Dennis' Mortgage Blog

PROGRAM NOTES—DOWN PAYMENT GUIDELINES:

 ** No Condos with 5% down for Fannie Mae and Freddie Mac

 ** FHA 3% Down okay but condos need to be on approved list

 ** Minimum down (except FHA) for all loans over $417,000 is 15%

            This includes new conforming-jumbo product

 ** FHA loans over $417,000 with minimum down require 2 appraisals

The past seven Fed rate cuts I let you know that rates would probably increase after the rate cuts—and that is what happened.  This week we had a brief surprise when after the rate cut on Wednesday bonds took off on the news and we opened Thursday morning continuing the decline in rates.  Thankfully for some of my clients I invest in multiple market alert programs and was following the market yesterday morning as rates took a dramatic turn for the worse about 10:30—I was able to protect my clients but I bet several “floaters” who were told to ride out the forward momentum from the rate cuts lost out on the turn around.  Do not gamble with your mortgage payment! More importantly do not let someone else gamble with it!

Rates headed back up yesterday and today from the dip on Wednesday but after some big surges they leveled off to modest bumps leaving us better off this Friday from last.  The economic news continues to show job losses and higher prices, a bad combination.  The job losses being reported for the previous month are also grossly under-reported; just like a year or two ago when 300,000 plus jobs were being added to the economy the numbers were too big and moving too fast for the statisticians at the labor department.  As a result each month when the job numbers were released for the prior month they would have upward revisions for the months prior to that.  We are seeing the same trend in reverse today; with each job release we are seeing the labor department add more lost jobs to prior reports. 

The job loss and economic growth slowing to 0.60% call for rates to be lower than they are; the inflation of food, energy and consumer goods calls for rates to be higher than they are.  With each piece of economic news the speculators and investors will react pushing our rates in one direction one day, and the other direction the next day—or later in the same day.

How should those looking for a mortgage react?  First, be informed; knowledge takes away a lot of surprises.  Second, be ready to act; hemming and hawing can push your payment past your comfort level or if refinancing the “makes sense” level.  Third, do not try to beat the market; lock in your loan and do not worry if you could have gained an extra one-eighth of one percent—usually the dollar figure attached to a incremental rate change is small.  Fourth, concentrate on payments not on rates; on a $400,000 mortgage a change in rate of 0.125% (one eighth) is just over $30 per month—a dollar a day, less than your cup of coffee on the way to work.  Fifth and finally, remember that rates go up like a rocket and down on a parachute. 

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, FULL DOC, AND FICOS OF 720 AND ABOVE (change from last Friday):

30 year conventional at 1 point 5.75%   (down 0.125%)

30 year conforming-jumbo at 1 point 6.25% (down 01.25%)

30 year FHA at 1 point 5.75% (down 01.25%)

30 year jumbo at 1 point 7.5% (down 01.25%)

What is in the pipe this week?  First time buyers using FHA financing for entry level homes and condos are very popular at the moment.  We are also working on FHA based refinances for some new clients that were in sub-prime loans—unfortunately many are caught in valuation issues preclude assistance.  Reverse mortgage applications are on the rise and we are seeing more clients inquiring about this financial instrument to assist their parents so they can maintain their homes while facing rising medical and care costs.

Have a great weekend.

Please feel free to forward this email to your co-workers and clients--or send them to my Mortgage Blog where it is posted weekly.

Have a great weekend,

Dennis

Dennis C. Smith
Stratis Financial
Direct (562) 472-1118

Mobile (562) 243-6912

Fax (562) 684-4316
 

www.DennisCSmith.com : apply on-line, check rates, check loan status and much more