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Mortgage Rates

louky

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#1
Mortgage rates in general.....not sure how to change the title

I would assume everyone here is savy enough to have already locked in a historically low rate, but if not here's something you might want to monitor. See the last two days since Mr. T. has been announced predsident:

 
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nickndfl

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Too late for a variable. If one must go into debt look at a 15 or 30-yr. fixed. There are some deals on 7/1 ARMs, but if you are retired and plan on staying then forget it.

I tried to get a 7/1 or 10/1 for my new home, but it was not available. I locked in a 30-yr fixed @ 3.875 on Monday before the election. Rates popped on Trump's win.
 

andial

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Yes I'm locked in at these low rates a good way to play these rise in yields is TBT. I was just thinking if the ten year goes another half point higher would President Trump lean on the fed Truman style.
 

louky

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Too late for a variable. If one must go into debt look at a 15 or 30-yr. fixed. There are some deals on 7/1 ARMs, but if you are retired and plan on staying then forget it.

I tried to get a 7/1 or 10/1 for my new home, but it was not available. I locked in a 30-yr fixed @ 3.875 on Monday before the election. Rates popped on Trump's win.
Yeah, exactly. The point I was trying to make was get a rate locked in NOW. Whether buying or off a variable rate if on one.. I'm not sure everyone realizes what's going on with rates in the two days Mr. T. has been announced president.
 

edsl48

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In many ways it makes a lot of common sense that mortgage rates will be rising. On the other hand I said that 5 years ago.
 

nickndfl

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Trump victory was the catalyst. Economy will move away from high tax low growth to low tax and high growth. Light my fire.
 

Someone_else

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I would never borrow at a variable rate. Never! I know it sucks for a lender to commit to a fixed rate for X years, but that's his problem.
 

edsl48

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I buy my rentals on a 1% over prime floating rate. I do this so that if my projections go astray or some financial calamity occurs I don't have to run to the bank in need of money. If things go right I pay them off in one year so it pays to grab the more or less variable rate offered me. There are no points, closing costs,appraisal fees, inspection fees etc. Variable rates can work but one has to be able to cough up the dough if things dramatically change. A good example is someone getting a lower variable rate and instead of putting the interest savings towards the mortgage principal balance they buy an new SUV instead. Then they are in trouble when rates rise. Once again we see the financial mistakes being made by people that can't manage their own budget.
 

Goldhedge

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Changed title 4 louky.
 

louky

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Thanks Goldhedge

Out of college I worked in the mortgage industry. That was the time period that led up to the housing crisis. If the broker needed a loan to go through. All they had to do was call up their "in house" appraiser. He would stretch the value to anything you needed. Lots of people would take variable rates then. I realize nowadays, with rates having been so low for years, most have already moved off them. That's why I mistakenly put "variable rates" in the title. It was on my mind.

I would only do loans that benefit people, which made it difficult to thrive in that environment. I was making 40-50 k, everyone else 100+ k. Finally, at one point the manager pulled me into the conference room. "I don't understand why you aren't closing these loans. I hear you on the phone and you're great. Then you go meet and come back without a signature". That's the only job I ever walked off of or quit in my life. Not because I wasn't good at it, but because I wasn't willing to screw everyone over.

Shortly after, as I stated, the housing crisis occurred. Now they have strict regulations, one being that you don't get to pick the appraiser. It goes through an assigning system, I believe.
 
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ErrosionOfAccord

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I have a lot of respect for a guy who actually looks out for his customer. It isn't in my blood to sell things to people they neither need nor want. A mortgage is a whole different animal though. If you can't afford a 15 year note then you have no business buying a 30 year note.
 
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Eyebone

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Death to mortgage inflater's, death to home price inflater's, death to the banks and generally anybody that inflates prices.

The house 'flippers', the banks that won't mark to market their unsalable property.

Burn them.,
 

nickndfl

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Thanks Goldhedge

Out of college I worked in the mortgage industry. That was the time period that led up to the housing crisis. If the broker needed a loan to go through. All they had to do was call up their "house" appraiser. He would stretch the value to anything you needed. Lots of people would take variable rates then. I realize nowadays, with rates having been so low for years, most have already moved off them. That's why I mistakenly put "variable rates" in the title. It was on my mind.

I would only do loans that benefit people, which made it difficult to thrive in that environment. I was making 40-50 k, everyone else 100+ k. Finally, at one point the manager pulled me into the conference room. "I don't understand why you aren't closing these loans. I hear you on the phone and you're great. Then you go meet and come back without a signature". That's the only job I ever walked off of or quit in my life. Not because I wasn't good at it, but because I wasn't willing to screw everyone over.

Shortly after, as I stated, the housing crisis occurred. Now they have strict regulations, one being that you don't get to pick the appraiser. It goes through an assigning system, I believe.
I did the same thing and often left money on the table. I would never put anybody into something they couldn't afford. My Spidey sense tells me we are on the way up again. Buy now or pay more later.
 

Ensoniq

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#16
My buddy was refinancing his rental portfolio this past week and told his rate went up 3/8 from the prior week.
 

louky

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I posted this Nov 10th after I'd noticed TLT crashing:


Huge red flag. Relating it to mortgage rates:

The bond market continuing on with its crash to lower prices and higher yields will be very negative for the U.S. economy for two reasons:

  • The 30 year residential mortgage rate is based on the 10 year bond’s yield. The 50% increase for the 10 year’s yield in less than five months will cause a spike in mortgage rates and reduce house prices. The prices of commercial real estate will also decrease since the higher rates will be reflected in the cap tables that are used to value commercial real estate. The decreasing prices of especially residential real estate and the resultant decline in construction activity increases the probability of a recession beginning as early as 2017.
Quote is from here (11/14/16) with more good info worth a read:

https://www.equities.com/news/the-p...-bonds-increases-risk-for-the-crash-of-stocks


When rates rise = debt pressure on companies (and consumers)

Trump wants to spend, but bonds crash won't let him so he plans to offset by lowering taxes.

Market is already raising rates itself. If the fed sticks to their plan to raise as well = stagflation


Cpi miss/slowing

Lets raise rates

Inflation is only good if it comes from higher growth. 2.5 cpi, 1.5 gdp growth = stagflation

http://www.investopedia.com/terms/s/stagflation.asp
What a molotov cocktail. It's going to be interesting to see how .gov and the new president navigate all this going forward.
 

louky

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Maybe GG will show back up and share his new jack in the box chart. Anyone remember the 1900 gold one he posted in 2008 or 09?

......9 k gold incoming
 
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edsl48

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Thanks Goldhedge

Out of college I worked in the mortgage industry. That was the time period that led up to the housing crisis. If the broker needed a loan to go through. All they had to do was call up their "in house" appraiser. He would stretch the value to anything you needed. Lots of people would take variable rates then. I realize nowadays, with rates having been so low for years, most have already moved off them. That's why I mistakenly put "variable rates" in the title. It was on my mind.

I would only do loans that benefit people, which made it difficult to thrive in that environment. I was making 40-50 k, everyone else 100+ k. Finally, at one point the manager pulled me into the conference room. "I don't understand why you aren't closing these loans. I hear you on the phone and you're great. Then you go meet and come back without a signature". That's the only job I ever walked off of or quit in my life. Not because I wasn't good at it, but because I wasn't willing to screw everyone over.

Shortly after, as I stated, the housing crisis occurred. Now they have strict regulations, one being that you don't get to pick the appraiser. It goes through an assigning system, I believe.
You are right the way I hear it. Appraisals have to be obtained on a more independent basis than before. However I purchased a simple 1200 sq ft ranch during the meltdown here for 51,000.00. A flipper bought a similar house right behind it for a similar price. He put on a new roof, new cabinets and windows. He then sold it for 129,000.00. Now how in the heck can adding 15,000.00 to a 50,000.00 house make it worth 79,000.00 more? None the less no doubt there was an appraiser that said it was worth the sales price when in clear view right out the back yard a perfect comparable sale was there? Once again I have my doubts on these appraisals. My thoughts are if you have great credit and can afford the payments the house you want will appraise out. Bad credit or can't make the payments then the house won't appraise and the lender will say you need a bigger down payment. I can not attest to that and it is just some tongue in cheek thoughts I have had over the years based upon things I have seen.
 

nickndfl

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Rates went up a half a point or more since November. Volume will increase in the spring.
 

louky

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I posted this Nov 10th after I'd noticed TLT crashing:


Huge red flag. Relating it to mortgage rates:



Quote is from here (11/14/16) with more good info worth a read:

https://www.equities.com/news/the-p...-bonds-increases-risk-for-the-crash-of-stocks


When rates rise = debt pressure on companies (and consumers)

Trump wants to spend, but bonds crash won't let him so he plans to offset by lowering taxes.

Market is already raising rates itself. If the fed sticks to their plan to raise as well = stagflation




What a molotov cocktail. It's going to be interesting to see how .gov and the new president navigate all this going forward.
Stagflation, mmmmhmm

http://www.zerohedge.com/news/2017-...n-manufacturing-sector-slumps-post-trump-lows
 

edsl48

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Houses are selling in my flyover area of St Louis as fast as they hit the market. Practically every house sells for more than asking price too. In my estimation these rates are actually too low at the moment. However, as I have experienced over the many decades of my life, this is just another part of the usual cycle where people are paying higher prices to where they will be in immediate underwater trouble at the start of the next downturn.
For what this is worth I see a lot of landlords selling houses at the moment as well. I am not selling mine because in my situation I prefer to leave my places as a group to my heirs. I also have certain tax implications. To me though this all adds up to the start of another bubble.

JMHO
 

louky

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Yes, my neighbor sold a month or so back. Hours on the market. He lived there 3 years maybe. I told him make sure you plan to stay in your next house because everyone buying now will be under water soon.

I bought 2009/10 bottom.
 

Goldhedge

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Same here in Colorado. Too many buyers, not enough inventory.
 

mayhem

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yep, not a buyer in this market, trying to sell off as much as I can

looking for new ideas in foreclosures, or new builds, etc. Not touching the standard issue markets.
I sure it holds up a while longer. Have a remodel contractor locked in and should start fixing up a lot of small stuff and put some lipstick on this pig starting on the 15th. We need to down size or start taking in boarders.:D Been retired 20 years now and this house is our last big asset. Will probably rent for a while next and see how things turn out. I have to face the reality that my expire date is approaching and I sure do not want to leave this place for the wife to deal with. Have to leave the area because it is getting way to expensive to live here. Love the weather and all, but the tax rate is $2,500 per 100k. Granted that isn't as high as some areas, but plenty high for a retired couple.
 

nickndfl

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I would never borrow at a variable rate. Never! I know it sucks for a lender to commit to a fixed rate for X years, but that's his problem.
Variables have their place, especially if you like to move around every 7 years or less. You save 0.5+ points and that is anywhere from $3k-$7k for the average homeowner over those years.
 

mayhem

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edsl48

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Houses in my neck of the woods are selling at prices unseen since the prior peak around 2006-2008. Naturally interest rates are a motivator to the how much down how much a month club that a considerable portion of the buyers are. In addition to rates look at some of the new ideas in mortgage financing

Lenders digging ever deeper
By Lew Sichelman

The great minds of the mortgage market continue to work overtime, coming up with fresh ideas in an effort to reach more would-be homebuyers.

Pilot programs like these don't always prove worthwhile; in fact, some never make it beyond the testing stage. But they show the lengths to which lenders are willing to go for new buyers.

Below are some of the latest offerings from the mortgage world.

• Mortgage giant Fannie Mae is looking at a way to help people build their own homes. In what's known as construction-to-permanent (C2P) financing, buyers get a construction loan to build a house, and when the place is complete, the loan converts to a permanent mortgage. But Fannie Mae doesn't purchase C2P loans from lenders until they convert to permanent status, and some lenders won't make them because they have to keep them on their books until they change status.

Under the pilot, which still needs to be approved by federal regulators, the company would buy the loan on Day 1 of construction.

• San Diego's Guild Mortgage is looking at a 1-percent-down mortgage in which the lender provides a 2 percent grant and the buyer puts up the other 1 percent. Guild is also trying to develop a shared equity program with both Fannie Mae and Freddie Mac, Fannie's chief secondary market competitor.

• New Penn Financial of Pennsylvania has joined with Home Partners of America (HP) to offer financing to purchasers participating in Home Partner's lease-purchase program. It is the first time HP has worked with a lender to back renters who want to buy their houses.

• Eagle Home Mortgage, the lending arm of national homebuilder Lennar, went to Fannie Mae with an idea for helping would-be new homebuyers deal with their student debt. Now, Fannie has expanded the pilot to nine other lenders. Under Eagle's plan, Lennar contributes up to 3 percent of the purchase price to pay down school loans incurred while attending universities, community colleges, trade schools and other certificate-granting programs. However, buyers whose parents took out loans to finance their educations don't qualify.

• Some states are passing laws that allow aspiring homeowners to create down payment savings accounts similar to the popular 529 college savings plans. Montana, Virginia, Colorado, Mississippi, Iowa and Minnesota now allow would-be buyers to open tax-free savings accounts. And Pennsylvania, New York, Oregon, Oklahoma, Maryland, Utah and Louisiana are moving to do the same.

Each program has its own subtleties and limits, but according to National Association of Realtors' (NAR) figures, the Mississippi law could encourage 7,000 first-time buyers to enter the market over the next five years. NAR's Oregon affiliate says if the bill passes there, 3,200 renters could become owners over the next five years.

• Michigan's Flagstar Bank recently rolled out a zero-down-payment program in which the company will gift the required 3 percent down payment, plus up to $3,500 toward closing costs. There is no obligation to repay the down payment money, but borrowers will have to qualify under income guidelines and buy homes in qualifying geographical areas.

• Angel Oak Mortgage of Atlanta recently rolled out a new program for "just-missed" borrowers: those who don't quite qualify under Fannie's and Freddie's guidelines. The Platinum Program features rates starting around 4 percent. Loan amounts can range from $150,000 to $3 million, with a credit score of at least 660.

• Citadel Servicing Co. in California has come up with a loan for which buyers qualify with just a verification-of-employment document. Applicants need two years of continuous employment, plus a voice verification of employment on the day the loan closes. They must also confirm they have enough money on hand for at least a 25 percent down payment, though no other proof of income is necessary. The program is open to borrowers with a minimum 650 credit score and is good for loan amounts between $250,000 and $3 million.

• Guaranteed Rate just launched the "Flex Power" product for loans up to $3 million ($2 million for condos). It requires as little as 10 percent down, with no private mortgage insurance, and interest-only payments are an option if the borrower boosts the down payment to 15 percent.

• San Diego's Credit Data Solutions has a new web-based tool called PreQual, which uses only a would-be borrower's name and address to pull a single-bureau credit score and report. PreQual is considered soft research, meaning it won't impact your credit score. But it cannot be used for an application for credit; your eventual lender will need to order a full-blown "hard-inquiry" credit score and report. Warning, though: Once you make a PreQual request, the lender is notified and you will receive a follow-up call, especially if you make the grade.

• Value Insured's down payment protection policy, now being offered by several lenders, reimburses borrowers for the full amount of their down payments -- up to 20 percent of the purchase price -- should they have to sell their homes because the market turns south. It is a lender-paid service, which may add dollars to your loan amount and result in a higher monthly payment.

• Lew Sichelman has been covering real estate for more than 30 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.

© 2018, United Feature Syndicate



 

nickndfl

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Fannie MAe doing CP lonas is new for them, but those loans have been around for decades from private lenders. When you build a house you either do CP to end loan or straight end loan from a preferred lender.

During the building process you have a construction loan (CP) that distributes a portion of the loan amount as the building progresses. It eventually converts to a permanent loan and you are still subject to locking in the rate when construction is completed. It costs more because the interest meter is ticking and home can sometimes take a year to complete although they average around 8 months in my area right now. The advantage is some people can buy a semi-custom home from a smaller builder.

Other big production builders will construct your home and you don't pay any interest during the period. You simply with $1k or $2k down and use an end loan when the process is complete. Those builders charge slightly more, but mine did not charge me any closing costs which saved around $10k.

I am living in my 6th new home and would never go back to a resale because of the energy efficiency and contemporary floor plans. My last electric bill was $84 and I have 2500 sq ft under air with 10' ceilings.