30 Year Fixed Rate Loan at a Cost of One Point: 5.125%*
The market appears to believe a recovery is in the works, so money continues to leave Bonds (and mortgage backed securities) for the Stock Market, which has improved almost 34% since March lows. Because higher rates will put a damper on the expected recovery, many analysts expect one or more dips in rates before the summer is out. Again, it remains to be seen if the Fed still has the ammunition to move rates.
Please do not let higher rates dampen the enthusiasm of your buyers, as rates remain extremely low by historical standards, and values are lower than ever. There is still no better time to buy than the present.
All lenders are not created equal! The market for a particular loan is not “efficient”. Between FHA high balance and low balance loans, and between Conventional high balance and low balance loans, different lenders can vary by as much a full per cent with respect to the terms they may offer at any given time.
A borrower called us last week for example after getting quoted a rate of 6.25% at a cost of 2 points for a high balance (over $417,000) FHA Loan. The rate was quoted by a very large and reputable lender that just happened to be way out of the market for high balance FHA loans. We were able to offer that same borrower 5.375% at a cost of one point simply because Citibank was “buying the market” that day for that type of loan. We effectively saved the borrower .875% in rate, and a full point to his fee. This was not due to our “talent” but simply due to our ability to access multiple lenders.
If your clients are ever concerned about the rates or fees they are quoted, please have them contact us without any obligation. If the terms are reasonable, we will be the first to tell them. If we believe the terms are not reasonable, we will likewise apprise them of their other options.
*The above rate quote has the following assumptions: $400,000 Loan Amount; 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is approximately 0.20% higher than quoted rate for a $400,000 loan. Estimated closing costs affecting the APR include $4,595 for Origination and Processing Fees, $850 for other Lender Fees; $1,400 for Escrow Fees, and $1,000 for Prepaid Interest.
Call Jay Voorhees or Heejin Kim at (925) 855-4491
Real Estate Broker, CA Dept of Real Estate, DRE# 01524255, NMLS# 335646