I thought I would revisit last Monday's post on economic releases and the actual results as compared to the forecasts.
1) Dec. New Home Sales: Previous: $647K Forecast: $635K Actual: $604K
2) Jan. Consumer Confidence: Previous: 88.6 Forecast: 88.0 Actual: 87.9
3) 4th Quarter GDP: Previous: 4.9% Forecast: 1.1% Actual: .6%
4) FOMC Rate Decision: Previous: 3.5% Forecast: 3.0% Actual: 3.0%
5) Dec Consumer Spending: Previous: 1.1% Forecast: .3% Actual: .2%
6) Weekly Jobless Claims: Previous: 301K Forecast: 315K Actual: 375K
7) Jan Unemployment Rate: Previous: 5.0% Forecast: 5.0% Actual: 4.9%
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Your Columbia, Missouri Mortgage Broker
Monday, February 4, 2008
Friday, February 1, 2008
Crazy Mortgage Rate Market!
I just wanted to talk briefly about the volatile rate market the mortgage industry is experiencing right now. Rates are going up and down so fast it is very tough to stay on top of. We have experienced days that have endured 5+ re-prices! That means we can quote a rate to you in the morning and if it is not locked, it changed 5 different times! Just imagine how that can make the lender and the client feel. With this being the case, we are extremely cautious about the rates we are quoting. Our goal is absolutely no surprises. While we cannot control the market, we can help you set your expectations. This way you are ready for the ride. If you are someone who wants to lock right away, we can do it. Many want to wait and try and catch the market on a down day to lock. This is fine too, just be aware it can sometimes be tough to get the lock request in. A couple weeks ago, rates dropped so low that an enormous amount of lock requests were attempted and re-prices hit before thousands of loans across the country were able to be locked. There simply was not enough time!
I don't bring this up to scare anyone! Just be aware of this volatility. This way we can consult with you and find out what your goals are and your tolerance level.
We also want everyone to be aware of the increased turn time it is taking lenders to get loans closed. Refinances are extremely backed up! If you are thinking of refinancing you may want to get started. This way you have plenty of time for your loan to work it way through the pipeline! The further along you are in the underwriting process, the more favorable pricing you will receive when the market does dip!
Your comments and questions are welcomed!
Brought to you by :
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
I don't bring this up to scare anyone! Just be aware of this volatility. This way we can consult with you and find out what your goals are and your tolerance level.
We also want everyone to be aware of the increased turn time it is taking lenders to get loans closed. Refinances are extremely backed up! If you are thinking of refinancing you may want to get started. This way you have plenty of time for your loan to work it way through the pipeline! The further along you are in the underwriting process, the more favorable pricing you will receive when the market does dip!
Your comments and questions are welcomed!
Brought to you by :
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Tuesday, January 29, 2008
What do you mean I can't refinance?
Wow, look at these great mortgage rates! It is a great time to refinance!
With this being the case, it brings up an un-settling fact for many people! Either it may not make sense to refinance or they simply can't!
This all comes down to your homes value and what it will appraise for. Gone are the days of buying a home and the appreciation begins. If you just purchased your home at market value and did a 100% loan, refinancing won't be so easy. Your need to have 5% equity in your home to refinance and this equity is simply not there for many homeowners. With people unloading their homes at reduced prices, comparable sales are hurting you. You may have purchased your home for $140,000 and then identical homes have sold in your neighborhood since for $130,000! These are comparables they use to appraise your home and the lender will not be able to refinance based on these current sales. Many are finding this out and are frustrated! It is frustrating for lenders like us as well. We see great rates and an opportunity to save our client some money and then we must tell them they are out of luck. They want the 5.625% rate when they are paying 6.625% or 7%. Instant savings would be there, but they can't grab it!
If you put money down on your home, received a great deal, or have been in your home for awhile; you are more than likely ok.
Just bear with us when it comes to applying for a refinance. It isn't because we don't want to help. The market is just out of our control at this point. We want to make sure the savings justifies the closing costs you must pay, add in how long you plan on staying in the home, and take a solid look at the homes current value. After evaluating these factors, we can give you a solid recommendation on what to do! If you are unsure, just consult a lender you trust will evaluate your situation properly. Don't go with someone that will try to squeeze the numbers to make it work and then find out later that it won't! All this does is waste your time, money,and get your hopes up! Who wants to pay for an appraisal that says, sorry you are out of luck! I sure wouldn't!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
With this being the case, it brings up an un-settling fact for many people! Either it may not make sense to refinance or they simply can't!
This all comes down to your homes value and what it will appraise for. Gone are the days of buying a home and the appreciation begins. If you just purchased your home at market value and did a 100% loan, refinancing won't be so easy. Your need to have 5% equity in your home to refinance and this equity is simply not there for many homeowners. With people unloading their homes at reduced prices, comparable sales are hurting you. You may have purchased your home for $140,000 and then identical homes have sold in your neighborhood since for $130,000! These are comparables they use to appraise your home and the lender will not be able to refinance based on these current sales. Many are finding this out and are frustrated! It is frustrating for lenders like us as well. We see great rates and an opportunity to save our client some money and then we must tell them they are out of luck. They want the 5.625% rate when they are paying 6.625% or 7%. Instant savings would be there, but they can't grab it!
If you put money down on your home, received a great deal, or have been in your home for awhile; you are more than likely ok.
Just bear with us when it comes to applying for a refinance. It isn't because we don't want to help. The market is just out of our control at this point. We want to make sure the savings justifies the closing costs you must pay, add in how long you plan on staying in the home, and take a solid look at the homes current value. After evaluating these factors, we can give you a solid recommendation on what to do! If you are unsure, just consult a lender you trust will evaluate your situation properly. Don't go with someone that will try to squeeze the numbers to make it work and then find out later that it won't! All this does is waste your time, money,and get your hopes up! Who wants to pay for an appraisal that says, sorry you are out of luck! I sure wouldn't!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Monday, January 28, 2008
A Big Week of Economic Data
The Fed will be meeting Tuesday and Wednesday of this week and to go along with this we have a plethora of data coming out as well. I believe we will find this week to be much like last week, extremely volatile with large swings going both ways based on the data at hand and the market's perception of this data. I have outlined some of the key data to be released this week and the forecasts for this data.
1/28 10:00am EST: New December Home Sales Previous: $647K Forecast: $635K
1/29 10:00am EST: Jan Consumer Confidence Previous: 88.6 Forecast: 88.0
1/30 8:30am EST: GDP 4th Qtr: Previous: 4.9% Forecast: 1.1%
1/30 2:15am EST: FOMC rate decision: Previous: 3.5% Forecast: 3.0%
1/31 8:30am EST: Dec Consumer Spending: Previous: 1.1% Forecast: .3%
1/31 8:30am EST: Weekly Jobless Claims: Previous: 301K Forecast: 315K
2/1 8:30am EST: Jan Unemployment Rate: Previous: 5.0% Forecast: 5.0%
There is other economic data scheduled to be released this week but I simply pointed out what I think are the "key" indicators! Is your mortgage professional on top of this data and how it could affect the market and in particular your mortgage rate, should you lock or float, do they know how analyze this?
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
1/28 10:00am EST: New December Home Sales Previous: $647K Forecast: $635K
1/29 10:00am EST: Jan Consumer Confidence Previous: 88.6 Forecast: 88.0
1/30 8:30am EST: GDP 4th Qtr: Previous: 4.9% Forecast: 1.1%
1/30 2:15am EST: FOMC rate decision: Previous: 3.5% Forecast: 3.0%
1/31 8:30am EST: Dec Consumer Spending: Previous: 1.1% Forecast: .3%
1/31 8:30am EST: Weekly Jobless Claims: Previous: 301K Forecast: 315K
2/1 8:30am EST: Jan Unemployment Rate: Previous: 5.0% Forecast: 5.0%
There is other economic data scheduled to be released this week but I simply pointed out what I think are the "key" indicators! Is your mortgage professional on top of this data and how it could affect the market and in particular your mortgage rate, should you lock or float, do they know how analyze this?
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, January 24, 2008
Market Volatility
Wow, what a crazy day in the market yesterday! We had 5 "re-price" notices (a re-price is when a lender is changing mortgage rates based on market conditions) 4 of which were for the worst. At one point in time 30 year fixed rates were at 5.25% and within 2.5 hours the market made a 600 point swing and we were back to 5.75%! I say this because I have never seen a day in the market like what we witnessed yesterday. It made our job extremely difficult because the lenders were so busy taking rate locks that I was not able to lock everyone of my clients. I literally was on hold 25 minutes to lock the last of my clients loans and during my "holding" the lender re-priced and my clients were left hanging the baggage.
Now with that being said it is predicted that mortgage rates will reach that low again but only time and market conditions will tell. What does all of this mean? It means you BETTER be doing business with someone who has the knowledge, ethics, and tools available to them to best serve YOUR interest in regards to your home financing needs! Be prepared for more of the same going forward especially next week when the Fed meets again to further discuss economic planning and stimulus issues.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Now with that being said it is predicted that mortgage rates will reach that low again but only time and market conditions will tell. What does all of this mean? It means you BETTER be doing business with someone who has the knowledge, ethics, and tools available to them to best serve YOUR interest in regards to your home financing needs! Be prepared for more of the same going forward especially next week when the Fed meets again to further discuss economic planning and stimulus issues.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Wednesday, January 23, 2008
Quoting Mortgage Rates
With record low mortgage rates upon us I thought it would be wise to discuss what goes into quoting mortgage rates. More specifically some of the assumptions that lenders, banks and brokers use in quoting these rates. Do not take anything for granted when market rates are at 5.5% and you overheard a lender quoting 4.875% then something is wrong and you should read the fine print.
#1) Locking Term: Typically when quoting rates most lenders use 7-15 day locks! This means that if you want a 30, 45 or 60 day lock your rate will be higher. Why? Because you are locking in today's rates for a future period in time and lenders must hedge their money to cover your lock. Longer locks are available (i.e. 180 day locks) however out-of-pocket expenses typically accompany such a lock. Why? Again because banks what you to close your loan with them and to ensure this they charge a locking discount which is refunded once your loan is closed.
#2) Escrow Account: Lenders assume that you will want your taxes and insurance included in your payment when they are quoting rates. If you would like an "escrow waiver" then a higher rate may apply. Why? Because when you don't escrow the lender loses money and in turn charges the broker or banker .25% to waive escrow. Why does the bank lose money? When you make escrow payments the lender takes this extra money and invests it. In turn they earn income on "your" money while they wait to pay your taxes and insurance. Therefore when they don't have this extra money to invest they do not have the income it produces.
#3) Loan Amount: Most lenders assume a loan amount of at least $130,000 when quoting rates. Why? Because the larger the loan amount the more interest the lender can collect and this translates to a better rate. For instance a person borrowing $55,000 will not get the "advertised" rates because the banks will take a .50%-1.25% rate hit for this loan size. Why? Again banks will not earn very much interest on a loan size of $55K and therefore will charge a higher rate to make up the difference.
#4) Credit Score: Effective November of 2007' lenders now hit borrowers with sub 700 credit scores. Meaning someone with a 660 score will get a slightly higher rate than someone with a 720 score, regardless of the fact that it is a Fannie Mae loan.
#5) Loan-to-Value: Lenders assume that the client will have at least 5% equity in a refinance transaction or 5% down payment on a purchase transaction. What does this mean? If you need 100% financing the rates being quoted will not apply to your particular situation!
#6) Documentation: Most rates being quoted are assuming that the client can document income via taxes, W2's, pay stubs and asset statements. Therefore if "other" documentation is being provided a slightly higher rate may apply.
#7) Collateral: Most rates advertised are assuming the property is a single family "stick built" primary residence. Therefore if you have a client purchasing an investor 2 or 4 unit property their rate will differ from the advertised rate.
Brought to you by Professional Mortgage Group, inc.
Your Columbia Missouri Mortgage Broker
#1) Locking Term: Typically when quoting rates most lenders use 7-15 day locks! This means that if you want a 30, 45 or 60 day lock your rate will be higher. Why? Because you are locking in today's rates for a future period in time and lenders must hedge their money to cover your lock. Longer locks are available (i.e. 180 day locks) however out-of-pocket expenses typically accompany such a lock. Why? Again because banks what you to close your loan with them and to ensure this they charge a locking discount which is refunded once your loan is closed.
#2) Escrow Account: Lenders assume that you will want your taxes and insurance included in your payment when they are quoting rates. If you would like an "escrow waiver" then a higher rate may apply. Why? Because when you don't escrow the lender loses money and in turn charges the broker or banker .25% to waive escrow. Why does the bank lose money? When you make escrow payments the lender takes this extra money and invests it. In turn they earn income on "your" money while they wait to pay your taxes and insurance. Therefore when they don't have this extra money to invest they do not have the income it produces.
#3) Loan Amount: Most lenders assume a loan amount of at least $130,000 when quoting rates. Why? Because the larger the loan amount the more interest the lender can collect and this translates to a better rate. For instance a person borrowing $55,000 will not get the "advertised" rates because the banks will take a .50%-1.25% rate hit for this loan size. Why? Again banks will not earn very much interest on a loan size of $55K and therefore will charge a higher rate to make up the difference.
#4) Credit Score: Effective November of 2007' lenders now hit borrowers with sub 700 credit scores. Meaning someone with a 660 score will get a slightly higher rate than someone with a 720 score, regardless of the fact that it is a Fannie Mae loan.
#5) Loan-to-Value: Lenders assume that the client will have at least 5% equity in a refinance transaction or 5% down payment on a purchase transaction. What does this mean? If you need 100% financing the rates being quoted will not apply to your particular situation!
#6) Documentation: Most rates being quoted are assuming that the client can document income via taxes, W2's, pay stubs and asset statements. Therefore if "other" documentation is being provided a slightly higher rate may apply.
#7) Collateral: Most rates advertised are assuming the property is a single family "stick built" primary residence. Therefore if you have a client purchasing an investor 2 or 4 unit property their rate will differ from the advertised rate.
Brought to you by Professional Mortgage Group, inc.
Your Columbia Missouri Mortgage Broker
Tuesday, January 22, 2008
The FED Acts Again!
The FED acted again this morning, slashing the Federal Funds rate by .75%! This is the largest cut since 1984! This comes during a time of great turmoil in our economy. It seems ironic that the mortgage industry is benefiting from a mess that they greatly contributed to! However, this is much needed. Rates have come out today and are 5.50% and ARMs are in the 4's! Keep in mind the Federal Funds rate is the interest rate at which private depository institutions (mostly banks) lend funds at the Federal Reserve to other depository institutions. This isn't a direct cut in prime or mortgage rates, but it factors into the equation!
We have seen some activity pick up here in the Columbia area and hopefully this just adds fuel to the fire. Refinances are way up and buyers are even starting to come out of the woodwork. This is no doubt a sign they want to take advantage of the extra buying power they will have! A buyer's market and low rates are quite the combination!
As always we will keep a close eye on rates and the market. Be sure to check back to our blog or http://www.pmg-inc.net/ for updates!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
We have seen some activity pick up here in the Columbia area and hopefully this just adds fuel to the fire. Refinances are way up and buyers are even starting to come out of the woodwork. This is no doubt a sign they want to take advantage of the extra buying power they will have! A buyer's market and low rates are quite the combination!
As always we will keep a close eye on rates and the market. Be sure to check back to our blog or http://www.pmg-inc.net/ for updates!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
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