Do I have the best rate possible?

February 6, 2012 by 1 Comment

One of my preapproved first-time home buyers asked me if they have the “best rate possible”.  The phrase “best rate” can mean different things to different people, in my opinion, the most common definitions to a borrower would be:

  • best rate possible based on qualifying; or
  • lowest rate possible based on current market pricing.

Best rate based on qualifying means that your credit scores are as high as they can possibly be and you’re putting enough money down (or have enough equity) to where there are as few price adjustments to your scenario.

With FHA loans, there are no price improvements after a credit score of 720 or higher. There is a slight improvement to mortgage insurance premiums with FHA at 5% down. With FHA a 720 score with 5% down will provide you the “best payment”.

With conventional financing, you can see by Fannie Mae’s chart below that there are different price adjustments based on credit score and loan to value. The best pricing on this chart is with 40% down (or equity) with credit scores of 700 or higher. There are additional charts for conventional depending on program features, such as an adjustable rate or the Home Affordable Refinance.

FannieLLPA

Below is a chart from a lender showing various adjustments based on program, credit score and loan to value.

LenderPricing

If you’re interested in obtaining the best rate possible based on qualifying, consider starting the preapproval process very early so that you have time to work on your credit, debts and/or down payment. I enjoy helping my clients develop a plan to put them in best possible situation based on their scenario. Sometimes this may take a month or two and sometimes it may be a year or more, depending on what my clients situation is.

Best rate based on pricing may be the very lowest rate available at that moment, which would take paying additional discount points and would increase your closing cost. Some might think “best rate” is lowest rate at the least amount of cost (par pricing or using rebate pricing).  Whether you want your rate priced with discount (higher fees/lower rate) or rebate credit to pay for closing cost (lower fees/higher rate) is up to the borrower. 

Keep in mind that mortgage rates are a moving target, much like buying stocks. Rates often change several times a day. A mortgage interest rate is only secure once it is locked. Once you pull the trigger to lock in a rate, rates may improve or deteriorate. You can lock in a rate once you have a signed around contract with a specific closing date if you’re buying a home. If you’re refinancing a home, you can lock in whenever you know what your approximate closing date should be.

Mortgage originators are restricted from advertising that they have the “best rate” since this is something a lender cannot guarantee. It’s impossible to know what all our competitors are currently offering in pricing and therefore, no lender can truly say they have the “best” or “lowest” rates.

As a correspondent lender, we work with several banks and lenders and utilize a pricing engine which compares their mortgage rates based on a borrower’s specific scenario so that we can select who has the most competitive pricing at that time available to our company for that borrower.

If you’re considering buying a refinancing a home anywhere in Washington, from Redmond to Walla Walla (and everywhere in between), I’m happy to help you with your mortgage needs. Click here for your personal rate quote.

Filed Under: Interest Rates Tagged With: ,

LOCK IN SOON!! Mortgages will Cost More thanks to Temporary Payroll Tax Cut

January 10, 2012 by 1 Comment

UPDATE: Since publishing this post this morning, another major bank announced a significant increase in their extension fees as noted below.

If you obtain a new mortgage next year for a refinance or purchase (for any purpose) and it is securitized by Fannie Mae or Freddie Mac or insured by FHA, you're helping to pay for the recently passed payroll tax cut bill.

From the FHFA:

“On Dec. 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011.  Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie Mae and Freddie Mac( the Enterprises) by no less than 10 basis points from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities. This requirement is effective immediately, meaning that the average guarantee fees charged in 2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011 and that this increase be remitted to the U.S. Treasury, rather than retained as reserves by the Enterprises…. FHFA will announce plans for further guarantee fee increases or other fee adjustments that will then be implemented gradually over the two-year implementation window, taking into consideration risk levels and conditions in financial markets…"

What I'm seeing from some of the various banks and lenders we work with ranges from announcements they're increasing their extension fees 0.25% 0.40% across the board and other lenders announcing fee increases to up to 0.5% to take effect in the next couple weeks. 

On a $400,000 loan, a 0.5% fee to interest rate increase means you'll be paying $2000 more for the same rate once the fee increases go into place!  

With a rate lock extension, currently the charge from one bank who has announced the price increase, 7 days cost 0.125% and now with the 0.4% add, the 7 day extension cost 0.525%.  Where an extension before would have cost $500 on a $400,000 loan, now it will cost $2,100 for the same seven days! This will force many borrowers to consider longer rate locks in order to avoid such a hefty penalty.

What can you do? 

If you are considering refinancing your mortgage, contact your local mortgage professional to discuss current rates and securing your lower (pre-fee) rate today. If your home is located anywhere in Washington state, I can help you.  

If you are buying a home and are in contract, but not yet locked, you may want to investigate locking.  

Whether you are buying or refinancing your home, make sure that the lock is for a long enough period to avoid possibly higher extension fees.

Different lenders have different guidelines and ways they're implementing their fee structures. One of the benefits of working with a correspondent lender, like Mortgage Master Service Corporation, is that I work with several different banks and lenders and can filter out who is offering the most competitive price for your program at the moment you are ready to lock.

If you would like a rate quote for your home located in Washington, click here or contact me.

Filed Under: Fannie, Freddie and FHFA, FHA, Interest Rates

Happy New Year!

December 30, 2011 by Leave a Comment

Thank you so much for reading Mortgage Porter this past year and expecially to those who selected me to help them with their mortgages for their Washington area homes. Many of my clients actually find me from reading this blog. 

My NMLS license to originate mortgages in 2012 was renewed weeks ago so I'm ready to help you this new year too!  As much as I love to write and share information with you on this blog, it's helping people refinance and buy homes anywhere in Washington that help keep our lights on and food on the table.

May you and yours have a healthy, happy and prosperous new year.

Mortgage Master Service Corporation will be closed on January 2, 2012 to observe the holiday.

 

Filed Under: Interest Rates

Mortgage Porter celebrates Five Years!

November 28, 2011 by 2 Comments

Hard to believe that five years ago today, I became a "mortgage blogger". I really didn't expect anything to happen when I wrote my first post…I simply had to vent because I wanted to set our local media straight about the licensing of mortgage originators.  Five years ago, to require a mortgage originator to be licensed, to take state regulated clock hour courses, to have to pass an exam and to have a background check was new and was only required of mortgage originators who did not work for a depository bank or credit union. So what launched my blog? 

I was watching the late night news and King 5's Suzannah Frame was covering a local cause of mortgage fraud and she ended her segment saying something along the lines of "Thank goodness all mortgage originators are going to be licensed soon". Well we know this isn't true (as I mentioned above) and I literally jumped out of bed and wrote my first blog post. 

Today, five years later, as amazing at may sound, this still is not true. Mortgage originators who work at depository banks or credit unions are not held to the same standards as those of us who are not employed by those types of institutions per the SAFE Act. Bank and credit union mortgage originators are only required to be "registered" which is a far cry from what is required to be "licensed".  Some bank and credit union mortgage originators have opted (or may be required by their employers) to step up and be licensed instead of merely registered and I applaud this action. I think all mortgage loan originators who take a residential mortgage application should be held to same standards and should all be licensed. Consumers should not have to know what the differences are between licensed and registered mortgage originators and should be afforded the same protections regardless of who helps them with their mortgage. Ah…I digress.

I am so thankful for my readers. I had no idea what this blog would evolve to five years ago – I had no expectations. And now I cannot even imagine originating mortgages without being able to share information about mortgages! I have been so fortunate with the recognition and press I've received from my blogging efforts and even more so for the clients who have found me from Mortgage Porter.

THANK YOU, THANK YOU, THANK YOU!

Filed Under: Interest Rates

Happy Thanksgiving

November 24, 2011 by Leave a Comment

Happy Thanksgiving from my family to yours.

Thanksgiving

Filed Under: Interest Rates

Washington Association of Mortgage Professionals honors the “Best of the Best” Tonight

October 27, 2011 by Leave a Comment

Tonight the Washington Association of Mortgage Professional is celebrating their 25th anniversary with a formal awards gala recognizing individuals and companies who have been nominated by their peers as being the best in Washington.

I am honored to be one of four finalist for Outstanding Mortgage Originator and that my employer, Mortgage Master Service Company is one of three mortgage companies in the state being recognized as an Outstanding Retail Lender. Mortgage Master Service Corporation is owned and managed by my in-laws, so I'll be attending tonight's event with my sister-in-law and President of Mortgage Master Service Corporation, Marilyn Porter. The family affair continues as we'll be sitting at my sister's table, Nicole Christy, who's an Account Executive for Kinecta Credit Union.

It's going to be a special evening regardless of who leaves the event with an award.

WAMP's Leadership Awards Gala begins tonight at 6:00 pm at the Renaissance Hotel in Seattle.  More info here.

Filed Under: Interest Rates

Checking Out Rates on the Internet, Newspaper or TV? Check the Freshness Date.

October 17, 2011 by Leave a Comment

MortgagePorterHourGlassHouse
When I’m reviewing rates with clients, many are surprised to learn how quickly pricing can change. It’s not unusual to hear a home buyer or someone considering a refinance say, “well how come I see “X” rate on the [insert your media here: internet, newspaper, television commercial, you get the idea]”.

As soon as a rate is posted, even on the internet, it may have changed. This is because mortgage rates are based on mortgage backed securities (bonds) and can change several times a day, similar to the stock market and sometimes just as volatile.  The more fresh a quoted mortgage rate is, the better odds you have of it being reliable.

[Read more…]

Filed Under: Interest Rates Tagged With: ,

How long does a mortgage rate quote last?

September 6, 2011 by Leave a Comment

When checking around for who has “the best mortgage rate” or just getting an idea of what mortgage rate you may qualify for based on your personal scenario, many will obtain a “mortgage rate quote“.  Mortgage rates change constantly, similar to the stock market, as they’re based on mortgage backed securities (bonds).

[Read more…]

Filed Under: Interest Rates
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