Mortgage Rate Apocalypse
Posted On: June 23rd, 2010 by James Posted In: Mortgage Rates • Refinancing
Now that I’ve got your attention, here is the real truth about the current state of mortgage rates. From the industry that has been “crying wolf” for the last I-don’t-know-how-many years about “low low rates,” I know that this is just more noise. I have been trying to figure out exactly how to describe what is happening lately in the fixed rate mortgage marketplace. Because rates usually move in step with the general state of the economy (economy good= rates go up, economy bad= rates go down), we’ve been in a VERY low mortgage rate market for most of 2010, as well as late 2009. I know that certain radio advertisers have been pimping the so-called “rate of a lifetime” every 15 minutes for going on 3 years now, to the extent that the urgency has been drained completely. Well, I’m here to tell you that today the FNMA 4% bond coupon that we use to track pricing has just hit the highest level in history.
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Refinancing Could Be Easier Than You Think
Posted On: June 14th, 2010 by James Posted In: Mortgage Programs • Mortgage Rates • Refinancing
With interest rates absolutely plummeting and apparently staying low for some time here, I really want to get a message out to the huge contingent of people who feel like they WON’T qualify for a mortgage, or a refinance. I have had many conversations with clients in recent weeks who seem to be in disbelief that they should refinance. Perhaps they just refi’d a year or so ago, and don’t want to take on another load of closing costs.
For borrowers who find themselves in this position, I only suggest a “no-closing cost mortgage refinance”. This will potentially get them a lower rate without any upfront costs, and put them in an immediate cash flow win.
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Greece is the Word!
Posted On: May 6th, 2010 by James Posted In: Financial Health • Government Actions • Mortgage Rates
Mortgage rates had a wild ride today where we saw a swing of over 80 basis points as the international markets continue to have concerns about Greek debt. Fixed rate mortgage pricing is fully informed by yields on FNMA Mortgage bonds. In general- When lots of people are BUYING bonds, the associated yield can be lowered. As its the yield that is what attracts buyers.
When there is a lot of FEAR and DOUBT in a marketplace, bonds of all kinds become very attractive. But a bond is a promise to repay over a given time frame. I heard that certain Greek “treasury” (or the Greek equivalent of US treasury bonds) Bonds were showing a yield of over 20% at times yesterday. What this means is that nobody is buying the bonds out of fear that Greece will not be able to pay them back. That yield has to be VERY high to outweigh the perceived risk.
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How I Saved a Client $188,000.00
Posted On: April 20th, 2010 by James Posted In: Financial Health • Mortgage Programs • Mortgage Rates • Refinancing
What could you do with $188,000.00?
I was recently talking with an old client of mine who was not even considering a refinance. He is about 2.5 years into a Jumbo 30 year fixed mortgage at 6.25% and a remaining balance of $519K.
We have recently rolled out second mortgages again, that can close at the same time as a conforming first. What this means to current Jumbo mortgage borrowers is a potential huge savings. We put together a maximum conforming first mortgage of $417,000, (with no closing costs) at a rate of 5.375%, and a second mortgage home equity line of credit at 4.5%. for the remaining balance of $105k. This new mortgage structure created over $700 per month in additional cash flow.
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March Madness for Mortgage Rates
Posted On: April 9th, 2010 by James Posted In: Government Actions • Mortgage Rates
March madness! NCAA tourney time, is always exciting for the dramatic upsets and almost upsets, and 2010 is no different. My bracket is a total disaster (full disclosure: I have Duke vs. Ohio State in the finals), as I write this post, I’m down to 2 of my final 4 teams even in contention!
The funny thing is- this whacky, topsy-turvy drama is also taking place in the US Mortgage Bond market. We had been kind of “lulled to sleep” in the previous 3 weeks after trading in a high and tight range giving us all VERY LOW MORTGAGE RATES during that time. I read a great article describing this long waiting period as a “tightening coil” needing to release its energy up or down… and well… it released alright, as the bottom fell out of the market on Wednesday.
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