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.

Will Listing Your Home Disqualify You From A Refi

Click on the title link. The short answer to the title of this post is, "Maybe." Many lenders will now accept a refinance where the home has been on the market. It must be off the market for at least one day. But there are two very important things about this:

1. The home absolutely must be off the market. People often execute a listing cancellation with their Realtor, but the Realtor drags their feet with actually taking it out of MLS. The lender will absolutely check this, and if it is listed in MLS then your loan is toast.

2. You have to convince the lender that you really are staying in the home with a good letter of explanation. It is up to the lender whether they believe you, or like your reasoning. They can deny the loan because your letter is not convincing enough. You are at their mercy on this.

Bottom line is it is doable, but not guaranteed by any stretch of the imagination. You have to jump through the "lender hoops", but it is often worth it.

Need To Refi, But Your House Is Underwater?

Click on the title to link. This is an article about two government options if your house is underwater. The thing about these two options is they are not as easy to get as they may make them sound. There has been numerous articles about how these two programs have not really accomplised what they were intended to. But they are, none the less, options.

If you are currently on an FHA or VA loan then you can also refi onto another VA or FHA loan at a lower rate without having to get an appraisal. This would eliminate any "underwater" issues.

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.

Don't Get "Rate Greedy"

There is one constant any time rates are really low, people always think they can/will get better. And they vary well may, and sometimes do. But you really have to be careful to not get greedy about it. Rates are at 50 year lows, that is pretty awesome! So you really have to question what makes one think they are going to get much lower, if at all. And is it worth the risk? People often do not realize a couple of things.

1. A large move in rates (.25% down, for example) will generally have a small effect on you payment. Does it help? Of course. And having a large loan amount also makes a bigger difference. But it is a risk to wait for that kind of movement. A .25% drop in rates is not something that happens daily (generally).

2. Rates move up much faster than they move down. It has also really bugged us that lenders are much slower to better rates than they are to worsen them. And when they get worse they can get worse much quicker than they get better. So although rates may take some time to improve .25%, they can worsen .25% in the blink of an eye. So, again, you cost vs. benefit has to really be thought through.

Bottom line, you can certainly wait things out and hope rates keep going down. And you may very well get a better rate. But know the risks going into it, and don't get greedy. 50 year low rates don't come around very often; roughly every 50 years. :-D

Cost of FHA loan to increase in early September

For anyone who is considering a new FHA loan, which includes taking advantage of the historically low rates through an FHA Streamline refinance (see past posts on this subject), you would be wise to get started now.

Congress just passed H.B. 5981 and it's expected to be signed by the President shortly. This bill gives the FHA the power to hike monthly premiums (mortgage insurance premiums) it charges to consumers. Currently the monthly premium is .55%/year, which translates to about $46 for every $100,000 financed. It is expected that HUD will raise the premiums initially to .9%, which will add about $30/month for the same $100,000 financed. The bill also give HUD the authority to raise the monthly premium to a factor of 1.55%. Given the authority, you can be sure it's coming.

There is a positive element to the bill. Presently, in addition to the monthly premiums, HUD charges the borrower 2.25% of the loan amount as an Up Front Mortgage Insurance Premium charge on every FHA loan - this Up Front premium will most likely be reduced to 1%.
The net effect of these changes will be an increase in the cost of an FHA loan. The planned effective date of these changes is September 7th, so again, if you're someone who's been considering refinancing and FHA loan, do it NOW. As always, we'd be happy to answer any questions you have.

Rates At A 50 Year Low

Hard to believe, but rates are really low right now. If you have not refinanced and what help evaluating if you should consider it or not then give us a call. It still may not be right for you. However, you need someone to honestly analyze whether it is good for you or not.

The thing about all this is the housing market is really not great right now, and we do not see it getting any better anytime soon (despite what you may hear). So now is the time to move on a refi if you have any thoughts about doing it because it is a tough time to sell your house. Get your payment down and start saving that difference.

Please Call Us Before......

We sometimes hear from clients who've considered refinancing with the lender currently servicing their loan. Let us just say - please call us first.

We just spoke to an existing client who had been contacted by their current lender/servicer about the possibility of refinancing. After a review of their situation, they were told they're not eligible for a refinance at this time. However, that's not true at all. They are eligible for an FHA Streamline (we referred to these in our last post). This program, combined with the offer we're making, will save them at least $200 per month, AND, we will pay ALL of their closing costs.

Not sure why the existing lender/servicer didn't mention this to them. Maybe they can't offer it, maybe they're not aware of it, who knows? Either way, we're grateful for the opportunity to serve them again and will vastly improve their current situation because of our steadfast commitment to ensuring we are on top of the latest opportunities of our industry.

You Must Call Us If You Have An FHA Loan

Do you currently have an FHA OR VA loan? If so then you need to be sure and take 2 minutes to call us. You may qualify for an FHA/VA program that will not require any appraisal at all, will cost you absolutely nothing to do ($0 in closing costs), and lower your monthly payment. Give us a call at 830-9685 (ask for Kim Kissane) so we can quickly analyze if you qualify. You can also email Kim at Kim@MyPremierAdvisors.com.

Fannie Mae's (the US Government's) New Rule

We just learned that, effective June 1 (thanks for all the warning, huh), any loan done as a Fannie Mae loan (which is most of them) will require a second credit report be pulled just before the loan funds. Which means that they are going to pull another report after your loan actually closes, but before they release the money to the title company.

They are doing this to ensure that you have not acquired any more debt since the process started. Seems fair, right? Well, as with almost anything the government touches, it is poorly thought through.

When your credit is pulled again you are going to get dinged, again, for the inquiry. What if your score was borderline for you getting a program and/or rate betterment, and your score now drops below the acceptable level for that? Does your rate now change? What if you don't qualify for the program now? Do we have to start all over? Or, worse yet, do you lose the loan? We are not sure how they are going to handle these situations, but they are going to have to be addressed. Stand by...

Refi Window Finally Ready to Close?

Who would have thought mortgage rates would be as low as they are for as long as they have been? Either way, it's common knowledge at this point, at least with folks in the industry, that rates for conventional loans (loan amounts less than $417,000 in most areas of the country) are artificially low by somewhere between .5% and 1%. This is the case due to the fact that the Federal Reserve has been purchasing mortgage backed securities for several months now.

Well, the Fed's Mortgage Backed Securities Purchase Program is slated to end in March 2010. In theory, this could result in a very quick jump in rates of .5% to 1%. To put this in perspective, consider that a 1% rise in rates could add more than $150 to a monthly mortgage payment for a $25,000 30-year fixed-rate loan.

So, if you've been considering a refinance either to make improvements to your current home, pay off some outstanding debts or simply to reduce your monthly obligations, the window to these historically low rates may be closing.

Mortgage Disclosure Improvement Act - Friend or Foe

Oh, the MDIA. Now that this is in full force, no consumer could possibly get bamboozled. The powers that be have come to the rescue. Among other details (obviously), this Act mandates a 7 day minimum waiting period between disclosing the details of a transaction via the Truth In Lending and closing on the mortgage.

This sounds reasonable I suppose; but, why? Are they really expecting that because one HAS to wait 7 days to close they are less likely to be taken advantage of. Even it that is the case, this is another example of the 99% being potentially inconvenienced for the 1%. Now, one of the primary purposes is that if the APR increases by more than .125% of what was originally disclosed, the details have to be redisclosed and the 7 days starts over. So sure, it could protect someone from closing on a loan that has surprises at the end. But, it has ALWAYS been the case that if someone is surprised at the end of the loan, they do NOT HAVE to close on the loan. They could have walked away. It is understood that MDIA will take some of the pressure off the borrower in these situations, but they may still ultimately have to make a difficult decision - go figure.

If you are picking up on the frustration and sarcasm, you're right on. The thing is, due to the way we've always done business, these types of legislative mandates (of which there are more coming in the near future) do nothing but create inconveniences. EG:

- we have a wonderful client who came in to do a streamline refinance. These can be done very quickly for various reasons; and this client wanted and needed to get it done quickly. Well, we had the client in and disclosures signed on the 19th of October. The disclosures the investor has to send out were sent on the 20th, and this loan was fully approved and ready to close on the 26th, which would have meant it could fund on October 30th - Perfect! But wait, because of MDIA, it could not be closed until October 28th, 7 full days from the 20th. This meant the loan would not fund until Nov 2nd - a problem because it's an FHA loan and the borrower would end up paying interest for November to both the lender being paid off (a rule specified by HUD) AND the new lender. So, we have postponed the closing until the end of November. The legislation designed to "protect" the consumer has again simply inconvenienced them.

All that said - thank you for allowing the vent session - we will continue to adhere to the rules we are governed by and be diligent in providing the best experience imaginable for our clients.

Getting Things In The Mail To Refi?

Many of you are probably getting stuff in the mail making all these claims about rates and skipping payments. We continue to hear from our clients they are getting these things, and they typically talk about rates in the low 4's and getting to skip 2 payments.

Well, like you have heard before, if it sounds too good to be true then it probably is. You most certainly can get rates in the low 4's...if you are paying a fair amount in points and/or fees. And the whole skipping payments thing is just a ploy to get you to call. Any loan you do, no matter what type it is, you will "skip" at least a payment because you are paying interest at closing as part of your pre-paid fees.

Bottom line...if you care thinking about refinancing and want to see what reality is in an up front, honest, ethical way then you need to call us at 830-9685. Don't trust the letter you get in the mail, call us.

Rates and Purchasing

This is a dual update. First of all, rates continue to hold fairly steady. They are still in the high 4's to low 5's depending on the circumstances surrounding the loan.

And as we have said for some time now, it is a great time to buy a house. If you are a first time buyer it is especially a great time with low values, low rates and incentives. You can get up to $14,500 in money help to buy a house. Call us at 830-9685 and we will walk you through the details.

Title Insurance Changes

One of the biggest complaints we have received over the years of being in this business is the cost of the Title Policy when refinancing a house. And we are there with you because it sucks to have to pay what they charge for a new policy when absolutely nothing has changed regarding your house. However, this is finally changing.

NM just passed a law where rates for policies will/should become more competitive. To read about it click on the title above because they give a good summary of the whole thing in the article.

Home Affordable Refinance

You can click on the title to link to a PDF long version of what we will highlight here for you. Many of you have been hearing about the Mortgage Bailout. You know our thoughts about this (we don't like it, in principal). For those of you who are not in default, however, you may be able to reap some of the reward from that.

Let us start here, what is the difference between a mortgage modification (mod) and what we are describing below? A mod is for people who are currently in default on their loan, and can only be done by the actual lender who holds the loan. So, for example, we cannot do mods because we are not the lien holder. You would have to work directly with the lender.

The Home Affordable Refinance is for those who are current, but can't refi for some reason. Here are the things to know about this:
1. You can borrow up to 105% LTV.
2. If your existing loan does not have MI, but the new loan would take you over 80% requiring MI, then you would not have MI on the new loan either.
3. You cannot combine a first and second mortgage in the refi. This sucks, frankly, because it is difficult to get some second lien holders to subordinate right now. So you could be out of luck if this is the case.
4. Your existing mortgage must be owned by Fannie Mae. You can call 1-800-7FANNIE to determine this. You can also contact your lender because they will know. You can also email Fannie at resource_center@faniemae.com.
5. You cannot take cash out on these refis.
6. You may, however, finance closing costs in the new loan.
7. To qualify you loan must have closed on or before February 28, 2009.
8. If you did a lender paid MI loan then you would not qualify for this loan.
9. You can add a borrower to the loan, if you needed to. But you cannot remove one.

This is the guts of this refi, called DU Refi Plus. Call us with questions about this and we will walk you through it. 505-830-9685.

The Nation of Inflation

Click on the title about to link to the article. Jim Jubak, who we enjoy reading, has a recent article about our next big struggle. We have been saying it for some time now. And that struggle is...inflation. With all this ridiculous spending there are sever and several consequences. One of those will be inflation. So despite the fact that things are still not doing so hot in the USA, we will start seeing rising interest due to this. We think this will start happening no later than the end of this year. Stay tuned...

What does this all mean? Well, again like we have been saying, now is the time to act. Rates are low and house prices are down. Now is the time to buy or refinance, if you do it at all.

Property Taxes in New Mexico

Many of you may have read our past posts about what is going on with our property tax situation in New Mexico. In short, folks are getting taxed out of their homes due to doubling and even tripling taxes. Below is a letter I wrote to the Senate Corporations Committee, who will be evaluating bills designed to correct the mess. After the letter, please note the applicable bills and the legislators who are on the committee. If you can make the time, particularly if you've been affected or know someone who's been affected, please contact one or all of the committee to voice your concern.



Dear Senators,

Given the amount of time being committed and the number of related bills, it’s obvious there is an understanding in the legislature of the enormity of the property tax issue. I’m hopeful that the legislature will see the necessity of passing the bills noted below.

Being in the mortgage business, we’ve seen numerous examples of the negative impact of the current property tax environment. I thought I’d share at least one specific example that I believe speaks volumes. This is literally from a call I took from a client TODAY. It’s not a coincidence that the call came in today, we receive calls like them all the time.

The call was from a client in California who purchased three homes here in Albuquerque in 2006. A client who has had to cover over $1,200 per month to cover the amount of the mortgage payments in excess of the rents being collected; and he’s done so for over a year and a half. He called me today because he received a notice from the lender on ONE (others will follow soon I’m sure) of the homes letting him know that he owed them over $2,500 due to a shortage in his escrow account. If he didn’t pay the lump sum, his payment would increase a total of $375.00. If he did, it would still increase by over $200 per month.

His dilemma centers around the fact that he believes morally he made an obligation to pay for these homes, which is why he’s continued to pay the $1,200 per MONTH beyond what is coming in for rent, even though a part of him thinks there is no reason to continue paying the mortgages. However, the latest development regarding the property taxes has created a situation where he may not have a choice. He’s now thinking that his best option is to let the homes go in to foreclosure. His thinking is why wait for values to come back up AND pay anywhere from an additional $300 to 600 more per month for the three homes combined?

Certainly no one expects you to have sympathy for this person because he bought some investment property here in Albuquerque and isn’t able to collect enough rent to cover the mortgage payments. These are the consequences of the decision he made. The point is that the current property tax environment has impacted him in a way that will likely cause these homes to go in to foreclosure, whereas most likely he would have chosen to continue on in hopes of a turnaround in the housing market. I think you would all agree this is the type of scenario we as a community need to avoid if at all possible.

It’s a good thing rates have gone down allowing folks to refinance. In doing so, many have been able to at least keep their payment the same after factoring in a recent or upcoming increase in their payment due to the property tax increases. In this clients case this is not an option because these are investment properties.

I appreciate your attention to this very important issue and look forward to significant progress being made.



Bills:


1. SB 181 - this will keep the 3% cap in place regardless of change in ownership, preventing future tax lightening.
2. SB 335 - regarding vacant land, this will change the tax ratio for valuing non-agricultural land from 1/3 to 1/6.
3. SB 457 - this will rollback the valuation of properties that have been hit by tax lightening.
4. SB 458 - regarding new construction, this will value new homes at 80% of sales price.
5. HB 34 & 261 - these would require disclosure of a property tax increase to future homeowners.
6. SB - to be introduced next week, this would reset property taxes to current and correct values with a 4-year phase in for homeowners that experience a tax loss or increase. After the reset, the 3% cap would be reinstalled.



Senators:

Phil Griego: senatorgriego@yahoo.com

Lynda Lovejoy: lynda.lovejoy@nmlegis.gov

Kent Cravens: klcravens@alphagraphics.com

Dianna Duran: dianna.duran@nmlegis.gov

Tim Keller: tk@timkellerfornewmexico.com

George Munoz: munozgeo@gmail.com

John Sapien: john.sapien@nmlegis.gov

Bill Sharer: bill@williamsharer.com

David Ulibarri: dulibarri60@zianet.com

Mark Boitano: BOITANOM@aol.com'