Rates are unbelievable - High 3's!!

It can be a really tough decision when contemplating whether or not to lock in to a rate when obtaining a mortgage. Generally, when rates are as low as they've been, the conventional wisdom would say to lock - why risk it when the pressure is for rates to go up, at least theoretically.

Well, they keep going down. Fortunately, for those clients who were locked in the last 30-45 days, we've been able to negotiate with the investors to get their rates down. A really great option that we, as brokers, are able to offer.

Now to the good stuff - currently, rates are ridiculously low:
- 30 year fixed conventional rates as low as 3.75%
- 30 year fixed FHA and VA rates as low as 3.75%
And of course rates are even lower for shorter terms, such as 15 years.

One may ask a next logical question like: should I lock if the trend is for rates to keep going down? Well, we'd say the conventional wisdom still suggests that if you're in the market for a mortgage, either to refinance your existing mortgage or to buy a new house, it would be a bit risky to pass on these rates for the hope of them going even lower. Especially when there is the option of renegotiating the rate if it decreases enough from where you happen to be locked.

As always, feel free to contact us if you'd like to discuss your mortgage needs. (505) 830-9685.

Refinancing Nightmares

Click on the title to link. This article talks about three refinancing nightmares for people. The thing is that two of the three are typically predictable from the very beginning. They should not turn into nightmares because you should be working with people and can look at them and know if it is an issue. The only thing in here that is truly a crap-shoot is the appraisal. They, indeed, can be nightmares right now.

Mortgage Payment Grace Period shrinking?

With the financial reform changes beginning to take affect, it's no surprise to hear that Bank of America is changing its grace period policy. After all, there will be a huge loss of revenue from profit centers such as overdraft fees. Beginning February 14th, unless you do your personal banking with B of A, the grace period for paying your mortgage serviced by B of A will shrink from 15 days to 9 days. If you have a B of A mortgage AND you do your personal banking with them, the grace period will remain at 15 days; BUT, a payment after the 9 day period will incur a $6 fee (Click the title above for related article).

There's certainly room to question this from an ethical point of view. Bank of America made an agreement to allow a 15 day grace period - is it right, or even legal, for them to change this for existing borrowers? My hunch is that this transition will occur with little resistance.

Something else to consider is whether other institutions will follow suit. I would guess the number of borrowers who wait as long as they can before paying is substantial, which means potentially huge revenues from late fees are at stake. It's going to be real difficult for the other guys to pass up this opportunity.

Some argue this is no big deal. We should all be making our payments "on-time" regardless. Either way, you may want to keep an eye on the flood of correspondence coming from your mortgage servicer to be sure you're aware of a similar change if it comes.

Foreclosure Record in 2010

Click on the title to link. We cannot imagine this would be surprising to anybody, especially if you read this blog, but 2010 was a record year for foreclosures. What may be surprising to you is 2011 will be worse.

The article says 5 million people are currently two months behind on their mortgage payment. It could get more ugly real quick. The thing is people will lose their will to fight it. Why bother holding on when your house is upside down anyways? Not that we are for that mind set, but it is tough to get past it if you are in that situation and struggling.

8 Keys to the Mortgage Market in 2011

Click on the title to link.

We find it quite funny how the government seems to think that more and more regulation is the answer (see Keys #1 and #2). This has proven so far to help some, yet make doing and getting mortgages extremely difficult. At times it has prevented folks from getting a mortgage that would be very helpful to them, or has punished folks by making it more expensive for the customer or us. It's not right. Does the government honestly think that "mortgage disclosure reform" is the answer? Are you kidding me? Yeah, that was the reason for the real estate/mortage mess. If they honestly think that then we are in big trouble.

Numbers 3-8 are so "pie in the sky" right now that it is almost laughable. Basically they are saying everything needs to get back to what it was and then it will be alright. Wow, that really insightful "keys" you all came up with. Not going to happen, folks.

There is one primary key to the mortgage market this year and that is the Federal Reserve (Key #8). Their "Quantitative Easing" plan is so full of holes that it could not hold water if it wanted to. Frankly, we are relatively convinced that the Reserve does not know what exactly to do because they are running out of options. Flooding the economy with Billions of dollars is not going to lower rates. It is, in fact, going to raise rates (as it has quickly done). Then when inflation kicks in what is going to happen? Rates will go higher, faster. Why the Feds do not seem to get this is utterly beyond us. But it's simple economics.

Hidden Victims of the Mortgage Mess

Click on the title to link. I am not sure how "hidden" these folks are, but the article is referencing those who are underwater on their house and are not in foreclosure. This certainly is a huge problem since it may take years for those homes to get back to what they were (depending on many things).

Mortgages...a "Simple" Flow Chart

Wow! You've got to look at this chart (click on the heading above to link to the article). Dan Edstrom, of DTC Systems, who performs securitization audits, spent a year putting together a diagram that traces the path of his own mortgage.

Prepare to be shocked, and outraged, and confused. You will be amazed at how convoluted the path is. Boy have we come a long ways from borrowing on a handshake.

Is Mortgage Shopping Safer?

Click on the title to link. This article says that mortgage shopping is getting "safer". Is that true? Well, maybe a little bit if you gauge "safe" as less junk fees. But for those of us who have always operated in an honest, trustworthy manner it is no different than before. Regulations are through the roof, which has actually made things worse for you, the borrower. But it has shored up scrupulous fees.

But keep this in mind, government regulation is not going to dictate that people serve you well. It completely ignores the fact that there are still a lot of people in this business who could not serve people to save their life. So is having a miserable process less likely now? No, because there are still people in this industry who do not care about you. They are in it to make a living.

Bottom line...be very careful to think that increased regulations means you are going to have a smooth experience. What ensures that? Working with people you know and trust, or at least working with a company that was highly recommend by those you know and trust. The only way for any company, including us, to ensure a smooth loan is with internal, defined systems. Anything short of that will only ensure either failure or mediocrity. That is not acceptable (at least not here).

Could Rates Drop to 0%?

Click on the title to link. The short answer is, "No way." The ramifications of such a reality would be severe and detrimental to our economy. Cars do offer 0% financing, but that is comparing apples and oranges. This article does a decent job of explaining it. Check it out and give us your feedback and/or questions.

More Barriers to Mortgages

Click on the title to link. I know we just posted something about this yesterday, but it still holds true the things they are mentioning in this article. At the same time, don't think it is impossible to get a mortgage. Many, many people are still obtaining them. It's just not exactly how it used to be, so be prepared to be patient.

6 New Hurdles To Getting A Mortgage

Click on the title to link. We have talked before about how much more difficult it can be to get a mortgage now. This is another article on the subject that you can read through. It is a good summary of many of the new hurdles that folks now face in trying to get a mortgage. We battle these things constantly.

Should You Buy New?

Click on the title to link to this article. Relating Albuquerque to this article, I would say it is not as clear cut as they may present it. There are certainly benefits to buying a new house, just like there are benefits to buying a new car. But there are just as many benefits to buying used. Especially in Albuquerque, do you want to be on the west or east side? If you buy new you will, most likely, be way on the west side. Values are much slower to increase on new construction on the west side, and you get the lovely landscaping of dirt!

All that said, I am not pushing for one to buy used and not new. Just remember there are always two sides to every story.

Is This The Time To Get A 15 Year Mortgage?

Click on the title to link. This is a relatively good article on the fact that now may be the time to get a 15 year mortgage. With 15 year rates in the mid to high 3% range, it is truly and increadible time to consider it. However, it still generally makes for a heafty increase in your payment. You really need to weigh the options. Are rates awesome? Yes. But you cannot jump in with both feet because you may sink fast. We can help you analyze the possible benefits for you.

Dream of Home Ownership Fading?

Click on the title to link. Here is a sad article about how many folks are thinking they will never be able to own a house. We think most of this is because people do not understand their options. When you here nothing but bad news about real estate in the news then it is going to ware on you. However, many of those who think it is unreachable just do not understand the process and what they can do.

If you are in that boat, or know somebody who is, then let us know because we can sit down and at least show you options. You have to window shop before you can buy. The first step to that is to see what stores are even open for your business. Make sense? We are here for you and anybody you may know.

Mortgage Reality Check

Some of you may have seen this on ABC News. It is a good video about the difficulties of getting a mortgage now-a-days with all the new regulations, and stingy banks. Now is, without a doubt, the most frustrating time we have seen in 9 years to obtain a mortgage. We hae always told our clients that lenders do not lend in logic, they use guidelines that often make no logical sense. The problem now is many of they have transitioned into the illogical. Not only do they use strict guidelines they are now venturing outside of the guidelines and asking for stupid things (and we mean really stupid sometimes). And often, unfortunately, it is due to laws that our terrible Congress has passed that are intended to make it "safer and easier" on you the consumer. Instead it has done the exact opposite (typical).

All of this said, you have to be careful not to let this video (and our statements) prevent you from pursuing a mortgage. There may never be another time when the perfect storm hits like it has right now. What is the perfect storm? Increadibly low rates and a dismal sellers market. You can get more house for the dollar than ever before. So from a purchase stand point it has never been better.

The same applies to refinancing. Yes, getting a mortgage can be (will be) a pain in the butt. But (no pun intended) rates are so low that you just cannot pass them up. We have seen our fair share of stupidity by lenders and law makers. However, we are here to help you navigate through the rough waters. This is why it is important you work with somebody who has your best interest at heart. You can work with a bank, but you have no buffer to help you understand why they are needing what they need. And you have nobody there to walk you through it. We often explain to people up front what issues may arise because we have seen it so much. Surprises come, no doubt. But if we can anticipate most of the garbage thrown at us all then it makes for a much smoother loan. That's our role for you.

More Closing Cost Info (this time good)

Click on the title to link. Although closing costs are up 37% from last year, New Mexico ranks 33 out of 50 for loan closing costs. That is a good thing. Not too many other states are lower than the Land of Enchantment.

"Sorry, No We Can't Lower Your Rate"

Huh? Here's another example of over-regulation by a government. We recently had a client who was purchasing a house. A couple of days before closing rates really dropped to where we could have gotten them a lower rate and, consequently, a lower payment. However, we could not do it because we now have a regulation where we cannot change the rate without there being a 3 day period before you can close on the loan; this includes lowering the rate!! Since this was a purchase, we could not do anything because the sellers would not budge on the closing date. So our client lost out on a lower rate and payment.

Make you mad? It should. It's not the first time this has happened for us. Now write your congress folk and tell them to fix it.

Fees Are Up...Thank Congress

Just watched a video talking about how the average amount of closing costs this year is up 37% from what it was last year! And this after the Feds came out with the new and "improved" Good Faith Estimate, which was suppose to stop lenders from adding on last second fees. Well, that has happened, no doubt. But for us honest lenders out there who never did something so stupid in the first place, it just complicated things for everyone. Now we use the old Good Faith to explain the new one. If that's not proof that people making laws that have no clue what they are doing then I don't know what is.

Why are costs higher? Simple...more regulation = more overhead to be compliant = more costs = higher fees to the consumer. It's simple math really; it's only hard to understand for those residing in Washington D.C. Just wait 'till the new health care goes into effect, especially for these large companies.

Don't like it? Write your congress folks and let them know what you think of it.

Refinancing Options If Your Under Water

Click on the title to link. We do not do either of these loans; you would have to go through your current mortgage holder. But they are resources for you if it is a last option, and you want to view these as last resorts.

Mortgage Brokers Regulations

We have mentioned this before, but it has been a while. Plus the linked article is a good summary of what is required of us now. Click on the title to link to it.

In the past, pretty much anybody could become a broker overnight. It really was ridiculously easy. That has all changed, and it is a fairly intense process now that includes getting finger printed, tested and registered. It is something long over due, and we are all for it.