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

Two Areas Big Banks Beat Us: CRA and Private Banking

I mentioned yesterday that we have been beating the “big banks” across the board on the interest rate front. But, there are two areas where we rarely beat the big banks in rate: CRA Loans and Private Banking. CRA LOANS CRA stands for Community Reinvestment Act. It is a law that “encourages” (aka requires) banks […]Read More

Surprising Reasons Why People Are Refinancing

The Fed raised short-term rates again yesterday but rates still remain much lower than expected. Part of the reason is that investors think the rate increases will hurt the economy at this point. As a result, investors moved from stocks to bonds and this demand for bonds keeps rates lower than expected. In any case, […]Read More

Jumbo Rates Are LOWER Than Our Conforming; Jumbo vs. Conforming

Our Jumbo rates are as much as 1/2 percent lower than our Conforming (Fannie and Freddie) rates. Our low Jumbo rates are also available for qualified borrowers down to the “low balance” conforming loan limit of $484,350. These very low Jumbo rates are highly unusual and there are several reasons for this including: (1) Fannie […]Read More

Good News! Fed Says Rate Increases May Halt

We have almost 1,000 pre-approved borrowers in our pipeline and all of them breathed a sigh of relief yesterday. The reason? Two top officials from the Federal Reserve recently implied that the Fed may be done or close to done pushing up rates (a December increase is still likely). Our pre-approved borrowers should be delighted […]Read More

What Could Bring Rates Plummeting Back Down?

According to Freddie Mac, the average 30-year fixed rate mortgage was 4.83% in October. We have not seen rates that high since 2011, and the Fed seems determined to continue to push rates up. Even though it seems likely that rates will continue to climb, there are some things that could bring them down again. […]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

Strong Employment Report; Rate Discussion

Rates increased again this morning in response to a strong employment report. Job creation was up more than expected; the unemployment rate dropped more than expected, and wage rates increased more than expected. This surprisingly strong report makes it more likely that the Fed will actually raise rates in December, but we’ve heard this before […]Read More

Three Reasons To Lock Now Or Sooner Rather Than Later; Can’t Time

We often have borrowers reluctant to lock in a rate b/c they want to time the market, and lock when rates “bottom out.” This almost never works and often creates major issues for several reasons. First – it is impossible to time the market; nobody knows what the market will do, ever. We have seen […]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

Interest Expense Always Exceeds Tax Savings; Nobody “Needs” Write-off

There is no doubt that renters experience a tremendous tax benefit or subsidy when they buy a house. This is b/c they can deduct all of the interest and property taxes they pay from their income before calculating their tax liability. But, we often have borrowers who are confused about the nature of tax deductions, […]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

Property Type and Fico Score Can Significantly Affect Rate

We recently had a borrower request a verbal rate estimate after telling us her credit was perfect and that she was buying a townhouse/PUD. We estimated her “no points” rate at 3.875%, assuming her credit score was above 740. Her credit score was actually 718, and she was buying a condominium. The combination of these […]Read More

Economy May Be Back; Happy Holidays From JVM!

Rates shot up yesterday primarily in response to a much stronger than expected Gross Domestic Product report, indicating that the US Economy is growing much faster than expected. This news sent stock prices way up and bond prices down, as investors left bonds for stocks. This is the type of news (along with strong employment […]Read More

Accrued Interest on Mortgages – Arrears, Skipping Payments

Interest on mortgages always accrues in arrears. This means your December 1st mortgage payment covers interest that accrued in November. In contrast, a December 1st car payment will cover interest that will accrue in December. For a purchase, borrowers pay interest through the end of the month, and then skip a payment. Hence, if a […]Read More

Accrued Interest and Mortgage Payment Myths

We had a seller recently who insisted on closing by month-end b/c he could “not afford another payment” on his mortgage. B/c we inherited the deal from another lender 7 days before month-end, we were not able to comply with the seller’s request. The seller was utterly confused, however. Interest was accruing against his mortgage […]Read More

Elections Don’t Affect Rates; CFPB Maybe

Elections (either pending or completed) usually do not move interest rates, or at least in the way people might expect. Rates historically move either up or down prior to Presidential elections (they do not always go down, as many think). And last night’s Republican victories did not affect the market significantly either. One hopeful outcome […]Read More