Mortgage Interest Rates

Off Topic
21

[quote]Testy1 wrote:
trailrash wrote:
Testy1 wrote:
Who are you doing your mortgage through? Be careful, there are many questionable mortgage companies in Michigan. I have used lasalle/standard federal for all of my loans, as they don’t sell off their loans after close. Current rates at lasalle are 6.875%

Selling of mortgages in the secondary market is no big deal and very common. Also keep in mind that LaSalle may keep the servicing of their loans but still sell them. At the end of the day LaSalle/Standard Fed is a good bank but the selling of loans does not make a bank.lender/broker bad.

While what you say is true, I personally don’t like it when where I send my payment changes. Also, it is nice to be able to walk into the bank to make a payment if need be. The one time I didn’t go with standard federal my payment info changed three times and I HAD to mail my payment.
[/quote]

I see what you are saying. Its a convenience issue. Makes sense.

22

I have some mortgage questions about appreciation.

1-In the current cooled off market are homes appreciating much more slowy?

2-Generally how much does one’s home need to appreciate for someone to refinance to get a lower mortgage rate with the same rate as the original loan?

Thanks for any answers.

23

[quote]kellyc wrote:
I happen to believe that in the next few years (3-7) we will be retesting mortgage interest rate lows. However, the standard rule of thumb for deciding if you should get a fixed or ARM is if rates are trending up, go fixed. If rates are going down go ARM. Currently rates are trending up so a fixed would be in order.

Getting back to the original poster. It sounds like you should find a different lender.

By the way, the interest rate on my home loan is 3.75%. Hehehe. South Africa, eat your heart out! I’m locked in for another 4 years when it will become a 1 year adjustable with a cap at 8.75. My plan is to pay huge chuncks off the mortgage if the rate ever goes above 6.25.[/quote]

What Index is your loan based off of? And what was the total fixed period for your ARM?

24

[quote]trailrash wrote:
jm85 wrote:
I’m a loan officer in San Antonio, TX, and if your borrowing 100%, with a 660+ middle FICO, your interest rate should be between 6.75%-7%. If you plan to live in the home for more than 5 years, I’d go with a fixed rate, an ARM can blow up on you in no time. Also, make sure your not paying Mortgage Insurance.

If anyone is looking for a second home or investment property in SA hit me up, the market here is going to boom.

He is at an 80% LTV… You can get a 6.75-7% on a 30 year fixed with no PMI? Who is your investor and what are the costs? everyone here needs to keep in mind that rates do very state to state and Michigan rates at the moment are being hit by banks.

[/quote]

100% CLTV?
Also, you should have been given a Good Faith Estimate (GFE) and under the section “Compensation to Broker” you’ll see a line called “Lender Paid Broker Premium” or something of that nature. That amount should never be more than 2% of the loan amount.

25

[quote]jm85 wrote:
trailrash wrote:
jm85 wrote:
I’m a loan officer in San Antonio, TX, and if your borrowing 100%, with a 660+ middle FICO, your interest rate should be between 6.75%-7%. If you plan to live in the home for more than 5 years, I’d go with a fixed rate, an ARM can blow up on you in no time. Also, make sure your not paying Mortgage Insurance.

If anyone is looking for a second home or investment property in SA hit me up, the market here is going to boom.

He is at an 80% LTV… You can get a 6.75-7% on a 30 year fixed with no PMI? Who is your investor and what are the costs? everyone here needs to keep in mind that rates do very state to state and Michigan rates at the moment are being hit by banks.

100% CLTV?
Also, you should have been given a Good Faith Estimate (GFE) and under the section “Compensation to Broker” you’ll see a line called “Lender Paid Broker Premium” or something of that nature. That amount should never be more than 2% of the loan amount.[/quote]

Not CLTV, he is putting 20% down. He isn’t doing an 80/20.

The actual Yield Spread doesn’t have to be disclosed until the Hinal HUD is drawn. On most initial GFE’s it will only say 0-3% with no figure in the fee section.

Why shouldn’t it be more than 2% ? They could be making more broker comp (YSP) to keep the up front costs low by doing a broker/Lender credit to pay for the borrowers closing costs to keep him from coming to the table with more money. Also, lenders are not required to disclose yield spread.

26

[quote]trailrash wrote:
kellyc wrote:
I happen to believe that in the next few years (3-7) we will be retesting mortgage interest rate lows. However, the standard rule of thumb for deciding if you should get a fixed or ARM is if rates are trending up, go fixed. If rates are going down go ARM. Currently rates are trending up so a fixed would be in order.

Getting back to the original poster. It sounds like you should find a different lender.

By the way, the interest rate on my home loan is 3.75%. Hehehe. South Africa, eat your heart out! I’m locked in for another 4 years when it will become a 1 year adjustable with a cap at 8.75. My plan is to pay huge chuncks off the mortgage if the rate ever goes above 6.25.

What Index is your loan based off of? And what was the total fixed period for your ARM?

[/quote]
I don’t know what index it’s based off of. It’s fixed for 7 years - 7/1 adjustable. When it starts adjusting it can’t go up more than 2% a year and, as I said earlier, it caps at 8.75. I got it at the market bottom from Alliant Credit Union almost 3 years ago. Alliant seems to specialize in adjustables.

27

[quote]kellyc wrote:
trailrash wrote:
kellyc wrote:
I happen to believe that in the next few years (3-7) we will be retesting mortgage interest rate lows. However, the standard rule of thumb for deciding if you should get a fixed or ARM is if rates are trending up, go fixed. If rates are going down go ARM. Currently rates are trending up so a fixed would be in order.

Getting back to the original poster. It sounds like you should find a different lender.

By the way, the interest rate on my home loan is 3.75%. Hehehe. South Africa, eat your heart out! I’m locked in for another 4 years when it will become a 1 year adjustable with a cap at 8.75. My plan is to pay huge chuncks off the mortgage if the rate ever goes above 6.25.

What Index is your loan based off of? And what was the total fixed period for your ARM?

I don’t know what index it’s based off of. It’s fixed for 7 years - 7/1 adjustable. When it starts adjusting it can’t go up more than 2% a year and, as I said earlier, it caps at 8.75. I got it at the market bottom from Alliant Credit Union almost 3 years ago. Alliant seems to specialize in adjustables.
[/quote]

If they didn’t charge the hell out of you to get that 3.75% then you got a smoking deal especially on a 7 year ARM. I don’t ever remember a 7 year being that low but nonetheless good for you.

The index is what they will base your rate off of when you go into your adjustment period. You will add your margin (which will be in your adjustable rate rider) to whatever the index is at the time. But like you said it has a 2% annual cap. Different indexes are better (or less volatile, ie. LIBOR index vs the MTA index) than others, which is why I was asking.

thanks

TR

28

[quote]trailrash wrote:
jm85 wrote:
trailrash wrote:
jm85 wrote:
I’m a loan officer in San Antonio, TX, and if your borrowing 100%, with a 660+ middle FICO, your interest rate should be between 6.75%-7%. If you plan to live in the home for more than 5 years, I’d go with a fixed rate, an ARM can blow up on you in no time. Also, make sure your not paying Mortgage Insurance.

If anyone is looking for a second home or investment property in SA hit me up, the market here is going to boom.

He is at an 80% LTV… You can get a 6.75-7% on a 30 year fixed with no PMI? Who is your investor and what are the costs? everyone here needs to keep in mind that rates do very state to state and Michigan rates at the moment are being hit by banks.

100% CLTV?
Also, you should have been given a Good Faith Estimate (GFE) and under the section “Compensation to Broker” you’ll see a line called “Lender Paid Broker Premium” or something of that nature. That amount should never be more than 2% of the loan amount.

Not CLTV, he is putting 20% down. He isn’t doing an 80/20.

The actual Yield Spread doesn’t have to be disclosed until the Hinal HUD is drawn. On most initial GFE’s it will only say 0-3% with no figure in the fee section.

Why shouldn’t it be more than 2% ? They could be making more broker comp (YSP) to keep the up front costs low by doing a broker/Lender credit to pay for the borrowers closing costs to keep him from coming to the table with more money. Also, lenders are not required to disclose yield spread.

[/quote]

If you are putting down 20% your rate shouldn’t be over 7%. I Don’t know how much rates vary state to state though.

Trailtrash, you make a good point, but don’t you think if they are including closing cost in his interst rate he would be made aware of that.
It’s just out of habit that I disclose YSP once I lock a client. Texas Savings and Loan department are vicious, so I try to cover my ass at all times and then some!

29

[quote]jm85 wrote:

If you are putting down 20% your rate shouldn’t be over 7%. I Don’t know how much rates vary state to state though.

Trailtrash, you make a good point, but don’t you think if they are including closing cost in his interst rate he would be made aware of that.
It’s just out of habit that I disclose YSP once I lock a client. Texas Savings and Loan department are vicious, so I try to cover my ass at all times and then some![/quote]

ahh. now I see what you were saying. I thought you were saying you could get a 1 loan to 100% with no PMI nor a funding fee in 6.75 to 7% range.

As for disclosing your YSP at time of lock, I applaud you because that is rare. Even though I have never had a loan where one of my brokers had a customer walk at close because of not initially disclosing YSP doesnt mean that it shouldn’t be done.

30

[quote]kellyc wrote:
trailrash wrote:
kellyc wrote:
I happen to believe that in the next few years (3-7) we will be retesting mortgage interest rate lows. However, the standard rule of thumb for deciding if you should get a fixed or ARM is if rates are trending up, go fixed. If rates are going down go ARM. Currently rates are trending up so a fixed would be in order.

Getting back to the original poster. It sounds like you should find a different lender.

By the way, the interest rate on my home loan is 3.75%. Hehehe. South Africa, eat your heart out! I’m locked in for another 4 years when it will become a 1 year adjustable with a cap at 8.75. My plan is to pay huge chuncks off the mortgage if the rate ever goes above 6.25.

What Index is your loan based off of? And what was the total fixed period for your ARM?

I don’t know what index it’s based off of. It’s fixed for 7 years - 7/1 adjustable. When it starts adjusting it can’t go up more than 2% a year and, as I said earlier, it caps at 8.75. I got it at the market bottom from Alliant Credit Union almost 3 years ago. Alliant seems to specialize in adjustables.
[/quote]

Oh yeah, I almost forgot. The loan cost 750 bucks with no points.

I feel so smug.

31

A nice reference on mortgage info is mtgprofessor.com

32

[quote]trailrash wrote:
And being an economist you know that inflation is only one of the factors thats influences the yield of the 10 year.[/quote]

Absolutely. And that is why I said inflation INFLUENCES mortgage rates. Not “drives”, not “tracks” – influences. :slight_smile:

33

[quote]Testy1 wrote:
While what you say is true, I personally don’t like it when where I send my payment changes. Also, it is nice to be able to walk into the bank to make a payment if need be.[/quote]

A month a go I closed on a loan with an “internet” mortgage company, at a much better rate than my bank would have given me. Guess who they sold the loan to? My bank.

34

Thanks alot for all of the information guys.

As far as getting an ARM, I’m pretty leary of that because I really can’t afford to “gamble” on the market at this time. I like knowing what I am going to owe every month.

My credit score is above 630, but in previous years it was much lower. I was told that they consider my credit as an average of the last three years, so that may come into play a bit.

All documentation of employment was provided from the start. It just seems a little crazy to me that since the beginning of this process and now (less than a months time) my interest rate has jumped almost a full percentage point. Hmmm…
Thanks again - Tim

35

[quote]hspder wrote:
trailrash wrote:
And being an economist you know that inflation is only one of the factors thats influences the yield of the 10 year.

Absolutely. And that is why I said inflation INFLUENCES mortgage rates. Not “drives”, not “tracks” – influences. :slight_smile:
[/quote]

I know man. Sorry if it came across the wrong way.

36

[quote]larryb wrote:
Testy1 wrote:
While what you say is true, I personally don’t like it when where I send my payment changes. Also, it is nice to be able to walk into the bank to make a payment if need be.

A month a go I closed on a loan with an “internet” mortgage company, at a much better rate than my bank would have given me. Guess who they sold the loan to? My bank.
[/quote]

Strange how that works isn’t it? Many times a bank’s wholesale division (this is the division Mtg Brokers broker your loan to) will offer better products and pricing than their retail division. However sometimes it goes the other way.

37

[quote]trailrash wrote:
hspder wrote:
timmyboy5410 wrote:
I am a first time home buyer and I’m a little confused about the way interest rates work.

Any info you can give me is greatly appreciated.

I’m an Economist and let me just reiterate what has been said above: the interest rates have indeed been rising steadily in the past couple of months – to put it simply, because there are fears of inflation – but indeed the rates you have been quoted seem a tad on the high side, unless your credit score is under 630, in which case they make some sense, considering we are talking about a 30-year fixed rate.

Having said that, at this point I STRONGLY recommend an ARM (Adjustable Rate Mortgage), especially if you can (as you should) get a lower interest rate there. Interest rates are bound to go down again in a couple of years, and if you have an ARM you do not need to refinance to benefit from it. Fixed rate mortgages are a pretty bad deal right now.

Timmy I sent you a PM.

Right now the 3/1 and 5/1 ARMS really aren’t much lower if lower at all than a 30 year fixed. So if someone wants to gamble and possibly save themselves as little as 12.5 bps on their rate then go ahead and go with the ARM.

[/quote]

Strangely after I said this, the gap between the 30 year fixed and 3/1 and 5/1 ARM actually widened today. And I saw pricing for a 7 year balloon go above the 30 year.

38

[quote]timmyboy5410 wrote:
As far as getting an ARM, I’m pretty leary of that because I really can’t afford to “gamble” on the market at this time. I like knowing what I am going to owe every month.

Tim[/quote]

No need to be “leary” just crunch the numbers to see what is best for you. It’s not a gamble. ARM’s are fixed for a period of time; 1 year, 3 yr, 5, 7, 10. After that it becomes a 1 year adjustable, so it only adjusts once a year, not each month. There is a cap on how much it can adjust each year and a maximum cap.

When I was looking for loans I crunched the numbers on the best 30 year fixed I could find and the 7/1 I ended up getting. I figured out that if the worst case scenario occured, it would take 11 years before the 7/1 cost me as much as the 30 year fixed.

Eleven years is a long time, very likely I would sell the house before then. I also calculated that after 11 years I would be able to pay the house off if I chose to do so.

Basically what I’m saying is crunch the numbers to see what’s best for you. Don’t just discount the ARM’s beacause you hear people say “you’ll get screwed if rates keep going up”.