Frisco Home Buyer Breathes Easy After Close of Home

Press Release
Frisco Home Buyer Breathes Easy at Closing

Frisco, TX - August, 18 2009 - Laura was buying in a time where, so she heard, "nobody could qualify for a home unless you had $20k or $30k to put down"...that just simply was not true and she found out the EASY way.

Brett Arends of the Wallstreet Journal said, "...the closely watched Case-Shiller Home Price Index, which tracks home prices across 20 major cities nationwide, the three-year housing slump slowed sharply in April and May." The National Association of Realtors reported that the inventory of unsold homes has come down. Like me, you ask, "how is this the case if nobody could qualify for a home loan..."?

You like me, hear the nightmare stories on the news and in the paper, but major media is selling their news and over dramatizing it and Laura, one of my recent clients found that out after they brought under $10,000 cash to closing on her $166,000 home. The fact of the matter is, today's loans aren't that hard to qualify for if you have decent credit and a job, it's just that there are so few experienced Loan Officers that know how to utilize the tools and opportunities banks are offering.

Service First Mortgage strives to live up to its name as it provides a full range of mortgage financing services to its clients and the real estate community through the execution of excellent customer service via a highly knowledgeable staff and professional business environment.# # #

No Payment for 2 Months After Purchasing a Home or Refinancing

There are a number of ways that you can structure or plan a closing so that you can maximize your specific needs when financing a home today. Assuming you have a choice on your closing day, here are three typical options.
Option number 1: The typical and assumed closing at the end of the month...
If you have bought a home lately, or refinanced, you might have heard someone in the transaction sphere of influence mention the large volume of closings that come together at the end of ever month. The idea is that if you close at the end of the month, you pay less prepaid interest. What that means is this; If you close on your home on say April the 30Th, the last day of the month, then you only borrowed money for your new loan for one day in April. They do not tack that one day on to the first payment of your loan, so you pay that up front at closing. You can see how if you closed at the first of the month how you would be required to come out pocket up front/at closing by much more money. In this scenario, you close on April 30Th and pay one day of interest up front at closing, you have no payment at all in May, and your first payment is due June 1st but isn't counted negatively in any way until June 15Th. That is a 45 day no payment closing, and it works for refinancing and purchases

Option number 2: Close on your home loan the 1st day of the month...May 1st.
There is 31 days in May, and since you'll have funds loaned to you all 31 days of that month with no mortgage payment, you'll pay 31 days worth of interest at closing. AH, but you don't have a payment in June at all. Your first payment is due July 1st and it is not late until July 15Th. That is two and a half months, or 75 days with no mortgage payment.

Option number 3: Close your home on the 1st day of the month with a "short pay"...May 1st
In a short pay, you do it all opposite of what the above options provide. You pay interest in days backward, and you make your first payment the very first month coming up. If you close on May 1st, you pay 1 day of interest up front, and your first payment is due June 1st and not late until June the 15Th. In this scenario, you don't have a "mortgage payment" in May, so you still ultimately get a month with no mortgage.

Here are the calculations for closing scenarios for options 1-3 Using a new loan amount of $270,000 and a new interest rate of 4.875%. Please take not that two of the closings are on the same day, and the other one is 1 day before the other:
Option #1...Close April 30Th;1 day of interest = $36.56 paid at time of closing
No payment due until June 1st of $1,429 a month (Principle and interest on $270k at 4.875%)
31 days of May you have no payment...
Pay all other closing costs PLUS $36.56 AND then come up with 1st payment of $1,429 in June. From day of closing until June first you spend a total of = $1,465 and then another mortgage payment of $1,429 July 1st
Money spent total from closing to July first = $2,894

Option #2...Close May 1st 31 days of interest = $1,096 paid at time of closing
No payment until July 1st of $1,429 a month (Principle and interest on $270k at 4.875%)
31 days of May you have no payment, 30 days of June you have no payment...
Pay all other closing costs PLUS $1,096 AND then come up with 1st payment of $1,429 in July. From day of closing until June first you spend a total of = $1,465
Money spent total from closing to July first = $2,525


Option #3...Close May 1st using a "short pay"
1 day of interest = $36.56 paid at time of closing
Payment due June 1st of $1,429 a month (Principle and interest on $270k at 4.875%)
30 days of May no payment...
Pay all other closing costs PLUS $36.56 AND then come up with 1st payment of $1,429 in June. From day of closing until June first you spend a total of = $1,465
Money spent total from closing to July first = $2,894

The number 2 option here appears to save you $369 out of pocket in your closing scenarios. I know some of you are thinking, "that's it! I'm going that route, and there is no discussion". Others are taking a little longer look at it and seeing how the options for cash in the pocket for a little longer in the front might help here, but "yada yada yada". Good! How ever you feel the options help you, that is what matters. Remember though, the majority of loans close at the end of the month and lender offices are busy busy busy towards the end of the month with such a work load, so consider closing at a different point in the month to avoid getting stuck in the traffic...you might have a hiccup in the process and when there is traffic, the slower you will be able to "get rid of you hiccup".

The Fed Buys Treasuries to Ripen Mortgage Back Securities...Mortgage Rates Better

Lets all get on the same page first. Why does U.S. mortgage interest rates benefit from the Fed buying up Treasuries?
Lets think first before I move on, the common law of supply and demand. So the Federal Reserve plans to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds. This will mean there is less of a supply...supply goes down, and demand goes up. So, the Fed is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting their price (when demand goes up, the merchant can increase their selling price) and lowering yields. That would allow banks to reduce the rates on new mortgages and still sell mortgage securities at a profit. Well, if the bank is getting a better "bang for their buck", they don't have to charge such a high rate when loaning us money to make their profit.
Why is everyone running around "willy nilly" refinancing if the rates are going to get better? The American government, American leaders, and American economists bleed the same color blood that we do, and if they all knew the answer beyond a shadow of a doubt, we wouldn't be where we are at right now.

Remember, the ultimate goal of all this is that rates get low enough for home buyers to come out of the wood work and buy homes. Bloomberg.com's Brian Louis reported Mike Larson, a real estate analyst of saying,

"Lower mortgage rates by themselves also may not be enough to spark demand for home purchases. For consumers who’ve lost their jobs or are worried about losing their jobs, low mortgage rates won’t be enough to prompt them to commit to buying a house, Larson said."

My advice to the families considering refinancing is, if it makes since for you to refinance with today's interest rates, and you can see a benefit for you and your family's financial future, "pull the trigger".
BEST OF LUCK IN YOUR REFINANCING!

Interest Rates Are Not Looking Good

Hoping for better rates so you can lock down on a rate soon? Patience may bring fruition, or "the early bird gets the worm" and you missed the worm.
Moving.com reported today on their website about todays bond market and how it will affect today's rates and why. They did a good job of speaking in "English" about it, so I'll just quote them here.

"Tuesday's bond market has opened well into negative territory despite early stock losses. The stock markets have also shown a weak opening with the Dow down 130 points and the Nasdaq down 40 points. The bond market is currently down 29/32, which will likely push this morning's mortgage rates higher by approximately .500 of a discount point over Friday's rates. The financial markets were closed yesterday in observance of the Martin Luther King holiday.
Today's weakness in bonds is a result of renewed concern about the supply of government debt that will need to be sold to cover the economic stimulus that President Obama has hinted at. The significant new debt that will be sold makes the current outstanding bonds less attractive to investors, leading to lower bond prices and higher mortgage rates this morning."

Hopefully next week will bring better hope.

How to find the best interest rate for your refinance watching the market?

At this point, making judgment to forecast what the market will deliver in reference to the best time to lock your interest rate has been a coin flip. This week and last week haven't necessarily followed the rules of the "game", so to speak. As economic reports continue to come out in the refinance seekers favor, the Stocks have taken their hits, but the bonds haven't executed to the extent that we needed them to for rates to drop.

On the other hand, rates have held tight and stayed flat overall in the past week and we haven't lost much ground. Getting that super low sub 5% rate in the 4.25%-4.5% range isn't out of the question. The experts at www.Moving.com are still releasing the knowledge about upcoming economic reports that can give us all hope that rates may still lower. Here is the commentary from Moving.com that may service our needs for lower rates.

Three economic reports, and we hope they all work in our favor. Moving.com said, "There are three relevant reports on the agenda for tomorrow. The first is December's Consumer Price Index (CPI). This is also one of the most important monthly reports that we see since it measures inflationary pressures at the consumer level of the economy...Weaker than expected readings should lead to bond improvements and lower mortgage rates tomorrow since this is the most important of the three." This could mean that tomorrow rates open up nicely for us if the reports work in our favor, or at least by the end of the day tomorrow.

"December's Industrial Production report is the second report to be posted tomorrow. It will be released at 9:15 AM ET and measures output at U.S. factories, mines and utilities." When the stock market sees the reports at 9:15am, that should be enough time to rally the selling of stocks and buying of bonds in time to give the banks what they need to confidently make their decisions on our hopeful lower rates...assuming the reports work in that direction.

"The final report of the week is January's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates." This is the final report for tomorrow and cross your fingers.

If all reports do what we want them to, and rates fall, I'll Blog about it and let you know what the outcome is. If there is not good news, I'll say now, have a great weekend and better luck next week.

Unbelievably Super Low Rates Today, but What About The Rest of the Week

Ultimately, yesterdays economic news was GREAT for today's rates, but there was some major volatile "others" that gave us a mid day worsening. In the end, we saw better rates today still, thanks to Bond gains like I haven't seen in a long time.
This morning the bond market was currently up 45/32, and usually we see it up on average of around 15/32 or so, so you can imagine how well it started today.
Tomorrow morning brings us the release of weekly unemployment figures from the Labor Department.
Moving.com, my favorite mortgage rate commentary site said the following. This data is not usually of much importance to the markets because it tracks only a week's worth of new claims. However, the second report of the day is only moderately important so if this data varies greatly from forecasts it could influence bonds enough to affect mortgage pricing. It is expected to show that 55 the week's last piece of economic news will be posted tomorrow morning with the release of the Conference Board's Leading Economic Indicators (LEI) for the month of November. This 10:00 AM release attempts to measure economic activity over the next three to six months. It is expected to show a sizable decline in activity, meaning that it predicts slower economic activity over the next several months. This probably will not have much of an impact on bond prices or affect mortgage rates unless it exceeds current forecasts of a 0.5% decline from October's reading. If it shows a larger decline, the bond market may move slightly higher, improving mortgage rates slightly.
8,000 new claims for benefits were filed last week.
In the end, this just means that they don't expect rates to sit this low for long, but there may be economic news in the coming weeks that return it to this rate low again soon.
My advice on your lock decision, DON'T BE GREEDY. Lock your loan now.

Home Investor Group/Club/Networking

During the past couple years as loan programs for investor loans began to diminish, numerous investor clients have called a halt to the hustle and bustle of buying new investment homes and cashing out current ones to buy new ones. In the meanwhile, I can just picture them in my head sitting around twiddling their thumbs and because so many of them are high energy people by nature, I figure they have learned to twiddle thumbs at back breaking speeds...if you know exactly the personality that comes with the "get'r done" type I am familiar with. (:

I would like to get involved in a Home Investor Group or Club and understand that there are some spread out through the DFW. If anyone is familiar with an Investor Club/Group/Networking organization, please let me know so I can refer my "thumb twiddlers" there until they figure out what to do next.

Best wishes to all for the Holidays and may God help play a part in it. Lets keep Christ in Christmas.

Best Interest Rates for FHA, Conventional, and VA

WOW! If there was ever anything that I thought could help the buyers market pick up, I would think it would be super low interest rates. The bond market staggers after stocks throw a "straight left" followed by a "right cross", and then bonds unleash a "body blow" that sets up a "right hook, left hand upper cut" that sends stocks to the mat for an 8 count. Take that analogy, wash/rinse/repeat over a months time and you see why interest rates go up for two days and then for the next 5-6 business days they drop, followed by the rinse, lather, and repeat method, and you get interest rates on a 30 year fixed loan as low as 5% today.
If you are waiting for the right time to buy and you truly are ready, this is the time. You can't couple the buying while it's low and while the interest rates are low timing better than now. Mortgage guru's expect that we'll see a small spike in rates on the short term followed by a stalactite drop deep into the 4%range before rates eventually shoot up into the 8's or higher. Remember, this is the mortgage business, and everything is a hypothesis or theoretical in nature when it comes to forecasting.
It is just a great of a buyer's market now than it was a couple years ago. There are less seller's than before, but there are far less buyers too. As a local mortgage consultant with numerous referring Realtor alliances, I hear daily how many listings my Realtor alliances have compared to the number of active buyers. There is no shortage of Realtors with 4-5 listings with sellers that continue to drop their listing price because they can't find buyers. This means that the sellers are aggressively ready to drop their price to get moved on to what ever it is they have planned after they sell their home. Go get that dream home before someone else does, or you will look back in 3-5 years and wish you had.