The term 'be careful what you wish for' is so overrated.....but true. Stocks and bonds were mixed this week. With good news of the earnings reports for some companies, and increased home sales, mixed with the bad news of unemployment, a jobless recovery and health care reform battles, NO WONDER bonds did not know how to price mortgage rates!
I did see a glimmer, and I mean glimmer, of 4.875% on Wednesday, for about 90 minutes. Then it was gone, as quickly as my winnings in Vegas last summer.
What am I seeing in the market? Lots of contracts, lots of backup offers, increased close times, so-so quality on appraisals, increased documentation from our investors, lots of review appraisals, longer underwriting times, lock extension fees, and volatility in rates. What else is new? This is the world we live in folks. And it may get worse before it gets better.
Ongoing advice to you is COMMUNICATE, and do it early - with everyone in the transaction. If you are not a list maker, BE ONE. If your client refuses to get pre approved early, THINK TWICE, and if you sense something does not seem right with a lender, title co, etc, ACT EARLY. And last but not least, BE FLEXIBLE. Your closings will be delayed when you least expect it. Advise your sellers not to move out until docs are at title, and don't let your buyers schedule movers that cannot be changed either. THIS WILL HAPPEN TO ALL OF US, even with the best intentions. Even when we are all on top of it. Something will come up, I promise you.
Showing posts with label Real Estate. Show all posts
Showing posts with label Real Estate. Show all posts
Friday, July 24, 2009
Tuesday, June 9, 2009
Will mortgage rates go back down?
It feels like summer ! Not only is school out and the traffic is eased up, but it feels like summer! The glorious hot days dear to Houstonians are officially here. So are the home buyers! We continue to see contracts pending, and inventory lessening. Thank goodness! There are still, however, some appraisals that come back with inventory at a 6 mo + supply. To lenders, that means a ‘declining market’. And beware that if your listing is in such an area, the lender may have some additional conditions, or may not even do the loan at all. That’s right, declining markets are not favorable. The reason? If we foreclose, we don’t want large marketing times to get rid of it! It also signifies a trend downward in prices. No lender wants to be on the top end of the market. So encourage your sellers to consider all realistic offers. I suppose realistic is the main catch here. Who knows in these unprecedented times? There may be other reasons, but that is the main concern.
The First Time Homebuyer Credit – in all its glory, has to be the most confusing legislation there is right now. No one is clear on what, how or when. The latest rumor is that FHA will allow the moneys to advance for down payment. Part of it is true, but keep reading. Our representatives on Capitol Hill have no idea what has to happen to ‘advance’ a tax credit to a homeowner. Who will check if they are delinquent on any federal debt? Who will advance the money (a HUD memo states it has to be a ‘3rd party’, certainly not them). Ok, then who? Is it really a good idea to advance money anyway before its spent? Isn’t that what got us in this mess to begin with? And then, the legislation just last week changed yet again, and now FHA loan purchases can use the money ONLY toward closing costs, not down payment. Again, WHO will administer this money? No lender thus far has jumped on this idea. So the opportunity may be there for your buyers, but they need to settle to the fact they will get it upon filing 2009 return. Not too much to ask for free money!
Interest Rates – are still low! Maybe not the 4.5% of last month, but STILL historically, low! As compared to 2 weeks ago, almost up a full point! Why? Good news in the market. Could it be from the good news to investors that Angelo Muzilo has been charged with Fraud, and that gives them a ‘temporary’ feeling that the culprits are about to be caught? Or could it be that banks are to pay back tarp money? Or maybe the ‘come clean’ speech to Muslims by our President in Egypt last week. I would have thought that the unemployment doldrums would have shocked rates back down…but no such luck yet. Rates also have gone up due to positive indicators in the market. Words from our legislators and commander in chief like ‘not as bad as it was’, or ‘the recession end may be near’ ……those types of words allow investors in stocks to feel like buying. When they buy, investors pull money out of bonds. Then bond rates go up, as the price is down to attract buyers back into the bond market.
Will rates go back down? – THAT is the million dollar question. Who knows. But inflation and higher rates is INEVITABLE. Take my word. My advice? If your buyers are holding out for rates to come down, or purchase prices to come down, they may be missing the boat on living in the present. Our (primary) homes are where we raise our families and share time with loved ones. If it makes sense, do it. If not, wait. But hanging on for a false sense of reality may be missing the boat on opportunity that is right in front of them.
The First Time Homebuyer Credit – in all its glory, has to be the most confusing legislation there is right now. No one is clear on what, how or when. The latest rumor is that FHA will allow the moneys to advance for down payment. Part of it is true, but keep reading. Our representatives on Capitol Hill have no idea what has to happen to ‘advance’ a tax credit to a homeowner. Who will check if they are delinquent on any federal debt? Who will advance the money (a HUD memo states it has to be a ‘3rd party’, certainly not them). Ok, then who? Is it really a good idea to advance money anyway before its spent? Isn’t that what got us in this mess to begin with? And then, the legislation just last week changed yet again, and now FHA loan purchases can use the money ONLY toward closing costs, not down payment. Again, WHO will administer this money? No lender thus far has jumped on this idea. So the opportunity may be there for your buyers, but they need to settle to the fact they will get it upon filing 2009 return. Not too much to ask for free money!
Interest Rates – are still low! Maybe not the 4.5% of last month, but STILL historically, low! As compared to 2 weeks ago, almost up a full point! Why? Good news in the market. Could it be from the good news to investors that Angelo Muzilo has been charged with Fraud, and that gives them a ‘temporary’ feeling that the culprits are about to be caught? Or could it be that banks are to pay back tarp money? Or maybe the ‘come clean’ speech to Muslims by our President in Egypt last week. I would have thought that the unemployment doldrums would have shocked rates back down…but no such luck yet. Rates also have gone up due to positive indicators in the market. Words from our legislators and commander in chief like ‘not as bad as it was’, or ‘the recession end may be near’ ……those types of words allow investors in stocks to feel like buying. When they buy, investors pull money out of bonds. Then bond rates go up, as the price is down to attract buyers back into the bond market.
Will rates go back down? – THAT is the million dollar question. Who knows. But inflation and higher rates is INEVITABLE. Take my word. My advice? If your buyers are holding out for rates to come down, or purchase prices to come down, they may be missing the boat on living in the present. Our (primary) homes are where we raise our families and share time with loved ones. If it makes sense, do it. If not, wait. But hanging on for a false sense of reality may be missing the boat on opportunity that is right in front of them.
Friday, October 10, 2008
Don’t look at your stocks today!
The stock market is depressing, I know. Most of you are not retiring tomorrow, right? Let’s joke so we can feel better…that we will now retire at 97. I certainly do not mean to make light of any of the losses we are all suffering in the markets. But lets us take a step back, and keep things in perspective. (1) You signed up for this the day you bought the stock- you knew the risk. It can go up, and go down (2) You have not complained at the gains you have made before 2007, certainly (3) TAKE A BREATH, stop ‘micro’ trading, and ride out the storm. Now for those of you that need the money now, I can certainly understand the wig factor you are experiencing. Talk to your advisor, put money in cash for a while. Take a break. But if you have a few months…sit it out. The market will rebound. The elections will pass, there will be confidence restored. History has shown us that.
Several clients this week were calling me about pulling out of contracts, or waiting until things calm in the markets. My question was ‘ Why?’ Real estate is the BEST investment there is. It is tangible. Furthermore, rates are still historically low, or at least average. By historically low, I mean in the last 20 years, not the last 5! Our problem is that we still remember the 3 month period back in 2003 when the 30 year fixed reached 5.0%. Those of us that really wanted to roll the dice, got a 7/1 ARM at 4.375%. As sexy as that may be, we know the end result, it was a pipe dream to think that would last. What has this thinking taught us? We as a society have a false sense of comfort in thinking that rates can stay low indefinitely, or that gains in stock will be there forever. Again, we have to step back and let things ride. Budget, spend wisely, save for a rainy day, or a down payment on a house or that matter.
As for mortgage rates, this week, the FED lowered the federal funds rate .50% . This is the overnight lending rate to banks – or the fed window as it is commonly named. Rock on! That means my mortgage rate on my pending purchase just went down! NOT THE CASE. In fact, mortgage rates went up at the news. Logical? Not to the average person. But economically, when the fed rate goes down, it is cheaper for banks to borrow, which increases profits, which translates to them spending hard dollars on things like wages, goods and capital expenditures. So the news on Wed made the stock market go up, confidence restored (temporarily, I know) and the investors took money out of bonds to purchase more stock. When this happens, the bond prices are pushed down..to attract more buyers back over, and the yields then go up…to attract more buyers. When bond yields go up, mortgage rates go up. There you have it, that is exactly what has happened. We are up .25% from last week.
Enjoy your weekend, and stay away from CNN. Go to the park instead, or go to the movies, just don’t buy the concessions, since we are now budgeting and all.
Several clients this week were calling me about pulling out of contracts, or waiting until things calm in the markets. My question was ‘ Why?’ Real estate is the BEST investment there is. It is tangible. Furthermore, rates are still historically low, or at least average. By historically low, I mean in the last 20 years, not the last 5! Our problem is that we still remember the 3 month period back in 2003 when the 30 year fixed reached 5.0%. Those of us that really wanted to roll the dice, got a 7/1 ARM at 4.375%. As sexy as that may be, we know the end result, it was a pipe dream to think that would last. What has this thinking taught us? We as a society have a false sense of comfort in thinking that rates can stay low indefinitely, or that gains in stock will be there forever. Again, we have to step back and let things ride. Budget, spend wisely, save for a rainy day, or a down payment on a house or that matter.
As for mortgage rates, this week, the FED lowered the federal funds rate .50% . This is the overnight lending rate to banks – or the fed window as it is commonly named. Rock on! That means my mortgage rate on my pending purchase just went down! NOT THE CASE. In fact, mortgage rates went up at the news. Logical? Not to the average person. But economically, when the fed rate goes down, it is cheaper for banks to borrow, which increases profits, which translates to them spending hard dollars on things like wages, goods and capital expenditures. So the news on Wed made the stock market go up, confidence restored (temporarily, I know) and the investors took money out of bonds to purchase more stock. When this happens, the bond prices are pushed down..to attract more buyers back over, and the yields then go up…to attract more buyers. When bond yields go up, mortgage rates go up. There you have it, that is exactly what has happened. We are up .25% from last week.
Enjoy your weekend, and stay away from CNN. Go to the park instead, or go to the movies, just don’t buy the concessions, since we are now budgeting and all.
Saturday, August 2, 2008
Constantly I am asked ‘How is the mortgage business doing?' Actually, it is doing quite well. My production is up 25% from last year. What I am finding, is that the brokers that were doing loans out of their garage, internet lenders, all of them are restructuring. No longer can these companies run on fumes. They go out of business, or if they stay in business, they are cutting costs and keeping only the top team players. This is, in my opinion, a good thing. Borrowers are realizing that doing business with smaller and unstructured companies has its costs. At Patriot Bank Mortgage, we are finding that consumers are relying more on reputation of their mortgage lender, more so than just finding the lowest rate. They are demanding service and results, at the most competitive terms as possible.
Yes, guidelines are stringent, and sometimes brutal. But isn’t that how things should be anyway? How in the world did we ever think the honeymoon of the ‘liar loan’ or the no down payment loan could go on? So……now that things are calming down, we, the average American, are left to deal with the aftershock. Those who are the most disgruntled , are the ones that have been caught red handed. The ones that were benefitting the most from the laxed guidelines. I must comment as well that there are those borrowers that have excellent credit, income and reserves that are caught a bit in the crossfire. The biggest complaint I (still) get, is that those borrowers are disgruntled about having to verify anything at all. They think that because they have all these things, they don’t have to prove it. There in lies a big issue. You see, we are loaning people, let’s say, $300,000. That is a lot of money! Yes, we require you to verify that what you are telling us is true. Just give us those bank statements. What’s the harm? Turn over the tax returns. Yes, we really want to know.
This last week, the President signed a bill that is anticipated to help some $400,000 homeowners avoid foreclosure. Here are the real interpretations:
Jobless claims are at a four year high. This news has relaxed rates a bit going into the homestretch of the summer. Oh, and have you noticed, gas is down at the pumps? Now it only costs me $55 to fill my tank versus $61. What a relief!
Rates as of Friday, August 1, 2008:
The following assumptions apply:
30 year (fixed) 6.250% APR 6.383% 30 year ( fixed ) 7.450% APR 7.585%
15 year (fixed) 5.875% APR 6.115% 15 year ( fixed ) 6.625% APR 6.836%
3/1 ARM 5.750% APR 6.639% 3/1 ARM 5.950% APR 6.073%
5/1 ARM 5.875% APR 6.549% 5/1 ARM 5.750% APR 5.872%
7/1 ARM 6.250% APR 6.638% 7/1 ARM 6.000% APR 6.124%
FHA/VA call for quote (max loan $270,000)
Yes, guidelines are stringent, and sometimes brutal. But isn’t that how things should be anyway? How in the world did we ever think the honeymoon of the ‘liar loan’ or the no down payment loan could go on? So……now that things are calming down, we, the average American, are left to deal with the aftershock. Those who are the most disgruntled , are the ones that have been caught red handed. The ones that were benefitting the most from the laxed guidelines. I must comment as well that there are those borrowers that have excellent credit, income and reserves that are caught a bit in the crossfire. The biggest complaint I (still) get, is that those borrowers are disgruntled about having to verify anything at all. They think that because they have all these things, they don’t have to prove it. There in lies a big issue. You see, we are loaning people, let’s say, $300,000. That is a lot of money! Yes, we require you to verify that what you are telling us is true. Just give us those bank statements. What’s the harm? Turn over the tax returns. Yes, we really want to know.
This last week, the President signed a bill that is anticipated to help some $400,000 homeowners avoid foreclosure. Here are the real interpretations:
- Conforming loan limit will be increased to 115% of the median home price, or $625,000, whatever is less. Sorry, Houston, with our median home price below $200,000, we will be stuck with the same $417,000.
- FHA loan limits will increase to $115% of the median home price, or $270,000, whatever is less. Sorry again, Houston, we are staying at the $270,000.
- First time homebuyers will receive a 10% refund up to $7,500- but if you make >$75,000, the refund will be phased out. Oh, and the refund is to be repaid over the next 15 years. So essentially, it is a 15 year interest free loan.
- All mortgage originators (brokers, bankers, etc) will be required to be licensed and adhere to a national registry. This is a good thing.
Jobless claims are at a four year high. This news has relaxed rates a bit going into the homestretch of the summer. Oh, and have you noticed, gas is down at the pumps? Now it only costs me $55 to fill my tank versus $61. What a relief!
Rates as of Friday, August 1, 2008:
The following assumptions apply:
- 20% Down Payment (call for other options)
- 1% Origination Fee
- Escrows Required (if no escrow, higher fees may apply)
- Purchase Transactions
- Primary Residence 30 day closing
- Credit Score 720 +
- Full Documentation of Income/Assets
- Loans > 1 mm require 30% down for these terms
30 year (fixed) 6.250% APR 6.383% 30 year ( fixed ) 7.450% APR 7.585%
15 year (fixed) 5.875% APR 6.115% 15 year ( fixed ) 6.625% APR 6.836%
3/1 ARM 5.750% APR 6.639% 3/1 ARM 5.950% APR 6.073%
5/1 ARM 5.875% APR 6.549% 5/1 ARM 5.750% APR 5.872%
7/1 ARM 6.250% APR 6.638% 7/1 ARM 6.000% APR 6.124%
FHA/VA call for quote (max loan $270,000)
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