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Mortgage Market Update

click for larger imageThe rate markets are under pressure again this morning. The recent spike in interest rates adds more confirmation to our forecasts that the lows in the interest rates markets are now in place and rates are unlikely to fall to new lows. The recent stampede to the safety of US treasuries became excessive; the run down in rates was mostly in treasuries but mortgage rates benefited as the outlook for the US economy hit new lows in July and August. A lot of concern the US economy would double dip and fall back into text book recession sent investors, both domestic and foreign, to the safety of bonds.  There just isn't much room left for improvement, but a lot of room for rate to go up.  I would Strongly advise capitalzing while you can.

Want to know more on how the Mortgage Market directly effects mortgage rates or need an explanation of the candlestick chart above? Send us an email and we'll gladly provide an in depth article.  Realtors, ask about a detailed presentation on the Mortgage Market at your next office meeting.

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Wednesday
Nov032010

Refinance ~ Is That Smart?

DateWednesday, November 3, 2010 at 12:06PM

Check your mailbox . . . you probably have a solicitation from an unknown mortgage lender with an enticing offer for a refinance.  Refinancing to a lower interest rate can be a GREAT thing; but not always!

Ready for a lender to be honest with you instead of give you a sales pitch?  I’m here to tell you the truth about refinancing.  There are 2 numbers you should focus on:

1.  What is your break-even time for the refinance (meaning how long will it take you to re-coup the cost of the refinance)?  Sure you can get a refinance with zero out of pocket expenses, but that certainly does NOT mean it is without rolled in expenses.  You will be financing more!

2.  What is your monthly savings as well as long term savings over the life of the loan?

Most lenders will be quick to point out #2 and completely skim over the all important #1 . . . how long will it take you to really benefit from this refinance?  Will you even be in the home that long?  Let’s take a look at a real loan scenario being advertised by another lender:

Loan Balance:  $120,000
Current Rate:  5.875%
Current Monthly Payment (principle & interest only): $745
Proposed Interest Rate: 4.25%
Monthly Savings: $100
Out of Pocket Expenses: $0

Wow, sounds great, right?  WRONG!  Yes you’re saving $100 per month with no money out of pocket, however in this scenario the lender’s closing costs were over $10,000 and it would take the home owner 9 years to break-even!  That’s right, NINE years to re-coup the expenses from the refinance!  Hmmmm, not such a sweet deal after all.

So, the moral of the story is DON’T BE FOOLED BY AN ADVERTISEMENT FROM A LENDER YOU DO NOT KNOW (or even one you do know for that matter!)

Interest rates are remarkably low and I work refinances on a daily basis for my current and past clients – most of which are highly beneficial to the homeowner.  But, that’s not always the case.  Call or email me for your free refinance scenario and the true comparion.  I need the following information to figure your break even time along with your short term and long term benefits:

Address of the house
Type of current financing (FHA, VA, Conventional)
Estimated loan balance
Current monthly payment breakdown (principle and interest – escrow for taxes & insurance – private mortgage insurance)

Proud to be your lender of choice throughout Texas and New Mexico! ~ Pamela



AuthorPamela Crim | Comments Off |

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