Are We There Yet?

December 15, 2009 · Dean Rizzi · 1 Comment

We cannot say for sure, but we think we are darn close. Of course, we are speaking of the bottom in mortgage rates. Last week we explained how the Federal Reserve has influenced the market with its massive purchases of mortgage-backed securities. This week we offer statistical support for our contention that rates are at least close to bottoming, if not likely to reverse soon.
Calculated Risk, an insightful Web site that tracks the comings and goings of the housing and mortgage markets, supplied the evidence. Calculated Risk has noted (as have we) the close relationship between the 30-year conventional fixed-rate mortgage and the yield on the 10-year Treasury note. Based on statistical analysis reprinted on Calculated Risk’s Web site, the 30-year conventional fixed-rate mortgage is expected to rise to 5.4% based on the current 10-year Treasury yield of 3.45%.

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Still the Time to Borrow and Buy

November 20, 2009 · Dean Rizzi · 1 Comment

For the past four months, we have been forwarding the argument that housing prices have stabilized. Wells Fargo has provided another arrow for our quiver. To avoid defaults and foreclosures, the banking giant is offering homeowners with Alt-A ARMs the option to offset monthly payment increases with interest-only loans to defer amortization for six to 10 years.

It sounds like a risky move. After all, interest-only loans were a contributing factor to the housing meltdown. But many of those loans were originated in a much riskier era – near a market top. That is certainly not the case today, which is why Wells Fargo is betting that home prices have stabilized and that the economy will improve. We think it is a smart move.

We also think it is a smart move to refinance or buy today. Rates are very, very good (but they will not be forever, for sundry reasons we have previously stated). What’s more, the purse strings aren’t nearly as tight as borrowers might think. According to the Federal Reserve, the rate of banks that reported tightening lending standards for prime residential real estate loans was 25% in October, which is well off the peak of 75% reported in July 2008.

In other words, 30-year fixed-rate mortgages are readily available at 5% (which for borrowers in the 28% federal income tax bracket works out to 3.6% after tax). Meanwhile, the 5/1 hybrid ARM presents an intriguing option for borrowers planning to move within the next few years. A 3.75% 5/1 works out to a mere 2.7% after tax for someone in the 28% tax bracket. Yes, rates could go lower, but not much lower.

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Your Credit History

October 20, 2008 · Dean Rizzi · 1 Comment

Underwriters look carefully at your past payment record as shown on your credit report. Credit reports are ordered at the beginning of the loan process and again just prior to closing to insure that you have not incurred any additional debt that could affect your qualification for the loan. That is why it is so important that you avoid buying anything large until after your loan has closed escrow. Read more

Appraisers… what’s their real job description?

October 9, 2008 · Nicole Machado · 5 Comments

Since when did appraisers become home inspectors? Just curious as I encountered a never before sitaution today… As my property inspector was packing up from a routine property inspection, the appraiser drove up (early I may add) to what I thought at the time was to appraise the property. Read more

Fannie, Freddie bailout: What it means for you.

September 9, 2008 · Dean Rizzi · 1 Comment

On Sunday morning the US government took over the ailing mortgage giants. Below are what I believe are the Pros and Cons to this historic event.

Pros:

Interest rates immediately took a positive outlook to the news. The benefit to consumers is clear. Cheaper money makes homes more affordable and refinancing into a 30 year fixed a better option for those who qualify. Read more