Well, on Friday I did receive confirmation from Santa that I have been good….rates were 4.625% on a 30 year fixed. (They were 4.5% for about an hour). This is for purchases. Refinances are a bit higher, so additional quotes apply. My feeling is that this WILL spark the interest of home buyers, and that activity in the new year will be renewed, and that it will spark the activity the government is hoping for. Why are rates so low? Who cares…take it for what it is, if I can be so blunt.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts
Friday, December 12, 2008
Friday, December 5, 2008
Rates down to 4.875%, be careful what you wish for!
Merry Christmas….oh, is it not Christmas yet? I thought the 4.875% 30 Fixed I saw this morning was Santa’s gift to me for being such a good girl this year. Then it vanished into thin air hours later, and we are at 5.25% . We should be careful what we wish for. Rates are extremely low, but the economy is in the tanker. There are so many things making the yields (rates) of bonds go down on a daily basis. Remember that yields/rates down means prices are up. Prices up means that there is more demand for bonds. This happens when investors lose confidence in stocks, and they buy more bonds. For the mortgage coupons these days, no one seems to know what they are buying. The spreads between buying a point are unreal, anywhere from .500% - .750%. Never in 14 years have I seen that much of a spread. So save your money to buy that point down, otherwise, you will be paying dearly in the interest rate.
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Friday, November 21, 2008
Does the new Homeowner Rescue Package encourage default?
Maybe this month I will not make my mortgage payment. Then, skip January and February too, and then I’ll be 90 days late so I can qualify for the homeowner’s assistance that was just passed through Congress. At that point, my mortgage payment will be reduced to 31% of my gross monthly income (good news if I lost my job). My rate will be set as low as 3% for five years, and amortized for as much as 40 years. Apparently there are 2.2 million borrowers that would benefit from this just like me. DO NOT GET ME WRONG here, I am all for helping out those in need. Those that have had the misfortune of a real estate market gone bad, a layoff , etc. Sometimes, however, the consequences are hard to process in my brain. I pay my bills, and , if I get laid off, I would work at Wal Mart if I had to , or wait tables, or something, in order to feed my family. Where does the buck stop between those of us that are ‘taking a bat for the team’, and those that will manipulate the system to benefit themselves? We saw it happen with FEMA assistance after Katrina (remember that?), and we will see it again. How will we be able to differentiate between those people that are really in need, or looking for a handout? Didn’t we all at some point benefit from (a) subprime, (b) stated income (c) high debt to income ratios, etc…………Are the people that foreclosed the ones that had those types of loans? Probably. But we will never know.
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
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)
Subscribe to:
Posts (Atom)