Mortgage Update 10-05-2010 (L-O-W)

October 5, 2010 by Leave a Comment

As you might know, I work with my husband, Steve.  Occasionally, I sit in his office waiting to talk to him – while he’s on the phone with a customer.  Today, I listened as he explained where mortgage interest rates are, and what the best interest rate was for the customer on the other end.

Have you ever bought tires?  Well, you know how when you are looking for tires there’s all these ads that say that tires are $25 each?  When you get in the tire shop, and the guy starts adding for valve stems, alignment, balancing… rebuilding tire pressure sensors and pretty soon the tires for YOUR car are $45 a piece.

Well, that’s kinda’ how I look at mortgage rates today. In general, rates are around 4.25%. You can get lower with a little more cost – or you can get a little higher rate with fewer costs.”

I thought that was pretty clever! It made me wonder though, how low COULD I really get a mortgage loan? Let’s say the seller is willing to pay closing costs, and I can pay a 1% origination fee and .25% in a discount fee.  If that was the case – what could I do??

On a conventional loan you could get a 30 year fixed rate today at 3.875% (with great credit and a 20% equity gap an APR of 4.064 refinance or purchase)

A 15 year mortgage interest rate is even lower!

On a Government loan (FHA or VA) you could get a 4.0% mortgage loan (4.562 APR) 30 year fixed rate!

If you get that 3.875% rate – does that mean you are getting the lowest possible rate? Someone said, getting the best mortgage rate takes research and LUCK.  I believe that’s true.  Mortgage interest rates don’t just change daily – they change by the HOUR, sometimes 2 or 3 times within 30 minutes!  You could research rates right now, and call back in the morning – and find a difference of an 1/8th or more!

The real purpose in researching all of this is (especially if you are shopping for a refinance) finding a loan officer that has YOUR best interest at heart.  You want to work with someone who is going to ask you important questions, like:

  • How long do you expect to live in your home?
  • Do you have a second mortgage or an equity line on the home?
  • What are the financial changes your family is going to experience in the next 3 – 5 years? (do you have children going to college, someone getting married, expect to have new children in your family/)
  • What is your debt and spending situation?  Have you been saving for retirement?

Besides the best mortgage interest rate, you are looking for a realistic idea of what it will cost to refinance your mortgage loan. If one person quotes you title insurance of $300 and another quotes title insurance of $378… well ask the $378 guy why his is higher.  Chances are, he’s given you an EXACT number, and the $300 guy gave you a “guestimate” on the cost to refinance your mortgage loan.  If one person quoted you $700 for hazard insurance and you know yours is $633 a year, tell them!

The insurance, title, recording, attorney, taxes appraisal, credit fees are generally NOT fees a loan officer has ANY control over.

The bottom line here is this… work with the loan officer that has your best interest in mind. If one person charges you $700 in fees and saves you $115 a month in your mortgage payment when you are refinancing your mortgage loan, I’d be happy!

BUT… if the loan officer asks the RIGHT QUESTIONS, and saves you $280,000 with a refinance on your mortgage loan by giving you a shorter term, or pays off consumer debt… THAT’s something to stand up and dance for, do a Whoot! Whoot! and tell your friends about!

If you are considering a REFINANCE, or the purchase of a home - call Steve and Eleanor Thorne, 919-649-5058 we have the best mortgage interest rates and the lowest fees available! If rates were at ZERO, would that make you want to buy?

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Does Obama Know Something We Don’t About the Economy?

September 3, 2010 by 1 Comment

I read a TON of Economic Newsletters, watch CNBC, and Congressional hearings… I’m an economic junkie who misses Louis Rukeyser!  I’m always looking to see if I can figure out which way rates are headed.

So when the President came on the news this week to announce that the war in Iraq was over, and the pundits started asking why it was only a 15 minute address – I was kinda’ let down, because I had also been expecting that he would take this chance to give folks a “Positive Message” when it comes to the markets.

Without that Presidential Guidance, I’m back to the Economic Numbers for insight.  And here’s what they are telling me:

  • “… the public is no longer investing in stocks, but rather in bonds.  So far this year through July, bond mutual funds have attracted $224.4bn in net inflows including reinvested dividends.  ” — Ed Yardeni, September 1, 2010.” Which means a Consumer Spending spree is not going to get the Economy going.
  • “The Fed terminated the purchases of $1.25 trillion in GSE mortgages and mortgage-related paper in March.  Simultaneously, the housing-purchases credit subsidy ceased in April.  Housing went into relapse, as most economists expected.  Simply put, subsidize something and you get more of it; remove the subsidy and you find that you have borrowed economic activity from the future, and now you get less of it.” Cumberland Advisors  Which means ANOTHER Tax Credit is not going to get the Economy going.
  • Case Shiller Numbers indicate that the Housing PRICEs actually went UP during the 2nd quarter.  “While some may see these price gains from the trough as a sign of bouncing along the bottom, most experts believe home prices nationally will fall again, but not necessarily immediately.”  Which means the Housing Market is not going to get the Economy going.
  • Private sector employment decreased by 10,000 from July to August on a seasonally adjusted basis…  and today’s non-farm payroll job’s numbers showed 54,000 jobs lost in August (many of those from the Census Jobs that are gone).  So there’s not a surge of Employment to get the Economy going.

So was it just that the President didn’t have any positive news… or does he know something we don’t know? One of my favorite charts is the Four Bad Bears.

Permission from D Short

As you look at this chart – this “Bear” looks just like the other three. Maybe we ARE heading into a little dip – but it’s not really that’s alarming!  When you stop just looking at the headlines, and you look at the long term trend… things are not sky rocketing up, but they don’t look that bad! We are going to have a slowly improving picture!

Mortgage Interest Rates typically get LOWER when there’s BAD NEWS in the Economy… and they go UP when there’s good news. Believe it or not – the last three days we’ve had higher rates!  The Dow is Happy!

That’s not good news if you are waiting to Refinance!  NOW is probably the time to do it!

If you are considering a Refinance, call Steve and Eleanor Thorne, 919-649-5058  We have the best rates available, we offer FHA Streamline Refinances, Conventional financing, USDA Home Loans and VA Mortgage Loans!

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Have We Hit The Bottom On Mortgage Rates in NC?

August 4, 2010 by 2 Comments

I read a ton of Economic commentary and as such, I can sometimes come across as a “Debbie Downer.” The reason for this is simple.

I like low mortgage rates – I’m constantly looking to see if they are going lower… and in general, as mortgage interest rates move lower, it’s BECAUSE of BAD NEWS in the Economy.

Most people don’t want to read commentary from someone who is delivering more bad news, because they get enough of that from the media. So instead of pointing out that home sales are down, and consumer confidence is off, and the Economist that Obama most listens to (Mark Zandi) thinks we need more jobs to make markets move higher…

Let’s look at the Bright Side of Life!

  • Mortgage Rates are at an ALL TIME low.  I’m talking lower than World War II when our grandparents all bought houses.
  • Housing Prices are at an ALL TIME low. You’ve never been able to get a better deal on Real Estate.  That’s a fact I don’t think ANYONE can disagree on!

The question then becomes… are we at the Bottom?

I am a syndicated writer.  I write for Zillow and Lender 411, and I’ve been saying lately that”this is not my first rodeo” – meaning, I’ve seen at least 7 other Refinance Booms in my mortgage career.  They all follow a pretty predictable path (If you want to know if you should refinance now, click here).  Rates get low, they pop back up, they get a bit lower over a gradual period of time, and then one day – they don’t get any lower.

At some point, the banks are just not interested in buying mortgage loans, over a 30 year period, that have rates below a certain percent of profit.

It looks to me like we are there. (Can I Get A Refinance Under 4.25%, click here)  I think we are at the bottom of this cycle, and that means if you are waiting for a lower rate, you are wasting valuable time! In a few hours, the ADP jobs numbers will be released, and Friday, August 6th the NonFarm Payroll Numbers will be released.

These reports, if AT ALL positive will likely move mortgage rates higher.

If you want to PURCHASE, and, and, and the moon is right, and you have money to cover your closing costs, and your down payment - you might be able to work out a temporary buy down so that you would have payments starting at 2.5% the first year, 3.5% the next year and 4.5% (4.8 APR) for there on out.  But that will be the exception, not the rule. (click here for more info on a 2-1 Buy Down)

So, if you are considering a Home purchase in Raleigh or Cary, or you want to refinance a mortgage in NC – please don’t wait, call Steve and Eleanor Thorne 919-649-5058.  We’ve seen these situations before, and you need to act while rates are where you want them to be!

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Mortgage Rates for NC 6-25-2010

June 25, 2010 by Leave a Comment

“There was a 7-year Treasury Note auction yesterday that was a little bit stronger than expected. Despite that encouraging news, Mortgage backed securities fell…”  So, what the heck does that mean??  Looking at this chart of the 10 Year Treasury Bond (which is really our Government Bonds that people and Institutions purchase… you can see that we are at or near as low as we were a couple of weeks ago.  Mortgages trade on the Bond Market – and are called MBS (Mortgage Backed Securites).  Currently – 30 year mortgages follow the 10 yr TBill “pattern.”  When the TBills go up… rates go up – when they go down GENERALLY rates will go down.

When the Mortgage Backed Securities are “off” or “down” – you’d think rates would be DOWN… but NO!  That’s trader talk for rates are moving HIGHER!  Are you confused yet?

The News and Observer (our local paper) ran a huge story today that rates are at their lowest point and you should refinance… well, they are “almost” at their lowest point.  We actually were lower for a couple of days at the end of May… but it’s still a good time to consider a refinance if your rate is adjustable, or you’re at 6% or higher.

So which direction are mortgage loan rates in North Carolina headed?  Data today started off with the GDP report.  Real GDP was reported at 2.7%, just below expectations of 3.0% and the GDP Price Index was reported at 1.1%, just above the 1.0% expected.  Overall, a fairly benign report.

Consumer Sentiment was released as well this morning and was reported at 76.0, slightly above expectations of 75.5 and up from the 75.5 in the last report.  Some Economist believe that this rise in Consumer Sentiment means that the high levels of Jobless Claims may be a result of some “special factor” (like the Gulf Oil)  and not due to actual deterioration in the labor market.  That kind of thinking aims at a continued economic recovery and a better jobs picture than has been presented with its respective data.

What does this mean for North Carolina Mortgage Rates? Mortgage rates have been trading in a “range.”  Although the day to day movement is very volatile… the long-term outlook is not perfect for even lower mortgage rates, so you really need to watch the 10 year TBill (look at the chart – every time we hit this low mark we pop back up!).  We hit a mark below 4.5% for just about 48 hours.  If that’s the mortgage interest rate you are looking for – call us, and get on our Rate Watch List.  We’ll call you when (if) we hit “your” rate!

Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058 North Carolina Mortgage Lenders.

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