Dec

30

Questions For Your Mortgage Lender

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More and more, consumers are learning that there is much more to getting a mortgage than just the interest rate and points. As a consumer, here are some questions for your mortgage lender.

A good mortgage planner is more in the advice business than the lowest price business. With tightening guidelines, often the question first is “Will the loan be approved?” But moreover, the borrowers’ concerns need to involve some of the answers to these non-price questions:

1. What type of lender should I use?

There are three basic types of lenders. Mortgage BROKERS promote a broad product menu, competitive pricing, and entrepreneurial approach; however, BROKERS cannot lock, commit, or approve your loan because they are not actual lenders. Banks and Credit Unions rely on financial strength, direct lending capabilities, and stability; however, the have limited product menus and often a “cover my ass” mentality. Mortgage BANKERS blend the best of both- direct lending ability, financial strength and stability, wide product offerings, competitive pricing and the entrepreneurial spirit.

2. What loan products should I be considering?

Make sure your lender has multiple types of products (Conventional, FHA, VA, State Mortgage Agency Products, etc.). While most people today do choose a 30 year fixed, it is not always the wisest choice. Borrowers need to consider how long they will be staying in the home and any changes in their income during that time period before just accepting the same loan as everyone else. Additionally, with many properties in need of some renovations or repairs, you need to explore the FHA 203K Program discussed in last week’s blog.

3. Should I lock or float my interest rate?

Most mortgage planners are trained to dodge this question. I believe you should be hiring an expert who should have an informed opinion about the direction of rates….in the short term and the long term. Weighing numerous factors ranging from your projected closing date to upcoming economic reports, a good mortgage planner can counsel a client into saving money. While no one can predict with absolute certainty, you need to reach a comfort level that the lender you choose has the best information and your best interest at heart.

4. What are mortgage rates based on?

There is only one correct answer. It is the pricing of Mortgage Backed Securities. (Unfortunately, too many people answer the 10-year Treasury Bill.) If you get the wrong answer on this basic question, what else don’t they know?

5. How do economic releases impact rates?

How will a Jobs Report, a Fed Board Meeting or Inflation Number affect your home loan? Your mortgage planner should know, should explain it to you, and keep you informed.

6. Can I improve my chances of approval while keeping costs low?

Sometimes even minor improvements in a credit score, the amount of your down payment, or how you position your assets can make a big difference. During your counseling sessions, your mortgage planner should be advising you on how the “little things can make a big difference’”

Good advice, whether it’s from your doctor, lawyer, real estate agent or lender, can be invaluable. Finding a lender who is an expert….who has your goals in mind…and who offers creative solutions is one of the most important factors in a successful real estate transaction.

By Dean Hartman
Chief Planning Officer
Continental Home Loans

For more information on the mortgage process, please sign up for one of the daily webinars listed below, hosted by Dean.
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Jun

8

Mortgage Rates Remain Low – Why?

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Mortgage rates remain low after The federal government stops purchases of mortgage backed securities and you might want to ask me why I was wrong about that. I listened to the experts in the industry who said the rates would go up. But this video explains why and the graph below is a direct quote about the markets.

Mortgage Rates Remain Low

Should you have any questions about this or any other topic related to real estate, please feel free to contact me at 631-831-9048.
By Thomas McGiveron, LSA

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17

What’s Going to Happen to Mortgage Rates: You’re Going to Pay More

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So you’re wondering what’s going to happen to mortgage rates. If you’re a buyer, you’re wondering that because you are trying to figure out how much the cost will rise for your monthly payment. If you’re a seller, you’re thinking about a lot of things and saying to yourself, “I should have sold 3 years ago”. But I digress.

When we look at information available to us, we see that mortgage rates are going to rise and we wonder, how that might impact the Long Island real estate market. Well just like any other market, when rates rise and demand remains lower than supply, prices must drop in order for someone to sell their home.

But let’s really look at the added costs of an increased mortgage rate.

Mortgage Rates

Now this graph is packed with a lot of different information about mortgage rates.

The Impact On Buyers
Well first thing you must realize is that in order for you to buy a home and pay about the same price per month for that home as the rate goes up, you’ll notice that the price of the loan must go down significantly. Let’s say you’ve been looking for a while and you see a few houses or one in particular that you love. But for some reason, you’ve held back for reasons such as…well to put it bluntly, fear.

Let’s face it, this economy has many people a little uneasy about the future. So you hold back for whatever reason, you want to wait until you get married, you need to “save more for the down payment”, prices are still too high, taxes are too much, the dining room is too small, and on and on.

Well look at that graph and ask yourself this: Do you honestly believe that this house you’ve seen or these few houses that are “potentials” will be there 10% from now? What I’m saying you to ask yourself is, will this same house or houses be on the market for sale 5 months from now when rates are quite possibly 1 full percent higher than they are now? Maybe. But more than likely, if you’ve got your eye on a nice house that you really like or love, chances are so does someone else. And if they’re a little less afraid than you, guess what, they’re buying it.

Another thing for buyers to look at is simply the savings. Paying 6% on a loan as opposed to paying 5% on a mortgage rate is a no brainer. You will save more money. And again, this graph is based on prices dropping as the rate goes up. Just because the rates goes up, doesn’t mean that the home(s) you like has to sell (or can sell for that matter – given the likelihood that they have a mortgage to pay off).

The Impact On Sellers
The cold harsh reality of the market is that prices are going to continue to see-saw in a downward spiral. Every economic and real estate expert out there predict a further decline in prices. Here on Long Island, the simple curve of supply exceeding demand will absolutely keep prices from appreciating for the near future (6 to 18 months).

With the flow of homes off and back on the market and increases in foreclosures, this extra supply, as it comes in waves, will continue to keep prices from going up.

Now this graph adds an element that is not seller-friendly. Historically, a 6% mortgage rate is incredibly good. However, given the current economic situation, decreased consumer spending and high unemployment (currently over 7% on Long Island), a 6% rate might as well be 8 or 9% in a “normal economy”.

Buyers on Long Island, with the high taxes and cost of living that exceeds about 90% of the rest of the country, living here isn’t cheap and many buyers don’t have $80,000 to buy a modestly priced home of $300,000. Remember, the standard, “good loan” for a home is 20% down (on $300,000 that’s $60,000) and the other $20,000 is for the very high closing costs associated with buying on Long Island.

So looking at the graph, as the mortgage rate goes up, if you need to sell, you will absolutely be forced to drop your price as the rate goes up. There is no question about this. Why? Because the buying market won’t have buyers to purchase your home at a 6% mortgage rate at the current prices of today (April 2010). And please note, that I’m not even mentioning the home buyer tax credit that is expiring in 2 weeks that’s helping home values remain somewhat stable. Without that, prices will drop.

But there’s definitely hope in that if you hire the right agent, who uses cutting edge technology to market your home, buyers will check out your home more often than just having it sit idle on mls, overpriced. Oh by the way, that “right agent” – that’s me – click here and let’s get started!

So What About The Mortgage Rate Anyway?

Let’s look at what experts are saying.

Where are mortgage rates going

From Moody’s Economy.com to Credit Suisse to Barclay’s Capital, we see that the experts are predicting increased mortgage rates. Why? Read my article on what’s happened in the last month with the Fed.

National speaker and residential real estate guru, Steve Harney, talks about how since 2006, April to July months have seen mortgage rate volatility.

mortgage rates

So to close this discussion out, I think it’s particularly important for buyers and sellers to consider their options. Information like this is invaluable and I hope it helps you make the best decisions for you and your families. If you have any questions at all, I can always be reached at (631)831-9048.

By the way, if you missed the commission discount I’m offering for home sellers, please click here.

(c) Copyright, 2010 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson
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Apr

5

Mortgage Interest Rates: Get In Now

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers | Comments Off

If there was a bar called Mortgage Interest Rates Place, right about now, the lights would be getting turned on and it would be last call.

The Fed did what they set out to do – purchasing $1.25 Trillion in Mortgage Backed Securities, and succeeding in their plan to lower home loan rates and help stabilize the housing sector. And even though they stretched out the length of the program slightly – in order to soften the impact of the end of the program – the training wheels are now off, the safety net is gone, and home loan rates have already moved higher.

In fact – as the Fed will now gradually become a seller of their massive holdings of Mortgage Backed Securities – rates are very likely to continue to move higher.

Even after home loan rates took a jump higher last week, they still remain at reasonably low levels – which makes right now a crucial time to take advantage of the opportunities that exist, including the Homebuyers Tax Credit which is down to its last month.

To take advantage of the generous credit, purchase contracts must be signed by the end of April. If you or someone you know has questions about this credit – please don’t wait to get in touch with me.

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Mar

25

Mortgage Interest Rates: Update, March 2010

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers | Comments Off

Years from now, we will all look back at this time in history and say, “Remember when mortgage interest rates were below 6%?”. And I said it, yes ‘below 6%’. The luxury of thinking that 6% is a high interest rate will be gone soon enough. And believe me, I wish this party could last forever. But there’s specific reasons the rate has been so low and if you haven’t read about those reasons, click here.

Unfortunately, it’s coming time for the federal government to make some tough choices. Those choices include pulling out of the Mortgage Backed Securities (MBS) market as planned.

With this pull out, there are multiple repurcussions. In order to better understand what happened just yesterday to the market and what’s going to happen, check out Morgage News Daily’s article about the mortgage interest rates.

Without getting too technical, please keep in mind that demand for something will keep prices high. When demand falls for something – the value of that something must go down in price. This is basic economics.

In order to assist you in reading that article at Mortgage News Daily, skipping to the bottom and reading the last paragraphs will put things in perspective. Now without having to understand the dynamics, all you need to know, as a home buyer or seller, is that when Treasury yields go up and bond selling increases, this causes mortgage interest rates to rise.

We’ll have to take a wait and see approach (as always) but it just seems like this recession and this “looming” feeling of the unknown has been going on for so long. That’s just my opinion. One thing is for sure, if you’re a home buyer (and I feel redundant in saying this), the mortgage interest rates are low now…don’t wait anymore!

Call me and lets get started on an aggressive home search campaign – 631-831-9048.

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« go back — keep looking »

Dec

30

Questions For Your Mortgage Lender

Jun

8

Mortgage Rates Remain Low – Why?

Apr

17

What’s Going to Happen to Mortgage Rates: You’re Going to Pay More

Apr

5

Mortgage Interest Rates: Get In Now

Mar

25

Mortgage Interest Rates: Update, March 2010

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