Archive for the ‘Mortgage Rates’ Category
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Mar
18
Posted by Mark Clawson
I must admit that the mortgage market is getting very crazy and unpredictable. So do we need to be celebrating with a glass of wine and a nice dinner? You can be the judge.
Two weeks ago the thirty year fixed rate mortgage had a note rate of 5.875% and today it is 5.5%. This is good. However, the 3 Year Adjustable Rate Mortgage has gone from a note rate of 4% to 5.625%. This is not good. You can view all of todays conforming rates by clicking here.
My thinking is not nessarily supported in fact, however, I will give you my best read. Long term mortgage rates are pegged, somewhat, to long term Treasury Notes or Bonds. Short term rates don’t have such a mechanism at work. Bankers are having a hard time finding Wall Street investors for their ARM products and with little demand the rates are moving upward. I believe there is concern about home values in the short term. Prices are falling and there is concern about the borrower losing equity in their home. Without a pricing mechanism in place fear is coming into play.
For now, ARM Products for mortgage loans don’t look very appealing. The rates are higher than fixed rate mortgages.
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Mar
04
Posted by Mark Clawson
LAS VEGAS FORECLOSURES AND BERNANKE
Fed Chairman Ben Bernanke today put forth some new ideas on how to prevent homeowners from falling into foreclosure. Bernanke notes that lenders have increased their efforts toward “loss-mitigation” but he believes that more can be done.
He went as far as saying that lenders should “reduce the amount of the loan to provide relief to a struggling owner.” Bernanke stated that “Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.” He indicated that “with low or negative equity in their home, a stressed borrower has less ability — because there is no home equity to tap — and less financial incentive to try to remain in the home.”
This would be a very tough sell to the lenders. Would they be pressured to write down the principal again in the future if housing prices continued to fall? Would the lender then share in any equity increase going forward?Lots of questions, but at least someone is thinking. The lenders are getting hurt due to the loan programs that they made available. The borrower is getting hurt because of a real lack of understanding the loan program that he signed off on.
We should be requiring our high school students to acquire the knowledge necessary to make decisions on home loans, as well as, understanding what and how credit scores work.
On the Mortgage Rate front, rates on 30 year fixed rate conforming loans have stayed pretty much the same. Three and Five Year ARMS are getting much better. It seems as though investors are not so concerned with the short term. They are worried about inflation and they are demanding higher rates on thirty year mortgages for that added risk.Here is a link to Conforming Mortgage rates for today.
Mark V Clawson 702-351-7912
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Feb
29
Posted by Mark Clawson
The stock market is in trouble and mortgage rates are falling. A couple of days ago I wrote a post about the potential for a test of the recent lows in the stock market. It seems as though this may be occuring. The Dow Jones Industrial Averge was down over 300 points today. The recent low was 11,645 on January 23rd and we could see a test of that number next week. If you are in the market for a refinance or a home purchase get ready to act.
My guess is that the Fed will cut rates again at their March 18th meeting. When this happens I would expect that 30 Year Fixed Rate mortgage rates will move higher. The last time the Fed cut short term interest rates 30 Year Fixed rate mortgages did not benefit at all. Rates moved quite a bit higher and the reason was inflation worries.
Mark V Clawson 702-351-7912
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Feb
22
Posted by Mark Clawson
Thirty year fixed rate mortgage rates in Las Vegas continued to move higher over the past week. What I am seeing is a slight disconnect from the 10 Year Treasury note yield. Changes in fixed rate mortgage rates tend to mirror the movements in the 10 Year Treasury Note Yield. A week ago the 10 year Treasury note yield was at about 3.7% and today it is about the same. However, fixed rate mortgage rates are higher. So, what is happening?There seem to be three factors that are influencing this type of action on rates for fixed rate mortgages.
One, you have uncertainty concerning the impact of the increase in conforming loan limits on mortgage backed securities.
Two, investors are demanding higher returns given the lack of liquidity in the market and the perception that inflation is on the rise.
Three, there is concern over the viability and sustainability of the insurers who guarantee performance on bonds. It’s a crazy market right now.
I still think rates on fixed rate mortgages can go lower since rates are moving down when the stock market has problems. My guess is that we will see the stock market test the lows seen on January 23rd of this year. That number was 11,645.
So, if you are thinking seriously about buying or refinancing your home; you need to plan in advance. On January 23rd of this year fixed rate mortgage rates dropped, for one day, to about 5.25%. That was the day that the market hit 11,645. The next day rates were back to about 5.625%.
If you are prepared to act you might just get lucky. Here is a link to mortgage rates being quoted today. Mark Clawson 702-351-7912
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Feb
18
Posted by Mark Clawson
The Las Vegas Review Journal had an interesting article on the foreclosure market in the Las Vegas Valley this weekend. A time warp in real estate values seems to be occurring.
“Sometime this weekend, while you’re shuttling the kids to soccer tournaments or picking up milk at the grocery store, several dozen of your neighbors will go back in time nearly 10 years. They’ll see a 3,128-square-foot Christopher Homes house in Summerlin’s upscale Country Rose Estates on sale for it’s circa 2000 price of $370,000.”
The Housing Bubble is creating a Perfect Storm for many homebuyers, investors or otherwise. The Bubble which was created by over zealous investors, lenders and builders pushed prices too far and too fast. We are seeing a retrenchment in home prices which will probably be overdone.The values of homes in the Las Vegas Valley will recover and move forward again.
You can review my reasoning in this article Las Vegas Real Estate - Time to Buy. The recovery time for the Las Vegas Real Estate market may be longer than some had thought. The same lenders who gave you option ARMS, stated income and stated asset loans are now trying to be good business people. These changes will reduce the number of homebuyers who can qualify for home loans.
There is an inventory of 7,000 foreclosed homes on the market in the Las Vegas Valley and this is hurting everyone’s home values. They need to be sold and taken out of the market.
A new marketing strategy is unfolding in Las Vegas. The investor or homebuyer will “simply hop a ride on a foreclosure bus tour led by Barbara and Marshall Zucker of Prudential Americana Group, Realtors. Such tours have been hot since the fall in distressed housing markets in California, Florida, Michigan and Georgia. Now they’re revving up here.”
This seems like a great way to get a real look at the market and to find some true values. The bus tours are free and you will have a chance to view multiple properties.
To read the full article “Home sellers warp time” in the Review Journal here is a link.
Mark V Clawson 702-351-7912 Your Local Mortgage Loan Consultant
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Feb
17
Posted by Mark Clawson
I think it’s important to know what points mean when you’re applying for a mortgage loan. Points are not necessarily evil as many borrowers think. A no fee loan doesn’t always work in your best interest.
Loan Origination Fees: Points
These fees are how your loan consultant gets paid. When the borrower pays all of these fees (points) the rate is lower. The borrower can receive what is called par pricing from the lender (the lender is not paying anything to the loan consultant). Let’s say that par pricing on a 30 year fixed rate loan is 5.5% and that the loan amount is $200,000. If the borrower pays 1 ½ points (loan origination fee) the loan consultant receives $3000 in fees from the borrower.
When the borrower chooses not to pay any points then the loan consultant must look to the lender in order to get paid. The consultant views the lender’s rate sheet and looks at what is called the yield spread premium. This is the lenders term for points paid to the loan consultant. To get 1 ½ points from the lender the rate may be 5.875%, for example, instead of the 5.5%. Hence, if you don’t pay the points the rate on your loan will be higher.
Here is some math on the differences:
- The points cost you $3000.
- You save $576 a year in interest payments with the lower rate.
- It will take 5.2 years in interest payment savings to pay for the $3000 in fees.
- After that you save $576 a year.
So, how long are you going to stay in this house?
If you are only planning on staying in the house for a few years you’re better off with the higher rate and not paying the points.
Keep in mind that you can structure the loan so that you can have a combination where you can pay part and the lender can pay the rest. There are options available to you. I am trying to bring some transparency to the subject. It is also important to talk about locking your loan with your loan consultant. Nothing is set until the loan is locked.
Where do you find the yield spread premium?
Currently only mortgage brokers have to disclose the yield spread premium, and you should find it on your Good Faith Estimate. Banks and mortgage bankers (loan officers who work for the banks) do not have to disclose. I find this rather odd when you look at the mortgage crisis that has been evolving over the last year or so. It doesn’t seem to me that the banks have been providing the best disclosure on some of the products they have brought to the marketplace.
It is important that your loan consultant is a trusted advisor who is working in your best interest. Not all loans are the same; some are more difficult than others. Remember points are percentage fees. A smaller loan amount should have a higher percentage fee than a large loan amount. It is important that the fees are reasonable.
I had a client who was quoted a rate of 7.5% on a 30 year fixed rate mortgage refinance. I reviewed the good faith estimate and the loan officer was making 4 points or $12,000 on a $300,000 refinance. My client had good equity in his home, good income, and excellent credit. I got him a 6% rate on a 30 year fixed rate mortgage and my fee was about $3500.
This post is just about keeping your eyes open and asking some significant questions. We don’t need loan officers like the one mentioned above. Just remember that the banks aren’t required to disclose. Always ask for the APR (annual percentage rate) and compare. Truth-in-Lending (Reg Z) requires this disclosure and it is a good basis for comparing loan programs as long as the terms of the loan are the same. You need to have an apples and apples comparison.
Discount Points:
This is really pretty simple. You can buy your rate down by paying the lender a certain number of points. You may be able to lower your rate by about .25% by paying 1 discount point (it will depend on the loan program that you are choosing). The money doesn’t go to the loan officer it will get you a lower interest rate. Here again you need to do the mathematics and determine if the cost is worth it. How long will you be in the home? If it is only going to be a few years then you’re better off with the higher rate and avoiding the fees.
If you ever have any questions please call me. Mark Clawson 702-351-7912
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Feb
14
Posted by Mark Clawson
I have updated Las Vegas Mortgage rates and you can view them by clicking on the bar at the top of the page. Over the last week we have seen the stock markets move higher and this has impacted the 10 Year Treasury Note Yield. We are seeing 30 year fixed rate mortgage rates moving up by about .375%. I have mentioned that in a declining stock market there is a flight to quality, so when the markets are doing better then rates on mortgages tend to move higher.
Now on the bright side, while the 30 year fixed rate mortgage rate has been moving higher the shorter term adjustable rates (3-5- and 7 year) have remained the same or have gone somewhat lower. The reason for this is that the loosening by the Fed is perceived as inflationary and inflationary pressures are not felt as strongly on shorter maturities.
Mark V Clawson 702-351-7912
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Feb
09
Posted by Mark Clawson
Everyday I will be posting conforming mortgage rates on my blogsite. You can click on Mortgage Rates on the bar at the top of the home page. These rates will be for purchases only. The rates that you will see assume 20% down, 680 credit scores, a conforming loan and purchase only. Your needs will vary because we are all unique.
Should you need a mortgage rate quote that is specific to your needs, please feel free to call at 702-351-7912 or e-mail me at markvclawson@gmail.com. The mortgage loan market has been in a state of turmoil for a number of months and lender quidelines are in a continual state of flux. Zero down loans are temporarily unavailable in Nevada. A good alternative is FHA. FHA will lend 97.15% of the value of the property and better yet these loans are assumable! Credit scores can be below 680. The rates I have quoted are for the perfect situation on a purchase. If your situation is not perfect there are alternatives. I just want you to know that each purchase or refinance (rate and term or cash out) is unique and that can effect the rate that you are eventually quoted. The best situation is to get pre-approved and determine what your real rate will be. There have been too many lenders who have been promising what they can’t deliver. We will work with you so that you don’t have any surprises.
