Posts Tagged ‘lehi mortgages’

Okay, well, it’s not that dramatic, but I do have a new post up on Zillow’s Mortgages Unzipped, with some in-depth commentary on why mortgage interest rates are not rising dramatically, pronouncements of doom to the contrary.

Thought you might like to see it.

Markets: We’re down 12 bps (to explain again, this means that the 4.5% FNMA mortgage-backed bond is down .12 points (whoops, just ticked down to .06, so we’re moving in the right direction)).  As that bond moves, so move interest rates, in the opposite direction.  As the bond moves up, rates move down.  As the bond moves down, rates move up.  This move today is the third straight one in a negative direction, meaning that rates are edging higher.  The move is not strong, but it’s definite.

Analysis: Or is it?  Previous to this, we had three straight green days, or rates moving in a positive direction.  new home sales and existing home sales have been a bit weak as prices begin to rise (and folks, prices ARE beginning to rise, especially in places like LA and Las Vegas, where the crash has been especially severe.  I think that we’re seeing some artificial boost from the tax credit, so Heaven knows how bad the existing  home sales would be without that.  Any weakness in the economy right now means good things for bonds and good things for interest rates.

Everyone is looking for evidence that the Fed mortgage-backed security purchase phase-out (expected the end of March) is going to substantially boost interest rates.  As I’ve written in this space before, I’m not sure that’s going to happen.  Generally, bond traders are able to read the paper, and they know better than we do that the Fed move is coming.  Also generally, when news comes out, markets are really, really fast to price it in.  So why, if bonds are going to get crushed in April without the Fed to prop them up, are bonds not getting at least partially crushed NOW?

I keep looking for signs that the selloff is starting.  Is the last 3 days’ movement a sign of that?  I don’t know.  But I am starting to wonder.  If it continues all week, I’m going to get suspicious.

And, of course, I’ll report those suspicions to you.

Action: If you’re looking for a house or trying to get refinanced, you need to have the throttle wide open and be moving forward rapidly.  Get with your mortgage professional and get something in motion right now.  Do NOT wait on this.  As tight as lenders have been recently, and as much as things have changed with loan programs, assuming you’re going to walk in my office and walk out an hour later with a loan is delusional.

For those hoping to take advantage of the tax credit, I have a full cheat-sheet on how that credit works posted here.  Read carefully.

More as events warrant.

Cj

Markets: Blah blah up just a little blah FED blah blah blah GDP growth blah unemployment numbers blah blah blah.  It’s Groundhog Day (again.  What, it’s not Feb 2 where you are?).  Of COURSE the markets are doing the same thing day after day.

Analysis: Nobody believes the economic reports.  Government data is having essentially no impact on anything.  We’re stuck in a narrow trading range and the betting here is that we will blow out of it to the downside, meaning that rates will increase.  When that will happen is anyone’s guess.  I’m no Punxsutawney Phil.  All I can do is promise that when it does happen, you’ll hear about it here first.

Action: Same recommendation as before.  You have time here, but nobody knows how much.  Use it to get yourself positioned correctly so that you can move when the opportunity presents itself.  If you do not do this, and the market takes of, you WILL NOT BE ABLE TO TAKE ADVANTAGE.  The days of deciding this morning to get a loan and tonight being approved are long, long gone.  In most cases, it takes WEEKS to make sure that you’re positioned properly and that there are no red flags.  PLEASE, I beg you, do not wait to start having a conversation with a true professional about your loan options.  Do it today.

Inspirational note for the holiday: I love the movie Groundhog Day.  I watch it with my family every year.  Every year I get something good out of it, and this year was no exception.  I firmly believe that our lives are much more like Phil Connors’ life than we care to admit, and I’m with Rita – “Sometimes I wish I had forever.  Maybe it’s not such a bad thing, Phil.  It all depends on how you look at it.”  We all have much more time than we think, and if we would use it the way Phil eventually did when he learned to play the piano, just plowing ahead, making mistakes all over the place, and not paying the mistakes the slightest attention, getting better and better by never quitting, we could accomplish almost anything.  ANYTHING.  You can do this.  I know of my own self, having put this plan to the test.  So pick something and give it the Groundhog Day treatment; do it and keep doing it as if you had forever.  You’ll get better and better and your life will be richer for it.

See you tomorrow.  Maybe.

Cj

Markets: Bonds were up slightly today, trading up against a line of resistance.  For the uninitiated, a line of resistance is an average, usually a 25-day or 50-day or 100 day, or what have you, that cuts across the bond price chart.  Those lines form “resistance”, against which bond prices have to push in order to move higher.  They also form “lines of support”, which keep bonds from moving lower.  Generally speaking, the markets will need something unusual in order to punch through a line, some news that is unexpected.  Nothing like that was in the offing today.

Analysis: Tomorrow and the next two days are the real kickers, with the Fed Beige Book tomorrow, and the retail sales and consumer confidence numbers Thursday, followed by a blizzard of numbers Friday, headlined by the Consumer Price Index.  Weak numbers will be good for bonds, strong numbers will be bad.  Good for bonds means good for interest rates.  I realize that means that a bad economy is good for interest rates, and that’s not strictly true, but for rough purposes, that’s where we are.

Actions: Watch for RateWatch on Thursday.  That’s when we’ll know what direction the market is heading.  But if you’re in the market for a short sale, your real deadline for getting an offer in is the end of the month.  Banks are moving glacially on approvals for those.  Remember that you have to be under contract by April to get the first-time or long-time homebuyer credit.

Thursday RateWatch will be interesting, as that is the date of our seventh annual Twelfth Night Charity Ball, and even that we throw to help raise funds for a local charity.  This year it’s the Heart-2-Home Foundation, also known as Utah Home Makeover.  I’ve been on their board for a couple of years, and I really believe in the work they do.  If you go to the website – www.lehilender.com – there’s a link to more info.  If you’re out of state, and many of you are, you can buy a memorial ticket that will send some badly-needed funds to this great organization.  Please take a second.  I’d appreciate it.

Cj

Got a question from a client the other day that I hear a lot, so I thought I’d post my response to it, in the hope that it would be helpful to more than just her.

Q: Why do I need to provide my social security number and birthday?  I’m not sure I want to give out that information.

A: Good Morning!

Let me give you a bit better idea what the approval and discovery process is for your loan.  There are, of course, a number of loan programs we can access.  Based on the info you provided already, we can eliminate most of those, and we’re left with three or four that are possibilities.

The closer we get to choosing a program, the more information we need, and the more specific that information has to be.  When we get to where we are now, choosing one loan out of the entire set of options, we are essentially underwriting the file as we go.  The Desktop Underwriter system is the same framework that the lender will use in underwriting the file, which has great advantages, but one of the disadvantages is that it requires mountains of specific data in order to function.  It is making very fine calculations about income, assets, and credit, and without the exact numbers, it doesn’t work.  We provide the income and asset numbers – though we will later have to verify to a human that those numbers are accurate – but the credit numbers it gets for itself.  To get those, it requires social security numbers and birthdays.

When it’s finished, we can have confidence that we have a real approval on a real loan that will eventually make it to closing.  But until we get the data, we can’t proceed from here.