The Mortgage Reports

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.

for a real-time rate quote.

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

• 33% predict mortgage rates will increase
• 27% predict mortgage rates will decrease
• 40% 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 this video about Poland Spring Water than reading my analysis.

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

"The Fed just bought the mortgage markets another 30 days of low rates."

With consumer confidence on the mend, net job gains nearing zero, and Retail Sales rebounding, Wall Street had bid up mortgage rates this month. Since touching an all-time low (for the 5th time this year) at Thanksgiving, rates had surged by nearly 3/8 percent.

Mostly, the trading was just jockeying for position ahead of the December 15-16 FOMC meeting.

Investors were worried that the Fed would blink; that it would change its economic outlook for 2010 and have to start raising the Fed Funds Rate sooner than forecast; that inflation fears would return.

Instead, none of that happened.

In the FOMC's post-meeting press release, the Fed talked about the economy "picking up" plus stronger jobs and housing markets, but it also said that risks to growth remain. Notably, consumer credit is tight and businesses are reluctant to hire new workers.

And then, to back that up, the Fed made 5 separate comments stating inflation is under control.

Markets didn't know what to make of the Fed's statement. There was a lack of conviction in both directions and that will help rate shoppers in the weeks ahead.  The last thing traders want to do is take on more risk before the New Year and the Fed just gave investors the green light to park cash in bonds.

This includes the mortgage-backed variety, of course.

That said, rate should remain bumpy for the foreseeable future so if you need to lock a rate, talk with your loan officer in advance about selecting the rate that's right for you. Then, set a plan to wait for it.

If you're patient and your rate target is reasonable, you'll probably get the chance to lock.

If you don't have a loan officer for refinancing, just with some notes on your mortgage. I'll bounce back with some answers for you. I handle my emails personally.

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 as "Fed Holds Rates Steady".

However, 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.  By contrast, mortgage rates are based on the price of mortgage-backed securities plus any loan-level pricing adjustments.

They're two very different animals. The chart proves it.

The difference between the Fed Funds Rate and mortgage rates is an important distinction because when the Fed meeting adjourns, Ben Bernanke & Co will release a brief statement addressing the nation's economic strengths, weaknesses and threats.

Now, remember.  Since March, the Fed has used its statements to say that the economy is growing, but remains threatened by job loss and lack of consumer spending.  This is a major reasons why mortgage rates are still so low.  Growth has been tempered by dour attitudes and the Fed knows it.

But then last month happened.

• Net job gains were nearly positive and much better-than-expected
• Retail Sales for November posted much higher-than-expected
• Consumer Confidence numbers rebounded strongly

The Fed's chosen "3 main threats to growth", it seems, are now showing signs of rebirth.  Rate shoppers should hope the Fed glosses over these facts because if its makes mention of the points in its press release, mortgage rates will jump.

Even if the Fed Funds Rate is unchanged.

Since 2000, 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.  In 1973-74 and again in 1980-81, the spread actually went negative; mortgage rates were below the FFR.

So, all of this to say: Don't expect mortgage rates to remain unchanged just because the Fed Funds Rate is unchanged.  The two don't move in tandem.  Rather, mortgage rates react to the Fed's words and that's why the Fed's post-meeting press release is so important.

If the Fed shows optimism for the economy in its statement, mortgage rates will rise.  If the Fed shows pessimism, mortgage rates will fall.  Either way, be on alert.

The FOMC's statement hits the wires at 2:15 PM ET Wednesday.

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 . 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.

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 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, 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 . 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.

Before this morning's jobs report, mortgage rates were up 0.375 percent on the week. Post-release, the figure has doubled.

According to the government, the U.S. economy shed just 11,000 jobs in November, a 100,000 job improvement from October and the lowest tally since June 2007. Furthermore, the national Unemployment Rate dropped to 10.0 percent.

The data is building economic optimism on Wall Street, forcing a retracement of the flight-to-quality bets made since October. These safe-haven bond buys dropped rates to their lowest levels of all-time last week. This week, not so much.

There's a massive MBS sell-off in process. Rates unwound 3 weeks of improvement in the first 3 minutes of trading.

Now, if it seems strange to be talking economic recovery while Americans are still -- let's face it -- losing jobs, remember that economic data always needs context and the context here is that Non-Farm Payrolls is a lagging indicator.  This means it's more of a commentary on past economic events than a prediction of future ones.

The jobs report rarely reflects the economy "right now" as illustrated above.

During the Recession of 2001, job loss peaked in October of that year -- 1 month before the recession ended.  Beginning in February, then, even as the economy expanded, job loss continued. It wasn't until October 2002 that job gains went net positive.

The same pattern emerged earlier this year.

• Job loss peaked in January 2009
• The recession ended in February 2009
• Job losses are continuing even as the economy is growing

And this is why today's job report, although negative, is still positive.  The numbers were much better-than-expected, further proof that the U.S. economy is in recovery.

Unfortunately for rate shoppers, though, mortgage markets are getting slammed. Already today, rates are up 0.375 percent.

If you're under contract for a home or otherwise in need of a mortgage, talk to your loan officer about rates as soon as possible. One of the dangerous patterns of which to be concerned is that rates tend to fall slowly and rise quickly.

We had several weeks of rates going lower; it could all unwind in just a day.

For questions about mortgage rates or for what rate you'd qualify, with some notes on your situation. The more you tell me, the faster I can respond with a rate, and my rates are pretty good.

When banks make fixed-rate, principal + interest home loans, a borrower's monthly payment gets calculated from amortization schedules (ah-mor-ti-ZAY-shun).  With respect to mortgages, amortization is the process of paying a loan to $0 over time.

For homeowners, an amortization schedule's most important trait is that it creates interest-heavy repayments in a loan's early life, with very little principal reduction.

At today's rates, it would take 20 years to reduce the principal balance on a 30-year, fixed-rate mortgage by half.

Amortization schedules are "bank-friendly".

Having said that, the schedules bring benefit to homeowners, too. This is because mortgage interest is often tax-deductible.  The early, interest-heavy years of a mortgage loan, therefore, can provide larger tax benefits to homeowners than the interest schedule throughout the loan's later years.

Here's some stats. Comparing different $300,000 mortgage loans at a rate of 5 percent, after 10 years:

• A 15-year mortgage has been paid down by 58 percent
• A 20-year mortgage has been paid down by 38 percent
• A 30-year mortgage has been paid down by 19 percent

After 15 years, the numbers look similarly disproportionate:

• A 15-year mortgage has been paid in full
• A 20-year mortgage has been paid down by 65 percent
• A 30-year mortgage has been paid down by 32 percent

And then, as interest rates climb, the numbers get more skewed in favor of the banks. At a 6.5 percent mortgage rate, for example, after 15 years, a 30-year fixed mortgage is barely one-quarter paid.  The bulk of the amortization doesn't happen until the last 5 years of the loan.

It's a terrific time to shop for a mortgage. Rates are scraping all-time lows and MBS volatility is fading.  Mortgage rates are changing every 5 hours on average -- a molasses pace as compared to June and the slowest rate since March.

Slow and low.  That is the tempo. And it suits rate shoppers just fine.

Mortgage rate volatility is a function of Wall Street.  The more skittish the investors, the more volatile the rates. This is why mortgage rates changed at break-neck speeds in October 2008, and again in June 2009.  These two periods, in particular, represented the dueling pinnacles of fear -- fear of depression in the case of the former, and fear of inflation in the case of the latter.

Today, Wall Street is convinced that the U.S. economy is in stasis pending the return of jobs and consumer spending.

Until jobs returns, or until news convinces investors otherwise, mortgage rates should remain somewhat stable. This isn't to say that rates won't rise, but if they do, you won't have to get frantic about it.  You'll have an hour or two to get your rate lock in.

Two months ago, that wouldn't have been the case -- you'd have had 8 minutes.

Meanwhile, it's tough to keep up with mortgage rates in real-time because there's a lack of public feeds.  Get the next best thing, then, by friending me on Facebook or following me on Twitter.  I post as-it-happens mortgage rate updates all day long.  If you want to be warned before lenders hike rates, make sure to follow me.

And if you want a rate quote -- conventional, FHA, VA or otherwise --  and I'll see what I can do for you.  I answer all of my own emails and my rates are very low as compared to brokers and banks.

The housing market is in recovery. There's lot of stats to back it up so take your pick:

• Existing home sales are up and supplies are down
• New home sales are up and supplies are way down
• Pending home sales are posting at record paces

And, perhaps, most importantly, the best gauge of the housing market's health -- home values -- is showing consistent improvement.  Both private-sector Case-Shiller Index and the government's own Home Price Index showed home prices on the mend.

Foreclosures may not yet have peaked, but the worst of the housing market is definitely behind us. Anyone who tells you otherwise is selling something.

Between the 2nd and 3rd quarter this year, according to the Federal Home Finance Agency, home values rose 0.2 percent nationally.

Now, it's a statistic without direct meaning to homeowners because the "national real estate market" doesn't exist.  You don't buy a home in America -- you buy a home in Cincinnati.  The Home Price Index data remains important for trending reasons, however.  Especially to lenders.

See, unlike you and me -- people with a limited geographical exposure to the housing markets -- lenders are nationwide.  To them, national data is extremely relevant.

A "national" real estate portfolio is a lender's path to diversification.

So, as we dissect Q3's data, it's important to pick up on a few of the subtler points as compared to Q2.

First, geography does not appear correlated to home price improvement. Each region is represented equally in the Top 10 and spread equally throughout the list.  Clearly, this isn't just a Coastal Recovery.

And second -- stunning analysts -- is that home value changes are occurring independent from foreclosure activity.  For example:

1. California ranks #2 in home value improvement between Q2 and Q3 2009.  Over that same period, California's Foreclosures per Capita is second-worst in the nation, behind Nevada.
2. Illinois beat the national average for home value improvement between Q2 and Q3 2009.  Over that same period, though, Illinois foreclosure rate was nearly 3 times the national average.
3. Between Q2 and Q3 2009, Delaware's foreclosure activity was third-lowest in the country. Its home values, however, fell by more than any other state.

The supply-driven relationship between foreclosure rate and home prices is broken. This is because buy-side demand for homes now exceeds new supply is most U.S. markets.  The inevitable result is higher prices everywhere.

Low mortgage rates, an expanded tax credit, and general optimism about housing should sustain demand through the winter.  Therefore, expect home values to continue to climb further.  If you plan to buy a home in 2010, consider moving up your time frame.

The best "deals" may the ones you get between now and the Super Bowl.

To get a feel for what mortgage rates and payments look like in your local market, with the details of your purchase. I may have some follow-ups for you, but it's a good place to start.  I respond to all of my own emails and I'm pretty quick about it, too. I can send a Good Faith Estimate upon request.

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.

for a real-time rate quote.

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

• 80% predict mortgage rates will increase
• 10% predict mortgage rates will decrease
• 10% 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 Neil Young sing the theme song to The Fresh Prince of Bel Air than reading my analysis.

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

"Mortgage rates, like everything else, are cheap this holiday season."

The U.S. economy is driven by consumer spending.  Spending is the catalyst for all things good.  Without spending, the economy idles and, right now, spending is flat.  Sure, the housing market is improving and so are the banks, but an economic recovery won't be proclaimed until everyday Americans start spending cash.

Consumer spending is down and trending lower. Retailers know it, too.

Tight purse strings explain why "Black Friday" specials started a full week early at Amazon, and why stores are discounting more than usual this year.  Anything to part a person from his paycheck.

Despite the deals and promos, however, consumers will spend less this season. Joblessness is high and shoppers are cautious. The lack of register receipts will hold the economy in place, which is to say that growth will remain tempered.

For mortgage rate shoppers, this is a good thing.

See, ever since Fed Chairman Bernanke's March 2009 interview with 60 Minutes, the one in which he metaphorically observed "green shoots" in the economy, Wall Street has been betting on recovery.  First, they thought it would come in summer.  Then, in fall.

Now, expectations are delayed again.

So long as our nation's economic future is in doubt, mortgage markets will benefit from safe haven buying. More demand means lower rates, and, by extension, cheaper home financing.

A year ago Thanksgiving, mortgage rates reached an all-time low.  We're approaching those same all-time levels again.  But unlike last year, rates should stay low for longer than an hour or two.

Mortgage rates will remain beat down until consumer spending returns.

My advice to homeowners?  Talk to your loan officer about a refinance. Don't worry about your equity, your job, your closing costs, or anything else for that matter -- just make the phone call and evaluate your options. You can always say "no".

Based on today's rates, though, I have a sneaking suspicion you'll want to say "yes".

If you don't have a loan officer and/or don't want to call your current lender's toll-free support center, just with some notes on your home loan and I'll bounce back with some answers for you.

I handle my emails personally and my rates are excellent.

The economy is in recovery. Or so we hear. There appears to be a lot of data in support of the argument:

• Existing Home Sales are up 24 percent in twelve months
• Credit markets appear markedly stable as compared to last year
• The stock market is touching 13-month highs

And while this has been happening, there's been nary a peep from inflation.

In most circumstances, we'd label the argument Case Closed, recession over, blue skies ahead.  Only, this isn't most circumstances.  And a major component of the economy is conspicuously absent -- consumer spending.

Consumer spending is a U.S. keystone, accounting for 70% of the economy.

Without consumer spending, we can't pronounce the recession's death.  Wall Street knows it.  As a consequence, Retail Sales data is the Economists' World equivalent of a rock star this season, getting scrutiny and attention well beyond its data-modeled peers.

The audit's also bringing focus to Consumer Confidence data.

Many analysts believe that confidence correlates to spending.  Looking at the trendline chart, they've got good reason -- there relationship between sales and confidence appears to be direct.  But there's some analysis worth doing, too.

• In a "healthy" economy, consumers spend more than their confidence suggests
• In a "sick" economy, consumers spend less than their confidence suggests

In other words, because our current economy is not yet recovered and because joblessness rests north of 10 percent, expect holiday sales to drag this year.  Consumers will spend even less than they themselves tell the pollsters they're planning to spend. Fear will rule the (shopping) day.

For mortgage rate shoppers, it's wonderful news.

As consumer spending drags, economic doubts will linger.  Tough recovery questions will resurface for 2010 and, until they're retired, mortgage rates won't have much reason to jump. Rates will be way up some days and nicely down on others, but, absent a complete shocker, look for mortgage rates should bounce within the same 5.250% range in which they've resided for the past 12 months.

Predicting mortgage rates is an inexact science but sometimes there are clues to help you. Make consumer confidence and retail sales data two of your guiding lights.  Then, follow me on Facebook or on Twitter to see what the market's doing in real-time.

When you're ready to lock or need a rate quote, . I lend in most states and if I can't help you, I'll point you to a resource that can. I answer all my own emails and my rates are always excellent.

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, 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.

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.

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, or call me so we can work together. I answer all my own emails and my rates are excellent.

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.

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, .

I answer all my own mail.

The pace of foreclosure activity slowed for the third straight month last month.  According to RealtyTrac.com, foreclosures are down 3 percent from September.

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

1. Foreclosure activity fell in 9 of the top 10 foreclosure states nationwide
2. Defaults in Nevada -- long the Foreclosure Capital of the County -- plunged 10% from last October
3. Job-ravaged Ohio's foreclosures are down 4 percent from last October

Overall, this month's foreclosure report is another positive signal in the housing market.  Recovery is underway.

For homebuyers looking at foreclosed homes, though, the window for "a deal" may be closing.  Since foreclosures became "big business" toward the end of 2008, real estate firms found ways to make buying a foreclosed home faster and cheaper.

It's no surprise that distressed properties now account for nearly 1/3 of home resales.

Especially because foreclosure data is now free 24/7.

If you're considering a foreclosed home, check out these 3 websites.  They're among the biggest of the foreclosure-tracking companies and each offers a free, 7-day pass.  That's usually enough to get you on the right path so you know what to tell your real estate agent.

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

You may want to register with all 3 because each site uses slightly different foreclosure sources.

The number of foreclosures are slowing, but, for now, the 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 . I'm experienced with bank-owned homes and I'm as comfortable with first-time buyers as I am with investors owning more than 4 properties.

Plus, my rates are really good.