Fed Moves the Discount Rate – Should You Care?
Posted On: February 24th, 2010 by James Posted In: Government Actions • Mortgage Rates
A couple of days ago, Ben Bernanke lowered the “discount rate”. This was seen as a surprise, and sent the futures markets into a freak out! But the CPI number came out and was/is awesome! The reading indicates that inflation is completely under control for the time being. The seismic shift in rates we’ve just seen (last Thursday Feb 18th) is totally from the Fed move to up the discount rate.
The discount rate literally has zero true effect on mortgage rates (except indirectly as an indicator of future fed policy). Many believe this was a concession from Bernanke to other members of the FED who are more “hawkish on inflation”. Bill Gross from PIMCO called this action FED groundhog day- where they poked their heads out and saw their own shadow! Now that they’ve seen the effect on rates, they will likely be more cautious in the future. I believe that the Fed will not allow rates to get too far above 5.5% this year. When they stop their purchasing program at the end of Q1, and rates skyrocket, I would bet they get back in the MBS buying game.
At the time I write this post, we’ve had 3 full trading days since the move, the bond market has just about completely recovered its losses from that day. All is well….. FOR NOW!
Mortgage Options with Co-signers
Posted On: February 20th, 2010 by James Posted In: FHA Mortgage • Mortgage Programs
Getting qualified for a loan these days has become increasingly difficult. Particularly for those who are self employed, or otherwise have more complex income documentation problems. Since there are no more “stated income” or “no-doc mortgages” available anymore, the loan industry has reverted back to late nineties approval practices. All income must be documented, and the only acceptable income is IRS verified- meaning filed tax returns or W2 statements are the only thing we can count for a borrowers qualification.
Under these approval parameters, it is becoming increasingly common for borrowers to enlist the help of family members to act as cosigners on the mortgage. The legal term for these cosigners is “non-occupying co-mortgagor”.
Continue Reading – Mortgage Options with Co-signers
PDX Home Loan Version 3.0
Posted On: February 16th, 2010 by James Posted In: Mortgage Programs
I am very excited to roll out my third iteration of my personal branded website: PDXHomeLoan.com. We kept most of the same graphics and layout of the old one but have changed the purpose of the site. It is now more information about my services specifically, and links to mortgage rates, loan programs, and loan calculator functions.
The old Pdxhomeloan site was more of a blog about the mortgage industry, and a place to apply for a loan. The new site has this, but the blog has moved to my new “companion site” the Oregon Mortgage Blog. So Pdxhomeloan.com is now aggregating articles that I write there along another blog I write called “Transitions Divorce”
Continue Reading – PDX Home Loan Version 3.0
My favorite online Mortgage Calculator
Posted On: February 8th, 2010 by James Posted In: Mortgage Rates
Normally, I think online mortgage rate calculators are completely worthless. My beef with them has always been that borrowers first don’t know what rate they can expect. Mortgage rates change a little every day, and I think the last 6 months have seen rates change TWICE per day on average. But the real problem is that people don’t get the whole picture when they plug in what they think their loan amount and rate will be and calculate a payment. Generally, they are just getting the P+I portion of their payment (principal and interest)…. when what is the truly useful number to learn is the PITI payment (principal, interest, taxes, and insurance & sometimes PMI/mortgage insurance).
That is why I love the calculators found here at Oregon Mortgage Blog and our companion site Pdxhomeloan.com. First of all, they are right beside the US Average mortgage rate survey, so you can at least have a rough idea about what rates are available. I encourage users to plug in one of those rates when trying to estimate their own possible payments
Continue Reading – My favorite online Mortgage Calculator
What is Up with the New Good Faith Estimate?
Posted On: February 4th, 2010 by James Posted In: Government Actions • Mortgage Programs
I have been biding my time on this topic. Waiting to see how this feels for clients and processing, before I shoot off with some knee jerk reaction to the new good faith estimate. This isn’t just a new document, its a drastically different document that performs a new function, in combination with some major RULE CHANGES. My knee jerk reaction has been all negative, so I didn’t want make a blog post until I gained some perspective. SO – now I’ve given this new document out to quite a few clients, and it really only makes things SLIGHTLY more confusing than it used to be, or needs to be, but I also think there are some good things about it. I will break this down in finer detail what I see are the good changes, and what I think are the crazy changes.
But first off I realize that we need to start at the right place. One thing that I think should be mentioned is that this new good faith estimate is no longer an estimate. So I feel that there would be less confusion if the government had just called it something else – like “your guaranteed loan costs”, or a “lender cost commitment”.
Continue Reading – What is Up with the New Good Faith Estimate?
