Category Archive: Interest Rates

Nov 25

Rate Calculator

Rate Calculator vs Payment Calculator

I recently searched for an online rate calculator for mortgage interest rates. All of the top results pointed to payment calculators instead of a rate calculator. This seems strange because I use a rate calculator every day.

In order to accurately compute a mortgage payment we need an accurate interest rate. This is particularly important when trying to estimate a payment on a conventional loan because the interest rates are tiered.  The tiers are so complicated one needs a calculator.  Here is a link will shed light on mortgage interest rate tiers.

For the most part the public believes mortgage lenders have only one interest rate, and I base this statement on my last thousand rate calls. Every single person asked for my best interest rate not for the rate they would receive.  There is no way to tell if every one of them thought they should receive the best rate or just assumed there was only one rate. 

My interest rate calculator is proprietary software that I use daily.  It is the only method I know to quickly calculate an exact interest rate. 

There is a sequence that should be followed to reach an accurate estimate. It begins with the individual’s credit score from a tri-merged credit report.  When I receive an initial call from a home buyer one of my standard questions is if they know their credit score.  Nine times out of ten their true credit score is 20 to 40 points below their answer. The free credit scores available online are not from a tri-merged credit report.

Using an online mortgage payment calculator without access to an interest rate calculator is dangerous.  The results could easily be off 30% to 40%. The only safe way is to have an experienced loan officer guide you through the process.

Jun 01

Rate Watch – June 2012

Mortgage Rates improved again this week hitting record lows.  Bad economic news domestic and abroad continued to push mortgage rates down.  The unemployment figures were also bad, jobs added were less than half of what was expected and the unemployment rate increased slightly. Something interesting about the new jobs report, they lowered the numbers for previous months by almost 50,000 and that is a lot of nonexistent jobs that were counted, opps!

I have been hearing for at least a month that home sale are picking up dramatically.  Locally that may be true, I know the mortgage company I work for had a record month for May.  We closed an all-time high for a month, breaking the old monthly record by 4.6 million.  Our previous record was set in September 2010.  By the way, the 4.6 million INCREASE is more than most of our competitors do totally for a month.  We were on the plus side of a 100 million for the month, by far the largest volume of any mortgage company based in Kentucky.

Okay, let’s be honest, we do a lot of things right, but there is a lot less competition too.  I have not had a call from a recruiter since 2008, I have had 3 calls in the last week looking for loan officers.  Volume must be picking up in my area.

I just posted the lowest rate on my application site, be sure to check them out.

How much lower can they go?  Not much, there are cost to bring money to the closing table, the current rates are getting painfully close to the hard dollar cost of raising the money.  How much higher can they go? No limit. 

Remember my first rule on interest rates, Rule #1, What goes up must come down, what goes down must come up.

Every day you do not lock in a low rate is one day closer to a higher rate.

 

 

May 05

CreditXpert™ – New Page Added

There is a new page added to the Buyer’s Section – CreditXpert™ .  It explains how the service helps our clients save thousands of dollars by fine-tuning the structure of the debts listed in a credit report.

This service is provided by CBCInnovis, the company that assembles our credit reports. 

Traditional credit repair companies advise borrowers to dispute accurate information that is negative in nature and that is illegal.  CreditXpert™ does not make suggestions that are dishonest. There is a big difference between lying about what is contained in a report and structuring the content in a positive manner.

This is a major innovation. It will only make suggestions that are 100% legal, and it is provided by the same company that compiled the original credit report, straight from the horse’s mouth. 

Sorry about the horse reference, it is Derby Day after all.

CreditXpert™ will help most home buyers achieve the next best credit position above their existing credit score. This can save a fortune in closing cost and or interest.  Both of these are related to the credit score. 

It can also be the difference between a loan application being approved or declined. All automated underwriting software weighs the entire contents of an application including the credit report.  The more the contents of the credit report matches the approval matrix of the AUS the more likely the application will be approved and the better the terms of the loan will be.  

Check out the New Page.

 

May 04

Rate Watch 5/4/12

Interest rates have remained steady for the past two weeks, unusually steady! Today I posted a slight improvement on the conventional 30 and 15 year rates, how much lower can they go? 

The jobs report released this morning showed an employment increase of 115,000 new jobs added in April, about 55,000 less than expected.  The unemployment figures also improved slightly. Personally, I do not believe these reports, a decline in unemployment claims is not an indication of new jobs created, simply that benefits have run out.  Mortgage bonds reacted favorably to the news, interest rates decrease when the price of mortgage backed securities increase.

I have watched interest rates for a few decades and it seems like Friday is usually an uptick day, not down.  That makes sense, some money managers sell paper on Friday just in case we get tangled up in a war over the weekend.  Those Canadians have been very quiet lately…  

 

To take advantage of the low interest rates visit my online application site or print and use this simple form to get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.

 

 

 

Apr 21

Mortgage Interest Rates Update

Mortgage rates for Kentucky continued to be ranged bound this week ending about where they started.  Not much good news for the economy kept them in check.  Even the mess in Europe had little impact.  The latest update on my Rate Sheet was almost identical to Monday’s posting.

I had a couple of interesting conversations on this topic with people that were inquiring about getting a loan this week.  The first person asked if I thought rates would go a lot lower.  My response was the same as it has been for almost a year now, “How much lower CAN they go?  There are more numbers above the current rate than there are below it.”

Jim’s Rules Regarding Rates:

Rule #1:  What goes up must come down, what goes down must come up.

Rule #2:  Every day you don’t lock a low rate is one day you are closer to locking a higher rate.

Rule #3:  The current rate is either going to get better, stay the same or get worse.  Count on it.

There was actually a quarter point improvement in the Secondary Market Program at KHC which I find odd.  This is a relatively new program and allows borrowers that are not first time home buyers.  Historically KHC has only provided financing to first time home buyers.  Last week both programs were priced the same.

The second interesting conversation on this subject was with a lady that is currently has an adjustable rate mortgage (ARM) and was inquiring about refinancing to a fixed rate.  Her reluctance is that her current ARM rate is about a quarter point lower than the current fixed rate.  Her answers to my questions pointed out that her rate cap is almost 8 points higher than where she is now!

It took her breath when I told her the highest rate on her existing loan could be in the mid 11’s.  See Rules # 1 & 2 above.

HARP 2.0

Harp is helping a lot of home owners refinance that are currently upside down or do not have enough equity.  If you have been told that you do not qualify due to either of these reasons, ask about Harp 2.0.

 

Visit my online application site or print and use this simple formto get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.

 

Apr 17

New Pages Added to the Credit Report Section

The Credit Report Section continues to grow.  A couple of new pages added recently, What is a Credit Score and Why Are Credit Scores Important

Coming soon is a page dedicated to taking the information on these two pages and turning it into cold, hard cash!

As always, my position is, “It’s not how much you pay for a house, it’s how you pay for it that matters”. 

 

 

Apr 10

Interest Rates Bouncing Around

Mortgage backed securities are being choppy today, they are the driving force behind mortgage interest rates.  The market opened strongly this morning gaining up to 12/32 before I left for lunch.  Interest rates do the opposite of the price of the bonds, if bond prices go up interest rates go down.  When I returned they had pulled back to 4/32 and I received an alert recommending lock.  

Clients frequently ask me if I think rates are going lower.  Anyone asking this question may want to calculate how small the difference of another 1/8 of a point interest makes.  When you see how small that difference is it may seem like a good idea to follow the advice of the alert I just received and lock that rate!

May 09

LIBOR Adjustable Rate Mortgages (ARM) Return

May 9,2011, adjustable rate mortgages returned to our rate sheet today.  Could this be a sign that things are settling down in the mortgage industry?  I see it as a good sign.  We have not offered ARM’s for a couple of years now.  For awhile they were still listed but with interest rates higher than fixed rate mortgages, then they were removed from our product list entirely.  Historically adjustable rates started much lower than fixed rates.

Today the difference is not as large as in the past but still enough to make them useful in some instances.  Our 5/1 ARM for example has a start rate about 1% lower than the 30 year fixed rate.  If the intended holding period is less than five years the difference could be substantial.  

If the holding period exceeds five years then the current low fixed rates are hard to beat.  

The current ARM indexes are currently the lowest I remember them.  The 1 year LIBOR index was .746 today, that is the lowest it has been since 1989 which was the oldest published rate on the chart at Mortgage-X.  

I am pleasantly surprised that rates have remained as low as they have and they are so incredibly low it is perplexing.  There doesn’t seem to be any problems in terms of availability of funds and yet demand remains low as well.  Strange times.

May 06

Mortgage Rates Remain Low – Louisville Kentucky

Mortgage rates remained low today in spite of better-than-expected unemployment figures.  The bond market was off this morning, with mortgage-backed securities down 11/32 in early trading.  By the end of the day they had regained all of their losses and even gone into positive territory.

I am shocked that the rates are as low as they have been so far this year.  Hold on to your seats when they do start to edge up because it is going to be a fast ride. 

New Mortgage Interest Rate Calculator

I received a new piece of software this week, something our IT guys have been working on for some time.  It is a mortgage interest rate calculator designed to factor in all of the adjustments based on client’s criteria.  It really speeds up the process.

 While I was test driving the new calculator I discovered something exciting.  Conventional interest rates are tiered based on credit scores and loan-to-value but only if the term of the loan is 20 years or longer.  I never knew that!

I plugged in a 15 year fixed-rate loan and made this discovery.  The findings looked strange because there were no adjustments to the rate.  I pulled up the rate sheet and that is when I discovered there are no adjustments for loan terms under 20 years.  This little tidbit makes a 15 year loan a much better deal than the longer-terms.  With rates as low as they are today considering shorter-term makes a lot of sense.

Apr 28

Mortgage Applications Fall

This is interesting; the number of loan applications fell last week by 5.6% according to the Mortgage Bankers Association. The number of applications declined at the same time interest rates improved!!! HAHAHAHA 

Can you hear The Oink Factor? 

I talk about this phenomenon in my book Selling the Invisible House in the chapter about mistakes to avoid.  Loan applications initially slow down as interest rates decrease. Then they speed up as rates start to rise.  How crazy is that? 

You economist types will state this is a matter of supply and demand.  That could explain it except for the fact that interest rates do not react that quickly to demand.  Demand on the other hand turns on and off like a faucet when ever there is a change in the direction of rates.

 Watch, when the rates start to increase there will be a spike in the number of loan applications.

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