30 Year Fixed Rate Loan at Cost of One Point: 4.625%*
Rates are marginally worse as a result of slightly improving employment numbers.
Once again we have a slight funding delay because the buyer simply deposited her gift funds (from her sister) without getting a copy of the check or keeping a copy of the deposit slip (she had forgotten our previous instructions). In any case, when a buyer needs gift funds to close, it is always best to simply have the gift funds go straight to escrow, as escrow will be able to provide the necessary paper-trail.
BUT, if a buyer does get a gift check prior to close, make sure she (1) makes a copy of the check; and (2) keeps the deposit slip. The lender will always ask for these items.
Just and an “FYI”, there is a bill pending in Congress that will increase the minimum FHA down payment to 5% from 3.5%, and it appears likely to pass. It certainly will not be the end of the world with FHA “gift” rules and seller credit rules so generous, but it will require some additional machinations. We will keep you posted.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
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*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Thursday, October 8, 2009
Wednesday, October 7, 2009
Rates Remain Low, Unchanged; Options With Less Than 20% Down; No More 2nds; MI Is Best if Borrower Is Very Strong
30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*
Rates remain mostly unchanged, as little economic news is surfacing.
If a buyer has less than 20% of the Purchase Price for a Down Payment, there are far fewer options than there were two years ago.
Concurrently funded 2nd mortgages and/or equity lines no longer exist. The only options now are Mortgage Insurance or FHA Financing.
For well qualified borrowers, Mortgage Insurance is still the best option because it remains cheaper than FHA financing because there is no “Up Front Mortgage Insurance Premium” (1.75% of loan amount for FHA).
But, Mortgage Insurance, in most cases, now requires exceptionally strong borrowers with low debt ratios (below 41%) and excellent credit (scores above 740). In addition, there is no Mortgage Insurance available for loans above 85% LTV for High Balance Loans (above $417,000) in California. And there is no Mortgage Insurance available for loans above 90% LTV for Low Balance Loans (below $417,000) in California.
FHA, on the other hand, goes to 96.5% LTV even if the buyer’s credit score is as low as 620. The drawback to FHA again is the Up Front Funding Fee of 1.75% of the loan amount.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Rates remain mostly unchanged, as little economic news is surfacing.
If a buyer has less than 20% of the Purchase Price for a Down Payment, there are far fewer options than there were two years ago.
Concurrently funded 2nd mortgages and/or equity lines no longer exist. The only options now are Mortgage Insurance or FHA Financing.
For well qualified borrowers, Mortgage Insurance is still the best option because it remains cheaper than FHA financing because there is no “Up Front Mortgage Insurance Premium” (1.75% of loan amount for FHA).
But, Mortgage Insurance, in most cases, now requires exceptionally strong borrowers with low debt ratios (below 41%) and excellent credit (scores above 740). In addition, there is no Mortgage Insurance available for loans above 85% LTV for High Balance Loans (above $417,000) in California. And there is no Mortgage Insurance available for loans above 90% LTV for Low Balance Loans (below $417,000) in California.
FHA, on the other hand, goes to 96.5% LTV even if the buyer’s credit score is as low as 620. The drawback to FHA again is the Up Front Funding Fee of 1.75% of the loan amount.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Tuesday, October 6, 2009
Tuesday Rate Quotes; Slightly Lower Than Last Tuesday's
30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.625%*
Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence
30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%
Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%
Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down
FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%
Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680
Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.5%
Assumes: 25% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down
FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.00%
Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
7/1 JUMBO Purchase to $1,000,000 Loan Amount: 7/1 ARM at a Cost of One Point: 5.5%
Assumes: 25% Down; Loan Amount less than $1,000,000; Credit Score above 740
Please feel free to call us with any scenario for a more specific rate quote. We prefer to know all the parameters, including Credit Score, Loan-to-Value, and Size of Loan, before quoting a rate. All of the above scenarios assume there is sufficient income to qualify. All rates are estimates and are subject to change without notice, as the market is volatile.
Jay Voorhees or Heejin Kim at (925) 855-4491
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence
30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%
Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%
Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down
FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%
Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680
Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.5%
Assumes: 25% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down
FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.00%
Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
7/1 JUMBO Purchase to $1,000,000 Loan Amount: 7/1 ARM at a Cost of One Point: 5.5%
Assumes: 25% Down; Loan Amount less than $1,000,000; Credit Score above 740
Please feel free to call us with any scenario for a more specific rate quote. We prefer to know all the parameters, including Credit Score, Loan-to-Value, and Size of Loan, before quoting a rate. All of the above scenarios assume there is sufficient income to qualify. All rates are estimates and are subject to change without notice, as the market is volatile.
Jay Voorhees or Heejin Kim at (925) 855-4491
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Monday, October 5, 2009
Rates Off Sligthly, But Remain Low; The Market for Mortgages Creeps Back; Use Down Payment to Pay Off Consumer
30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*
Rates remain low as the economy remains soft. In further good news for interest rates, investor demand for mortgage backed securities is improving, as investors are realizing that mortgages are now much safer havens than in the past. This is because mortgages are much less likely to default because of more stringent lending guidelines. In addition, with rates so low now, loans are much less likely to pay off early.
We had several clients come to us in recent weeks with $30,000 to $40,000 saved up for down payments, but they also had substantial quantities of consumer debt (car loans and credit cards). It is always our advice to use most of the down payment to pay off the consumer debts, and then get FHA financing with a minimal 3.5% down payment.
In the case of one borrower with a little over $30,000 in cash savings (and “gifts”) we used $20,000 to pay off consumer debts with over $900 of monthly payments. This left the borrower just enough for a minimum $10,500 down payment for a $300,000 home*. And while the smaller down payment did increase his mortgage, his mortgage payment was only increased by about $115 per month. In other words, this buyer’s “net” payment went down by $800 by using his savings to pay off his consumer debt.
*Buyer had to get a seller credit to cover his closing costs.
Jay Voorhees and Heejin Kim at (925) 855-4491
Rates remain low as the economy remains soft. In further good news for interest rates, investor demand for mortgage backed securities is improving, as investors are realizing that mortgages are now much safer havens than in the past. This is because mortgages are much less likely to default because of more stringent lending guidelines. In addition, with rates so low now, loans are much less likely to pay off early.
We had several clients come to us in recent weeks with $30,000 to $40,000 saved up for down payments, but they also had substantial quantities of consumer debt (car loans and credit cards). It is always our advice to use most of the down payment to pay off the consumer debts, and then get FHA financing with a minimal 3.5% down payment.
In the case of one borrower with a little over $30,000 in cash savings (and “gifts”) we used $20,000 to pay off consumer debts with over $900 of monthly payments. This left the borrower just enough for a minimum $10,500 down payment for a $300,000 home*. And while the smaller down payment did increase his mortgage, his mortgage payment was only increased by about $115 per month. In other words, this buyer’s “net” payment went down by $800 by using his savings to pay off his consumer debt.
*Buyer had to get a seller credit to cover his closing costs.
Jay Voorhees and Heejin Kim at (925) 855-4491
Friday, October 2, 2009
Rates Drop Again; Back to May Levels!
30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
Rates are officially back to the record low levels we had in May. Employment numbers continue to indicate that the economy is not as strong as analysts had thought or hoped in late summer. This drop in rates comes as a surprise to most people in the industry. We employ several “secondary analysts” on a contract basis and we subscribe to commentary by several others, and they all indicated last summer that it was highly unlikely that rates would ever dip below 5.0% again.
This recent rate reduction is also surprising in light of the tremendous quantity of manufactured money resulting from the Federal Government’s massive deficit spending and purchasing of Mortgage Backed and Treasury Securities.
Once again, there is no better time to buy than now, as rates are better than ever.
A $300,000 purchase will result in a TOTAL payment (PITI) of only about $1,600 per month with 20% down and a 30 year fixed rate loan of 4.5%.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Rates are officially back to the record low levels we had in May. Employment numbers continue to indicate that the economy is not as strong as analysts had thought or hoped in late summer. This drop in rates comes as a surprise to most people in the industry. We employ several “secondary analysts” on a contract basis and we subscribe to commentary by several others, and they all indicated last summer that it was highly unlikely that rates would ever dip below 5.0% again.
This recent rate reduction is also surprising in light of the tremendous quantity of manufactured money resulting from the Federal Government’s massive deficit spending and purchasing of Mortgage Backed and Treasury Securities.
Once again, there is no better time to buy than now, as rates are better than ever.
A $300,000 purchase will result in a TOTAL payment (PITI) of only about $1,600 per month with 20% down and a 30 year fixed rate loan of 4.5%.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Thursday, October 1, 2009
Rates Improve; "Squatters" in REOs?
30 Year Fixed Rate Loan at Cost of One Point: 4.625%*
Rates are almost back down to the levels they hit in May, as unemployment numbers (jobless claims) came in higher than expected. Apparently the economy is not picking up as much steam as our elected officials might want us to believe, and the bond market responded accordingly.
Here is another new issue that is slowing down some of our transactions: “Squatters” in an REO. Lenders are now well aware of how difficult it can be to evict squatters, tenants or occupants of any kind from an REO. Therefore, if lenders become aware that an REO Property is occupied, many will not fund a purchase money loan until they have proof that the current tenants or occupants have vacated the property.
Please be aware of this if you are bidding on an occupied REO on behalf of a buyer seeking “owner occupied” financing; your negotiations need to include certain arrangements for an eviction of the tenants before close of escrow.
Jay Voorhees or Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Rates are almost back down to the levels they hit in May, as unemployment numbers (jobless claims) came in higher than expected. Apparently the economy is not picking up as much steam as our elected officials might want us to believe, and the bond market responded accordingly.
Here is another new issue that is slowing down some of our transactions: “Squatters” in an REO. Lenders are now well aware of how difficult it can be to evict squatters, tenants or occupants of any kind from an REO. Therefore, if lenders become aware that an REO Property is occupied, many will not fund a purchase money loan until they have proof that the current tenants or occupants have vacated the property.
Please be aware of this if you are bidding on an occupied REO on behalf of a buyer seeking “owner occupied” financing; your negotiations need to include certain arrangements for an eviction of the tenants before close of escrow.
Jay Voorhees or Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
Wednesday, September 30, 2009
Rates Off Slightly; ARMs Anyone??
30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
5/1 ARM at a Cost of One Point: 3.75%*
Rates are off slightly, as Gross Domestic Product numbers were revised upward for the 2nd Quarter. Apparently our economy shrank less than we thought. This was “good news” so rates rose slightly.
Many of our lenders are pushing their 5/1 ARMs. As indicated by the above quote, the best 5/1 ARM rate is currently about 1% less than the 30 year rate. The payment for a $200,000 loan at 5.75% is about $1,046 per month. The payment for $200,000 at 3.75% is about $926 per month. The 5/1 ARM saves about $120 per month.
We still do not think 5/1 ARMs are advisable, despite the savings, even if a buyer has a short-term horizon. The reason is that many analysts anticipate inflation and far higher rates in the future. Tying a home to a low-rate, 30 year fixed rate mortgage can make that home far more valuable in the future. Even if the loan is not assumable, a “wrap around” mortgage may be an option. Feel free to contact us for more information.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
5/1 ARM at a Cost of One Point: 3.75%*
Rates are off slightly, as Gross Domestic Product numbers were revised upward for the 2nd Quarter. Apparently our economy shrank less than we thought. This was “good news” so rates rose slightly.
Many of our lenders are pushing their 5/1 ARMs. As indicated by the above quote, the best 5/1 ARM rate is currently about 1% less than the 30 year rate. The payment for a $200,000 loan at 5.75% is about $1,046 per month. The payment for $200,000 at 3.75% is about $926 per month. The 5/1 ARM saves about $120 per month.
We still do not think 5/1 ARMs are advisable, despite the savings, even if a buyer has a short-term horizon. The reason is that many analysts anticipate inflation and far higher rates in the future. Tying a home to a low-rate, 30 year fixed rate mortgage can make that home far more valuable in the future. Even if the loan is not assumable, a “wrap around” mortgage may be an option. Feel free to contact us for more information.
Jay Voorhees and Heejin Kim at (925) 855-4491.
For Comments from previous days, please visit the Voorhees/Kim Daily Comments Archives at http://thevoorheeskimdailycomments.blogspot.com/
To subscribe to the Daily Comments, please email Heejink@jvmlending.com and type “subscribe” in the subject line.
To be removed from our email distribution list, please email admin@jvmlending.com and type “remove” in the subject line.
*The above rate quote has the following assumptions: 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is about 0.25% higher than quoted rate for a $417,000 loan.
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