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Why We Say A $2 Million Home Is Worth $999,000; Best Month Ever For Mortgage Rates

PIWs, or Property Insurance Waivers are never allowed for properties valued over $1mm. This dining room from a million dollar home would just manage to qualify for a PIW.

“PIWs” REIGN SUPREME

“PIW” stands for Property Inspection Waiver or an Appraisal Waiver. We are getting more of them than ever before, making both refinances and purchases faster, easier and cheaper.

We are getting them more often now b/c Fannie and Freddie loosened their guidelines in response to the COVID-19 crisis and b/c more and more borrowers and appraisals are now in the Fannie and Freddie databases (a requirement for PIWs).

I blogged in more detail about PIWs here.

As asides – we never see PIWs for jumbo or FHA financing, PIWs are not allowed for cash-out refis in Texas, and PIWs are never allowed for properties valued over $1mm.

Hence, many loan officers will often significantly “undervalue” $1mm+ properties on refinance applications in order to get a PIW.

BEST MONTH EVER FOR MORTGAGE RATES

The above heading is a headline from this Mortgage News Daily article.

June was the all-time record low for mortgage rates – both a great opportunity for borrowers and something that is amazing to live through.

Here are a few takeaways:

  1. “Record low rates” are only marginally lower than where they were in May, so it is not like everyone who locked or refinanced in May missed the boat.
  2. It’s all about COVID-19 – something we all know; rates would not be this low but for our massive economic contraction.
  3. Different borrowers get different rates (b/c of FICO, property type, LTV, loan amount, etc.). This is a point I make often so I was happy to see Mortgage News Daily highlight it.
  4. Watch “the Spread” between the 10 Year Treasury and Mortgage Rates. It has tightened somewhat but it remains much higher than normal b/c of the additional perceived risk in the mortgage market. If that risk fades, expect rates to fall further.
  5. Too much volume. B/c of the low rates, the mortgage industry continues to face far more volume than it can handle and it is fostering continued delays.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167