This is some finance market info, i thought everyone should know. So you can be an expert to your clients. The Treasury bill drives mortgage prices, it is the primary cost associated with standard bank mortgages.
We have an excellent finance group that tracks the bond market for us.
So far rates have worsened 6 of the 7 days. Although everyone got good news from the fed, that rates were holding at 5.25%, the notes from the fed meeting showed a strong concern for inflation and little concern over the health of the economy.
The economic date released since then shows that employment is up and the overall economy is strong.
What's the big deal? The rate ceiling (maximum rates for a standard 5% down mortgage) we have seen for many months of 6.25% was annihilated by the market. The bond forcast we recieved late last week showed the market settle down again at 6.5% to 6.625%. This is expected to stand.
This is a 0.375% rate worsening from a week ago.
So warn your clients, to lock their rates to avoid the market shift.
Monday, June 4, 2007
Monday, May 28, 2007
When is it good to pay discount points?
As rates slowly rise with inflation, buyers will be looking for more options to purchase the home they want. While there are other products, one of the simplest and safest options is paying points. Discount points are fees paid to the lender at closing to permanently pay down the interest rate of the loan (this is not a buy down).
Each "point" is equal to 1% of the loan amount. For example a $200,000 loan, a point would equal $2,000. The amount of interest rate discount depends on the loan product, but it can reduce the rate from a quarter point to sometimes over a half point. This is especially beneficial on larger home purchases and buyers that can't document their income.
If buyer has a little extra to put into the purchase or the seller is willing to contribute a little bit more, this becomes a stronger option.
Example:
Suppose a buyer wants to purchase a $200,000 house
0 points in discount | 1% in discount
Interest Rate 6.25% | 5.875%
Payment $1231.43 | $1183.08
A simple formula for weighing the benefits:
Monthly savings is $48.35 divided into the discount of $2000.00
It would take just over 41 months or 3.44 year to recover the cost.
If your buyer plans on staying in the house for more than 3.5 year this makes sense. Remember, the longer that you plan on staying in that house, the more important that rate becomes.
For my other active rain posts: http://activerain.com/blogs/ethanhoke
Each "point" is equal to 1% of the loan amount. For example a $200,000 loan, a point would equal $2,000. The amount of interest rate discount depends on the loan product, but it can reduce the rate from a quarter point to sometimes over a half point. This is especially beneficial on larger home purchases and buyers that can't document their income.
If buyer has a little extra to put into the purchase or the seller is willing to contribute a little bit more, this becomes a stronger option.
Example:
Suppose a buyer wants to purchase a $200,000 house
0 points in discount | 1% in discount
Interest Rate 6.25% | 5.875%
Payment $1231.43 | $1183.08
A simple formula for weighing the benefits:
Monthly savings is $48.35 divided into the discount of $2000.00
It would take just over 41 months or 3.44 year to recover the cost.
If your buyer plans on staying in the house for more than 3.5 year this makes sense. Remember, the longer that you plan on staying in that house, the more important that rate becomes.
For my other active rain posts: http://activerain.com/blogs/ethanhoke
IMPORTANT LEGISLATIVE ITEM NEEDS YOUR ATTENTION!
Have you or one of your friend ever got stuck with a higher mortgage rate, because they had to use the builder's Mortgage Company?
There is legislation in the Texas House of Representatives that would prohibit sellers (builders) from making incentives contingent upon using any specific service provider. Builders would no longer be able to steer borrowers to their own mortgage companies.
HB 3798 is legislation to allow the home buyer to apply any contributions from the builder as inducements to buy the home, not be contingent on specified lenders or mortgage originators. This will give the buyers a fairer position and also the originating industry a chance to be competitive for the buyer.
Contact you house rep to pass this;
http://www.legis.state.tx.us/Members/Members.aspx?Chamber=H
I'm curious what you think about this. Let's do our own vote. You can comment and say yes or no.
You can always say more. I'll total the votes - 1 for 1 against
There is legislation in the Texas House of Representatives that would prohibit sellers (builders) from making incentives contingent upon using any specific service provider. Builders would no longer be able to steer borrowers to their own mortgage companies.
HB 3798 is legislation to allow the home buyer to apply any contributions from the builder as inducements to buy the home, not be contingent on specified lenders or mortgage originators. This will give the buyers a fairer position and also the originating industry a chance to be competitive for the buyer.
Contact you house rep to pass this;
http://www.legis.state.tx.us/Members/Members.aspx?Chamber=H
I'm curious what you think about this. Let's do our own vote. You can comment and say yes or no.
You can always say more. I'll total the votes - 1 for 1 against
Friday, April 27, 2007
How to evaluate your loan officer.
Good loan officers always put their customers in front of the bottom line. This is accomplished by providing a high level of customer service, quoting competitive rates and fees.
These a partial list of what your loan officer must do to be competent.
1) Returns phones calls - most are pretty busy, but they should respond with in half a day.
2) Answers your questions – must be willing to teach, so you will be informed.
3) Ask for your information on the first call. Why? a good loan officer asks for specific information, to make sure the loan they quote matches your needs. This way you don't end up with a different loan at the closing.
4) Doesn't change fees at closing - if there is a change in the fees or rate, they must send out a new good faith estimate, truth in lending document and loan application.
5) Gives you copies of the HUD Guide ( Settlement Costs and helpful information) and consumer handbook on Adjustable Rate mortgages.
6) Offers to send you a good faith estimate. So you can compare the costs associated with your loan.
7) Tells you the difference between a pre-qualification and pre-approval - a pre-approval is more desireable. The extra effort could save you earnest money.
8) Tells you the news you need to hear, even if you don't want to hear it.
9) Protects you from fraudulent transactions. It's better to pay a little bit more on a loan, than risk fraud charges.
10) Checks to see if you are happy at or after the close. Now you know if they are in it for the long haul.
These a partial list of what your loan officer must do to be competent.
1) Returns phones calls - most are pretty busy, but they should respond with in half a day.
2) Answers your questions – must be willing to teach, so you will be informed.
3) Ask for your information on the first call. Why? a good loan officer asks for specific information, to make sure the loan they quote matches your needs. This way you don't end up with a different loan at the closing.
4) Doesn't change fees at closing - if there is a change in the fees or rate, they must send out a new good faith estimate, truth in lending document and loan application.
5) Gives you copies of the HUD Guide ( Settlement Costs and helpful information) and consumer handbook on Adjustable Rate mortgages.
6) Offers to send you a good faith estimate. So you can compare the costs associated with your loan.
7) Tells you the difference between a pre-qualification and pre-approval - a pre-approval is more desireable. The extra effort could save you earnest money.
8) Tells you the news you need to hear, even if you don't want to hear it.
9) Protects you from fraudulent transactions. It's better to pay a little bit more on a loan, than risk fraud charges.
10) Checks to see if you are happy at or after the close. Now you know if they are in it for the long haul.
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