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Monday Morning Mortgages>
Monday Morning Mortgage
August 24, 2009
Monday Morning Mortgages ~ Monday 8/24/2009
Rates
There is an expectation in the financial markets that the stock market will have a retracement (drop) in the near future. The initial stock market recovery of recent weeks was a response to bright economic news that signals the recession may be bottoming. But more recent data shows our economy is not yet out of the woods, based on manufacturing and employment data. So traders are hedging, waiting for the market to drop again. But as long the drop is widely anticipated, it won’t happen.
As the stock market struggles, government debt bonds and notes become more attractive investments driving up demand for bonds, driving up the prices, resulting in lower yields (rates). This week the Treasury will be auctioning $109 billion of debt. The appetite for that debt will impact the direction of our rates for the coming week. Rates are expected to remain volatile.
Friday, rates rose slightly on Bernakes’ improving economy speech. Today rates are looking good. For up to the minute rate info, go to www.sonomacountyhomeloans.com, and bookmark the page. The home page has a chart of up to the moment rates. Use the drop down box to check rates on ARMs, FHA, investor financing, jumbos…
For you crazy agents who like detailed financial rate info, I’ll share with you my favorite site for current rates and indices in the financial markets.
http://www.mortgage-x.com/general/mortgage_indexes.asp
How to Use HELOCS for Contingent Sales
Yes, home equity lines of credit (HELOC) are endangered, but not extinct. Evolved would be a better term for what these loans are now and how they are used. For an existing home owner, no-fee HELOCS are available through local banks like Bank of the West. They are easy to get, require little paperwork, and are great financial tools for the well heeled homeowner with very little or no current debt on the home. The rates are fixed to prime rate (currently 3.25%) with a margin attached. The restrictions are:
• Home must be owner occupied
• Must have excellent credit/income
• These can only go to 80% CLTV
Is your client relocating or downsizing? HELOCS can also be used for purchase of a home while preparing to sell a former residence. If your client has a home they know they will sell within a year, they may want to use those future proceeds to pay down the new mortgage on their newly purchased home. But if the new mortgage is a single fixed loan, paying down the principle with sale proceeds when the old home sells will not lower payments on the new loan. Instead it will only shorten the pay off time.
In this situation, using a smaller first loan plus a HELOC for purchase accomplishes 2 goals. It can lower the amount of the first loan to fit it into a conforming loan amount resulting in a lower rate. In addition, it can leave one of the mortgages on the new property in a position to be paid off upon sale of former home, leaving the borrower with one smaller mortgage to be carried into the future. Here are some characteristics of this financing structure.
• 25% down payment required
• Good credit/income required
• No fees or separate application
• HELOC rate at prime + 1.5% (4.75%)
Loan Closing Turn times for Escrow Timing
Conventional Mortgage 30-35 days
FHA 30-35 days
Note: I recommend increasing loan contingency release to 25 days from the standard 17 days.
Today's Rates (see current days throughout the day with APR calculations at www.sonomacountyhomeloans.com
WITH ONE LOAN POINT
Conforming (<= $417,000)
30 Year 5.125%
5/1 ARM 4.375%
5/1 ARM IO 4.375%
7/1 ARM IO 4.75%
Jumbo Agency ($417,001 - $662,500 in Sonoma County)
30 Year 5.375 %
FHA Conforming (<= $417,000)
5.25%
FHA Jumbo (to $520,950)
5.375%
Super Jumbo (<= $3 million)
30 year fixed 6.5%
3/1 ARM 3.875%
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