Tag 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.

Nov 19

Mortgage Rate Watch November 19, 2012

A little late posting this tonight, very busy day!

After the post last Friday the market improved towards the end of the day.  This morning it opened off a little then bounced back in the afternoon.  Not enough change in either direction to impact interest rates.  One reason they are not moving is because the yield spread between the 1/8 increments rates are quoted in is so large it will take a pretty big movement to bounce either direction.

It will be a short week for trading in the mortgage backed securities market as well as the stock market.  Both are closed all day Thursday and half a day Friday.

Nov 16

Mortgage Rate Watch November 16, 2012

No change in mortgage interest rates over Wednesday’s pricing.  The Industrial Production Report was released this morning and the index declined very slightly when the experts were expecting a slight improvement. 

I believe the storm has been more of an influence on the markets than the recent financial reports.

The last quote I received this morning for the bond market showed a little improvement which is a good sign on a Friday.  Over the years it seems to me Friday’s are usually off days, investors taking money out of the market over the weekend in case we attack Canada or something silly like that.

 

Next week is going to be a light one for financial reports, home sales will be released on Monday, and housing starts are due Tuesday, sounds backwards to me.  Ironic but Jobless Claims and Consumer Sentiment are both due out Wednesday, as are the Leading Indicators. 

 

2:00 update, Mortgage Backed Securities are up 8/32 which is good for interest rates, when bonds go up interest rates go down.  That is not enough change to impact rates yet, but at least they are headed in the right direction.

 

There will be fewer hours of trading next week, the market is closed Thursday and half a day Friday in observance of Turkey Day.

 

Nov 14

Rate Watch November 14, 2012

 

Bonds Down a Little Rates Up Slightly

 

Not a big movement, but Mortgage Backed Securities are trading a little lower this morning, down about another 5/32’s. Interest rates are up very slightly, not enough to change the rate.  Lenders look at yield and borrowers look at rate, the yield is only slightly less than yesterday so not enough change to bump the rate an 1/8 of a point. 

 

In fact, considering how small the change is in yield supports something I have thought for the last couple of weeks, interest rates are not as low as they should be.  Yes, I know they are at an all-time low!  But considering how much the price of bonds have increased recently I would have expected the rates would have improved more than they have.

 

So this little movement today and yesterday didn’t change anything, there was already a little fat imbedded in the rate or so it appears to me.   

 

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 10

KHC Funds Down Payment Assistance Programs

I noticed earlier this week that KHC had funded two of the more popular down payment assistance programs.  Check Available Funds.

The Regular DAP must be repaid over a ten-year period at 6%.  It is provided in the form of a second mortgage loan up to $6,000, and can be used to purchase a home up to a price of $243,500. This DAP is NOT restricted to first-time home buyers.  Home buyers that recently sold a home but do not have enough funds to purchase another can use this program!

Home-DAP goes up to $4,500 and does not require repayment, it is forgiven over five years.  The ceiling price for homes when this program is being used is $195,700. 

Okay, here is how both programs can be used for maximum benefit.  The buyer can borrow the entire down payment and have the seller pay all of the closing cost and pre-paids. It is possible to purchase a home with less than $100.  The only reason any money may be needed is because the down payment could be an odd number and the DAP’s are made in $100 increments.  

May 09

CreditXpert™ Rides Again

Had a guy call me this morning, said he had been turned down by two loan officers from other mortgage companies because of his credit report.  When I asked why they turned down his loan request he said it was because of a bankruptcy and a low credit score.  The bankruptcy was five years ago, not a reason to decline a mortgage.

He told me his credit score was low, below 580, but when I asked if they gave him a copy of the credit report he said neither had bothered to pull one.  Okay, how do you know the credit score was my next question.  Answer, one of the online free credit reports. Bad, bad, bad, not a true credit score.

We pulled a real credit report and the score was actually 635, only a couple of points below the threshold but the problem had nothing to do with late payments or other negative entries.  In fact, his payment history was absolutely perfect after the BK.  I could see the reason for the low score was two credit cards cranked to the limit, one was $150 above the limit.

We ran CreditXpert and it confirmed my assessment but gave exact numbers to reduce the balance, what a program!  Half an hour later he had an approval letter based on paying down the credit cards.

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 29

FHA Changes Have little Impact

The recent changes to FHA’s mortgage insurance premiums have had little impact locally.  The largest change, an increase to the Up Front MI, nearly double the previous factor, has not slowed the number of FHA applications.  In fact, the number seems to be on the upswing. 

I do not have access to all of the stats in our market but my government applications have picked up the pace considerably.  As a percentage in the first quarter FHA slipped a little in my pipeline but only because of a spike in conventional applications.  The number of both types of loans saw a huge increase. 

Earlier this week a Realtor told me they will not allow their clients to use an FHA mortgage to finance a purchase.  My first thought was, “Good luck with that.” 

That’s half of my pipeline! 

My second thought was something I learned 30 plus years ago from Warren G. Harding, author of the book, “Trade Secrets of Exchanging.”  Warren asked me, “What is the value of a life preserver?  If you are drowning in the middle of the ocean it is worth a lot more than it was in the store.”

FHA is still one of the most affordable options available to homebuyers.    

 

     

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