions.

Some lenders also are waiving mortgage-related fees, and more are allowing down payments to be made by other parties, such as the borrower’s family.

The deals are aimed at buyers with good credit scores and a steady income who have been unable to save enough for a sizable down payment. They are often targeted at buyers who live in expensive housing markets, where even a small down payment can equal tens of thousands of dollars.

The trend toward lower down payments has picked up since mortgage-finance giantsFannie Mae and Freddie Mac, which buy most mortgages from lenders, recently lowered the minimum down payments they will accept to 3% from 5%. The changes are driven by an Obama administration effort to make homeownership affordable to a wider group of buyers.

Low-down-payment mortgages have long been available. The Federal Housing Administration insures mortgages with down payments as low as 3.5%, and it is lowering the annual mortgage-insurance premiums on new mortgages beginning on Monday.

Borrowers should be aware that small down payments leave them more at risk of owing more on their mortgage than the property is worth should home values in their market decline, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla. In addition, borrowers likely will incur higher costs over the life of the loan, including higher interest rates and, often, mortgage insurance.

The moves come as mortgage originations declined substantially last year. Lenders gave out an estimated $1.12 trillion in mortgages in 2014, down 39% from a year earlier and the lowest amount since 1997, according to the Mortgage Bankers Association, a Washington-based trade group.

Most mortgages have been going to existing homeowners who are refinancing into lower interest rates, as demand among home buyers has been low compared with historical norms.

Regions Bank, a unit of Regions Financial, launched a mortgage program in September that allows some borrowers to make a 5% down payment. The bank says it will lower that requirement in the next few weeks to 3%. To qualify, borrowers must meet certain criteria, including not having owned a property or had a mortgage in the past three years.

TD Bank, the U.S. unit of Toronto-Dominion Bank, is allowing first-time buyers to put as little as 3% down through its “Right Step” loan program. The bank—which also is extending the offer to low- and moderate-income borrowers as well as those purchasing a home in some up-and-coming neighborhoods—lowered its cash-down requirement from 5% last year.

The banks allow borrowers’ down payments to be partially or fully funded by family, nonprofits or other sources.

Lenders also have been lowering the bar for large mortgages, known as ”jumbos,” which they typically hold on their books. Such loans exceed $417,000 in most parts of the country and $625,500 in pricier housing markets such as New York and San Francisco.

In November, PNC Financial Services Group began allowing exceptions to its down-payment requirements for jumbo mortgages, says Tyler Case, a loan officer at PNC’s Fords, N.J., branch. The lender, which has been requiring at least 20% down for jumbos up to $1.5 million, lowered that to 15% for borrowers whose income and assets go beyond what the bank generally requires. To qualify, borrowers will need a higher credit score and less debt relative to their income than is usually required, as well as having savings after the home purchase equal to at least 12 months of mortgage payments.

PNC also is offering exceptions on down-payment amounts for larger loans up to $3 million.

Wells Fargo, meanwhile, began permitting down payments of as little as 10.1% last year on jumbo mortgages. Previously, its lowest down payment on jumbos was 15%.

Borrowers who want to get a mortgage with a particular lender should ask if it would allow a lower down payment than what is officially offered. PNC, for example, isn’t advertising its 15% option, Mr. Case says. Instead, it is offering it to eligible borrowers who inquire or mention that they have been offered lower down-payment loans at competitors, he says.

The costs associated with these low-down-payment mortgages can vary significantly. The interest rate and fees borrowers pay often depend on whether the lender plans to sell their mortgage to Fannie or Freddie, or if it plans to hold the loan on its books, in addition to borrowers’ qualifications.

Borrowers need to compare costs, including the interest rate, whether they have to pay any upfront fees to get that rate, and what their total costs to get the loan will be. A lower interest rate might not be a good deal if it requires larger out-of-pocket payments.

Often, borrowers have to pay an extra fee for private mortgage insurance, which protects the lender from incurring significant losses if the borrower defaults, in exchange for a low down payment. In most cases, the fee is included in the monthly mortgage payment, though borrowers sometimes have the option to pay it as an upfront charge.

Mortgages purchased by Fannie Mae and Freddie Mac usually require private mortgage insurance if the down payment is less than 20%. Lenders generally decide which mortgage-insurance firm to work with.

Borrowers with higher credit scores, smaller loan amounts and fixed-rate mortgages pay less.

The size of the down payment also matters. Typically, someone with a FICO credit score of 760 or more—on a scale that tops out at 850—who is making a down payment of just under 5% and getting a $400,000, 30-year fixed-rate mortgage will incur at least a 0.57% fee, according to Radian Guaranty, a unit of Radian Group, and Mortgage Guaranty Insurance, a unit of MGIC Investment, two of the largest private mortgage insurers.

That comes out to $190 a month. The same borrower with a down payment of just under 10% would incur a fee of at least 0.43%, or $143 a month.

Before signing up, borrowers should find out if they will incur these costs, and for how long. They should consider asking their lender if they can stop paying this fee when they reach at least a 20% equity stake in the home through a mix of home-price appreciation and amortization, for example, says Keith Gumbinger, vice president at mortgage-information website

Lenders who hold low-down-payment mortgages on their books typically don’t require this insurance. But the loans may not be a bargain, he says, because they often charge interest rates that can be an eighth to a quarter of a percentage point higher.


Most millennials say they’d rather rent than buy a home — a decision that could cost them more than $700,000 over the course of their lives.

Nearly six in 10 millennials (59%) say they’d rather rent a home than buy one, with just one in four saying they are either very or completely likely to purchase a home in the next five years, according to a survey of 1,300 millennials released this week by EliteDaily and Millennial Branding. (This anti-home-buying trend can already be seen: Currently, only about one in four millennials own a home, down from about one in three in the mid-70s and early 80s, according to data from the Demand Institute.) That’s “bad news for the real estate industry,” the report concludes.

The reasons for this sentiment are many. More than six in 10 feel they simply can’t afford it, the survey revealed (whether or not they actually can’t afford it is another question entirely). Plus, millennials tend to marry and have children later (two events that often inspire home purchases) and are a generation that doesn’t like feeling stuck in one place, says Dan Schawbel, the founder of Millennial Branding.

Whatever the reason, this decision may be a costly one. “In most markets it is still cheaper to buy than to rent [each month]” — even when you factor in the insurance and property tax payments, in addition to the mortgage payments, says Daren Blomquist, vice president of RealtyTrac. And because interest rates are so low, now is a good time to buy in many markets — at least if you plan on staying in the home over the long term (Blomquist says that, as a very rough rule of thumb, if you don’t plan on staying in the home you are buying for at least five years, it may make sense to rent instead of buy).

Plus, you’re working toward owning an asset when you buy — that’s not the case when you rent. Considering that the median home in America costs $190,000 and historic annual home price appreciation is around 3%, according to data from RealtyTrac, a millennial who bought an average home today (and put $19,000 — that’s 10% — down) with a 30-year fixed rate mortgage at 4% would outright own a home worth $426,000 in 2045, and pay a total of roughly $373,000 for it (mortgage, taxes and insurance included) — a difference of $52,000. Plus, after 30 years, the person could live rent-free — a compelling prospect for retirement.

If that same millennial rented — let’s assume he pays $1,312 a month in rent this year (which is the average fair market rent for a three-bedroom nationwide, according to RealtyTrac) — and his rent appreciates at a rate of 2.7% a year (the average increase over the past decade, RealtyTrac says), he’ll end up shelling out nearly $717,000 in rent over that 30-year period — all without an asset to show for it in the end. Of course, he can cut that by having roommates, but at some age, he’s probably going to want out of the roommate game, unless it’s a spouse or love interest.

That said, many millennials will likely rent now but buy a home down the road. But waiting to buy has its costs, too — interest rates and median home prices are likely to rise down the road. At current rates of appreciation, in 10 years the average home (now priced at $190,000) would be selling for about $249,000. If interest rates return to their historical norm (from over the past 15 years) of 5.6%, a monthly house payment (including mortgage, taxes and insurance) on a $249,000 home would be $1,574 a month, a 52% increase over the $1,037 house payment for a median priced home now; plus, over that 30 years, you’d pay a total of $566,640 (assuming you put 10% down) for a home worth $558,356 at the end of that period. “In this scenario you wouldn’t come out positive on your investment in the property until a year after the mortgage was paid off, in 2056 — at which point the home would have a projected value of $573,608,” explains Blomquist.

Of course, there are some compelling reasons to rent. You have more flexibility when renting, as you aren’t tied to a mortgage payment, and savvy investors can likely get higher than 3% annual returns elsewhere. And, quite frankly, “if you can’t afford it, don’t buy,” says Blomquist; you don’t want to end up in a situation where you have to foreclose on a home.


By: Catey Hill - Market Watch Reporter


The steep decline in the price of oil has temporarily thrown a curveball into the financial markets. Lower oil prices in December led to lower gasoline and energy prices. Oil declined even further in January, which means this deflationary pressure isn’t finished working its way through the economy. Will this trend dampen the positive outlook for housing and the economy in 2015? On the contrary, lower energy prices should be a net positive for the economy and housing in most markets in the country.

Lower energy prices and global economic weakness have given us one more shot at historically low interest rates. It’s not clear yet if these short-term trends will keep interest rates this low through the start of the spring selling season, but the average 30-year fixed conforming mortgage was at 3.66% this week and the 15-year fixed conforming fell beneath 3%. As a result, mortgage applications surged.

Consumers continued to be buoyed by the cheaper prices they are paying at the pump. The initial reading from the University of Michigan released today showed that consumer sentiment in January rose almost 5% over December and was up 21% from last January. Consumers haven’t been this happy according to that measure of sentiment since January 2004.

Effect on U.S. oil producers and their workers

The primary negative from lower oil prices is the impact it will have on the areas of the country that have benefited from significant growth in the extraction and production of oil in recent years. Those were often the areas that had the strongest economies from 2011 to 2013, and now they are most at risk to see some economic weakness from oil companies cutting back on investment and even potentially laying off employees.

According to analysis of employment data published by the National Association of REALTORS® this week, just over 197,000 people are employed in oil and gas extraction in the U.S., or 0.14% of total employment. Even in Texas, the percentage of the workforce involved in gas and oil extraction is less than 1%.

A net gain for consumers

The energy sector may suffer, but other businesses and the consumer will gain. Petroleum is an ingredient in many other products, like plastics. Energy is required for every type of business. Transportation cost is a core part of the final goods we purchase. And transportation itself is a key part of our day-to-day lives.

Even oil-producing Texas, on the whole, will benefit from a lower price of oil. In Texas, 9.7 million workers drive themselves alone to and from work each day, spending almost an hour total on average in their cars and trucks, according to current estimates from Nielsen Demographics.

A recent survey by The Wall Street Journal showed that economists are now even more upbeat about the prospects for the U.S. economy in 2015 as a result of the lower oil prices.

At least based on the retail sales data from December, not all of the savings from lower gas prices are being spent on other goods. I view that as a potential positive as well—it could be that many households are saving up their weekly gasoline windfalls to apply to a down payment on a new home.

Jonathan Smoke is chief economist at


Did you pay too much for your mortgage? If you’re like millions of Americans, the answer is probably yes — and that means you may be throwing tens of thousands of dollars of your hard-earned money at the bank, when you might not need to.

A report released Tuesday by the Consumer Financial Protection Bureau finds that almost half (47%) of Americans don’t shop around for a mortgage when they purchase a home. “Consumers put great thought into the choice of a home, but the mortgage process continues to be intimidating,” CFPB Director Richard Cordray said in a statement.

Number of lenders Americans seriously consider before applying for a mortgage

Graphic: Number of lenders Americans seriously consider before applying for a mortgage


Source: Consumer Financial Protection Bureau

If you don’t shop around for a mortgage, you’re probably leaving free money (and a lot of it) on the table. “Interest rates can span more than half a percent for a conventional mortgage for borrowers with a good credit rating and a 20% down payment,” says Sam Gilford, a spokesperson for the CFPB.

While half a percent may not sound like a lot, it can be a more than $25,000 mistake for the average borrower (as of November 2014, the average price of a home sold in the U.S. was about $321,800, according to data from The Census Bureau), who takes a mortgage that’s half a percent higher than one he could have gotten by shopping around.

Say a borrower accepts a 4.5% interest rate instead of a 4% interest rate on the average home (a sale price of $321,800 and a down payment of 20% means he borrows a total of $257,440). If he gets a 30-year fixed rate loan at 4.5%, he’ll pay a total of $212,148 in interest; for a 4% interest rate, he will pay just $185,021 — a difference of more than $27,000.

For those who buy a home that costs more than average — or who put down a smaller down payment than 20% even on an average home — the results may be even more grim. For example, a person who gets a $500,000 mortgage would pay more than $412,000 in interest over the life of his 4.5% 30-year fixed rate loan, which is roughly $53,000 more than with a 4% rate.

To be sure, many people who don’t shop around may get the best rate anyway — or at least close to it. Others get a mortgage that may be a little too costly, but will later refinance and save themselves money. And still others will sell their home well before the 30-year loan period is up, so they end up paying less in interest.

Still, experts say it’s worth shopping around, as even 1/10th of a percentage point can mean thousands of dollars in extra payments to the mortgage company over the life of a loan. Luckily, doing so is relatively easy. Before shopping around, Greg McBride, the chief financial analyst for says that you should pull copies of your credit reports from each of the three major credit bureaus (you can get these for free, consider what type of loan makes the most sense for you (see MarketWatch’s “How to Get a Mortgage” guide) and figure out how large of a loan you can afford (there are dozens of online calculators that can calculate your monthly payments and more).

Once you’ve done that, McBride says that you should get quotes from your local bank and credit union as well as online and apply with up to three lenders on the same day. (Kathleen Campbell, the founder of Campbell Financial Partners in Fort Myers, recommends using Bankrate to check mortgage rates, and considering online lenders like Quicken Loans, CapitalOne 360 and Pentagon Federal Credit Union.) Finally, “compare all lender fees and rates, negotiate to get the best deal, and select the best offer,” McBride says.

This story was originally published Jan. 13 on


It should be the perfect moment for first-time buyers—the missing link in the housing recovery—to enter the market. Houses are selling, prices are rising, foreclosure rates are down, and interest rates have maintained historically low levels—yet they have not jumped in. With its recent moves, the Obama administration is trying to entice them.

On the heels of a new 3% down loan program outlined in December, President Obama announced this week that the Federal Housing Administration will cut mortgage insurance premiums on its loans. The FHA estimates that 250,000 first-time buyers will enter the market after the premium reductions.

Mortgage insurance premiums on FHA loans will be cut to 0.85% from 1.35% for a new borrower choosing a 30-year fixed-rate mortgage starting Jan. 26. This comes after years of raises—the premiums had gone up a whopping 145% since 2010, the FHA said, at one point reaching 1.55% per month.

As the fees increased, the share of first-time buyers using FHA-backed loans shrank from 56% to 39%, according to the National Association of Realtors.

“The newest borrower pays an average $1,600 per year more in fees, or triple what they would have paid prior to the financial crisis,” said Brian Sullivan, public affairs supervisor at FHA.

Return to normalcy

In essence, today’s home buyers are paying for the mistakes of yesteryear. By cutting the monthly mortgage insurance premium, the FHA can also be seen as attempting to return the mortgage market to a state of normalcy and loosening the tight lending environment that denied access to many would-be buyers.

“This is vital in supporting homeownership,” said Jonathan Smoke, chief economist at “If we are unable to provide mortgages to people without a 700 FICO [score], then we shut out half the population. The haves remain the haves and the have-nots have no way to get in.”

NAR expects the FHA action to open the door to an additional 1.6 million to 2.1 million renters and trade-up buyers, said Ken Fears, NAR’s director of regional economics and housing finance. That increase could translate to an additional 140,000 home purchases.

Its action is expected to save buyers $900 annually, according to the FHA.

Estimated savings

Many believe the estimated savings is conservative. Some buyers could save as much as $100 per month, said Adam McLain, a mortgage broker at Wintrust Mortgage. “This is huge for the consumer.”

Allowing buyers to use the $100 a month toward the home price rather than mortgage insurance is a $25,000 direct increase in buying power, McLain said.

Still, critics say lowering mortgage insurance premiums puts the FHA at risk of needing another bailout should the housing market sour again. Some critics also lament removing barriers to homeownership, conflating a low down payment amount with default rates.

Smoke insists that this is not a return to the days of reckless lending. “There is an enormous distinction between no money down and some money down,” he said.

The Urban Institute agrees. The default rate on a Fannie Mae 3% down payment loan before 2013 was  similar to that of its 90% to 95% loan-to-value products, according to a recent report from the institute.

More options

Now facing multiple financing options—3% or 3.5% down payment loans—what’s a cash-strapped millennial to do?

Choose a FHA loan and pay up front mortgage insurance (1.75%) as well as monthly mortgage insurance premiums (0.85%) for the life of the loan, albeit at a lower rate? Or opt for a Fannie Mae or Freddie Mac 3% down loan, which requires a good credit score?

With Fannie Mae or Freddie Mac, borrowers still pay private mortgage insurance up until their equity in the property reaches 20%.

Either way, home buyers now face fewer hurdles to homeownership, and that’s the point.


The new year is starting with a gift to home buyers: lower-than-expected interest rates.

The 30-year fixed-rate mortgage averaged 3.73%, the lowest it’s been since May 2013, according to the Freddie Mac Primary Mortgage Market Survey. During the last week of 2014, the rate averaged 3.87%. It was as high as 4.51% a year ago at this time.

“Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2% for the first time in three months,” said Frank Nothaft, vice president and chief economist at Freddie Mac.

The 15-year fixed-rate mortgage averaged 3.05% this week, down from 3.15% last week and 3.56% a year ago this time, according to Freddie Mac.

Likewise, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98% this week, sliding from 3.01% last week. It was 3.15% last year this time, according to Freddie Mac.

The 1-year Treasury-indexed ARM averaged 2.39% this week, down from 2.40% last week. At this time last year, it averaged 2.56%, according to Freddie Mac.

The majority of experts polled by believe rates will continue this downward trend. According to the Mortgage Rate Trend Index, 55% say rates will fall and 36% say rates will rise. The remaining 9% say rates will remain unchanged.


Your kitchen should be more than just a waystation to warm up leftovers and microwave a stray frozen burrito.

A focal point for gathering family, friends and food, our kitchens offer up a wealth of warm possibilities. But if you’re unhappy with your current configuration—don’t fret, you’re not alone.

According to a recent report from the Demand Institute, a full 62% of homeowners said that an updated kitchen with modern appliances is on their to-do list.

There’s no time like the present for inspiration, and we want to set you up for success in 2015 in your culinary and social pursuits.

Which brings us to these eight stunning spaces featured below. We cooked up a mix of cool kitchens currently on the market at a variety of price points.

If any of them inspire ideas for a new kitchen in the new year, just click on the image to learn more.


1. 3017 Pine Spring Rd, Falls Church, VA — $799,000
The dish: “Open kitchen-living-dining with walls of glass.”


Falls Church Kitchen



2. 14 Farnham Park Dr, Houston, TX — $5.4 million
The dish: “Dream Chef’s Kitchen: Sleek Boffi cabinetry, honed granite, Gaggenau ovens.”


Houston Kitchen



3. 10040 E Happy Valley Rd Unit 2016, Scottsdale, AZ — $1.725 million
The dish: “Chef’s kitchen includes beautiful Oceana granite counters from Brazil and top of the line appliances.”


Arizona Kitchen



4. 2040 NW 62nd St, Seattle, WA — $649,950
The dish: “Chef’s kitchen with quartz counters and stainless appliances.”


Seattle Kitchen



5. 65 Audubon Blvd, New Orleans, LA — $1.199 million
The dish: “Gourmet kitchen with granite and stainless appliances.”


New Orleans Kitchen



6. 3310 Quinette Rd, St. Louis, MO — $790,000
The dish: “Renovated kitchen with breakfast room, all drenched in light by sunny windows overlooking lush grounds.”


St Louis Kitchen



7. 899 Gunter Ridge Rd, Pulaski, TN — $599,000
The dish: “The flavor of an English country manor with a renovated kitchen.”


Pulaski Kitchen



8. 1900 Edgewood Ave S, Jacksonville, FL — $1.695 million
The dish: “Your own slice of paradise comes with … a gourmet renovated kitchen.”


Jacksonville Kitchen



Fannie MaeFreddie Mac and their regulator provided details on Monday for a low down-payment mortgage program, which could open homeownership to thousands of cash-strapped borrowers.

The mortgage-finance companies and the Federal Housing Finance Agency said borrowers could be able to get mortgages with down payments as little as 3%, but noted that the loans will be available only to first-time buyers, buyers who haven’t owned a home for at least a few years and those with lower incomes.

Many of the loans will also require borrowers to undergo home-buyer counseling before making a purchase.

Fannie’s low down-payment loan program and Freddie’s program will have slightly different requirements. Officials at both companies said the 3% down-payment loans could be made to borrowers with credit scores of as low as 620, which is the standard minimum, if they had other factors to mitigate their risk, such as lower debt-to-income ratios or high reserves.

Fannie said its program will be limited to borrowers who haven’t owned a home in the past three years. Freddie’s program will generally be available to borrowers who don’t make more than their area’s median income.

Freddie’s program “gives qualified borrowers with limited down payment savings a responsible path to homeownership and lenders a new tool for reaching eligible working families ready to own a home of their own,” said Freddie Mac executive Dave Lowman.

Fannie’s program goes into effect almost immediately, while Freddie’s won’t be available until March. An FHFA official in a call with reporters said that because lenders generally take some time to adapt to new guidelines, they don’t expect the new low down-payment mortgages to be widely available until the end of the first quarter of next year.

Mel Watt, who heads the FHFA, first announced the new program in October along with other changes that some banks say will make it easier for them to make loans. The new program was lauded among some lenders and analysts who have said that mortgage availability has been too limited over the last couple of years.

In a statement, Mr. Watt said that the guidelines “provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.”

Critics have expressed concern that mortgages with low down payments could expose borrowers, Fannie and Freddie to some of the risks that precipitated the financial crisis. If home prices drop, homeowners with a small amount of equity in their homes can quickly owe more than their homes are worth.

Still, even those homeowners don’t necessarily default. According to the Urban Institute, about 0.4% of borrowers in 2011 who made down payments of 3% to 5% have defaulted, no worse than borrowers who made down payments of 5% to 10%.

Fannie and Freddie don’t make loans, but buy them from lenders, wrap them into securities and provide guarantees to make investors whole if the loans default.

Both companies already guarantee loans with down payments of as little as 5%. Those mortgages, as with the new 3% down payment mortgages, require borrowers to pay for private mortgage insurance.

It isn’t yet clear how popular the new down-payment programs will be. Borrowers can already get mortgages with down payments of as little as 3.5% through the Federal Housing Administration, though the costs of such loans have increased markedly over the past few years.

Fannie and Freddie officials said that they expect the low down-payment loans they guarantee to be cheaper than FHA loans for borrowers with higher credit scores. An FHFA official said that they expected the new loans to be a small proportion of the companies’ business.

“We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers,” said Fannie Mae executive Andrew Bon Salle.


The 30-year fixed-rate mortgage dropped to its lowest point of the year as 10-year Treasury yields closed at their lowest level since May 2013, according to Freddie Mac.

This week, the 30-year fixed-rate mortgage fell to 3.80%, down from 3.93% last week. A year ago this time, it was 4.47%, according to the Primary Mortgage Market Survey.

“The temporary decline in rates will likely be short-lived,” said Jonathan Smoke, chief economist at®.  “Those who can take advantage now and lock in a purchase or refinance at these levels may never see these rates again.”

Falling mortgage rates can be attributed to global economic jitters and plunging oil prices, according to Bankrate.

With the Russian currency in crisis, there is a flight to safety, Smoke added.

“The dollar and U.S. treasuries have become a safe haven for international investment, and when demand for bonds increases, rates go down,” he said.

The 15-year fixed-rate mortgage also came down this week, to 3.09% from 3.20% last week. The rate was 3.52% a year ago this time. In addition, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.95% this week, 2.98% last week and 3% a year ago this time.

The 1-year Treasury-indexed ARM averaged 2.38% this week, down from 2.40% last week and 2.56% a year ago this time.

A majority of mortgage experts surveyed by expect rates to either remain unchanged or dip again next week. Among the experts, 42% believe rates will dip again, while another 42% said rates will remain unchanged. Just 16% of respondents thought rates would increase, according to the Rate Trend Index.

“This is likely the last of the low rates,” said Smoke. “We’re likely to see increases in the weeks ahead.”


Even as the housing market gets back on track, the numbers of first-time buyers continue to disappoint. This is strongly associated with the tight credit requirements facing would-be buyers. Recent important government policy changes and the introduction of new low down-payment programs, however, should set the stage for increased first-time buyer activity in 2015.

Clarity on Mortgage Qualifications

Both Fannie Mae and Freddie Mac finalized mortgage qualification guidelines that went into effect on Dec. 1. These guidelines clarified murky qualification standards set in place as a result of the Dodd-Frank reforms, which were intended to prevent a repeat of the financial crisis.

Up until now, the absence of specific rules and clear guidance on what types of errors would prompt Fannie or Freddie to reject a loan, leaving the underwriting bank or lender on the hook, led to very conservative lending practices. To avoid the risk of Fannie or Freddie rejecting a mortgage months or years after it closed, banks added “overlays,” or additional requirements, to the proposed guidelines.

As a result, according to Ellie Mae, a mortgage software company, the average denied credit score on conventional purchase mortgages in October was 723 even though the minimum standard set by both Fannie and Freddie was 620.

The new standards should lead to thousands more consumers being able to get a mortgage and should also speed up the underwriting and approval process.

Measures of mortgage credit availability from the Mortgage Bankers Association already indicate a slight loosening of credit in November prior to these rules going into effect. All three measures of mortgage credit availability were also higher than November of last year, between 3% and 5%. If that trend continues, it will indeed mean that we are seeing standards revert to more normal levels.

More Attractive Low Down-Payment Mortgages

Earlier this week, Fannie Mae and Freddie Mac both announced the details of new low down-payment mortgage programs they will be offering that enable qualified buyers to purchase a home with down payments of as little as 3%.

While these programs only lower the down payment threshold by 0.5% from similar loans available from the Federal Housing Administration (FHA), they will likely be far more attractive to consumers than the FHA loans. These new programs avoid the FHA fees that effectively increase the rate charged. Another advantage over FHA is the borrower’s ability to stop paying private mortgage insurance fees once the equity of the home reaches 20%.

Fannie Mae’s offering will be the first available to qualified borrowers who have not owned a home before or within the last three years. But Fannie Mae doesn’t lend directly, so it may take some time before we see specific lender offerings—perhaps in early 2015.

Clarifying when lenders are at risk and offering low down payment programs should increase flexibility in mortgage qualification.   This should pave the way for more first-time buyers in 2015. If we start to see specific competitive low down-payment lender offerings and evidence that standards are loosening, the spring selling season may start earlier than normal. After all, first-time buyers do not have to sell an existing home and can jump into the market at any time.

Jonathan Smoke is®’s chief economist.

Zip code

View subdivision price trends for the past 13 years, and create comparative subdivision analysis reports online.
View a list of my sold listings.
Search for information on Houston and Texas schools based on the county, district, campus and/or zip code.
Golf Course Finder allows you to search for Houston golf courses and to view properties on or near a golf course.
Search for Houston area highrises and see their comprehensive list of features and amenities.
Includes residential home sales statistics for residential properties and new homes listed by REALTORS®
Online resource center for affordable housing information
Information source for mortgage info, lenders, refinancing and more!
Providing links to valuable Real Estate news and Information.
Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Houston Association of REALTORS®
Copyright© 2015, HOUSTON REALTORS® INFORMATION SERVICE, INC. All Rights Reserved.