Mortgage Master Service Corporation is closed today in observance of Independence Day. With the beautiful sunny weather we're celebrating freely, I hope you and yours have a fun, safe and sane holiday.
Happy Independence Day
July 4, 2011 by Leave a Comment
Should You Pay Your Mortgage Off Quicker
July 1, 2011 by Leave a Comment
Earlier this week, The Seattle Times published with tips for "paring down your mortgage" siting that many home owners are opting to pay off their mortgages quicker:
The portion of borrowers refinancing in January who took 15-year mortgages rose to 29 percent from 11 percent two years earlier, according to the most recent data available from CoreLogic, a real-estate information firm in Santa Ana, Calif. Mortgages with 30-year terms accounted for 52 percent of refinancings in January, down from 80 percent in January 2009.
The share of cash-in refinancings reached a record 44 percent in the fourth quarter, according to data from Freddie Mac dating to 1985. While the share fell to 21 percent in the first quarter as mortgage rates climbed, it was almost double the quarterly average over the past 26 years.
I've noticed a much healthier, financially responsible "attitude" with my clients over this past year. Instead of home buyers wanting to know "how much" they can buy, they want to know what a certain payment will qualify them for. There's a definite trend where folks are buying less than what they could be preapproved for.
Many are considering shorter terms, as the Seattle Times article mentions, including the 15 year and 10 year amortized mortgage (which is being heavily advertised on the radio). I caution to make sure you have plenty of reserves if you opt for a shorter term mortgage…you can always pay shorten the term of a 30 year mortgage and have the flexibility of only making the 30 year amortized payment; but should you find yourself needing more cash flow in the future, you cannot make a 30 year payment on a 20, 15 or 10 year amortized mortgage. And should you find yourself in a financial squeeze in the future, you may not qualify to refinance into a longer term.
30 Year Fixed: 4.625% (apr 4.790) with a principal and interest payment of $2057.
20 Year Fixed: 4.500% (apr 4.679) with a principal and interest payment of $2531.
15 Year Fixed: 3.750% (apr 3.995) with a principal and interest payment of $2909.
10 Year Fixed: 3.500% (apr 3.808) with a principal and interest payment of $3955.
The savings over the life of the loan is great…but if you're having to refinance to obtain cash back or to reduce your payment or if you're relying on your credit cards, you may want to seriously consider a longer term mortgage. You can reduce the interest you pay by making additional payments towards your principal.
Cash-in refinances are continuing to be popular as many home owners are wanting to take advantage of the lower rates that are available with conforming and conforming high balance loan limits. This has become more of a phenomenon with the loan limits set to be reduced from $567,500 to $506,000 as of October 1, 2011 in the Seattle area for both FHA and Conforming loans and possible reduced lower effective January 1, 2012.
Here's an example of the difference between current conforming high balance and jumbo mortgage rates with a 30 year fixed in greater Seattle:
Conforming High Balance loan amount of $567,500: 4.750% (apr 4.871) principal and interest payment of $2,960.
Non-Conforming Jumbo loan amount of $567,501: 5.375% (apr 5.486) principal and interest payment of $3,178.
With a cash-in refinance, it's important to weigh the lost opportunity of the cash you're investing into your home (you may not have access to it for quite a while) along with the monthly savings of the refinance.
Adjustable rate mortgages are also gaining in popularity. If you're not planning on retaining your home for more than five years, it's worth at least comparing the savings. However if the idea of having a mortgage that will adjust in five, seven or ten years makes you uncomfortable, then you should stick with a fixed rate product.
10/1 ARM: 4.125% (apr 3.911). Interest rate fixed for 120 months with caps of 5/2/5 and a principal and interest payment of $1,930. The highest the rate can adjust on the 121st payment is 9.125% and the lowest is 2.25%.
7/1 ARM: 3.625% (apr 3.537). Interest rate fixed for 84 months with caps of 5/2/5 with a principal and interest payment of $1,852. The highest the rate can adjust on the 85th payment is 8.625% and the lowest is 2.25%.
5/1 ARM: 3.250% (apr 3.359). Interest rate fixed for 60 months with caps of 5/2/5 and a principal and interest payment of $1,714. The highest the rate can adjust to on the 61st payment is 8.250% and the lowest is 2.25%.
If you have questions or are interested in obtaining a mortgage for a home located anywhere in Washington state, please contact me! Nothing makes me happier than helping my readers.
Rates quoted above are effective as of July 1, 2011 at 11:45 a.m. and may change at anytime. Rates are based on 740 or higher credit scores with an 80% loan to value for a purchase or rate-term refinance in Washington.
Ben, the Fed and Mortgage Interest Rates [Live Post]
June 22, 2011 by Leave a Comment
Today the Fed will announce if they're going to change the Fed Funds rate. It's highly anticipated that they will leave the rate where it's currently at. What ever action the Fed takes does not directly change mortgage rates, however it does have a strong INFLUENCE on mortgage rates. Following the Fed's announcement, Ben Bernanke will be holding a press conference which may also impact mortgage rates. Remember, mortgage rates are based on mortgage backed securities (bonds) and inflation will drive mortgage rates higher.
This is a live post to illustrate how the Feds actions may impact mortgage rates, assuming the markets don't shrug off the information.
As of 9:00 am this morning, prior to the Fed's monetary decision and MBS (FNMA 30yr 4.00%) are up 34bps. What you and I probably relate to more than mortgage backed securities (MBS) are how this translates to mortgage rates.
I can lock in a 30 year fixed at 4.375% (based on the criteria I use for rate quotes) with a discount of 0.198% (apr 4.503).
5/1 ARM is currently at 2.875% (apr 3.256) with a discount of 0.043%. 5/1 ARM is fixed for 60 months and has caps of 5/2/5. The highest this rate can be at the 61st payment (or the life of the loan) is 7.875%.
11:10 am: we're minutes before Ben Bernanke's news conference. Mortgage rates that I've quoted are unchanged.
9:25 am: DOW is down about 7 points.
"No change" to interest rates is announced. The Feds Funds rate is unchanged at 0 – 0.25%. Good news to those who have home equity lines of credit which are based on the prime rate, they've dodged another bullet!
Initial reaction: markets seem unmoved. No real surprises in the FOMC press release.
9:31 am: Receiving an intraday rate sheet with pricing for the better from one of the lenders we work with. This lender did not have as competive pricing as what I quoted above (they're still far from it) as the began the day with worse pricing. The rate quotes above is still current pricing that I have available.
9:50 am: In just over an hour, we'll hear from Fed Head, Ben Bernanke. Stay tuned. I'll continue to share rate updates and updating this "live" post.
10:30 am: MBS down to session lows at 15bps for the 30yr.
11:10 am: minutes before Ben Bernanke's news conference and mortgage rates are unchanged from what I've quoted above. DOW is up 7.46.
12:15 pm: Ben Bernanke has wrapped up the news conference. MBS are up slightly to 22bps with the DOW down 32. Mortgage rates and pricing that I quoted above are unchanged.
I listened to as much of Bernanke's conferene as I could while I was work on my day job, originating mortgage on homes located in Washington. Some bits that I extracted (and shared on Twitter) are that Bernanke referred to the pace of unemployment being "frustratingly slow". During the Q&A he said that "we don't use words like "extended period" to be intentionally opaque, it means that we really don't know how long". Regarding housing, he commented that "those who can get credit, can buy a lot more house than they could a few years ago" referring to low rates and affordable home prices. He would like to see further efforts from mortgage servicers to modify loans when appropriate and to speed up the foreclosure process when appropriate.
DOW closes down 80.34.
Financing a “Kiddie Condo” for your College Student
June 2, 2011 by 1 Comment
A few weeks ago, I helped a Kent couple purchase a condominium located in Seattle for their daughter to live in while she attends college at Seattle University. They were prequalifed with their credit union, however the credit union was treating the transaction as if it were an investment property even though the couple (we’ll call them Mr. and Mrs. Kent) were not going to rent the property.
Potential Mortgage Rate Movers this Week
May 31, 2011 by Leave a Comment
This week is packed full of scheduled economic indicators that may impact mortgage rates. Mortgage rates are based on mortgage backed securities (bonds). Typically, good news for stocks means that mortgage rates may rise as investors will trade the safety of bonds for a greater return received from stocks. The reverse is also true. Signs of inflation will also impact mortgage rates for the worse. Here are some of the scheduled reports to be released this week:
Obama Administration Proposes Tougher Mortgage Guidelines and Increased Pricing (Rates) to You
February 13, 2011 by Leave a Comment
In a time where our housing marketing is not out the woods and many who want to keep their home are having a difficult time refinancing; the Obama Administration released their proposal for "winding down" Fannie Mae and Freddie Mac. They plan on phasing the government out of the GSEs over the next 5 to 7 years.
Here are some of the highlights of the reform plan as released by the Treasury Department on Friday:
Phasing in Increased Pricing at Fannie Mae and Freddie Mac to "level the playing field". The Obama Administration believes that if they increase conventional mortgage rates, it will help private lending have a fair chance at originating mortgage loans. If you've been reading my blog, you know that Fannie and Freddie have been increasing their pricing by their LLPA's (Loan Level Price Adjustments). Adjustments to pricing translates to higher mortgage rates in addition to what the market pricing would be. Higher rates means that Seattle area home buyers and those seeking to refinance will qualify for less.
Reducing Conforming Loan Limits. Currently in King, Pierce and Snohomish counties, we have a temporary high balance conforming loan limit of $567,500. This plan confirms the governments intent to "rest as scheduled on October 1, 2011 to levels set in the Housing and Economic Recovery Act (HERA).
Phasing in Minimum 10% Down Payment. In my opinion, this isn't a huge deal for Fannie and Freddie mortgages…as long as we still have FHA. Speaking of FHA…
"Returning FHA to its Traditional Role". FHA has become the mortgage du jour in many cases when a borrower doesn't have 20% down payment…you never know what you're going to get with a PMI underwriter. The Administrations proposal for FHA includes:
- allowing current high balance loan limits to expire on October 1, 2011
- increase the annual mortgage insurance (again) by 0.25 basis points
- "lowering the maximum loan to value ratios…and adjusting pricing". FHA plans on increasing the minimum down payment from 3.5%.
Increased mortgage disclosures for consumers. What happened to simplifying the process? I've found that HUD's Good Faith Estimate and the Fed's Truth in Lending have not helped consumers. New disclosures are being worked on and hopefully what ever our government creates, will be more clear and concise than what I've seen.
Here is the entire 32 page Reforming America's Housing Finance Market – A Report to Congress.
Good Bye, Dad
December 6, 2010 by 2 Comments
My father, Ron Christopherson, passed away Friday afternoon, just as the beautiful sun was setting. He was only 64 years old and had been suffering from several heath issues, including cancer. I am thankful that he is no longer in pain and my little sisters and I miss him terribly.
I will be taking a few days off as we plan for his services.
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