Posts

Signing Bonuses = Higher Rates; No Free Lunch In Mortgages

Heejin and I have been offered seven-figure “signing bonuses” (in exchange for aligning with a new mortgage bank) on numerous occasions by large mortgage banks trying to lure JVM under their umbrellas. We always say “no thank you” without hesitation b/c we know for certain that there are no free lunches in the mortgage world. […]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

Six Factors That Can Impact Your Mortgage Rate in Texas

Every borrower wants to get the lowest rate when applying for a mortgage loan. JVM is proud to offer our buyers some of the lowest rates in the industry. But many buyers are unaware of the many different factors that can affect interest rates. The market moves. The Texas market is a powerful force in […]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

“This was the worst week for mortgage rates in 3 years – and it may be just the beginning”

Rates fell sharply on Wednesday and everyone breathed a sigh of relief and started locking like crazy. But then rates shot up again yesterday and a friend of mine sent me this link to a short CNBC article with a title that I borrowed for the above subject line. Here are the article’s key points: […]Read More

Rates – “Sticky” Down; “Slippery” Up; Why We Like to Lock

Rates moved higher today primarily in response to the removal of tariff threats with Mexico. I mention often how good economic news (regarding employment, retail sales, GDP growth, trade, etc.) usually moves rates higher while bad news tends to push rates lower. But, the market’s response to good and bad news is not always proportional. […]Read More

7 Dangers From Falling for “Rate Quotes”

Our borrowers come to us constantly with rate quotes from other lenders, and that is all well and good because our rates are very low and we love competition! What is not good though is that those quotes are often misleading or inaccurate, or they can’t be honored at all. And worst of all from […]Read More

The Fed Halts Rate Increases; Good Or Bad?

Yesterday, the Fed announced that there will be no more rate hikes in 2019. And many people in the mortgage and real estate industries cheered. But a lot of economists and Fed-watchers are more worried than ever. Here is just one of many articles (from the WSJ) I read today illuminating serious concerns. The Fed […]Read More

States With Lowest Mortgage Rates; CA Wins! Why? Bringing Low Rates To Texas!

Lending Tree recently did a study to see which states offered the lowest mortgage rates. And surprisingly, California (the land of all-things-expensive) won! The next best states for low mortgage rates were New Jersey, Washington, Massachusetts, Utah, and Colorado. The worst five states for rates were New York, Iowa, Arkansas, Oklahoma, and Maine. WHAT INFLUENCES […]Read More

12 Factors That Impact Your Mortgage Rate

We often have buyers or agents ask: “What is your 15-year rate today?” Or “What is today’s interest rate?” We always respond by explaining there is no single rate, b/c the market moves so often and b/c there are so many things that affect an individual borrower’s rate. Here are 12 factors that affect almost […]Read More

Transparent Pricing for Mortgages; It Worked for Macy’s and Wanamaker’s!

In the 1870s, department stores Macy’s and Wanamaker’s completely transformed retail and soared to heights unseen by any retailer up to that time. What did they do? They put price tags on their merchandise! Prior to price tags, consumers didn’t know the cost of any item until they brought it to the counter and haggled […]Read More

Mortgage Middle Managers – Why They Matter

DECAY TOUR OF DETROIT I took my 17 year old daughter on a “decay tour” of Detroit last summer. She of course hated it, but I found it fascinating. From WWII through the early 1970s, Detroit was one of the mightiest industrial cities of the world, and it is now only a shell of its […]Read More

Six Factors That Can Impact Your Mortgage Rate

Every borrower wants to get the lowest mortgage rate when applying for mortgage loan. JVM is proud to offer our buyers some of the lowest rates in the industry. But, few buyers are aware of the many different factors that could affect the interest rate they are given. Here are six factors that could impact […]Read More

Why Rates FELL After Fed RAISED Rates; Econ Data Trumps Fed Policy

The Fed raised its short term “Fed Funds Rate” again yesterday, but long term mortgage rates fell. Once again, the Fed Funds Rate is only a short term interest rate (the rate that banks charge other banks for overnight loans necessary to pad their required reserves). This short term rate does not always directly influence […]Read More

How & Why We Offer “No Cost” Refi’s

Nobody, and I mean nobody, expected rates to fall this much in 2017. When rates do fall, we reach out to all of our eligible borrowers and offer the option to refinance – usually at “no cost” (where JVM pays for all non-recurring closing costs). Borrowers sometimes wonder how we get paid when we offer […]Read More

Rates Down After Fed Pushed Rates Up? Why?

The Fed raised the short-term Fed Funds rate yesterday by 1/4% to a range of 0.75% to 1.00%. And long term interest rates fell. Here are a few reasons why this happened. First of all, the markets anticipated the increase and had already accounted for it. Rates actually improved after the increase was announced, in […]Read More

Why Higher Rates Are Good? Rates Up After Fed Announced More Rate Increases

In real estate, we focus on the harm of higher interest rates – higher mortgage payments, less buying power, and fewer refinances for lenders. But, there are some good things for the economy overall that come from higher rates, and this benefits real estate in the long run. Here are a few benefits of higher […]Read More

Perspective for Fence Sitters Concerned About Rates & Presidents

We have had a few fence sitters lately, not wanting to get into the market now because they are concerned about rising rates and our new President. In regard to rates, we remind borrowers that rates remain amazingly low overall. The average rate over the last 45 years has been 8.26%, per the WSJ today. […]Read More

Can Rates Fall Again? Heck Yeah! New Conforming Loan Limits

One of the primary reasons behind the recent rate increases is the expectation that Mr. Trump will deregulate the economy and bring about more economic growth. B/c of this expectation, investors have moved into stocks and out of bonds, pushing rates up 5/8% since the election. But, while the stock market loves “Trump the Deregulator,” […]Read More

Timing The Bottom for Rates? Get While Gettin’ is Good; Refi Again

Borrowers often ask us if we think rates will fall further before they lock, or they 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 to […]Read More

Misleading Closing Costs Quotes, and Inaccurate Scenarios

JVM spends a substantial amount of time educating buyers, and this process includes multiple “Payment and Closing Cost” Scenarios. We go out of our way to make sure we include every possible cost in our estimates to ensure there are no surprises at closing time. Our estimates include Transfer Taxes, Property Taxes, Interest and Hazard […]Read More

When We Do/Don’t “Take” Loans From Other Lenders; 1/4 Percent Rule

We constantly get contacted by borrowers who are already working with or approved by other lenders. Sometimes borrowers come to us before they get their offers accepted, at their Realtor’s urging, b/c they need our speed and reputation to make their offers competitive. Borrowers also come to us b/c their current lender misled them, or […]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

Refi Boom; What It Means?

Rates dropped again this morning to shockingly low levels not seen since early 2013. A lack of inflation, falling oil prices, weak economies, stock sell-offs, and other factors are all working together to push rates to amazingly low levels. This will affect turn-times at lenders everywhere as no lender was prepared for a surge in […]Read More

Refi Options Now Better Than Ever; Values Up; Rates Down

With values higher than they were a year ago (especially in certain areas) and with rates shockingly low once again, every buyer who puts down less than 20% should evaluate refinance options. We are of course more than happy to conduct free analyses for everyone. We analyze current estimated property values, current available interest rates […]Read More

Lender-Paid-Mortgage-Insurance – Overrated?

Many lenders tout Lender-Paid-Mortgage-Insurance (LPMI) as a way to avoid mortgage insurance. In fact, one of our lending sources (Quicken) has extremely good LPMI rates. With LPMI, borrowers can avoid mortgage insurance altogether by taking a slightly higher interest rate (3/8 to 1/2 percent higher for a 90% LTV for example). There is no free […]Read More

Janet Yellen Speaks; Fed Backing Off on Bond Purchases; Good Thing?

Rates jumped yesterday after Janet Yellen (the new Fed Chairperson) spoke. She rattled the markets by implying that the Fed may push rates up sooner than expected. She also made it clear that the Fed will continue tapering (backing off on its bond purchases). Rates are heading up this year. We discussed this before but […]Read More

How Much Does Paying “1 Point” Lower Your Rate?

We are often asked what a borrower gets when he pays 1 point. A “point” is just a % of the loan amount. 1 point = 1% of the loan amount. Typically, borrowers lower their rate about 1/4% if they pay a point, although it varies depending on how “steep” the yield curve is. There […]Read More

No Cost Refi = No Risk = No Prepay Penalty = Savings for Free

We have many borrowers with Mortgage Insurance who qualify for “no cost” refinances that would save them as much as $500 per month in some cases. These borrowers are “ripe” for refinancing b/c their homes have appreciated rapidly since their purchase date. We of course contacted these borrowers and explained the benefits of a refinance, […]Read More

As Values Climb, Refi’s for Many Now an Option

We have a borrower who has been stuck with a 6.5% interest rate for years b/c he thought he did not have enough equity in his Antioch home to refi. We checked today, and his loan-to-value ratio is under 90%; we can lower his rate 2% at no cost to him. He will now save […]Read More

WARNING To Fence Sitters: Rates Will Climb This Year; Tapering

Despite recent rate-improvements, rates will most definitely climb significantly this year. The reason is that the Fed continues to announce reductions in the amount of mortgage backed securities and treasury bonds it is purchasing. The Fed is expected to reduce its overall purchases from $85 billion per month in December to zero as soon as […]Read More

“QM” – Much Ado About Nothing?

This is the latest we have ever sent out our Daily Comments, but we didn’t want to break an unblemished streak of 4+ years of never missing. Rates got worse on a strong GDP reading but have since come back. The markets remain very volatile; rates often edge up towards the year-end. “QM” fears seem […]Read More

Do Rates Move, Go Down In Election Years? 50/50 Chance

Last week we had a borrower who wanted to hold off on buying a house until late summer b/c he was certain rates will go down prior to the Congressional Elections this Fall. In order to convince him otherwise, we Googled the topic (“do rates go down in election years”) and our own blog from […]Read More

“Broker Vs. Bank;” Brokers Access Wholesale Channel

Last week a borrower told us that he preferred to use his bank for his mortgage financing b/c he thought he could get “lower rates by going straight to the source.” Nothing could be further from reality. Banks sell their mortgages on the secondary market, just like everyone else. Their rates are usually higher b/c […]Read More

Will Higher Rates Choke Off Housing Recovery? We Say “No”

Will increasing rates choke off the housing recovery? Probably not. This is important for leery new buyers to understand. It is true that low rates improve the housing picture b/c they foster more affordability. But, the other factor that drives housing is the overall employment picture, and it has been steadily improving. This is particularly […]Read More

Benefits of Buying; Rates Remain Historically Low

We say this often, but once again, please feel free to have us help sell your clients on the benefits of buying. For example, we have a client buying a house with an in-law unit for $737,000. The client is currently paying rent of $2,300 and he had very cold feet about increasing his housing […]Read More

“Slippery Up/Sticky Down;” Rate Increases Are Good

There is an adage in the industry that rates are “slippery up and sticky down,” meaning that rates are much more likely to move up quickly than they are to move back down quickly. Hence, nobody expects a fast reduction in rates to match the recent sharp increases. Rate increases can be seen as a […]Read More

1/2 Percent Increase = $28 per $100,000 in Payment Increase

Our average loan size is about $400,000, so our average payment-increase as a result of the recent rate-bump is about $112 per month (for a $400,000 loan). When tax deductions are accounted for, the net effective increase is much less for most borrowers (probably about $70). Hence, the rate increase is probably not as serious […]Read More

Rates Way Up; Almost 1% higher than Nov.; Equity Line = Seasoned Funds

Troubles still abound in Europe, however, and all is not rosy here in the U.S. Hence, we could see rates come back somewhat if significant negative news surfaces. Note to borrowers locking in rates now: If rates come back, you can always refinance in a few months (usually at “no cost”). Many borrowers seem to […]Read More

Values Drop But Rates Up? – Payment Still Way Higher; Don’t Wait

We recently had a borrower repeat a refrain we heard often in years past: “I think the market is over-priced right now b/c there is too little inventory; I am going to wait for prices to drop even if it means I have to take a higher rate; higher rates may actually push prices even […]Read More

Much Lower Price But 1% Higher Rate = Higher Total Payment

We had a borrower yesterday express reluctance to buy because there is “so little inventory” that he thinks he will “inevitably end up over-paying in a bidding a war.” We had two responses. First, we think the chances of housing prices coming down again, if and when there is an inventory surge, are slim to […]Read More

Annual Percentage Rate or “APR” – Includes MI

“Annual Percentage Rate”, or APRs, remains 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

“Rates Are Awful” – An Amusing Matter of Perspective

As most readers know, it is JVM’s philosophy to hire for education and brainpower as opposed to hiring for just “experience.” We are able to do this because we have developed an extraordinarily unique and effective training program. The bi-product of this hiring philosophy is an office full of much younger and more educated employees than […]Read More

How Does President Obama’s Re-Election Affect Rates/Industry?

Historically, there has been about a 50/50 chance that rates will fall prior to an election, as we have mentioned before (rates do not always fall before elections, as many believe). Similarly, rates can go in either direction after an election. Upon news that President Obama was reelected, rates fell for two reasons, according to […]Read More

Inflation Fears Could Push Rates Up Sooner Than Expected

Inflation fears are a major reason why rates may shoot up sooner than expected despite the Fed’s efforts to keep rates low. Buyer’s of Bonds, Mortgages and Mortgage-Backed Securities are concerned are about inflation b/c they want to make sure the return from their investment in these instruments exceeds the rate of inflation (or remains […]Read More

What It Means to “Lock” In an Interest Rate

An interest rate lock is a commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time. Typical lock periods are 15 days (for approved loans), 30 days for most purchases, and 45 days for most refinances in a high volume market. Interest rates change every day […]Read More

Rates Same for SFRs & Townhomes; Higher for Condos > 75% LTV

Interest rates for Single Family Residences (SFRs) and Townhomes are the same. There are no “add-ons” or “hits” for financing a Townhome/Planned Unit Development (PUD). Condos, however, with loan-to-values above 75% have rates approximately 1/8 to 1/4 percent higher than those associated with SFRs and Townhomes. Condo buyers looking for the very best interest rates […]Read More

Will Rates Stay Up? Still Say Lock Now

There are three reasons why rates have spiked: (1) improvements in Europe’s sovereign debt picture; (2) improvements in the US economy overall; and (3) decreasing likelihood that the Fed will move again to “ease” or push rates down. As we point out frequently, positive economic news sends investors into stocks and away from bonds (and […]Read More

2nd/Vacation Home Financing to 90% LTV

This is a reminder that 2nd Home or Vacation Home Financing is alive and well. For loan amounts below $417,000, borrowers can buy 2nd homes with only 10% down. The rates are only marginally higher than those associated with primary residence financing. No points loans can easily be locked in the mid to high “3’s.” […]Read More