Dennis' Mortgage Blog

RETIRE YOUR FLAG! 

Before I get to the question of the week and the Rate & Market Update I want to let you know of an opportunity to properly retire your current flag and replace it with a new flag in time for Independence Day.  Tonight as part of the Bixby Knolls First Fridays events I will be at The Expo building (4321 Atlantic Avenue, Long Beach) from 6:30 to 8:30 collecting American flags that are in need of retirement.  For those who turn in a flag to us I will be providing a 10% discount for any new flag purchased at the Orchard Supply and Hardware (O.S.H.) in Bixby Knolls.

Collected flags will be given to the Boy Scouts who will dispose of them properly in a retirement ceremony.

At 8:30 I will have two drawings to give a new flag to a child under twelve and a flag to an adult.  Must be present to enter but not to win!

Come to Bixby Knolls this evening, stroll Atlantic Avenue enjoying the local establishments and shops and see us at The Expo where you can turn in your flag that has perhaps become a bit worn out waving in the breeze representing liberty and freedom. 

Our thanks to the Long Beach Post, Press-Telegram and Uptown Gazette for articles on this event!

Question of the week:  I (don’t) want an FHA mortgage.

Answer:  Okay this is not a question but a declarative statement, or statements, both of which I have received in the past several days in response to my recent updates on FHA mortgages.  In reading those updates I can see why someone would think they do not want an FHA mortgage as I tended to dwell on the problems they have.  As well the information on low down payments and rates can lead someone to think they need to have an FHA mortgage.

Question to you, my faithful reader, would you go to your dentist and say “I want a root canal?”  Most likely you go to your dentist and after a thorough exam your dentist adivises you that you need a root canal and explains the reason why and the procedure.

Not trying to compare the mortgage process to root canal surgery, though many would be quick to make the comparison, but like oral surgery, qualifying for a mortgage is a process in which many factors are considered before a recommendation is made for the mortgage product that best suits your abilities and objectives.  The recommendation may be for a FHA mortgage, or for a conventional mortgage, or in some cases no mortgage at all for now and a plan to be qualified at a later date.

If you are ready to purchase a home do not have your mind made up as to what type of mortgage you will get.  Go through the qualification process, discuss your objectives and preferences and with your mortgage professional (me!) arrive at the best mortgage product for you and your family.

For those who are anti-FHA consider these advantages of FHA financing:

Lowest down payment for those who are not Veterans at 3.5%

Non-occupant co-borrowers (usually parents but not always) for income qualifying

Low FICO score requirements

For those who currently own FHA will fund cash-out refinances up to 85% of your property value

Don’t go into the mortgage process with a hard set preconceived notion of what mortgage you will get, go through a thorough process to determine what best meets your objectives and abilities.

Have a question for me?  Ask me!

This week’s blog postings:

I am continuing the process I started a few months ago of experimenting with different ways of presenting timely mortgage, real estate and economic data.  A quick recap: Originally this weekly update was once a month to real estate professionals so they would have an idea of rates direction and what was impacting the market.  After a few months I added clients to the email list for a monthly update and started a weekly update for real estate agents.  About year later I started the Weekly Rate and Market Update that contained the Question of the Week, a recap of economic events during the week that impact mortgage rates and of course the rates for that particular Friday.

In March I began doing several blog postings per week to cover events and data in a more timely fashion and used the Weekly Update for a more broad discussion of rates and where/why they were moving.  I have had mixed reviews on the more frequent blog reports and scaled down summary in the Weekly Update, though most have been positive.

This week I have started something a bit different that I will also need some feedback on, video blogging on the mortgage market and economy and what is moving rates that day.  Recognizing my technical expertise needs some assistance as the video and audio do not match extremely well (think of news reporting on videophone in Kabul), what I think will be more meaningful is the ability to show my screen with charts etcetera while discussing the events.  But in the end what you think is more important than what I think. 

My objective is make available to the public information and education about the mortgage markets, industry and economy and how it impacts their real estate and mortgage decisions. 

Please give me your feedback.  In the meantime to check out the videos, each about two to three minutes here are the links to the YouTube page I am setting up:

Stratis Financial YouTube

As I get more comfortable with the technology and am able to produce videos sooner I will post instructional videos as well on various topics such as mortgage insurance, FHA, debt-to-income ratios, etc.

Please give me your feedback as to what you want to see or read to increase your knowledge and awareness!

Mortgage 1.0 Update: Real estate agents I have scheduled a seminar/workshop to cover fundamental aspects of the mortgage industry from products to qualifying to process to underwriting.  The session will be on Thursday July 12^th from 9:30 to 11:00 in our office.  Please contact me to reserve your spot for this informational and valuable session that will enhance your communication with buyers and sellers.

BAM! POW! OOOMPH! All the onomatopoeias from the old “Batman” television show fight scenes apply to this week’s mortgage market.  Instead of Batman and Robin against the Riddler or Joker, it was stocks versus bonds with stocks winning in a rout.  After losing around 800 points from June 1^st to June 16^th and then floating around 12,000 points for several days, the Dow Jones Industrial Average zoomed this week.  The Dow will end the week up around 600 points for the biggest one week increase since July 2009. 

Get an ice pack for the bond markets and particularly the mortgage markets to reduce the swelling from the pummeling this week.  As investors poured money into stocks they took money out of bonds and we have seen Mortgage Backed Securities drop 150 basis points for the week, usually a bad week is about a 30-50 point drop. 

What started this rock ‘em—sock ‘em?  Greece.  Showing how much investors like reduction in public spending and obligations for public entities that are way over-extended and in extreme debt, when Greece’s parliament passed the required austerity measures to get their bailout stocks began their climb. Contributing factors were the end of the Fed buying government debt, end of the quarter profit taking and technical selling triggered by the dropping market.

Unreasonable. That is the word that comes to mind for the huge drop in bonds and hike in rates.  Here is the news this week that should have pushed rates lower, or at least caused them to hold their own in value: China’s economy slowed down, jobless claims at 428,000, consumer spending flat, personal income flat, consumer confidence down, consumer sentiment down, construction spending down.  Rates up.  Go figure.  I have a short video showing stocks and mortgage rates for the past week and month at YouTube

Rates for Friday July 1, 2011: Rates see biggest one week increase since January and are back to levels we saw in May.  One of my many sayings is that rates go up like a rocket and come down like a balloon.  Our rate graph this week illustrates that as five weeks of gains to lower rates are wiped out in a week.  The good news is that rates are still incredibly good.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS*

30 year conforming                               4.50%               Up 0.25%

30 year high-balance conforming           4.75%               Up 0.375%

30 year FHA                                         4.201%             Up 0.168%

30 year FHA jumbo                              4.289%             Up 0.116%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. 

* Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment with an impound account for taxes and insurance and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

Come kick off your Independence Day weekend with us in Bixby Knolls at First Fridays.

As a nation we will celebrate the 4^th of July with parades, picnics, barbecues and trips to the beach or pool.  Let us also take time to remember and give thanks to those brave patriots who in sweltering heat in Philadelphia 235 summers ago put to paper for their signature a Declaration of Independence that was the first of its kind in history.  Affixing their signatures to the documents they risked their lives so that a nation may be born that would stand for liberty and freedom for centuries.

I encourage you to take a moment this weekend to read the Declaration of Independence.

Happy Independence Day,

Dennis