April’s YOU Magazine is Now Available

April 5, 2008 by Leave a Comment

This month’s YOU Magazine is now available for your review.  YOU Magazine is one of the many tools that I subscribe to for my clients.  This month’s articles include:

Does The Fed Change Your Monthly Mortgage Payment?

Does the Fed Change Your Monthly Mortgage Payment?

The Federal Reserve has cut interest rates six straight times since September 2007. Most analysts are predicting that the Fed will cut rates even further when it meets at the end of this month. And yet, despite a full 3% in interest rate cuts during this time, mortgage rates are significantly higher now than they were just three months ago. How is that possible? Don’t rate cuts equal lower mortgage rates? Read on as the team at YOU Magazine goes behind the headlines to show you how these Fed cuts do and don’t affect your mortgage. 

Everything You Need to Know About 529 Plans

Accidental Landlords: A Great Unplanned Investment

Accidental Landlords: - A Great Unplanned Investment

Lower house prices and higher rents have created a new breed of real estate investor: the accidental landlord. Some bought new homes and couldn’t sell their old ones while others chose to invest in the changing market. Either way, being a landlord is more than just sitting back and collecting the rent. This month YOU Magazine takes a closer look at how being a successful landlord is no accident.

Just to name a few…

Filed Under: Interest Rates

Not a Friend to this Family: Part 1

March 28, 2008 by Leave a Comment

When I helped Micheal and Pam with the financing of their home almost five years ago, it was a challenging transaction.  They were excellent borrowers, except for the particular type of Visa he had (they’re Canadian).   Long story short, we wound up doing a 5/1 ARM through Woo Whoo Bank as they were only planning on staying here for about 5 years.  About four months ago, Micheal met with me to review his Note and to see about refinancing.  They may be staying a few years longer if they have their choice…Michael is having a challenge extending his Visa.  Michael wanted to refinance and was concerned about his ARM adjusting.  With our current mortgage climate and his current situation with his Visa, I could not refinance him.   We reviewed how his ARM and discussed how it functions and at that time, I told him that he has time–he did not to refinance yet.  He was still feeling pressured to do something–letting his ARM adjust was not sinking in.  He went directly to Woo Whoo to investigate a refinance.  Michael forwarded me the first good faith estimate from Big Bank.  The rate seemed too high to me; especially compared to his current mortgage.   I again encouraged him to wait out a few more months to see what rates do and that by that time,he would have more information on the status of his Visa.  Fast forward to the present.

[Read more…]

Filed Under: Adjustable Rate Mortgage (ARM), Interest Rates, Rant, Refinance

A Good Faith Estimate is Not a Commitment

March 18, 2008 by 2 Comments

It’s very important to know that when you receive a Good Faith Estimate from any loan originator, it is not an offer nor is it a commitment to lend.  It concerns me when I’m dealing with a rate shopper (especially in a volatile market where rates may drastically change 3-5 times a day) and they are going to select who handles their mortgage transaction by the good faith estimate.  Here’s a quote from an email I recently received that prompted me to write this post:

"We do appreciate all your kind attention and the fine offer you made to us."

This couple had contacted for the past few months while shopping for homes requesting good faith estimates.  I appreciate that they were upfront with me by letting me know they were receiving quotes from someone else as well.  Depending on the day (actually the time of the day) the quote was prepared, they may have actually selected a lender who is quoting a higher rate than I would have.   Fact is, I only provided them good faith estimates when they requested them; I never provided them any "offers" or "commitments".

A Good Faith Estimate is a detailed interest rate quote for that moment (unless the LO doesn’t track the markets and is simply going off the morning "rate sheets") with the closing costs associated with that rate.  I’m actually considering adding a time/stamp to my GFE’s when I send them just because rates are changing that often (for better or worse) in this climate.

A Good Faith Estimate is not a guarantee of interest rate or closing costs.   In fact, the rate may all ready be different, or the cost to obtain the rate (higher or lower) by the time it’s been created and delivered to the borrower.  Make sure you receive a Lock Commitment from your lender and ask them to guarantee their closing costs.  As a matter of fact, certain situations may cause your rate or closing costs to change from the lock and/or good faith estimate, such as:

  • Appraised value – LTV (higher or lower than estimated)
  • Change in employment
  • Credit scores not what estimated prior to quote.
  • Closing time extended beyond the lock period.

If we have a change to cost (perhaps the appraisal cost less or the LTV is lower than expected changing the loan amount or cost for the rate) I will provide an updated Good Faith Estimate.

My last little bit of advise for you is (if you’re still insisting on shopping lenders by rate) to see if your lender offers a one time interest rate "float down" should the rate improve by more than 0.125%.   This provides you with a ceiling that your rate will never go higher than "x" and allows you to receive the benefit of a lower rate should they improve more than 0.125%.

Just because you have received a GFE from a lender, does not mean that you are qualifed for the mortgage.   It really just means that the lender is quoting this rate with those closing costs on that moment of the day.  Rates are a moving target, and without a lock–it’s just a quote.

Filed Under: Interest Rates, Mortgage

Qualify a Loan Originator with this One Simple Question

February 27, 2008 by Leave a Comment

How do you track mortgage rates?

If the person who will potentially helping you obtain a mortgage answers:

“I get rate sheets in the morning and later if they change during the day.”

Run!  Anyone who is gauging interest rates by when lenders issue new rate sheets is behind the market.  The rates have all ready adjusted.

“I watch CNBC (or something along those lines) and keep tabs on how the 10 Year Note is performing.”

Wrong again.  Mortgage interest rates are not based on the 10 year note.  However you will hear the media and other professionals incorrectly state this is what rates are based on.  If you or your loan originator are tracking the 10 year based on when to lock, it will cost you.

The correct answer:

“I keep a close eye on mortgage backed securities.  I am committed to my mortgage practice and this is why I subscribe to a service (such as Mortgage Market Guide) which allows me to do so.”

Now here’s my question for you:

If you are working with a Loan Originator who is not dedicated to their practice enough to subscribe to a service that allows them to track mortgage backed securities or (even worse) who does not know or care to track what influences mortgage rates: WHY?

Filed Under: Interest Rates, Mortgage

Bait and Switch Mortgage Rate Advertisements

February 26, 2008 by 4 Comments

EDITORS NOTE: Please notice this post is from February 2008! Wachovia is gone, 5.5% isn’t a great rate “right now” and I no longer publish rates at Rain City Guide or weekly here at Mortgage Porter. It simply takes too much time. I’m happy to provide your personal rate quote for your home located in Washington.  10/16/11.

Nommag72008

Bait and switch is when a consumer is offered something tempting (bait) that is no longer available and then they are offered something else (switch).   I see this over and over again when lenders of all types promote rates in main steam media such as the radio, print ads, bill boards, television…you get the picture.

[Read more…]

Filed Under: Interest Rates, Predatory Lending, Rant

The Trigger Finger on Mortgage Interest Rates

February 19, 2008 by 1 Comment

TriggerfingerVolatile times with our economy are giving lenders an itchy trigger finger when it comes to issuing rate sheets.  Just today, one of the lenders we work with issued 4 different rate sheets with various price change.

Lenders are just simply jumping at the bit…if you look at them cross-eyed they will issue a new rate sheet. It makes for very interesting times for Loan Originators when you’re trying to lock in a rate that you have just told a borrower is available.   During a rate change, many bank systems will hold or freeze during the change and you have to wait until the change is complete before you can see how it will impact you.  Those few minutes are enough to drive you crazy and you’ll will either be a hero to your client or not after the rate change takes place.

These days, several rate changes are the norm and not the exception.   Consider this, based on the last 30 days with a conservative lender who only offered two rate changes today (vs. the four another lender did today):

  • Days of daily rate sheet without changes in last 30 days: 7
  • Days with two intra-day price changes for a specific day within the last 30 days: 10
  • Days of three intra-day price changes for a specific day within the last 30 days: 5

A lender with a trigger finger can work in your favor when rates are improving.  Even better, a Mortgage Professional who works with several resources, such as a mortgage broker or correspondent lender, may be in your very best interest.

More drama is on the slate for tomorrow for mortgage interest rates with the CPI being released…stay tuned!

Filed Under: Interest Rates

Don’t Ask at the Signing Table “How’s My Rate?”

February 9, 2008 by 1 Comment

I just read a great post by S-Crow at Seattle Bubble about his frustrations over the rates he sees when he’s signing clients at his escrow company.   I relate since before April Fools 2000, I was in the title and escrow industry for 14 years and often times, at signing, borrowers ask something along the lines of “How is my rate?”

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Filed Under: Escrow and closing, Interest Rates

Tomorrow Morning I’ll Either Look Like a Hero or a Zero

February 6, 2008 by 3 Comments

Hero

Just before 5 tonight I provided a Good Faith Estimate along with a Total Cost Analysis comparing four price points for a 30 year fixed rate purchase closing at the end of March.   You see most lenders are not allowing locks to take place “after hours”; you have to wait until the markets re-open in the morning.  This home buyer is still shopping rates with various lenders and so when she calls them tomorrow, my estimate is either going to look outstanding because rates have increased (and I won’t be able honor it since it’s not locked tonight) or I’m going to look like a mooch with higher rates because the market has improved.  Unless rates are unchanged, the rate on my good faith estimate is worthless.

[Read more…]

Filed Under: Interest Rates, Mortgage, Residential Purchase
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