Posts Tagged ‘lehi lender’

Economic times are tough.  There are layoffs and threatened branch closings, all sorts of unrest in the labor markets.  The “recovery” hasn’t shown up at your door yet, and you’re considering going to work with your brother and opening that new office selling the supercool widgets he makes.

It might be a great idea.  Can I offer one thing, as a lender in Utah (and the rules are the same everywhere), for you to think about before you go?

If you’re going to refinance or buy a house, do it before you leave your job – before you even mention to anyone that you’re thinking of doing so.  Underwriters are unkind to the self-employed (and even more unkind to those whose verifications of employment come back with “we don’t think he’s staying here very much longer”).  There are no more stated-income loans (well, essentially), so you’re going to have to document all your income, and not with bank statements, either.  It will be tax returns. And those will be verified by an IRS transcript.

You’re going to want to have a long chat with your accountant.  She’ll probably have some suggestions for ways that you can minimize your tax liability while maximizing your adjusted gross income (AGI), and you definitely want to do that.  Underwriting is going to look hard at your AGI, and there are also add-backs for depreciation and amortization, so you can get some tax relief there without hurting your qualifying income.

But the big thing is that if you are self-employed, you have to have two years of tax returns showing this before you can be qualified for a loan under FNMA/FHLMC (Fannie/Freddie) guidelines.  So it’s going to be at least 24 months, and possibly longer, before you’ll qualify, once you leave.  And don’t try to claim that you’re not self-employed just because you get a W2.  If you own more than 25% of the business, you’re self-employed no matter how you get paid.

I’m not saying you shouldn’t do it.  I love self-employment.  I’ve been self-employed for a decade.  Small businesses are the heartbeat of the economy.  But before you go, get your house in order.  Literally.

Welcome to RateWatch for Thursday July 29, I’m your host, Chris Jones, and here’s what’s happening:

Today’s market: The benchmark bond is up 12bps today.  We’re trading in a very narrow channel.  Economic news today was all about employment, as in, there isn’t much of it.  Unemployment benefits have been extended, so continuing claims were up, which did not surprise anyone.  New claims were down, but not very much.  The recovery continues to fail to do the one thing that would really get the economy moving again – create jobs.

What that means to you: rates are holding steady.  It’s generally acknowledged that banks would like to raise rates, but competition is making that very difficult.  Remember, they don’t make money unless they lend it out to people.  Rates are therefore critical to attracting business.  There’s no central rate-making authority in mortgages.  The banks take their cues from the bond market and from each other.  So today’s rates are in the 4.5% range on conventional and FHA, with 15-year rates in the 4% range.

At some point, obviously, this is going to change.  We’ll have a terrorist attack (which would be mixed for bonds) or we’ll have IBM invent cold fusion (which would be very, very bad for bonds), and the market will break out of this channel and start moving, almost certainly upward.  We are trading right now at the bottom of the historical range, as in, it’s never been this good.  Ever.  So it isn’t as if there is a lot farther down we can go.

How long will it last? That’s the billion-dollar question.  Here’s the answer: NO ONE KNOWS.  Only one thing is certain: rates in this range will go away.  Do not wait to talk to a professional.  You can call us.  That’s what we’re here for.

That’s RateWatch for July 29, I’m your host, Chris Jones.  You can find us at thechrisjonesgroup.com or text us at 801-850-378.

Welcome to RateWatch for Thursday July 22, and here’s what’s happening:

Today’s market: The benchmark bond is down 15bps today.  We’re trading in a narrow channel.  It’s a huge day for economic news, with jobless claims coming out worse than expected – at least, worse than the experts expected – and existing home sales numbers showing the housing market still weak but not as weak as expected. All that bad economic news is bad for stocks and good for bonds.

What that means to you is worse mortgage rates, but not very much worse.  We’d need to be down 30-40 bps before banks would react with worse rates.  There’s a certain fatigue on the part of banks, who don’t really want to make loans in the low 4% range, so they’re not going lower on rates unless we have a huge move in the market.  That’s not happening.  Moves higher are very possible, however, so stay tuned.  To you all this means that rates are holding steady in the 4.5% range on most loans, down in the 4% range on 15-year terms.  Those rates are truly ridiculous, by the way.  At 4.5%, you can buy 20% more house than you can at 6% for the same payment.  An example:

6%, $200,000 loan, payment $1200/mo

4.5%, $240,000 loan, payment $1216/mo

So let’s all be grateful.

What’s in it for you? Money.  It’s going to take you 60-90 days to be able to complete a sale, so start the process right now.  For many of you it will take as much as six months.  Sound like a lot?  It isn’t.  And January is traditionally one of the cheapest times of the year to pull the trigger.  Do not wait to talk to a professional.  You can call us.  That’s what we’re here for.

That’s RateWatch for July 22, I’m your host, Chris Jones.  You can find us at thechrisjonesgroup.com or text us at 801-850-3781. ‘Til next time, we’ll be watching the rates.

So I made RateWatch a videocast.  Approximate text is below.  But I beg you – send me an email (chris@lehilender.com) or make a comment and let me know what you think.  Good idea?  Good idea but bad execution?  You don’t have to be gentle.

Let’s get to it.

MARKET: the market is down a bit today, off about 25 basis points.  For those just joining us – hey there, Tyler, Corrine, and Taylor – what that means is that the bond we track, the FNMA 4.5% 30-year bond – is being sold off and its price is declining.  It also means that the yield on that bond is rising.  Since lenders hedge their lending by buying those bonds, when the yields on them rise, mortgage rates rise with them.  So today mortgage rates are increasing.  Not very much, but a little.  More than we’ve seen in a month.

ANALYSIS: Markets rise and markets fall.  The big news over the past few weeks has been the increasing probability that we’ll see a market slump over the last half of the year and into next year.  There is also a real fear that next year could be truly ugly.  With the Bush tax cuts sunsetting on January 1, businesses will be moving their cashflow into the latter half of this year to avoid the explosive tax increase.  Dividend taxes nearly triple, which will be terrible for pension funds, and every single tax bracket will see tax increases.

Anyone that thinks that won’t have a huge negative impact on economic growth is not a serious person.  There is a chance – really, a pretty good one – that Congress will do something about an extension for part of the cuts, especially those that will have the smallest economic, but largest political, impact.  As of this moment, however, it doesn’t seem a good time to invest in stocks.  Bonds, as a result, have been flourishing, driving interest rates to 4.5% and even lower on some programs.

ACTION: We may have hit the bottom of this trench in mortgage rates.  Those of you that have been thinking now might be a good time to buy, now might be a good time to buy.  For refinances, I’m willing to go out on a limb and say it’s now or never.

Until next time, we’ll keep up the RateWatch.

Cj

What’s on your to-don’t list today?

A few weeks back, on Facebook, I asked people for their time-management suggestions.  I got a lot of them, and most of them were outstanding.  One in particular, from my old friend Janice Welker, leaped out at me, and set me thinking ever since.  She said that a to-do list was a chance for her to decide on all those things she was not going to do that day, that she used it to remember who was in control of her life.  I thought that was a great concept.

So, in the spirit of that, here is today’s to-don’t list:

1. Don’t stay in bed because you think nobody will care if you’re just a few minutes late.

2. Don’t assume that Jeanette knows you love her, just because you told her last night.

3. Don’t figure that the kids will weed just as hard if you’re not out there with them.

4. Don’t leave the baby for Jeanette to change because you think your work is too important for you to take a couple minutes.

5. Don’t make your body try to do its work on a glass of water and some vitamins.

6. Don’t call later.  There is no “later”.

7. Don’t figure people are smart enough to know what you need without your asking them.

8. Don’t think you can fit everything in that you have to do without taking a couple minutes to plan.

9. Don’t make the mistake of thinking your job is more important than your family.  It’s just louder.

10. Don’t think you’re ever going to get around to going fishing with your Dad unless you put something on the calendar.

11. Don’t think people that need mortgage lending in Utah are going to call you out of the blue, even if you aren’t doing anything to let them know you’re there.

12. Don’t expect blocks of time to magically open up in your calendar so you can take your wife out for ice cream.

13. Don’t get discouraged because two hours of writing only gets 4.7% of your book written.  It’s 4.7% more than you had before you started.

There’s more, but this post was not on the to-do list this morning, which I had better get back to.  What’s on YOUR to-Don’t list today?