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.

Frisco Texas Home Buyers See Interest Rates Increase In Their Real Estate Purchase In and Around Dallas

Why do mortgage rates seem kind of high?
One answer is that in order to fund the rescue and the new government guarantees, our Treasury must sell more new Treasury securities to raise money. And the Treasury has to offer higher interest rates to sell them. On top of that, mortgage related bonds always trade at a slightly higher yield due to the prepayment and delinquency risk. Lastly, the cost of financing mortgages has increased for Freddie and Fannie due to the plan for the FDIC to back the newly issued, unsecured debt of some banks. Obviously by guaranteeing bank debt, the government is making that debt more attractive for investors, and consequently creating more competition for Fannie and Freddie when they look to sell their own securities. To compete for buyers, the mortgage giants will have to raise their own yields - and to pay for that they'll have to charge borrowers higher interest.

Washington Mutual Bust, Todays Interest Rates

The Federal Deposit Insurance Corporation or FDIC seized Washington Mutual and sold the thrift's assets to to JP Morgan Chase. This is one of the largest bank falls in our history. Some said pitfalls that WAMU ran into that caused this issue was their involvement in the subprime world, and even more the "option ARM". In case you are not aware of what the option ARM is, I'll tell you. The Option ARM was a popular loan in the California area where appreciation was blasting upward so fast that you could stand to buy a home that negatively amortized because the appreciation "outran" the negatively amortizing costs of interest. In the Option ARM, you had the option to make a monthly payment that was less than an "interest only" payment. Let me dig in a little deeper to explain. In this lowest payment option they gave you, your monthly payment had $0 money going to principle, and only a portion of what you owed the lender in interest monthly was paid. This means that the remainder of what you owed the lender in your monthly interest went back on top of the loan...therefore increasing your loan amount every month. In other states where homes weren't appreciating so fast, and eventually California, buyers would get into a home with this loan, or refinance using this loan because they couldn't afford the monthly payment they were currently paying, and the loan amount would eventually get to an amount defined in the loan details that said they could no longer make the lowest payment anymore, and then they would be forced to pay the next lowest payment option in that program which was the interest only payment that they couldn't afford int he first place...so they eventually foreclose.
Today was one of the first interest rate "betterings" in over a week. The mortgage interest rate market today was a result more of the reaction of the bailout and economic news rather than the economic reports that were issued at any point this week. Scary news with such a large bank falling. What will our economy and banking look like in the coming year? Really scary!

Government Makes Ends (profit) AND Helps Banks With Toxic Mortgage Assets - Title Inspired by CNN Money

Ok, for the Layman's terms...that's how I "roll". I put it in terms YOU can understand.

Govie (Government, Washington, Uncle Sam, etc...) has got a plan. Treasury Secretary Henry Paulson (money organizer of Government) has suggested that Govie buys the "toxic" mortgage assets from American banks at a discount. This means that the banks can unload their risky mortgage assets to the government for less than what they are worth, but expectantly better than what those assets are worth after the next wave of defaults comes through...the bank can stand to loose a calculated amount, but possibly not an unforeseen/unexpected amount that might occur in foreclosure costs. This way, banks stand to have a higher probability to make it through this U-G-L-Y situation. Now, I like the idea of the plan for a simple reason. First, I'm not an economist and therefore it's my opinion. I like it because our government has taken on some major liabilities in the very recent past with the Fannie/Freddie help, bailing out big player lenders, war, etc... It's obvious that our government has the strength and money to help everyone when times call for it. A good example of a sign that might show that, is this; Me and you are not economists, so we have to look to signs of those people in our world that are, to see what confidence they have in our Govie for help. Well, when Henry suggested this option to help, stocks blew up like 400 points. If stocks are going up, that means the people who are economist and ARE in the "know", are momentarily confident. Back to why I like this. Since the government is buying these mortgage assets for "cents on the dollar", they stand to make a profit when the market turns around. You catch that? I'm ok with Govie making "ends" (ends=money or profit) on such a scenario so that they can reimburse themselves for the spending they have done to get our economy back to par, so that the next time our economy is against the ropes, they'll have the money power to dig America out again.

Oh by the way, rates terrible today because of all this. Remember, whats good for the economy isn't usually good for our mortgage interest rates. If you wonder why, search my archived blogs that explain that.

Brad

Aurora and Lehman Brothers Negative Media Gets You the Best Rate On Your Mortgage

Just in case you are new to the search and learning mortgage, the basics are as follows. Mortgage rates are directly related to bonds. When bonds do good, your mortgage rates drop. Today the bond market opened very positive again like yesterday...that's good for your interest rate and helps you get the best interest rate possible. Oppositely as yesterday where the bond market did SUPER and the Stock Market plunged, as the bonds did well today, the Stock Market opened with modest gains as well. Yesterday we saw a large swing in rates, but today we may only see a little swing. If we see a couple more days like yesterday and today, rates will be as low as they have been in 3 years.
WHY ARE RATES SUDDENLY DROPPING?
Lehman Brothers, a large player in the lending world, filed bankruptcy. This makes the more risky stock investments even more risky, so the stock investors take their money out of stock and put it in bonds...supply and demand. So yesterday, the Dow Jones Industrial blundered a 500 point drop. Aurora is a subsidiary to Lehman and more involved in the day to day mortgage lending and servicing, so expectations of Aurora's success are no good either...they are giant in this mortgage lending world.
Paul Jackson said it in a way that makes it very easy to understand, "In lending terms, Aurora is a shell of its former self: the company, once an Alt-A powerhouse for Lehman, laid off 1,300 employees starting in January of this year as it cut both wholesale and correspondent origination channels. As recently as the first half of 2007, however, Aurora was regularly seen producing more than $3 billion a month of Alt-A mortgages." He also mentioned that they are a giant when it comes to servicing companies - ranked 15Th largest service by Inside Mortgage Finance for 2007. We don't want Aurora to tank, but if it does and you see it hit large Mortgage Media, you might expect another drop in rates.

Wall Street News Provides Hope for Frisco Real Estate and Mortgage

There was a story out this week about Fannie & Freddie not needing an injection of capital from the US government, and that they have enough saved to weather the current problems.


Wouldn’t that be nice? I imagine that government and finance officials have found out that these companies, and their financing, are so much more complicated than anyone ever imagined. The public and banks own huge numbers of shares, with the banks holding preferred stock. If the preferred stock’s value goes to 0, it would put many of these banks out of business. So news like this morning’s is welcome.

What's In the Forecast For the Real Estate Market

In a Market Update written by Jennifer Eggen, Regional VP of Wells Fargo, she offered that before we see a market change, the housing market prices have to stabilize so that banks and investors can have harder number to calculate risk on REALLY how much equity they have in their investments. You can see that if they have say, $1,000,000 (small number for easy explanation) loaned out, and they find that the total amount of loan plus assets are $2,000,000, then they know they have 50% equity and can calculate where to loosen guidelines. Jennifer Eggen also reflected on former Fed Chair Alan Greenspan’s expectations of the bottom of this crisis finally being in our sights, and that we may likely see that turn we all have been waiting for in the first half of 2009. Greenspan is probably one of the most well respected experts when it comes to forecasting, so that should leave us all with some hope. Concluding that thought, the housing “starts” a couple weeks back showed an increase, but last week reported a fall…just a sign to say that the volatility is NOT quite in the history books yet.

Interest Rates Today and the Market Expectations

Have you ever taken a week or two and read the commentary from day to day about the economy and it's expectations? Have you ever noticed that every day seems to contradict the previous days expectations? Well, thats not necessarily the case, but it sometimes seems that way in the last year or so. I continue to say that the American Economy runs on placebo. All arrows continue to point to recession, poor economic market in reference to the 90's, and little hope for a housing market to pick up steam quickly. The "market watchers" at Wells Fargo, I think, see things similar as I do. They wrote in a News Letter this week about their views. Put like this, Wells Fargo writer said, we have seen some "irrational exuberance in our years of market watching, but nothing like what is currently going on in the stock markets." They go on to say how Friday's employment report mentioned 232k in first quarter losses and 80k in last month job losses alone. Remembering the supply and demand from economics 101. When the economy is doing well, people want a piece of it and the demand goes up..you want your money in the public stock that will also go up...WHEN THE MARKET IS GOOD. When the aforementioned employment losses were reported to the public, stock prices went up. Wells Fargo writer says similar to my belief, "it is absurd that the economy is showing every indication of recession and this will hurt the corporate profits, so stock prices should be falling and they are not." Being that the stock market made a positive move after such negative reports, DO THEY KNOW SOMETHING WE DON'T KNOW? In conclusion, rates have drizzle downward over the past couple weeks but nothing significant. When we see a day open with lower rates than the previous day, we usually follow that up in a day or so of a short up swing...lather, rinse, and repeat, and you get what has happened over the past couple weeks.
Experts still expect the Fed to lower prime again soon...I know it has helped on my home equity line of credit. Best of luck in your home buying, shopping, and refinancing!