Mortgage backed securities finished the day yesterday with a slight improvement over Monday. For the day today (Wednesday) mortgage pricing is showing a slight rebound as bond pricing is up slightly.
I read this article earlier today: My comments have been added in red.
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Fixed-rate mortgages continue to fall
Rates on 30-year fixed-rate mortgage at lowest since 1971: Freddie Mac
By Amy Hoak, MarketWatch
Last Update: 10:42 AM ET 12/24/08
CHICAGO (MarketWatch) -- Fixed-rate mortgage rates fell again this week, with the 30-year fixed-rate mortgage setting another record low, at least since Freddie Mac began doing its weekly survey in the early 1970s. (Current rates are slightly higher than this weeks past lows)
The 30-year averaged 5.14% for the week ending Dec. 24, down from last week's 5.19% average, according to the survey, released on Wednesday. It was more than a full percentage point below its 6.17% average a year ago, and hasn't been lower since Freddie started doing its rate survey in 1971.
Fifteen-year fixed-rate mortgages averaged 4.91% this week, down from 4.92% last week and 5.79% a year ago. The mortgage hasn't been lower since April 1, 2004, when it averaged 4.84%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.49% this week, down from 5.60% last week and 5.90% a year ago. One-year Treasury-indexed ARMs averaged 4.95%, up slightly from 4.94% last week yet still down from 5.53% a year ago.
To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.8 point (in other words, if you wanted a loan with 0 points and standard closing cost, the average rate would have been almost .25% higher than the rates shown above), the 15-year fixed-rate mortgage required an average 0.7 point and the ARMs required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
"Interest rates on 30-year fixed-rate mortgages eased for the eighth straight week and set another record low since Freddie Mac's survey began in 1971," said Frank Nothaft, Freddie Mac chief economist, in a news release. This is true. However, like the stock market we have seen movements both up and down with current rates higher than this last weeks lows, but still at record low levels, just not as favorable as this past weeks low point.
"Real GDP growth fell 0.5% in the third quarter of the year, pulled down by the largest drop in consumer spending since the second quarter of 1980. The market consensus calls for an even larger decline in the last three months of the year," he said. And the housing market continues to contract, Nothaft added.
"Existing home sales (excluding condominiums and co-ops) fell 8.6% in November to 4.0 million houses (annualized) in November, representing the slowest pace since July 1997. Moreover, the median sales price fell 12.8% from November 2007, the largest 12-month decline since records began in January 1968, according to the National Association of Realtors," he said in his comments. Read more on the decline in home sales and fall in home prices.
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My point is most people will look at the headline and a rate and will stop there. The average client does not understand the the average rate includes points. Point buy you a better rate and are not common in our market. In addition, you have cost to take into the equation. Far too often clients look at rate only and do not look at the total cost of a transaction.
In rare cases, does it make sense to pay points. In situations where one is refinancing more often than not you are better off not paying closing cost and taking a slightly higher rate. As always we will work the numbers for clients both ways to help them figure the option that is best for them. If you are looking strictly at rate, more often then not you will select the option that is the worst one for you.
I wish you a great Christmas holiday and hope you take time to enjoy your family.
God Bless!
Merry Christmas From The Bond Market?????
In time to ruin the Christmas cheer, the bond market has decided to play Scrooge. Mortgage rates saw a record 40yr low last week with pricing being extremely attractive. This record low was brought on by the Federal Reserve promising to become an active buyer of mortgage paper. It was NOT a result of the Fed's rate cut.
Over the last couple of days, mortgage backed securities have seen losses resulting in rates moving upward from last weeks historic lows. As with the stock market, we are seeing volatility in both directions. Rates will look attractive one day only to look less attractive the next. Trying to time the bottom of the market is like trying to predict a stock price, almost impossible to do.
I have been advising clients that a good deal that makes sense is worth pursuing. There is a fine line between good and greedy. Borrowers who try to time the bottom of the market generally end up getting a worse deal.
We are continuing to work diligently on responding to all phone calls and e-mails. I appreciate your patience as we work thru our back log of inquiries.
Over the last couple of days, mortgage backed securities have seen losses resulting in rates moving upward from last weeks historic lows. As with the stock market, we are seeing volatility in both directions. Rates will look attractive one day only to look less attractive the next. Trying to time the bottom of the market is like trying to predict a stock price, almost impossible to do.
I have been advising clients that a good deal that makes sense is worth pursuing. There is a fine line between good and greedy. Borrowers who try to time the bottom of the market generally end up getting a worse deal.
We are continuing to work diligently on responding to all phone calls and e-mails. I appreciate your patience as we work thru our back log of inquiries.
The Best Rate on The Wrong Loan Is Still A Bad Deal
It is a cold Monday morning along the lake shore and I am definitely looking forward to the Christmas Holiday this week. Before I have too much fun with the family, I do still have a job to do. In the spirit of Christmas, I wanted to write a post giving you some insight on why the best rate on the wrong loan structure is still a bad deal.
Over the last week, I have had several clients call me only to be disappointed to find out that rates in the "real" world are not as good as those advertised on TV or the Internet or even those mentioned by the media. Allow me to share some insight with you on the rates and rate quotes.
First of all, each rate quote is custom. The fact that you are reading a rate on a website does NOT mean you qualify for that rate. This is especially true if your credit score is less than 720 and you have less than 20% equity. Please read the What Are Rates post for more info.
I like to explain rate quotes like a teeter-totter. The higher the cost the lower the rate, the lower the cost the higher the rate. The perfect rate is generally the one that balances your cost with your rate in an option that works for you.
So how do you determine what that option is? That is where I come in, my clients get the benefit of multiple options with assistance in determining which option is best for them, not the bank.
Too often, clients assume the lowest rate is always the best deal. That is what companies like Quicken, Rock Financial and even some local lenders are banking on. By advertising a really low rate, they got you in the door. Most people would say "So what, I got a great deal". That would be true if you looked only at the rate. Once you take the cost into account and figured what your money really cost you, plus the missed opportunity cost, at the end of the day, you actually got a worse deal.
If you want expert advice and guidance from a professional we look forward to working with you. All lenders who are good are extremely busy. Please be patient as we do our best to serve every client with attention to detail. You can get your application started online at our website http://www.danmoralez.com/.
If you just care about rates and find no value in professional expert advice and guidance, please continue your search elsewhere as we are not the lender for you.
As of Monday the 22nd, the bond market continued to give back recent gains which is continuing to put pressure on mortgage rates. At the time of this post we are down around 22bps from the close on Friday. This will continue to add pressure to mortgage rates. The sweet spot for mortgage pricing may have come and went.
I wish everyone a Happy Holiday Season!
Over the last week, I have had several clients call me only to be disappointed to find out that rates in the "real" world are not as good as those advertised on TV or the Internet or even those mentioned by the media. Allow me to share some insight with you on the rates and rate quotes.
First of all, each rate quote is custom. The fact that you are reading a rate on a website does NOT mean you qualify for that rate. This is especially true if your credit score is less than 720 and you have less than 20% equity. Please read the What Are Rates post for more info.
I like to explain rate quotes like a teeter-totter. The higher the cost the lower the rate, the lower the cost the higher the rate. The perfect rate is generally the one that balances your cost with your rate in an option that works for you.
So how do you determine what that option is? That is where I come in, my clients get the benefit of multiple options with assistance in determining which option is best for them, not the bank.
Too often, clients assume the lowest rate is always the best deal. That is what companies like Quicken, Rock Financial and even some local lenders are banking on. By advertising a really low rate, they got you in the door. Most people would say "So what, I got a great deal". That would be true if you looked only at the rate. Once you take the cost into account and figured what your money really cost you, plus the missed opportunity cost, at the end of the day, you actually got a worse deal.
If you want expert advice and guidance from a professional we look forward to working with you. All lenders who are good are extremely busy. Please be patient as we do our best to serve every client with attention to detail. You can get your application started online at our website http://www.danmoralez.com/.
If you just care about rates and find no value in professional expert advice and guidance, please continue your search elsewhere as we are not the lender for you.
As of Monday the 22nd, the bond market continued to give back recent gains which is continuing to put pressure on mortgage rates. At the time of this post we are down around 22bps from the close on Friday. This will continue to add pressure to mortgage rates. The sweet spot for mortgage pricing may have come and went.
I wish everyone a Happy Holiday Season!
Snow Is Falling Faster Than Rates
It is a cold and snowy morning here along the lake shore. Looking out my office window I am reminded of how beautiful the white stuff can be when I look at it from inside. My appreciation for it goes down significantly when I am behind my snow blower or the wheel of my car.
I wanted to give you a quick update. The last two days have seen mortgage pricing deteriorate nearly 70bps. That offset a large part of the recent drop we saw. While rates are still attractive, 30 year fixed rate money is no longer in the high 4's without points or high closing cost. Rates are still very favorable. Like I mentioned in my blog post a couple of days ago, I thought that the extremely low rates were a blip on the screen. Based on the last couple of days that appears to be the case.
We are working diligently to return all calls and e-mail. Thanks for your patience as we are working through a large back log.
Please review the blog as you will find answers to several questions about refinancing. Here are just some of my recent post:
What Are Rates?
Refinancing Q&A
Fed Cuts Rates By .25%, What Does It Matter To You?
As always, my team and I are here to assist you. Please be patient as we are working hard to give each client the time and attention they deserve.
Have a great weekend and drive safe!
I wanted to give you a quick update. The last two days have seen mortgage pricing deteriorate nearly 70bps. That offset a large part of the recent drop we saw. While rates are still attractive, 30 year fixed rate money is no longer in the high 4's without points or high closing cost. Rates are still very favorable. Like I mentioned in my blog post a couple of days ago, I thought that the extremely low rates were a blip on the screen. Based on the last couple of days that appears to be the case.
We are working diligently to return all calls and e-mail. Thanks for your patience as we are working through a large back log.
Please review the blog as you will find answers to several questions about refinancing. Here are just some of my recent post:
What Are Rates?
Refinancing Q&A
Fed Cuts Rates By .25%, What Does It Matter To You?
As always, my team and I are here to assist you. Please be patient as we are working hard to give each client the time and attention they deserve.
Have a great weekend and drive safe!
So Where Are Rates?
Today brought continued volatility to the world of mortgages. Over the last couple of days mortgage rates showed a nice decrease on the heels of the Fed's announcement that they would be purchasing Mortgage Backed Securities (MBS) in an attempt to narrow the spread between MBS and Treasuries. This announcement fueled a big rally in mortgage bonds and helped to bring rates lower.
All things that go up must come down. The sharp run up in bond prices may have been a blip on the computer screen. Mortgage bonds on Wednesday saw wild price swings and finished the day in negative territory. So clients who heard rates were falling might meet with a little disappointment as the lowest rates of the day were to be had early today. With the afternoon's price erosion, mortgage rates saw a tick upward.
Did the recent Fed cut in interest rates benefit those of you who are in the market for a mortgage? While the Fed did cut rates, it does NOT have a direct effect on mortgage rates. For a complete explanation click here on why Fed rate cuts DON'T equal lower mortgage rates.
The rally we saw in the market was driven by the Fed's announcement that they will be purchasing MBS securities. It was NOT the result of the Fed rate cut. Like with other strong favorable moves, they tend to be short lived. We have already started to see the recent price improvement start to fade away.
For well qualified borrowers paying all closing cost, with an escrow account and no other unique loan characteristics rates were at a low point of 4.99% for a 30 year fixed rate and ended the day closer to 5.25%.
IMPORTANT!
Any lender who quotes you rates or cost without an application or review of your financial position is leaving you open to risk. Simply put, there are too many factors to quote generic rates and terms. The day's of one size fit's all mortgage rates are long gone. Want to understand more on the world of Mortgage Rates? click here.
We are diligently working through the backlog of phone calls and e-mails. Thank you for your patience. Please continue to check back often as I will continue to try and update this blog with market information.
All things that go up must come down. The sharp run up in bond prices may have been a blip on the computer screen. Mortgage bonds on Wednesday saw wild price swings and finished the day in negative territory. So clients who heard rates were falling might meet with a little disappointment as the lowest rates of the day were to be had early today. With the afternoon's price erosion, mortgage rates saw a tick upward.
Did the recent Fed cut in interest rates benefit those of you who are in the market for a mortgage? While the Fed did cut rates, it does NOT have a direct effect on mortgage rates. For a complete explanation click here on why Fed rate cuts DON'T equal lower mortgage rates.
The rally we saw in the market was driven by the Fed's announcement that they will be purchasing MBS securities. It was NOT the result of the Fed rate cut. Like with other strong favorable moves, they tend to be short lived. We have already started to see the recent price improvement start to fade away.
For well qualified borrowers paying all closing cost, with an escrow account and no other unique loan characteristics rates were at a low point of 4.99% for a 30 year fixed rate and ended the day closer to 5.25%.
IMPORTANT!
Any lender who quotes you rates or cost without an application or review of your financial position is leaving you open to risk. Simply put, there are too many factors to quote generic rates and terms. The day's of one size fit's all mortgage rates are long gone. Want to understand more on the world of Mortgage Rates? click here.
We are diligently working through the backlog of phone calls and e-mails. Thank you for your patience. Please continue to check back often as I will continue to try and update this blog with market information.
Fed Cuts Rates By Another .25%
This afternoon the Federal Reserve cut rates by another .25%. This has led to a nice rally in the bond market this afternoon. Market rates have drifted lower as of recent. This has lead to a substantial increase in inquiries from borrowers looking to refinance their existing mortgages.
We are working diligently to get back to all clients as soon as possible. Please review my blog for information about refinancing, including common questions and explanations as to how the process works.
To expedite your application process, please complete your application online at my website. In addition, please review our refinancing Q&A for answers to common questions.
As always, we will do our best to take care of our clients. Please be patient as we are diligently working thru the backlog of applications. Thanks for your patience and understanding. We will work diligently to insure as prompt service as possible.
We are working diligently to get back to all clients as soon as possible. Please review my blog for information about refinancing, including common questions and explanations as to how the process works.
To expedite your application process, please complete your application online at my website. In addition, please review our refinancing Q&A for answers to common questions.
As always, we will do our best to take care of our clients. Please be patient as we are diligently working thru the backlog of applications. Thanks for your patience and understanding. We will work diligently to insure as prompt service as possible.
Refinancing Q&A
When is it worth it for me to refinance?
Determining when refinancing makes sense can depend on a number of factors. The two most important are what your closing costs are and what your payment savings are. I have always advised clients that ideally you want to have a break even point of 12 months or less. If you take your cost to refinance and divide it by your monthly savings, you want the breakeven period to be 12 months or less. Remember, the more you owe, the lower the change in rate necessary to make it advantageous to refinance. The less you owe, the higher the change in rates necessary to make it worthwhile. For loans over $200,000 a change as low as .25% is typically worthwhile.
Why do I have closing cost on a refinance?
Unfortunately, some, not all of the documentation has to be done over again. This results in costs as part of the transaction. Some items can be used over depending on when you purchased your home and the type of transaction you did. We will review your individual file to save you as much money as possible.In addition, many clients are opting for our no closing cost mortgage. This option has a slightly higher interest rate; however, there are no closing costs. This allows you to save money without spending money. In addition, should rates drop even lower, you can refinance a second time with no closing costs again!
Can I lock in my interest rate?
On a refinance transaction, before you can lock in your interest rate, we require that your loan application be submitted before locking you in. In addition, we will collect an application deposit from you to lock in your interest rate and start the application process. When your loan closes, the application deposit is refunded to you. Should your loan be declined, it is refunded to you less any appraisal cost. Should your loan be approved and you elect not to close, the application deposit is non-refundable. To help expedite this process, the following is a check-list of documentation that we will need to insure a fast approval process:
1. Updated mortgage application (easiest if done at my website http://www.danmoralez.com/)
2. Copies of your last two paystubs
3. Copies of your two most recent bank and/or investment account statement(s) (all pages, front & back)
4. Copies of your most recent retirement account statement(s) (all pages, front & back)
5. Your signed application disclosures returned (provided after formal application is made)
6. Copy of your current homeowners insurance policy or your agent’s name and phone number
When rates are dropping, the faster we can get your paperwork the quicker we can get your closing completed.
What if I lock and interest rates go lower than what I locked at?
An interest rate lock is just that, a lock. By locking in, you are guaranteed the rate you lock in at, whether or not market rates go up or down, you get what you locked in at. This is one more reason why I suggest our no closing cost mortgage. You can lock in and close with no closing cost. Should the market continue to move in your favor, you would close on your mortgage application and then would have the ability to refinance a second time at no closing cost. Keep in mind, when you lock we do collect an application deposit. Should you not close your transaction at the terms you have locked into, you could forfeit your application deposit. In cases of extreme market movements (rates moving by more than .375%) the bank may allow you to renegotiate your lock terms.
Do you offer a no closing or reduced closing cost option?
Absolutely, these have become some of our most popular refinance options.
No closing cost options allow you to refinance with no cost or fees. The best part is you can lock in a lower rate now and close without having to worry about closing cost. If rates go even lower, you can do it again with no cost or fees. So what's the catch? Depending on your loan size, your rate may be slightly higher than the average market rate. However, if you are saving money even at the slightly higher rate, it makes complete sense to refinance for no closing cost.
Many clients will opt for reduced closing cost option. Generally speaking, this option has costs of $500 to $800 and will allow you to get an aggressive rate. Depending on your loan size, the cost to take advantage of this option may vary. We will show you all cost and rate options, whether it be paying all cost, some cost or no cost, we will help you review each option and the cost associated with them to insure you have the option that is best for your financial picture.
As a reminder, an application deposit is collected on all applications whether or not you choose a no or reduced closing cost option. That deposit is refunded to you at the time of closing (see above for additional details).Will paying closing cost get me a better rate?Yes, paying closing cost will get you a better rate. However, it may not make sense to pay $1200 to $1800 in closing cost if the difference in rate is small. This is because it may take you longer to make back your cost. In addition, if rates were to drop further, you could be out the investment of closing cost. Our recommendation in today’s market is to look at both options and make sure you pick the option that is best for you. We will help you do the math to make sure you understand both options and have selected what is the best deal for you.
Rate's are going lower, I am going to wait.
While it is your option to wait, you need to be aware of the risk in waiting. Here are some thoughts about waiting for rates to go even lower:
1. Mortgage money comes from Wall Street and the bond market in particular. The dynamics of how mortgages are priced are extremely complex. While we may think rates will continue to drop, the truth is any number of events can cause rates to go against us. Keep in mind we live in a global economy and now more than ever we are seeing foreign markets affect what is happening in the US. In addition, investments in US housing loans have been hurt by the recent housing crisis. While you can wait for rates to drop lower, remember, you are playing with fire and can get burnt. This adds more strength to the no closing cost options as you can close with no closing cost and secure a lower rate today and do it again if warranted.
2. Mortgage guidelines are changing. Your ability to refinance can be affected by the change in mortgage guidelines. This is especially true if you financed 95 to 100% of what your home was worth when you purchased it. In addition, if you had a loan that had PMI, several of the PMI companies are increasing rates, which would reduce substantially your savings on your mortgage.
3. Property values can affect your ability to refinance. If you purchased a home and had 15 to 20% down and were able to avoid PMI, you need to be concerned about whether or not your property has decreased in value. A decrease in value can lead to PMI where you may not have had it previously.If you financed 95 to 100% of what the house was worth when you purchased it, you may be unable to refinance all together if your property value has decreased. Bottom line, there is a fine line between good and greedy. You can get a good deal with no cost or you can get greedy and play with fire (not recommended)
What are mortgage rates?
I am often asked why we don’t post rates on the internet like other lenders do. The truth is each rate quote is custom. So why do other lenders post rates and we don’t if each rate is custom? In my opinion, it is misleading to almost every client. Some clients may qualify for rates better than on the website because of their loan characteristics and others for rates worse. So what factors go into determining your rate? Here is just an abbreviated list:
Credit Score
Equity – Down Payment
Property Type
Loan Type
Loan Term
Number of Units
Occupancy
Debt Ratios
Closing Cost
Escrow Accounts
Second Mortgages
Mortgage Insurance
I have to be honest, that is a very short list of the many factors that can have an impact on your mortgage rate. It is important to remember that each characteristic can and will have an impact on your cost of mortgage money. In order to accurately price your mortgage, it is important that we have all a complete mortgage application so that we can give you detailed accurate figures. Lenders who quote a rate sight unseen don’t know your credit score, equity position, debt ratios or any other pertinent factors. Quoting rates like that is like a doctor who gives a diagnosis to you even though they have never met you and don’t know what your symptoms are.
How do I get started?
The fastest way to start is by submitting an updated mortgage application on our website http://www.danmoralez.com/. As soon as we receive your application, we will confirm it and contact you to quickly review the details and your options.
We will also need your supporting documentation (see above). Please forward that information as soon as possible to us. This will help to insure a quick closing and the best rates possible for you.
Can I ask you a favor? If you have a friend or family member who could benefit from our services, would you be so kind as to pass along their contact information to us or to refer them to our mortgage practice. Our success is dependent on the referrals of our clients. Please don’t keep us a secret. Thanks again for making The Dan Moralez Mortgage Team your choice for home financing.
Determining when refinancing makes sense can depend on a number of factors. The two most important are what your closing costs are and what your payment savings are. I have always advised clients that ideally you want to have a break even point of 12 months or less. If you take your cost to refinance and divide it by your monthly savings, you want the breakeven period to be 12 months or less. Remember, the more you owe, the lower the change in rate necessary to make it advantageous to refinance. The less you owe, the higher the change in rates necessary to make it worthwhile. For loans over $200,000 a change as low as .25% is typically worthwhile.
Why do I have closing cost on a refinance?
Unfortunately, some, not all of the documentation has to be done over again. This results in costs as part of the transaction. Some items can be used over depending on when you purchased your home and the type of transaction you did. We will review your individual file to save you as much money as possible.In addition, many clients are opting for our no closing cost mortgage. This option has a slightly higher interest rate; however, there are no closing costs. This allows you to save money without spending money. In addition, should rates drop even lower, you can refinance a second time with no closing costs again!
Can I lock in my interest rate?
On a refinance transaction, before you can lock in your interest rate, we require that your loan application be submitted before locking you in. In addition, we will collect an application deposit from you to lock in your interest rate and start the application process. When your loan closes, the application deposit is refunded to you. Should your loan be declined, it is refunded to you less any appraisal cost. Should your loan be approved and you elect not to close, the application deposit is non-refundable. To help expedite this process, the following is a check-list of documentation that we will need to insure a fast approval process:
1. Updated mortgage application (easiest if done at my website http://www.danmoralez.com/)
2. Copies of your last two paystubs
3. Copies of your two most recent bank and/or investment account statement(s) (all pages, front & back)
4. Copies of your most recent retirement account statement(s) (all pages, front & back)
5. Your signed application disclosures returned (provided after formal application is made)
6. Copy of your current homeowners insurance policy or your agent’s name and phone number
When rates are dropping, the faster we can get your paperwork the quicker we can get your closing completed.
What if I lock and interest rates go lower than what I locked at?
An interest rate lock is just that, a lock. By locking in, you are guaranteed the rate you lock in at, whether or not market rates go up or down, you get what you locked in at. This is one more reason why I suggest our no closing cost mortgage. You can lock in and close with no closing cost. Should the market continue to move in your favor, you would close on your mortgage application and then would have the ability to refinance a second time at no closing cost. Keep in mind, when you lock we do collect an application deposit. Should you not close your transaction at the terms you have locked into, you could forfeit your application deposit. In cases of extreme market movements (rates moving by more than .375%) the bank may allow you to renegotiate your lock terms.
Do you offer a no closing or reduced closing cost option?
Absolutely, these have become some of our most popular refinance options.
No closing cost options allow you to refinance with no cost or fees. The best part is you can lock in a lower rate now and close without having to worry about closing cost. If rates go even lower, you can do it again with no cost or fees. So what's the catch? Depending on your loan size, your rate may be slightly higher than the average market rate. However, if you are saving money even at the slightly higher rate, it makes complete sense to refinance for no closing cost.
Many clients will opt for reduced closing cost option. Generally speaking, this option has costs of $500 to $800 and will allow you to get an aggressive rate. Depending on your loan size, the cost to take advantage of this option may vary. We will show you all cost and rate options, whether it be paying all cost, some cost or no cost, we will help you review each option and the cost associated with them to insure you have the option that is best for your financial picture.
As a reminder, an application deposit is collected on all applications whether or not you choose a no or reduced closing cost option. That deposit is refunded to you at the time of closing (see above for additional details).Will paying closing cost get me a better rate?Yes, paying closing cost will get you a better rate. However, it may not make sense to pay $1200 to $1800 in closing cost if the difference in rate is small. This is because it may take you longer to make back your cost. In addition, if rates were to drop further, you could be out the investment of closing cost. Our recommendation in today’s market is to look at both options and make sure you pick the option that is best for you. We will help you do the math to make sure you understand both options and have selected what is the best deal for you.
Rate's are going lower, I am going to wait.
While it is your option to wait, you need to be aware of the risk in waiting. Here are some thoughts about waiting for rates to go even lower:
1. Mortgage money comes from Wall Street and the bond market in particular. The dynamics of how mortgages are priced are extremely complex. While we may think rates will continue to drop, the truth is any number of events can cause rates to go against us. Keep in mind we live in a global economy and now more than ever we are seeing foreign markets affect what is happening in the US. In addition, investments in US housing loans have been hurt by the recent housing crisis. While you can wait for rates to drop lower, remember, you are playing with fire and can get burnt. This adds more strength to the no closing cost options as you can close with no closing cost and secure a lower rate today and do it again if warranted.
2. Mortgage guidelines are changing. Your ability to refinance can be affected by the change in mortgage guidelines. This is especially true if you financed 95 to 100% of what your home was worth when you purchased it. In addition, if you had a loan that had PMI, several of the PMI companies are increasing rates, which would reduce substantially your savings on your mortgage.
3. Property values can affect your ability to refinance. If you purchased a home and had 15 to 20% down and were able to avoid PMI, you need to be concerned about whether or not your property has decreased in value. A decrease in value can lead to PMI where you may not have had it previously.If you financed 95 to 100% of what the house was worth when you purchased it, you may be unable to refinance all together if your property value has decreased. Bottom line, there is a fine line between good and greedy. You can get a good deal with no cost or you can get greedy and play with fire (not recommended)
What are mortgage rates?
I am often asked why we don’t post rates on the internet like other lenders do. The truth is each rate quote is custom. So why do other lenders post rates and we don’t if each rate is custom? In my opinion, it is misleading to almost every client. Some clients may qualify for rates better than on the website because of their loan characteristics and others for rates worse. So what factors go into determining your rate? Here is just an abbreviated list:
Credit Score
Equity – Down Payment
Property Type
Loan Type
Loan Term
Number of Units
Occupancy
Debt Ratios
Closing Cost
Escrow Accounts
Second Mortgages
Mortgage Insurance
I have to be honest, that is a very short list of the many factors that can have an impact on your mortgage rate. It is important to remember that each characteristic can and will have an impact on your cost of mortgage money. In order to accurately price your mortgage, it is important that we have all a complete mortgage application so that we can give you detailed accurate figures. Lenders who quote a rate sight unseen don’t know your credit score, equity position, debt ratios or any other pertinent factors. Quoting rates like that is like a doctor who gives a diagnosis to you even though they have never met you and don’t know what your symptoms are.
How do I get started?
The fastest way to start is by submitting an updated mortgage application on our website http://www.danmoralez.com/. As soon as we receive your application, we will confirm it and contact you to quickly review the details and your options.
We will also need your supporting documentation (see above). Please forward that information as soon as possible to us. This will help to insure a quick closing and the best rates possible for you.
Can I ask you a favor? If you have a friend or family member who could benefit from our services, would you be so kind as to pass along their contact information to us or to refer them to our mortgage practice. Our success is dependent on the referrals of our clients. Please don’t keep us a secret. Thanks again for making The Dan Moralez Mortgage Team your choice for home financing.
What are rates?
As a mortgage banker since 1991, I have been asked that question thousands of times. In the past, it was a relatively easy question to answer. In the good old days of mortgage banking rates were one size fits all. In other words, if you met the criteria to be approved for a mortgage you would get the same rate whether you had perfect credit or just barely were able to obtain your mortgage approval. In addition, back in those days, your equity (down payment) and type of transaction didn’t matter like they do now days.
If you are searching the web, there is no doubt that there are hundreds if not thousands of mortgage lenders available. Often times these lenders quote unbelievable rates and terms. The truth is they are unbelievable because they are intentionally designed to mislead you into thinking you are obtaining a loan that is better than what it really is.
I have learned that the golden rule holds true no matter what business or profession we are in. As a consumer, I want honest, straight forward answers with all pertinent details upfront. In addition, I want the best deal possible. Our clients expect and deserve the same as well. Often times, clients in a desire to get the cheapest and lowest rate will fail to review all of the details to insure that the mortgage option they get is truly the best option for them.
Clients will often tell me a 30yr fixed rate is the same no matter where you go, so price is the only difference. I can assure you that price, while an important component is not the only component of a successful mortgage transaction. The truth is there are several factors that can lead to one loan being more expensive than another. This is especially true when a borrower has a down payment of less than 20%, as there is generally more than one way to structure your loan and an unskilled lender may choose to structure your loan with the option that was most expensive to you, not knowing better.
Costs are often overlooked by borrowers and are seldom discussed by lenders who are charging excessive fees in order to make rates look better. For example, Ditech.com advertises heavily on the internet as well as on television. One ad will advertise an incredible low fixed rate the next ad will offer a flat $395 closing fee. Who would not want the super low rate with low closing cost? What they fail to make obvious in their advertisement is that the two do not go hand in hand. In other words, the incredibly low rate comes with incredibly high closing cost. In addition, the incredibly low closing cost comes with an incredibly high rate. This same strategy is employed by lenders on bankrate.com as well as other companies such as Quicken loans. Yes, even some banks are guilty of misleading advertising as well.
So what is a client to do? How do you sift thru the options to insure you get the best deal possible? Simply put, if you are reading this you are already headed in the right direction. I have prided myself on being honest and have from time to time told a client to take the other deal because it was something we just couldn’t beat. Not to sound self serving, that doesn’t happen often. Over the years, I have found giving clients the best price and loan structure while showing them all of their options allows them to pick the option that is best suited for them. I just believe providing great service combined with a great price and expert advice make for a rare combination in a world filled with less than ethical business practices.
I am also asked why we don’t post rates on the internet like several lenders do. The truth is each rate quote is custom. So why do other lenders post rates and we don’t if each rate is custom? In my opinion, it is misleading to almost every client. Some clients may qualify for rates better than on the website because of their loan characteristics and others for rates worse. So what factors go into determining your rate? Here is just an abbreviated list:
- Credit Score
- Equity – Down Payment
- Property Type
- Loan Type
- Loan Term
- Number of Units
- Occupancy
- Debt Ratios
- Closing Cost
- Escrow Accounts
- Second Mortgages
- Mortgage Insurance
In addition, remember a local lender uses local vendors who know the local market. Lenders from outside of the area don’t know this market and its dynamics. In addition, often times large lenders are staffed by newbie’s who don’t know the mortgage business. These newbie’s don’t have the skill set necessary to help you make the best mortgage decision possible. A successful mortgage transaction requires the experience and advice of a true specialist with years of experience. These years of experience translate into a successful mortgage transaction for you.
Long story made short, what makes up a mortgage rate can vary from one client to another and the days of the good old one size fits all mortgage rates have long since gone away. We will give you detailed and accurate figures with all of your options explained in depth to insure the mortgage you select is the best one for you, not the best one for the bank.
Thanks again for giving The Dan Moralez Mortgage Group the opportunity to serve you!
4.50% Mortgage Money???????
Recently there has been a lot of chatter about a plan by the US Treasury Department to use the influence of Fannie Mae and Freddie Mac to lower mortgage rates down to 4.5% for home purchases. The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages in order to attempt to stimulate the housing market.
The plan remains in discussion and may not be made final before the Bush administration's term ends in January. President-elect Barack Obama has said repeatedly that his administration would do more than the current one to help struggling homeowners but he has not offered specifics.
The Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.
The plan is very similar to an idea floated in October by R. Glenn Hubbard and Christopher Mayer, academics at Columbia University's Business School. "I think a program to substantially bring down rates for homebuyers would be an incredibly valuable program, and I think it captures a real part of solving what has been an incredibly challenging dislocation in the credit markets," Mr. Mayer said in an interview. He estimated the idea under consideration could quickly help 1.5 million to 2.5 million people buy homes, giving a major boost to the housing market and broader economy.
Normally, the rates lenders charge consumers, including home buyers, are determined by the secondary market, in which investors buy mortgages or mortgage-backed securities. But Treasury Secretary Henry Paulson views lowering mortgage rates as key to fixing the housing crisis; hence the mortgage-security-buying program announced last week.
Here is an article with details of the plan - http://money.cnn.com/2008/12/03/news/economy/treasury_mortgage_rates/index.htm
So, can you expect 4.5% interest rates? I say don't hold your breath.
Let's review the proposed government plans that have failed so far this year:
-FHA Secure - this program was aimed at helping homeowners faced with foreclosure to save their homes, it bombed and never really got off the ground.
-Hope for Homeowners - this plan was supposed to replace FHA Secure, and to date it has bombed, with very few lenders participating.
-$700 billion bailout - this was supposed to be used to purchase mortgage related assets of banks, but quickly changed to the Federal Government investing in banks to provide them with much needed liquidity; while the final implementation of the plan should be successful, the original intention was abandoned.
The only successful government intervention thus far was last weeks announcement by the Federal Reserve that they will purchase $800 billion in mortgage backed securities from Fannie Mae and Freddie Mac- this announcement lead to an immediate decrease in interest rates by .5%
The government realizes that until housing bottoms, the economy overall will lag. Stabilizing housing is the first step in economic recovery, much like housing is usually the first sector of the economy to show signs of struggle when we are headed into a recession. Jim Cooper of Business Week wrote a great article about it here - http://www.businessweek.com/magazine/content/08_49/b4111014822796.htm
The government is trying to solve the problem, and this program might prove me wrong, but I am not going to count on it…….But lets just say that it did get implemented. This is the effect that you could see:
Interest Rate and Corresponding Principal & Interest Payment
Loan Amount 4.50% 5.00% 5.50% 6.00%
$ 100,000 $506.69 $536.82 $567.79 $599.55
$ 125,000 $633.36 $671.03 $709.74 $749.44
$ 150,000 $760.03 $805.23 $851.68 $899.33
$ 175,000 $886.70 $939.44 $993.63 $1,049.21
$ 200,000 $1,013.37 $1,073.64 $1,135.58 $1,199.10
$ 225,000 $1,140.04 $1,207.85 $1,277.53 $1,348.99
$ 250,000 $1,266.71 $1,342.05 $1,419.47 $1,498.88
$ 275,000 $1,393.38 $1,476.26 $1,561.42 $1,648.76
$ 300,000 $1,520.06 $1,610.46 $1,703.37 $1,798.65
$ 325,000 $1,646.73 $1,744.67 $1,845.31 $1,948.54
$ 350,000 $1,773.40 $1,878.88 $1,987.26 $2,098.43
$ 375,000 $1,900.07 $2,013.08 $2,129.21 $2,248.31
$ 400,000 $2,026.74 $2,147.29 $2,271.16 $2,398.20
$ 417,000 $2,112.88 $2,238.55 $2,367.68 $2,500.13
In essence, buyers could qualify for anywhere from $30,000-$80,000 more in loan amount, which could boost the housing market.
Again, it is important to remember that this is strictly in the developmental stage. Just the perception that it could happen could trigger more interest in purchasing and selling and as we know in these times, perception is very important.
As your trusted mortgage advisor- we will continue to keep you update in these events. In the meantime, when we can be of assistance give us a call.
The plan remains in discussion and may not be made final before the Bush administration's term ends in January. President-elect Barack Obama has said repeatedly that his administration would do more than the current one to help struggling homeowners but he has not offered specifics.
The Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.
The plan is very similar to an idea floated in October by R. Glenn Hubbard and Christopher Mayer, academics at Columbia University's Business School. "I think a program to substantially bring down rates for homebuyers would be an incredibly valuable program, and I think it captures a real part of solving what has been an incredibly challenging dislocation in the credit markets," Mr. Mayer said in an interview. He estimated the idea under consideration could quickly help 1.5 million to 2.5 million people buy homes, giving a major boost to the housing market and broader economy.
Normally, the rates lenders charge consumers, including home buyers, are determined by the secondary market, in which investors buy mortgages or mortgage-backed securities. But Treasury Secretary Henry Paulson views lowering mortgage rates as key to fixing the housing crisis; hence the mortgage-security-buying program announced last week.
Here is an article with details of the plan - http://money.cnn.com/2008/12/03/news/economy/treasury_mortgage_rates/index.htm
So, can you expect 4.5% interest rates? I say don't hold your breath.
Let's review the proposed government plans that have failed so far this year:
-FHA Secure - this program was aimed at helping homeowners faced with foreclosure to save their homes, it bombed and never really got off the ground.
-Hope for Homeowners - this plan was supposed to replace FHA Secure, and to date it has bombed, with very few lenders participating.
-$700 billion bailout - this was supposed to be used to purchase mortgage related assets of banks, but quickly changed to the Federal Government investing in banks to provide them with much needed liquidity; while the final implementation of the plan should be successful, the original intention was abandoned.
The only successful government intervention thus far was last weeks announcement by the Federal Reserve that they will purchase $800 billion in mortgage backed securities from Fannie Mae and Freddie Mac- this announcement lead to an immediate decrease in interest rates by .5%
The government realizes that until housing bottoms, the economy overall will lag. Stabilizing housing is the first step in economic recovery, much like housing is usually the first sector of the economy to show signs of struggle when we are headed into a recession. Jim Cooper of Business Week wrote a great article about it here - http://www.businessweek.com/magazine/content/08_49/b4111014822796.htm
The government is trying to solve the problem, and this program might prove me wrong, but I am not going to count on it…….But lets just say that it did get implemented. This is the effect that you could see:
Interest Rate and Corresponding Principal & Interest Payment
Loan Amount 4.50% 5.00% 5.50% 6.00%
$ 100,000 $506.69 $536.82 $567.79 $599.55
$ 125,000 $633.36 $671.03 $709.74 $749.44
$ 150,000 $760.03 $805.23 $851.68 $899.33
$ 175,000 $886.70 $939.44 $993.63 $1,049.21
$ 200,000 $1,013.37 $1,073.64 $1,135.58 $1,199.10
$ 225,000 $1,140.04 $1,207.85 $1,277.53 $1,348.99
$ 250,000 $1,266.71 $1,342.05 $1,419.47 $1,498.88
$ 275,000 $1,393.38 $1,476.26 $1,561.42 $1,648.76
$ 300,000 $1,520.06 $1,610.46 $1,703.37 $1,798.65
$ 325,000 $1,646.73 $1,744.67 $1,845.31 $1,948.54
$ 350,000 $1,773.40 $1,878.88 $1,987.26 $2,098.43
$ 375,000 $1,900.07 $2,013.08 $2,129.21 $2,248.31
$ 400,000 $2,026.74 $2,147.29 $2,271.16 $2,398.20
$ 417,000 $2,112.88 $2,238.55 $2,367.68 $2,500.13
In essence, buyers could qualify for anywhere from $30,000-$80,000 more in loan amount, which could boost the housing market.
Again, it is important to remember that this is strictly in the developmental stage. Just the perception that it could happen could trigger more interest in purchasing and selling and as we know in these times, perception is very important.
As your trusted mortgage advisor- we will continue to keep you update in these events. In the meantime, when we can be of assistance give us a call.
Market Softness
The market showed wild fluctations toward the end of the day yesterday. At one point the market was up favorably (good for mortgage rates) only to come back the other way sharply. This mornings trading shows mortgage bonds losing some ground as rates ticked closer to 5.875% for a 30 year fixed with a borrower who is paying all cost, good credit, escrows, etc.
The market continues to show volatility. I will continue to update the blog to give you an update on market conditions. We are working thru a large backlog of calls and e-mails. I appreciate your patience and understanding as we do our best to contact all of our clients as soon as possible.
Have a great and prosperous day. Feel free to call us with any questions or concerns.
The market continues to show volatility. I will continue to update the blog to give you an update on market conditions. We are working thru a large backlog of calls and e-mails. I appreciate your patience and understanding as we do our best to contact all of our clients as soon as possible.
Have a great and prosperous day. Feel free to call us with any questions or concerns.
Market Goes Up, Market Goes Down
Mortgage bonds continue to rip saw higher and lower. As with the stock market, we continue to see volatility. Mortgage bonds have been up as much as 72bps today (that would normally mean a decrease in rates of .125% to .25%). However, since the highs of the day, mortgage bonds are back to being up 19bps (essentially making rates unchanged from Friday).
For borrowers who are paying their own closing cost, with excellent credit, equity and an escrow account, the 30yr fixed rate conventional mortgage is approximately 5.75%. Borrowers who are not paying closing cost can expect rates slightly higher than that.
I will continue to update the blog. With the sudden drop in rates we have had a large influx in e-mail and phone calls. We are doing our best to return calls and e-mail as quickly as possible. Thanks for your patience. I can assure you we will do our best to serve every client as quickly as possible.
For borrowers who are paying their own closing cost, with excellent credit, equity and an escrow account, the 30yr fixed rate conventional mortgage is approximately 5.75%. Borrowers who are not paying closing cost can expect rates slightly higher than that.
I will continue to update the blog. With the sudden drop in rates we have had a large influx in e-mail and phone calls. We are doing our best to return calls and e-mail as quickly as possible. Thanks for your patience. I can assure you we will do our best to serve every client as quickly as possible.
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