by Jim the Realtor | Dec 18, 2024 | Interest Rates/Loan Limits, Mortgage News |
Mortgage rates rose today by about as much as the Fed lowered – just like last time!
If anyone needed any further convincing that a Fed rate cut is no guarantee of lower mortgage rates, today is a great piece of evidence. Perhaps “great” is the wrong word. There was nothing great about the mortgage rate movement following today’s Fed rate cut.
The average lender is at least 0.20% higher than earlier this morning. Lenders are still in the process of adjusting their rate sheets, so the total damage could vary slightly by the time we’re able to run the full numbers.
Either way, the top tier conventional 30yr fixed rate will easily be back over 7% for the average lender.
What gives?
Read full article here:
https://www.mortgagenewsdaily.com/markets/mortgage-rates-12182024
by Jim the Realtor | Nov 2, 2024 | Mortgage News, Where to Move |
Hat tip to Lance!
Roam CEO Raunaq Singh has a bold plan to unlock housing affordability: Connect homebuyers with home sellers who have mortgages eligible to be “assumable,” enabling buyers to take over the existing mortgage, including its presumably much lower mortgage rate.
Back in September 2023, Singh launched Roam, a real estate portal that resembles Zillow.com or Realtor.com. However, Roam exclusively showcases homes currently for sale with loans eligible to be assumable. One of the challenges with assumable mortgages is that, typically, most conventional mortgages are not assumable. However, if specific requirements are met, most loans insured by the Federal Housing Administration (FHA) and loans backed by the Department of Veterans Affairs (VA) or the United States Department of Agriculture (USDA) are eligible.
As of today, Roam’s listing website exclusively showcases homes currently for sale with assumable loans in Arizona, Georgia, Florida, Illinois, Colorado, Texas, North Carolina and South Carolina. Singh says that these eight states represent nearly 50% of the country’s market share of assumable mortgages. The company, a licensed real estate brokerage in these five states, aims to expand to more states, including Ohio, in the near future.
When a seller in those states lists their home for sale, Roam then cross-checks it with proprietary mortgage data. If that mortgage is eligible to be assumed, it’s listed on Roam’s site.
On Roam’s site, you’re asked to fill out a simple questionnaire. Then you’re taken to a portal for your selected market.
by Jim the Realtor | Oct 27, 2024 | Interest Rates/Loan Limits, Mortgage News, Mortgage Qualifying
Mortgage rates are going to be sticky. A good solution for buyers is to do a 2/1 buydown on their rate today. They get the benefit of lower-than-market rates for the next year or two while waiting to refinance once rates drop – and if they don’t drop, at least you get the 5.99% in this example:
A recent example: the buyer negotiated a $100,000 discount on a house priced in the $2 millions. Then he took a $60,000 discount on the price, and had the seller apply $40,000 towards a rate buydown to get a program similar to the one above!
by Jim the Realtor | Aug 23, 2024 | Interest Rates/Loan Limits, Jim's Take on the Market, Mortgage News |
Fed Chair Powell finally indicated today that it is time for rates to be lowered…..and the 10-year bond yield barely budged. The next Fed move is already priced into mortgage rates.
Don’t wait to buy just because you think rates might get better. Buy when you find the right house!
From realtor.com:
In the coming months, we’ll provide regular updates on these homebuyers so you can see how their various strategies pay off, and learn more about how to time your own home search just right.
‘I’ll buy a home once rates fall below 6%’
Homebuyer: Kathi Kendall
Where she’s buying: Scottsdale, AZ, or Gilbert, AZ
Price range: $500,000 to $1 million
How low rates need to go: Below 6%
Her waiting game: Kathi Kendall, 62, who works at a university, wants to sell her current home and buy into a 55-plus community with a golf course and mountain views.
“I am looking for a lifestyle change now that I’m going into retirement and my kids are out of the house,” she says.
Her current home is paid off, with no outstanding mortgage balance. Even so, she explains, “I’m waiting for rates to go down to sell, because lower rates tend to mean higher home prices.”
Once she lists her house, she plans to start looking for a new property immediately, but since she plans to finance her next home purchase, interest rates will continue to affect her choices.
“If the interest rate drops half a point next month, I am going to buy a more modest place,” she says. “If rates drop a full point, I am getting something nicer with a lot of potential to build on its value.”
If Kendall doesn’t find something she loves, however, she plans to wait out the market, put her stuff in storage, and rent a furnished apartment until the time is right.
(more…)
by Jim the Realtor | Aug 21, 2024 | Jim's Take on the Market, Mortgage News, Mortgage Qualifying
We are going to hear more about making home ownership more affordable. An op-ed:
https://www.cnbc.com/2024/08/20/op-ed-the-case-for-a-40-year-mortgage.html
An excerpt:
Homeownership has long symbolized the American Dream, embodying stability, wealth creation, and community investment.
Yet, for millions of Americans, especially younger generations and first-time homebuyers, that dream is slipping away. Rising home prices, stagnant wages, and restrictive mortgage terms have made it increasingly difficult to take that crucial first step onto the property ladder.
To address this, I propose a bold new approach: a 40-year mortgage using the Federal Home Loan Bank (FHLB) system as the framework, with federal subsidies for first-time homebuyers who complete financial literacy training.
There’s no magic in the 30-year mortgage term — it was born during the Great Depression when life expectancy was also around 60 years. Today, with life expectancy nearing 80 years, a 40-year term aligns better with modern realities.
Critics may argue that a longer mortgage term increases the total interest paid, but the benefits of affordability and access outweigh this drawback. For many, the alternative is indefinite renting, which builds no equity and leaves families vulnerable to rising rents and economic displacement. A 40-year mortgage allows more people to begin building equity sooner, offering a pathway to long-term financial stability and sustained human dignity — a key element of the American Dream. A pathway up the repaired economic aspirational ladder in America.
He makes a quick reference to buying down the interest rate here:
To further support first-time homebuyers, I propose federal subsidies for mortgage rates between 3.5% and 4.5% for those who complete certified financial literacy training. Subsidies would be capped at $350,000 for rural mortgages and $1 million for urban markets, reflecting the varying costs of homeownership across the country.
Let’s use math to help make the decision on which way to go on a $1,000,000 loan:
The 40-year mortgage is a waste of time – there isn’t enough monthly savings, and the overall amount of interest paid over the 40 years is $2,641,025. If saving $493 per month on a $1,000,000 loan is a big deal, you probably shouldn’t be buying a home that expensive. The unexpected maintenance and improvements will cost more than that.
But the interest-rate buydown does make a significant difference, especially with reducing the balance faster, which should be every homeowner’s goal. They will include mortgage and budget training with any federal subsidy program, and I’ll sum it up in one sentence: Pay additional sums with your regular payment every month, and/or refinance to a 10-year or 15-year mortgage as soon as possible (both have the same rate, which is usually 1/2% lower than the prevailing 30-year rate).
by Jim the Realtor | Aug 3, 2024 | Interest Rates/Loan Limits, Market Conditions, Mortgage News |
Mortgage rates plummeted yesterday, making people wonder if the housing market will perk up for the rest of 2024.
Getting a lower rate will be a nice sweetener, but buyers aren’t going to overpay just because their payment went down a couple of bucks. Just the turbulence from the realtor fiasco will force extra caution into the equation.
Who will benefit are the sellers of fresh new listings entering the market.
The current inventory is picked over, and unless those sellers dump on price, they still don’t have much chance of selling, even with lower rates. The remaining buyers have waited this long – they aren’t going to cave now.
Sellers – it’s the time to give it everything you got!
https://www.mortgagenewsdaily.com/markets/mortgage-rates-08022024
by Jim the Realtor | Nov 7, 2023 | Fraud, Mortgage News, Scams |
The interest-rate they get is only 1/2% better, but the down-payment requirements are lower – and that’s where the trouble starts. For those looking for some legit doom potential, here ya go!
by Jim the Realtor | Oct 16, 2023 | Mortgage News, Mortgage Qualifying |
The White House issued a press release today that outlines more money to bolster prop up the FHA loans:
For millions of Americans homeownership is a foundation for so many parts of their lives, and for many it is also their primary source of wealth. The Biden-Harris Administration is committed to expanding access to homeownership, ensuring homeowners can afford to stay in their homes and make the repairs they need, and that the wealth building potential of homeownership works equally for everyone.
Today, the Biden-Harris Administration is releasing new data showing major federal investment in homeownership, and announcing key new actions to accelerate progress. These actions make important strides, but given the lack of homes on the market and current interest rates, to truly ensure homeownership is accessible to all households, we need Congress to act. That is why President Biden proposed $16 billion for the Neighborhood Homes Tax Credit, which would result in more than 400,000 homes built or rehabilitated, creating a pathway for more families to buy a home and start building wealth. The President has also proposed a $10 billion down payment assistance program that would ensure first-time homebuyers whose parents do not own a home can access homeownership alongside a $100 million down payment assistance pilot to expand homeownership opportunities for first-generation and/or low wealth first-time homebuyers.
I love this new way to qualify – they will count the prospective income you might get from an ADU:
https://www.whitehouse.gov/briefing-room/statements-releases/2023/10/16/white-house-announces-new-actions-on-homeownership/
by Jim the Realtor | Jul 18, 2023 | Mortgage News, Neg-Am |
The Orange Man pioneered the distribution of neg-am mortgages to the masses, and then hoodwinked Wall Street into thinking the loans were worthy of buying in tranches – yet he didn’t want to take the blame and instead enjoyed his retirement as a member at all the private golf clubs around Brentwood.
Some of his best quotes:
In 2006, when Mozilo was the chief of the mortgage lender Countrywide Financial, the firm originated $461 billion worth of loans — close to $41 billion of which were subprime. Subprime loans were responsible for the global financial crisis.
Mozilo was also charged by securities regulators of insider trading and securities fraud. Once named as one of the best chief executives in the United States, the disgraced CEO was subsequently named as the second worst US chief executive of all time by Conde Nast Portfolio.
“I’m fairly confident that we’re not going to do anything stupid,” he told The Wall Street Journal in 2004 when asked about the risks of a housing bubble. “We have a history of not doing anything stupid.”
Yet Countrywide, like many other lenders, embraced riskier types of loans. By August 2007, Wall Street worried that Countrywide might go bankrupt.
In January 2008, Bank of America agreed to buy Countrywide for what seemed like a bargain-basement price, $2.5 billion, which was less than 10% of what it was worth in 2007.
It was no bargain. The acquisition ended up costing Bank of America tens of billions of dollars in real-estate losses, legal expenses and settlements with regulators.
Mozilo retired from Countrywide, at age 69, a few months after the sale to BofA. Later, the Securities and Exchange Commission accused him of fraud, saying he had offered rosy assessments of Countrywide while dumping nearly $140 million of Countrywide stock.
In 2010, he agreed to settle the SEC’s charges without admitting or denying wrongdoing. He also agreed to pay $67.5 million in penalties; the bulk of that was covered by indemnities from Bank of America.
In interviews in 2018 and 2020, Mozilo told the Journal he had been unfairly singled out for blame in the aftermath of the housing bust. “I was very visible,” he said. “Anytime I was asked to go on TV, I did it.” As a result, he said, “When the s— hit the fan, everybody looked at me.”
Mozilo had defended himself several times against accusations that he was a key architect of the 2007-2009 financial crisis.
“Somehow, for some unknown reason, I got blamed for it,” he earlier said.
Mozilo had reason to cheer as well. In 2006, he was paid $48 million, beating JPMorgan Chase & Co. Chairman and CEO Jamie Dimon by $10 million and Bank of America CEO Kenneth Lewis by $20 million. From 2000 until 2008, Mozilo received total compensation of $521.5 million, according to Equilar, a compensation-research firm.
Looking back on those boom years, Mozilo said Countrywide had been swept up in a “gold rush” mentality that had overtaken the US. “Housing prices were rising so rapidly — at a rate that I’d never seen in my 55 years in the business — that people, regular people, average people got caught up in the mania of buying a house, and flipping it, making money,” he said in a 2010 interview with the US Congress-appointed Financial Crisis Inquiry Commission.
“Housing suddenly went from being part of the American dream to house my family to settle down — it became a commodity,” he said. “That was a change in the culture.”
by Jim the Realtor | Apr 18, 2023 | Mortgage News, Mortgage Qualifying |
Hat tip to the readers who sent in this article found in the tabloid newspaper NY Post. It mentions the Fannie/Freddie fee increase for those with higher credit scores, and fee discount for those with lower credit scores. All the revised policy does is reduce the gap – those with lower credit scores are still paying more.
https://nypost.com/2023/04/16/how-the-us-is-subsidizing-high-risk-homebuyers-at-the-cost-of-those-with-good-credit/
An excerpt:
LLPAs are upfront fees based on factors such as a borrower’s credit score and the size of their down payment. The fees are typically converted into percentage points that alter the buyer’s mortgage rate.
Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%.
When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate. On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.
Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.
When absorbed into the long-term mortgage rate, that equates to a 0.4% to 0.5% discount.
