Mortgage Master is closed today in observance of President's Day. We will reopen for business as usual on Tuesday, February 17, 2009.
What to do if you missed out on refinancing with last week’s rates
January 22, 2009 by 2 Comments
Tuesday, following the holiday, rates popped up about a half point to rate. Last week, the very same people I was quoting mid-to-high-4’s to who opted not to lock yet, now are receiving updates with rates in the low 5’s…much to their surprise. Why didn’t they lock? Because some want just 0.125% better in rate and some want the rate priced with zero points (which is a much taller order than 0.125% improvement in rate these days with rebate pricing almost non-existent).
Fannie Mae: The Hits to Rate Keep Coming
January 9, 2009 by Leave a Comment
Fannie Mae has announced new "hits to rate" that will take place on mortgages they purchase effective April 1, 2009. This means that lenders will start to implement these increases ANY TIME since loans originated today may be bought by Fannie around the effective date for the new increased pricing. No lender wants to be an April Fool and in position of having to make up for the difference in price when the loan is sold.
Below is an example of some of the hits to pricing rates. You can see why Mortgage Professionals should not rattle off rate quotes without having detailed information of the borrower. If a couple (or single borrower) has a low-mid credit score of 720-739 and they are putting 20% down (LTV 75.01-80%) they can pay 0.25% more in fee than a borrower with a 740+ mid score or the 0.25% will be factored into the interest rate (currently running about 0.125% to rate).
Agency Products
 |
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
| FICO |
<=60%
|
60.01-70%
|
70.01-75%
|
75.01-80%
|
80.01-85%
|
85.01-95
|
>95%
|
| >=740 |
+0.25
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
| 720-739 |
+0.25
|
0.00
|
0.00
|
-0.25
|
0.00
|
0.00
|
0.00
|
| 700-719 |
+0.25
|
-0.50
|
-0.50
|
-0.75
|
-0.50
|
-0.50
|
-0.50
|
| 680-699 |
0.00
|
-0.50
|
-1.00
|
-1.50
|
-1.00
|
-0.75
|
-0.50
|
| 660-679 |
0.00
|
-1.00
|
-2.00
|
-2.50
|
-2.25
|
-1.75
|
-1.25
|
| 640-659 |
-0.50
|
-1.25
|
-2.50
|
-3.00
|
-2.75
|
-2.25
|
-1.75
|
| 620-639 |
-0.50
|
-1.50
|
-3.00
|
-3.00
|
-3.00
|
-2.75
|
-2.50
|
| <620 |
-0.50
|
-1.50
|
-3.00
|
-3.00
|
-3.00
|
-3.00
|
-3.00
|
Cash-Out Refinance
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
LTV
|
| FICO |
<=60%
|
60.01-70%
|
70.01-75%
|
75.01-80%
|
80.01-85%
|
85.01-90%
|
>90%
|
| >=740 |
0.00
|
-0.25
|
-0.25
|
-0.50
|
-0.625
|
-0.625
|
N/A
|
| 700-739 |
0.00
|
-0.625
|
-0.625
|
-0.75
|
-1.50
|
-1.00
|
N/A
|
| 680-699 |
0.00
|
-0.75
|
-0.75
|
-1.375
|
-2.50
|
-2.00
|
N/A
|
| 660-679 |
-0.25
|
-0.75
|
-0.75
|
-1.50
|
-2.50
|
-2.00
|
N/A
|
| 640-659 |
-0.25
|
-1.25
|
-1.25
|
-2.25
|
-3.00
|
-2.50
|
N/A
|
| 620-639 |
-0.25
|
-1.25
|
-1.25
|
-2.75
|
-3.00
|
-2.50
|
N/A
|
| <620 |
-1.25
|
-2.25
|
-2.25
|
-2.75
|
-3.00
|
-3.00
|
N/A
|
Condominium and Cooperative Property Types
|
Adjustment Name
|
Old Adjustment
|
New Adjustment
|
|
LTV >75%
|
N/A
|
-0.75
|
Here are the current (soon to be former) price adjustments from Fannie.
Santa Ben and the FOMC Deliver Lower Rates
December 16, 2008 by Leave a Comment
Just in time for the holidays, the FOMC surprised everyone by cutting the Fed Funds 
rate to a range of zero to 0.25%. This 0.75-1.00 reduction is more than the widely anticipated 0.50% rate cut. The Fed also reduced the Discount Rate by 0.75% to 0.50%.
Bernanke and the FOMC didn’t stop with the giving there…they reiterated their commitment to buying mortgage backed securities which keeps mortgage interest rates low.
How to get your personal bailout
December 15, 2008 by Leave a Comment
Kenneth R. Harney had a great article syndicated in the Seattle Times this weekend “Be Ready for Your Own Little Bailout“.
Perhaps my favorite part:
“So what do you do if you’re already well along in your shopping, you’ve found a house at a great price, and you’re ready to apply for a mortgage at 5.5 percent but don’t want to miss out on potentially lower rates?
Ask your broker or loan officer whether you can lock in today’s rate but still have the ability to move down should cheaper money become available to you.
Not all lenders can accommodate such requests. Some brokers offer 60-day locks with that option; others may charge you.”
By the way, this applies to refinances too. Do check with your loan originator before you commit to a lock what their lock policies are.
Another reason to lock in lower rates now with a lender who has the ablity to provide you a lower rate, should they drop further, is the plan that Obama’s team is considering. From Bloomberg:
“While Paulson’s team is only exploring an initiative for new purchases, the incoming administration wants to go beyond that and address the record surge of foreclosures. Some industry lobbyists have urged the inclusion of refinancing for existing homeowners, up to one-fifth of whose loans are bigger than the value of their properties, estimates show….
“It’s a much more efficient use of the government’s balance sheet to do this as a purchase program” only, said Nicholas Strand, a mortgage analyst at Barclays Capital Inc. in New York. He estimated the cost of a plan to buy 4.5 percent loans for new purchases at about $300 to $400 billion. Adding the refinance option could cost up to $3 trillion, he said”.
If you benefit from restructuring your mortgage with today’s low rates, you may want to consider securing (locking) a rate now with a lender who has the ability of providing a lower rate should it become available prior to closing…if it happens.
Five Questions You Must Ask Your Loan Originator
December 1, 2008 by 4 Comments
If you've been a Mortgage Porter subscriber or have seen my posts at Rain City Guide, you know how I feel about chosing your mortgage by who's quoting the lowest rate. However, if you feel you must…here are a few quick questions to ask the loan originator to make sure they qualify to care for your largest debt which is tied to your biggest asset.
What are mortgage rates based on?
What is the next economic report or event that can trigger interest rate movement?
When the Fed changes rates, how does this impact mortgage rates?
Should rates improve after we lock, what are my options?
Will you gurantee your closing cost shown on your good faith estimate?
Nothing is more expensive than chasing rates and winding up with the wrong mortgage. The best plan is to have the correct mortgage from the start so you can hopefully avoid refinancing (unless rates dip low enough to justify based on your financial plan).
Is My Preapproval Still Valid with all the Rate Changes?
October 29, 2008 by Leave a Comment
My clients and readers ask such great questions…I just received this one from one of my clients that I’ve been working with since June of this year:
“…with all the rate changes how is our pre-approval looking? It the original amount still applicable?”
Rates on Bank Websites
October 23, 2008 by Leave a Comment
I received this email from a client yesterday. Since it’s a common question, I thought I’d share it with you:
“I just noticed on the [big bank’s] website that the conforming mortgage rate with 1 point is now 5.75.
Do you know what type of rate it would be for conforming jumbo without paying a point?
How much do you anticipate my closing costs will be if I decide to refinance? I know [big bank] has a new program now where they pay for all closing costs besides interim interest and taxes when you refinance. Do you know if any other banks offer the same program?”
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