Posts

Interest Rates Hit All-Time Low? Yes & No

10-YEAR TREASURY YIELDS HIT ALL-TIME LOW; MORTGAGE RATES DON’T ALWAYS FOLLOW THE 10-YEAR There is so much talk about rates hitting “all-time lows” that I wanted to discuss it in a blog quickly. 10-year Treasury bonds are hitting all-time lows and then some, currently sitting at 1.16% as I type. It is the 10-year Treasury […]Read More

5 Key Credit Reminders & Misconceptions

#1 – Consumer credit scores are not the same as mortgage credit scores. Borrowers often share their credit scores with us, as if those scores are set in stone. Those scores, however, are often generated by online “consumer” oriented scoring models that are much less stringent than the scoring models mortgage lenders employ. As a […]Read More

Why I Was So WRONG About Interest Rates Rising – Part CCXXIX

If you Google the word “Wrong,” the below picture pops up in the results: OK… that is a real photo taken at a holiday party (in a photo booth – thank you Danny Winkler) when I really did think rates were going to shoot up. BUT, I am pretty sure I was not thinking about […]Read More

Rates Do NOT Always Go Down In Election Years

We have a great client who was holding off on a “no cost” refinance because he was convinced rates were going to fall further this year “because it’s an election year.” But fortunately, he finally locked in his rate last week, taking advantage of the temporary rate drop (caused by the Iran skirmish) right before […]Read More

Why Interest Rate Might Be Higher at Contract Time Than at Pre-Approval Time; Not a “Bait & Switch” :)

We pre-approved a borrower in August and sent him numerous estimated payment scenarios, based exactly on the interest rates available at that time. When he went into contract in mid-September, we locked him at a 1/4% higher rate than what we estimated in August. The borrower was upset b/c he thought we pulled a “bait […]Read More

Charles Schwab No Longer Charges Commissions for Trades

Charles Schwab started to offer discount brokerage services (low commission trades) way back in 1975. Much of the financial industry paid little attention to the upstart firm but it nonetheless continued to grow and capture more and more market share. And then finally, 44 years later, Schwab announced that they would charge no commissions at […]Read More

Rates Fell Again – Why? Unexpected, As Per Usual

Rates have moved steadily lower over the last week. And, as per usual, nobody saw it coming. The unexpected news that pushed rates down included the following: Nancy Pelosi’s Impeachment Inquiry. Major uncertainty in both political and economic arenas tends to push rates down. Waning Consumer Confidence. Traders watch these surveys closely and react sharply […]Read More

The Fed Cut Rates by 1/4 Point And Mortgage Rates Fell Marginally

The Fed cut the Fed Funds Rate by 1/4 percent yesterday, and rates…actually fell after the announcement. I was almost disappointed to see that b/c it will again confuse people about the influence the Fed has on mortgage rates. Briefly and once again – the Fed cut “The Fed Funds Rate” which is a short […]Read More

Will Rates Fall Again? Yes, But Probably Not Soon

Barry Habib is a relatively famous mortgage industry pundit and a Broadway musical producer (l learned today) who was on The National Real Estate Post today discussing the future of interest rates. He has a lot of credibility in the industry as of late b/c he has become relatively skilled at predicting interest rate movements, […]Read More

Will a Recession Tank Housing Prices? Probably Not…

I know numerous people who are anxiously waiting for the next recession b/c they expect housing prices to tank. They can’t wait to swoop in and find bargains like the many that were available after the 2008 meltdown. BUT, according to Appraisal-Blogger-Extraordinaire, Ryan Lundquist, housing prices don’t always “correct” or decrease during recessions. Prices often […]Read More

Luck vs. Talent; The Risk of Confusing the Two

One of my favorite podcasts is “How I Built This,” as I mention often. In the podcast, entrepreneurs tell their stories (often terrifying) of what it took to get their companies off the ground. There are usually two recurring themes: (1) the founders had to go through hell and back to achieve their success and […]Read More

Fannie & Freddie Breaking Off From Government Control?

INTEREST RATES COULD SHOOT UP AT ANYTIME We often remind both borrowers and agents that interest rates are generally expected to remain low for some time, but that does not mean they cannot shoot up unexpectedly. Our point is that both buyers and current mortgage holders should take advantage of today’s low rates now before […]Read More

Trade Wars Spark Lowest Rates Since 2016; Why?

Over the last four business days, rates have fallen to their lowest levels since 2016. The primary reason is an escalating trade war with China; it was not the Fed’s rate cut, as I have now mentioned more than a few times, as the rate cut was highly anticipated and fully accounted for long before […]Read More

When Can Borrowers Lock Their Rate? Rate Volatility

BORROWERS OFTEN WANT TO LOCK PRIOR TO GETTING INTO CONTRACT Borrowers often want to lock in their interest rates prior to going into contract (they typically want to take advantage of low rates before they go up). We are unfortunately unable to do so b/c we need to identify a property address before we can […]Read More

Why Fed Rate Cuts Often Don’t Result In Lower 30-Year Fixed Rates

The Fed reduced the Fed Funds Rate by 1/4 percent and 30-year fixed rates are actually now slightly HIGHER. I have blogged about this paradox many times b/c it is so confusing to borrowers and agents alike. Many of our clients are in fact asking us if they can now get a 1/4 percent lower […]Read More

What Moves Interest Rates

I’ve touched on interest rates often in recent months b/c the most recent drop has been so surprising. Examples: Are Low Rates the New Normal? Rates Hit 19-Month Low; Will They Stay Low Borrowers and agents alike are nevertheless still asking if rates will stay low or move lower, so I thought it was time […]Read More

Beware of Lending Delays; Layoffs & Unexpected Refi Boom

2018 was an absolutely horrific year for the mortgage business. Interest rates were up significantly, all but wiping out most of the refi business. And overall purchase volume was down to boot. As a result, there was massive over-capacity in the mortgage industry so everyone started to compete with lower interest rates to maintain market […]Read More

Why Rates Matter So Much Now

GOV’T SHUTDOWN UPDATE The IRS has agreed to process tax transcripts (tax return verifications). This is good news, as this could have held up the funding of numerous loans. REALTOR DROPS LOAN OFFICER B/C HIS RATES WERE TOO HIGH My wife Heejin recently visited a Realtor who had been using the same loan officer for […]Read More

The Fed Lost Control Over Interest Rates; Now What?

RATES AT 8 MONTH LOW Rates are at an eight-month low right now – about 1/2 percent lower than they were at their peak in October. I should add though that they still remain about 1/2 percent higher than they were last year at this time. So, did the Fed finally achieve its stated goal […]Read More

Why Can’t Rates Stay Low Forever?

A few weeks ago I discussed why rates don’t always increase when the Fed announces a rate increase. (You can find that blog here.) I had pointed out how the markets often account for likely increases in the Fed Funds rate long before the Fed announces them. Since that September 6th discussion, rates have continued to […]Read More

Why a Good Economy Is Bad for Rates; Why Not Leave Rates Low?

A few weeks ago, I blogged about why rates don’t always increase when the Fed announces a rate increase (as they likely will today). The blog can be found here, and I pointed out how the markets often account for likely increases in the Fed Funds rate long before the Fed announces them. Since that […]Read More

30-Year Loan vs. 15-Year Loan: Which One is Right For You?

When it comes to fixed rate mortgage loans, borrowers are usually faced with two choices: a 30-Year Fixed Rate Mortgage or a 15-Year Fixed Rate Mortgage. There are some key differences between these two loan types that will play a role in deciding which one is the best fit for borrowers. The Standard: 30-Year Fixed-Rate […]Read More

Mark Cuban: “More Sales Cures All”

RATES AT 2014 LEVELS We have not seen interest rates this high since 2014, and both the mortgage and real estate industries are in panic mode b/c volumes are dropping. MARK CUBAN And, it reminded me of a blog I wrote in 2014 where I quoted something Mark Cuban said – “More Sales Cures All.” […]Read More

Interest Rates Remain a Gift – History Vs. Hysteria; Look at the History, Please

PANIC OVER RISING RATES Borrowers, Realtors, investors and the markets as a whole all seem to be in a panic over rising interest rates. The only people who should be worried, however, are “refi-ologists” (businesses and companies who focus only on refinancing). For starters, higher rates can be a good thing for several reasons, as […]Read More

Why Interest Rates Should Finally Increase This Year; Or Not

INTEREST RATES PLUMMET AFTER 2008 MELTDOWN After the 2008 meltdown, mortgage interest rates plummeted from the mid 6% range all the way down to the low 3% range at various times. More recently, mortgage rates have hovered in the 4% range. Over the last ten years, I have repeated pundit predictions of imminent rate increases […]Read More

Our Interest Rates vs. The Other Guys’ Rates; Rate Comparisons

I wrote Monday about the debacle Heejin and I endured after we chased interest rates in Texas (the bank lost our file for 17 days). Interestingly, the bank is now trying to save the deal and won’t take “no” for an answer, but we know there is no way it can perform in time. I […]Read More

What Affects Rates For An Individual? A Lot!

Yesterday, I wrote an all too complex explanation about macroeconomic influences on interest rates, and got this wonderful feedback from a top producing KW agent: I’m dying of boredom reading this….😁 OK – that is not the feedback we hope for, but I was just trying to be thorough…  :). Today’s subject will be simpler […]Read More

Timing The Bottom For Rates? Get While Gettin’ Is Good

Borrowers often ask us if we think rates will fall further before they lock, and they often want to “time to the market” and lock in their rate at the “bottom.” As a result, they are sometimes reluctant to lock or get us their paperwork. This in turn delays purchase transactions and sometimes causes borrowers […]Read More

What the Heck Is Going On With Rates? They’re Rising, Right? Wrong

Interest rates fell again, surprising everyone (again) b/c rates are supposed to be going up, right? Wrong. Rates are supposed to being going up b/c the Federal Reserve has been increasing the short term Fed Funds Rate; b/c the economy is heating up; b/c Mr. Trump’s policies are potentially inflationary; and b/c the Fed is […]Read More

What Moves Interest Rates? Will Rates Fall?

We get asked time and again if we think rates could fall again, and our answer is “maybe.” The Fed has indicated that they plan on raising short term rates a few more times in 2017. But, the Fed is not the only influence on rates. Other factors that influence rates include the following: 1. […]Read More

1/2% Since Election; Important Tips For Refi Guys Doing Purchases!!!

The huge rate increases do not threaten JVM’s business b/c we have always been about 85% purchases; we truly are purchase experts. With rates up so much though, the “refi guys” are going to be clamoring into the market offering stellar service and everything else to Realtors in an effort to garner business. So, here […]Read More

Interest Rate Increases – Effect, Likelihood and Perspective

There is a lot of talk once again about rates increasing, especially b/c the Fed is indicating they will try to push rates up in December. But here is some perspective. The Fed may not be able to push long-term rates up. When the Fed increased the short term Fed Funds rate last December, it […]Read More

Factors That Affect A Borrower’s Rate; Must Know Before Quoting Rate

Borrowers often come to us after getting misleading rate quotes from large banks or on-line lenders. This is b/c the loan officers sometimes quote rates before obtaining all of the necessary information. There are many factors that influence interest rates. This is why it is impossible for us to just quote a rate before assessing […]Read More

Annual Percentage Rate or “APR” – Includes MI

“Annual Percentage Rates,” or APRs, remain confusing to many borrowers (and to most loan officers). We want to address them again because they are especially confusing with respect to FHA Loans. The intent of the APR disclosure requirement is good; it is to prevent lenders from advertising unduly low-interest rates without conveying the effective cost […]Read More

Credit Score Under 700 And Less Than 20% Down – FHA’s Better Deal

We have a borrower with a 670 credit score and 5% down payment who is comparing interest rates on the web, and getting severely misled. Borrowers often do not understand how significantly low credit scores affect interest rates with conventional financing. For borrowers with less than 20% down and lower credit scores (under 700, and […]Read More

Lender Paid M.I. Revisited – Why We Don’t Recommend It

We have been asked numerous times lately about “LPMI,” and it reminded us to re-publish the below comments. We have many conventional borrowers with less than 20% equity (or down payment) and an aversion to Private Mortgage Insurance (PMI). These borrowers often ask about Lender Paid Mortgage Insurance or “LPMI.” With LPMI a lender simply […]Read More

Loans/Rates Not a Commodity; Vary by Source, FICO, LTV, Loan Amount

Loans and Rates are not commodities. We reiterate this b/c so many borrowers ask us what “the” rate is. Or, they demand that we match an advertised rate they find on the internet or at a bank, when their loan is significantly different than what is getting advertised. Many things affect interest rates including Credit […]Read More

Positive News Makes Rates Worse

We periodically explain the reasons why bond and stock prices move and why it is so important for borrowers, lenders and Realtors. Interest Rates are driven by demand from major investors (money managers, mutual funds, banks, hedge funds, etc.). If positive economic news surfaces, investors want to buy stocks in companies, as stocks are best-suited […]Read More