Question: Should I get a Home Equity Line of Credit, if so how does it work?

Answer: This question has come up frequently in the last few months, usually as part of a bigger question regarding remodeling your home and how to pay for it. Last January I discussed options for paying for a remodel of your current home, and encouraged you to weigh going through the remodel against buying the home you desire.

Those options are still there: new cash out mortgage, a Home Equity Line of Credit (HELOC) or paying cash, or a combination.

Of the available options the most mysterious to many homeowners is the HELOC, what is it, how does it work? When looking for a HELOC what are the factors I should consider?

A HELOC works very much like a credit card. You are approved for a credit limit and you can use and pay down, and use and pay down and use…through what is known as the “draw period.” During this period your minimum payment is typically interest only. Interest is calculated by taking the published Prime Rate (lender will let you know which bank’s or publication’s Prime Rate it is using to establish your rate) and to the Prime Rate a margin will be added. If the draw period is not equal to the term of the credit line then when the draw period is up the ability to obtain funds from the HELOC is no more and the lender will generally fully amortize your payments for the remainder of the loan.

Let’s put some numbers to the explanation and make it a bit clearer for you:

You apply for and are approved for $100,000 HELOC. The lender says the terms are Prime + 1, the draw period if for ten years during which you must pay interest only on any outstanding balance and the total period of the loan is twenty years.

Currently the Prime Rate is 3.75% so the rate on any outstanding HELOC balance is 4.75%, until the Prime Rate changes at which point your rate will decrease (unlikely in short/medium term) or increase (very likely short/medium term).

You want to put in a new garage door and add cabinets to the garage, the cost is $10,000 and you decide to use your HELOC to pay for the work. After you take the funds out you get your statement for the first month and it shows you have a $10,000 balance and $90,000 still available for use. The rate is 4.75% on $10,000 so the interest due for the month is $39.58 (10,000 x 0.0475 = $475 for 12 month period, or $39.58 for the month) which is your minimum payment.

Having some additional funds you pay the interest plus another thousand dollars for a total of $1039.58. You do not use any more funds in the coming month so your statement shows a balance of $9,000, but right at the billing cycle the Federal Reserve raised their Fed Funds rate by 0.25%, as a result the Prime Rate also increased so your rate is now 5% (Prime = 4% + margin of 1%). Your account has accrued interest of $37.50 which is the minimum payment due and you have available credit of $91,000. You pay just the interest this month as you use additional funds you have for the month on fixtures, etc for the refinished garage.

Having finished the garage you realize that the exterior paint doesn’t look as good as it did before the new garage door so you hire a painter to paint and patch your home and the cost is $18,000 which you put on your equity line.

Your monthly statement comes and it shows you have an outstanding balance of $27,000, the Fed raised rates again by 0.25% so your rate is 5.25%, the interest you have accrued for the month is $118.13 which is the minimum payment due. You have available credit of $73,000.

And so it goes for the ten year draw period. You borrow the money on the HELOC, make your minimum interest payments some months and others when you have more funds available make payments to lower the principal balance. During the period rates fluctuate up and down and your monthly interest rate adjusts accordingly.

At the end of the ten year period you have a balance of $62,000 on the HELOC and the Prime Rate is 6.25%, your interest rate is Prime + 1 so your rate is 7.25%. The bank has informed you sixty days before that your draw period is coming to an end and in two months you loan will become fully amortized for the remaining ten years of the loan.

To amortize the loan the lender will take your outstanding balance, the number of months left on the HELOC and the current interest rate and calculate what the payment would need to be to make the same payment every month so at the end of 120 monthly payments your balance will be zero.

With $62,000 balance and a 7.25% rate your monthly payment the first month of no longer having the interest only option is $727.89, of which $374.58 is interest and $353.30 is principal. You make the minimum payment.

Coincidentally once again, the Feds raise the rate on the same day of your billing cycle to 6.5%, you HELOC rate is 7.5% and your balance is now $61,646.70 and you have 119 months left to pay off the balance. Your payment for the month is $735.89, a bit higher due to the rate increase.

For the next ten years your payment will adjust depending on the Prime Rate and your outstanding balance and the number of months you have left on your HELOC before it is to be paid in full.

Even if we were not coming off years of historically low interest rates, when getting any type of adjustable loan you should assume your interest rate will go up during the life of the loan. What may be a comfortable payment today may not be next month, year or in five years. As well since the rate is adjustable you should pay down the principal as much as you can as soon as you can to mitigate future rate increases.

Most banks and credit unions offer HELOCs, so what factors should you consider when looking for a HELOC and considering where to apply?

The primary factor is what is the margin over the Prime Rate for the interest rate you will be paying? Does the margin vary depending on how much you apply for, i.e. is the rate lower for $150,000 credit line as opposed to $75,000? Does the margin vary if the combined total of my current mortgage and my new HELOC exceeds a certain percentage of my home’s value, i.e. is the rate higher if the combined totals of the loans exceeds 80% of the value of my home?

Next what are the terms of repayment? Is the draw period short or long? After the draw period is up is the remaining balance amortized or can you still pay interest only? How long is the period the loan may be amortized?

Finally, what is the cost up front for the HELOC and what, if any, is the annual maintenance fee?

For many clients calling over the past few years inquiring about HELOCs I have suggested they contact their credit union instead of a major bank. While Stratis Financial does have some equity lines available I find the terms for many/most credit unions are better than what we can offer, and better than any of the major banks in the region. Particularly in the amount they will lend as a percentage of the value of your home and typically with the margin over Prime as well. If you don’t belong to a credit union research them anyway as these days many credit unions allow members beyond what their traditional charter called for—for instance I have accounts with a credit union that used to be exclusively for tele-communications workers, and in the past have had accounts with local teachers credit union, even though I have never been either.

I think equity lines are a very good financial tool to have handy if used wisely. They provide access to relatively cheap funds and due to their nature you can control your balances within your financial abilities.

My biggest piece of advice with having a Home Equity Line of Credit is to concentrate on paying down principal as soon as you are able so you are not caught in a difficult financial position many years down the road.

Finally, if you do have a HELOC and sell your home it must be paid off with proceeds from the sale, a lender will not let you carry it to your next home. As well if you are refinancing your current primary mortgage the total loan limit of the HELOC will be a factor in determining ability to qualify and possibly your interest.

[email protected]

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

December saw moderate gains in personal wages and salaries, increasing 0.3% after being flat in November. While wages had a moderate increase personal consumption so a more robust increase of 0.5% from November, mostly for durable goods—especially autos. With higher consumption increasing more than wages it is not surprise that the personal savings rate dropped for the month. For the year the personal price index increased a modest 1.6%, well below the target for the Federal Reserve. Overall the news is neutral for mortgage rates.

The monthly employment data for January was released today and new jobs for the month strongly exceeded expectations, with 227,000 jobs added for the month. The total exceed the monthly average of 187,000 for 2016. The best news in the report was that the private sector added 237,000—which means government employment decreased—and the participation rate increased. Hourly earnings increased only 0.1% for the month and the unemployment rate increased 0.1% to 4.8% as more people sought work. The news is somewhat mixed in that the number of new hires is good news but not keeping up with new job seekers tempers the positive. Overall the news is somewhat positive for rates as the data would suggest the Fed may not increase the Fed Funds rate at its March meeting.

Rates for Friday February 3, 2017: Still some inter-day instability in rates as investors try to process all the information and possible ramifications coming out of Washington, but a little less than in prior week(s). Week to week we are flat from last Friday as rates show resistance at the 4.125% level we have bounced off of three times in the past seven weeks. Looking ahead I maintain my advice to lock in your rate when you can through your rate period.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.00% Flat
30 year high-balance conforming 4.125% Flat
30 year FHA 3.50% Flat
30 year FHA high-balance 4.00% Flat

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. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.

Very busy weekend for the Smith family that should be a lot of fun. As many of you know our family moved to Brussels, Belgium after my freshman year in high school and I spent my sophomore through senior years in Belgium graduating from the International School of Brussels. Tonight Leslie and I are hosting a gathering of other ISB alumni in the Southern California region. We are expecting to have Mr.Vantieghen, the Belgian Consul General in Los Angeles make an appreance along with ISB Raiders who attended the school from the 1960s to more recent years. We have plenty of excellent Belgian beer on ice and look for to reminiscing about our years in Brussels.

Tomorrow we welcome to our home a student from a town outside of Paris who will be with us for the next two weeks. Our French visitor is about the same age as our oldest daughter, and no surprise they have been texting and Snapchatting each other with regularity. We look forward to sharing our home, city and region with her and learning about her life in France—as well as dusting off our French vocabulary and ability to coherently communicate.

Our Super Bowl will be a teenage affair as our daughters have invited several friends to our home to ostensibly watch the game, but more importantly to meet Mallory so she is more comfortable when she starts walking the halls of Poly High on Monday. No word yet on whether she is a Patriots or Falcons fan!

So the Super Bowl will be a bit of a background component to our Sunday, and not having any significant affinity for either team that is just fine by me.

I hope you have a great weekend and are entertained as much as you desire by the game on Sunday. My predictions have not been great so I’ll make one more—the Patriots in a very high scoring game (over 70 total points) and covering the 3 point spread Vegas has put out.

Have a great week,

Dennis

Question: How different is your job when helping a client with a refinance versus a purchase?

Answer: This question came up in conversation with some real estate agents who find themselves subject to greatly increased solicitation from lender representatives in the past several weeks looking for referrals.

Why the increase in solicitations? Because interest rates have increased slowing down the volume of mortgage refinance applications causing many lenders who have been answering phones taking refinances having phones that are not ringing. A great source of business for mortgage originators is real estate agents, the foundation for my business as well as many other “old timers,” so with a drop in refinance business….

Back to our question, how different is my job when working with a client refinancing a current home as opposed to working with a client purchasing a home?

Very different. Very, very, very different.

At the basics there is little difference. Collect personal and financial information on client, make sure the guidelines are met, process, submit, approve and fund the mortgage.

Where the differences start to appear however is all the variables that have to be considered, managed and solved for when working with a client purchasing a property.

Before you purchase a home we will want to make sure you can afford it and be able to successfully close the transaction. Are there items on your credit report that will require additional work that may delay an escrow? Are you funds for down payment and closing costs available and in the bank? Did you have large non-work related deposit(s) we need to account for? Is your income verifiable and eligible for consideration, especially if self-employed or have significant overtime or bonuses? Do you own a home now? Does it have to be sold for you to purchase your new home? This is part of what gets us through the pre-approval process.

The pre-approval information and any challenges we will be keeping an eye on must be communicated to your real estate agent so s/he will be aware and we can properly strategize not only price and loan amount but also timing.

When you find a home you wish to buy you will write an offer and naturally want it accepted. This will require a strong pre-approval package and the ability to communicate to the agent representing the seller (the listing agent) confidence in our ability to close your mortgage and therefore a successful close to escrow.

Once your offer is accepted we now have a firm deadline to meet which means managing timing for appraisal, loan processing, submission and approval. Coordinating final conditions and communicating timing to the agents, escrow and title companies to name just a few.

This is all if everything goes well. What if the seller has an issue on the home they are buying and we face a possible delay in closing? The appraiser discovers a problem with the property that will need to be repaired before we close? Could this have been prevented with proper questioning of the agents before we order the appraisal and corrective measures taken? What if there is language in the offer or counter-offer that could trigger more conditions from an underwriter? What if your buyer falls out of escrow delaying your closing? What if a tax lien pops up through title during escrow?

There are hundreds of “what-if” scenarios that can come up during a purchase transaction, many we have not yet seen but most we have seen and successfully handled through the years based on thousands and thousands of purchase transactions.

At the foundation for the differences between a refinance and purchase transaction is the communication. For starters we go from communicating primarily with our client and escrow to adding at a minimum two real estate agents, possibly more if there are other homes up or down stream from our transaction. That may not seem like much, however the communication between ourselves and the agents is critical to a smooth transaction and ability to solve problems that may pop up later in escrow as everyone has built a level of trust and confidence.

On paper it may not seem like there is a lot of difference, but experienced agents will let you know there is a tremendous difference in working with a lender who has experience with purchase mortgage transactions versus one who does not.

Whenever we get a call from a buyer in escrow who is having challenges closing their transaction with their lender it pains me that they have gone through the process and expense and not being able to get to closing. Had they called us before they started they could have avoided the headaches, frustration, stress and potential costs.

Buying a home is not the time to “try him out,” there is too much at stake for you and the seller. Make a call to someone who has experience and proven ability to assist you with your purchase transactions. (By the way, coming up on my 30th anniversary being licensed I have just a bit of that experience!)

[email protected]

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

The big news in residential real estate this week was the reduction of the annual Mortgage Insurance Premium (MIP) for FHA mortgages that close on or after January 27, 2017. The MIP for loans under $625,500 with minimum down has dropped from 0.85 points (0.85% or 85 basis points) to 0.55 points (on $400,000 FHA loan the monthly payment drops from $283 per month to $183 per month, $100 per month or $1200 per year). For loans over $625,500 the MIP drops from 1.05 points to 0.60 points ($500,000 the monthly MIP drops from $438 to $250, a savings of $188 per month, or about $2250 per year). The Upfront Mortgage Insurance Premium remains at 1.75% of the loan amount that is usually financed and added to the loan amount (for $400,000 this amount is $7000, for $500,000 it is $8750).

The final data for Producer Prices in 2016 were released this week and the news is mixed. Prices for wholesalers rose 0.3% from November and were up 1.6% from December 2015. Both numbers fairly benign and below what the Fed would like to see for economic growth. Food and energy were both very volatile in 2015. Food prices increased 0.7% in December but were down 1.1% from the prior year. Energy prices overall were up 2.6% in December, led by a 7.8% spike in gasoline, year over year energy prices climbed 5.9%. With overall prices under 2% growth the data is neutral for mortgage rates and gives little support to inflation in the near future.

How was your holiday shopping season? If you were a national retailer it wasn’t very great. Retail sales in December were a pretty decent 0.6% gain from November’s sales, however…take out auto sales and December holiday sales were only 0.2% above November’s take away autos and gas and there was no increase. This news is somewhat friendly for mortgage rates as it shows a slow-down in expected consumer spending (accounts for approximately 65-70% of economy) for what should be the busiest retails sales month of the year.

Rates for Friday January 13, 2017: Let’s hear it for stability! After a bit of a dip earlier in the week and rebound yesterday rates end the week at the same place they did on the last Friday of 2016. After the run up from the election to mid-December a few weeks of no change is quite welcome. Looking ahead we should stay in a tight range around the current rates for the near term.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.00% Flat
30 year high-balance conforming 4.125% Flat
30 year FHA 3.50% Flat
30 year FHA high-balance 4.00% Flat

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. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.

An interesting week coming up. On Monday we celebrate Martin Luther King’s birthday and his contributions to our nation, on Friday we celebrate the peaceful transition of power for the 45th time in our nation’s history. After a contentious, ugly, divisive atmosphere in the media, on social media and at many family dinner tables perhaps everyone can take this week to reflect on Dr. King’s message and from where our nation has come from his historic speech on The Mall in Washington D.C. in August 1963.

As I do every year on the Friday Weekly Rate & Market Update before Martin Luther King Day I encourage everyone to take about twenty minutes out of your schedule to watch Dr. King’s most famous speech. Watch as he goes from somewhat hesitant and stilted into a beautiful oratory rhythm that has moved millions since that hot summer day.

Click here for “I Have A Dream” and please share with other.

Have a great week,

Dennis

Question: What were the highs and lows of mortgage rates in 2016?

Answer: As you can see by the chart below we are ending 2016 with interest rates just below the highest rates we saw all year.

The year started with conforming rates starting to fall from near 2015 highs, dropping from 3.875% to 3.75% (using criteria I have used for my chart quotes for over 15 years as described below) in six weeks. After a brief pop up into March rates remained very steady through June before hitting the lows of 2016 in July at 3.25%. From July until election week rates were either 3.25% or 3.375%. Post-election rates quickly climbed to their highs of the year, reached two weeks ago at 4.125%.

We end 2016 with the conforming fixed rate only 0.125% higher than it was on January 1st, but 0.75% higher than our lowest rates of the year. We end 2016 with the 30 year fixed rate at its highest since September 2014.

If I had to use one word to characterize mortgage rates in 2016 I would use “stable.” Absent eight weeks when we saw rates drop steadily (five weeks at start of year) or increase steadily (three weeks in November) rates held steady within a quarter-percent range from February to November.

If I have to use a word to characterize what I think rates will do in 2017 I will use “inconsistent.” With a transition of leadership in Washington that includes not just the President but the heads of every regulatory agency, one party control of the legislative and executive branches, international turmoil through the transition period with tensions increased in the Middle East and with Russia, an economy that appears to be strengthening amidst an international economy that is struggling, I see little that would create an environment for “stable” rates.

Instability in the economy, global relations and politics generally means lower interest rates as investors flee to the safety of fixed return investments like mortgages. However positive economic outlooks lead to higher rates. Rates will be effected by whether investors see more of a threat from external forces than positive economic impacts from policies and regulations.
[email protected]

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

Rates for Friday December 30, 2016: We close 2016 with rates dropping for the first Friday September 23rd when rates had their last day on the low for the year. Flight to safety is the primary cause for the drop. There was scant economic news to impact rates this week, but plenty of political and international relations issues that did have an impact. With tensions ramped up between the United States and Israel and the United States and Russia investors have been moving from stocks to bonds to end the year. I see no lessening of the tensions for several weeks or more which could lead to lower rates—“could.”

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.00% Down 0.125%
30 year high-balance conforming 4.125% Down 0.125%
30 year FHA 3.50% Flat
30 year FHA high-balance 4.00% Flat

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. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.

Thank you to everyone who helped make 2016 another great year at Stratis Financial. We are very grateful for the opportunity to help so many families with their mortgage needs. For those who put their own reputation on the line by referring us to family, friends, co-workers, clients, etc we are extremely thankful for your trust and confidence.

We are into our eighteenth year at Stratis Financial and we know we would not be without the support of our wonderful clients and business partners who continue to return for their mortgage needs and refer others we can assist with our expertise and service.

Cheers to a wonderful 2017 to you and your family,

Dennis

Question: Does the Fed raising interest rates Wednesday affect me?

Answer: The last time we answered this question was last December, the last time the Fed increased its Federal Funds Rate. The answer on how the rate hike by the Fed earlier this week is no different than the answer when the Fed raised the fed funds rate last December.

How much will the rate hike affect you? Depending on the type of debt you have either a little or not a lot in the short term, longer term based on the Fed comments with the rate increase you could be impacted more in 2017 and beyond.

The actual increase by the Fed was from between 0.25% to 0.50% to now being between 0.50% to 0.75%. So the Fed is still not charging member banks 1.00% to borrow money.

Virtually none of your consumer, or if you are a business owner your commercial, debt is directly impacted by the Fed rate since you do not borrow from the Fed. However the rate that is generally tied to the Fed rate may impact you: the Prime Rate.

Contrary to common belief, there is no official “prime rate”, each bank may set its own but generally the consensus moves all banks rates to the same number. The Prime Rate is the rate that banks charge their best and most credit worthy clients. It almost always moves in the same direction and in the same amount that the Fed funds rate moves. Once the Fed moves the funds rate banks immediately increase their Prime Rate, why charge 3.5% when everyone else is charging and getting 3.75%?

The increase on Wednesday of the funds rate led to an increase of 0.25% of the Prime Rate from 3.50% to 3.75%. This was only the second increase in the Prime Rate since 2006, with the last increase coming in December 2015 from 3.25% to 3.50% and the prior increase was June 2006 when the Prime Rate moved from 8.00% to 8.25%. In June 2006 not only did the Prime Rate hit a cyclical peak, being the highest since 2001, but peaking were also housing prices, stock markets and GDP before the Great Recession.

Those consumers who are most immediately impacted by the increase in the Prime Rate are those who have lines of credit, more specifically for homeowners, those who have Home Equity Lines of Credit. Almost every HELOC interest rate is tied to the Prime Rate, either Prime plus a margin, minus a margin or just plain Prime. So when the Prime Rate increased on Wednesday by 0.25% so too did the rate you are paying on your HELOC. This means your monthly payment is increasing accordingly.

Some consumer credit cards are also tied to the Prime Rate, in which case the rate you pay for your Visa or MasterCard will also increase, resulting in an increase in your minimum monthly payment.

The net monetary impact is not tremendous to most people. If you owe $100,000 on your HELOC and your rate is equal to prime your minimum payment has increased from $292 per month to $313, a $21 increase.

Longer term those who may be impacted are those who still have adjustable rate mortgages. Slowly the Fed hike can begin to move the benchmark rates that are used for ARMs, those being the LIBOR or U.S. short term Treasury notes. It is important to note that these rates move independently of the Fed and also banks’ prime rates, however as the rate environment increases these rates will follow. This also means that the cost to maintain government debt, federal, state and local bonds will be increasing, meaning it will take more tax dollars to pay the interest on borrowed money.

As for fixed rate mortgages the impact is negligible for the current increase. With all the talk, speculation and predictions of a rate increase by the Fed the increase was priced into mortgage rates some time ago by investors purchasing Mortgage Backed Securities (MBS). As anticipated the immediate reaction in the MBS markets following the increase was a jump in MBS prices (lower rates).

Looking forward, however, there is an impact on fixed mortgage rates as the Fed announced it anticipates three more rate hikes in 2017 with each increase being 0.25%. Because of this announcement investors will start pricing these anticipated increases which will put upward pressure on all interest rates, including mortgage rates. Baring an economic downturn (which I am on the record predicting for around the middle of 2017) mortgage rates probably have seen their floor this past year.

If you have a HELOC the then rate increases next year will raise the Prime Rate basis for your interest rate from 3.50% to 4.25%, increasing the repayment on $100,000 from $313 per month to $354 per month.

One other impact of the rate hike for consumers, you should see a slight bump in the rate your bank pays on your savings or money market account—perhaps paying up to a full one percent, one and a half?

Looking forward rates on consumer debt for credit cards and auto loans will see increases with the increase in the Prime Rate and rates in the Treasury and mortgage markets.

So to paraphrase that great writer, overall the Fed hike is much ado about nothing in the short term, a small increase in some people’s payments but for most no impact at all.

Have a question? [email protected]

Remember, with Dennis it’s not just a mortgage, it’s your complete financial picture.

The Fed news casts a long shadow over other economic news released this week, but even in the shadows the data released this week shone a bit given its significance. Both the Producer and Consumer Price Indexes for November were released. PPI increased 0.4% for the month and 1.3% for the year, exceeding expectations and stronger than we have seen in several months. CPI lagged increasing only 0.2% after 0.4% increase in October but year over year the increase is 1.7%, a big part of the increase being housing costs. The news for the price increases are mortgage rate unfriendly as they show inflation momentum which supports higher rates in the future to temper inflation.

Retail sales had interesting data for November. Overall growth was only 0.1%, not a good number. The total number was dragged down by auto sales which fell 0.5% for the month, but a lot of strength from restaurants which rose 0.8% for their biggest gain since February. Also strong were furniture and furnishings. The latter two data sectors are important as they are generally discretionary spending showing consumers feel confident by spending beyond essentials. Overall the big number is positive for mortgage rates, however the details of the report is not as positive forecasting possible strengthening consumer spending.

Rates for Friday December 16, 2016: I have a service that texts me the movement of Fannie Mae Mortgage Backed Securities (MBS) throughout the day. A normal day may have updates every hour as schedule, up 5 basis points (bps), down 4 bps, small normal movements of a calm market. Since the election we have had some days where the message is up 20 bps, down 16 bps, up 19 bps, etc. indicating rates moving up and down. Wednesday following the Fed rate hike announcement I was in my weekly Rotary lunch meeting and my phone was lighting up, as the MBS fell being down 21 bps for the day, down 43 bps, down 52 bps, 64 bps, 79 bps, 86 bps, finally closing down 89 basis points for the day. Wow, a run straight down meaning rates shooting up through the day based not on the Fed rate hike which was priced into the market but because of the announcement of more hikes in 2017. For those waiting for lower rates that ship has probably sailed. I have missed this market completely. I thought we would see a flight to safety with a Trump election due to uncertainty but the exact opposite has happened as investors flee the safety of bonds and mortgages and have been buying equities. Looking forward there no longer appears to be any large correction to lower mortgage rates short of a possible recession in the future. Rates are up 0.75% in the past six weeks.

FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 4.125% Up 0.125%
30 year high-balance conforming 4.25% Up 0.125%
30 year FHA 3.50% Up 0.25%
30 year FHA high-balance 4.00% Up 0.25%

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. Rates are based on 20% down (3.5% for FHA) with 740 FICO score for purchase mortgages.

A celebratory week for us. First, tomorrow is our annual company party. I am so proud to work with the great people at Stratis Financial. The opportunity to celebrate another great year of helping families with their mortgage needs while working with professionals who are the best in the business and do so in a relaxed fun atmosphere is something for which I will always be grateful.

Speaking of grateful another, and more personal and special, celebration will be held next Wednesday as Leslie has a somewhat significant birthday. Not less than a few years ago we had a big celebration for her 39th birthday and have been celebrating anniversaries since. This summer we through another big celebration for early celebration for this birthday since it is hard to have a party four days before Christmas. I am so grateful to have been able to say, Happy Birthday to my wonderful wife for what will be the 23rd time. Happy Birthday Leslie, so proud to be your husband!

Have a great week,

Dennis