Okay, not the lowest ever, but there is a point to this....
Mortgage interest rates for the most part in my 16 year career as a loan officer dropped quicker today than ever before. But they still aren't the lowest that I have seen in my 16 years. But why such a quick decrease in interest rate?
Today, the Feds announced two new programs, one of which will allow them to purchase up to up to $500 billion of mortgage-backed securities issued by Fannie, Freddie and Ginnie Mae. This is after the fact the MBS's have been more expensive in the last year or so, costing investors more money, which in some cases keeps the interest rates from coming down. For more information about mortgage-backed securities (MBS), please read : Mortgage-backed securities.
Overall, this is excellent news for many homebuyers and those that might have a chance to refinance into a cheaper rate.
Here is what I fear.... there will be some companies now advertising much lower rates. Some will make it sound like the lowest rates ever. Very easy to do....it's called advertisement.
My Biggest CONCERN for the day today.... 11/25/08???
In black and white... if you have applied for a mortgage in the last 21 days or so and haven't closed as of yet.... you should have received a call from your loan officer today... no matter what anyone says... especially if you are closing in the next 5 to 20 days. Yes, rates went down today, but spiked back up just a tad. But they still ended about 5/8 of a percent lower than what they opened as of yesterday.Yes, just yesterday & over a half of a percent better today.
It doesn't matter if I am talking about FHA loans, conventional loans, VA loans, or USDA loans...
Here is some more advice that I can give you. You will see many posts that talk about mortgage interest rates, and when you should lock your rate. Word of advice, many of these same loan officers get this advice from services, so don't base your decision on what you think they might know when it comes to what rates will do. Especially since they can change at any time. Please read...
Mortgage Interest Rates - 10/14/08 - Be carful on advice given!!!!
SUMMARY : My biggest pet peeve??? Again, if you have applied with a lender in the last 3 weeks to 4 weeks and you didn't receive a phone call from your loan officer. hhhhhmmmm My advice, in many cases, seek a true professional that is on top of their game and who keeps you in the loop. Especially if you haven't locked in as of yet. But even if you have locked in, many of these lenders have probably flipped your loan to another investor and are making a killing. Not many will be passing the difference onto you unless you call them.
Early today I called a client who I first spoke with on 10/10/08 who decided to use Countrywide Home Loans 13 days ago. I spoke to them today and they are closing on 12/12/08 and the loan officer didn't lock their rate. Well, I had her call me again tonight after she got home from class, which she takes after work, and no word from her lender. OUCH... maybe her lender locked her in, but they didn't tell her. If she didn't ask, more in likely, the loan officer is going to pocket the profit. Because I called her, I am still saving you $1,100 more in costs and an extra $15 a month. Hey, just in 3 years, that's another $1,000. And check this out... they are getting $10,800 back from the seller. As it stands, her loan officer never told her to get addendum's to the contract to reduce it to $9,800, which would reduce the purchase price buy $1,000, because there will be money left over from the full seller's concessions. And in regards to my scenario, that I am $1,000 cheaper than her current lender, they will get to reduce the purchase price by $2,000. It's because I caught this and educated them, that they won't be losing this money. It's illegal to get money back at closing, unless there is an addendum reducing the seller's concession. Otherwise it's lost money.
LASTLY.... if any of this or all of this has happened to you, please don't hestitate to call me or another mortgage professional. But don't stick with your current lender. They didn't give you the true service that you should have received.
All pictures from istockphoto
- FHA Loans - USDA Loans - Conventional Loans - VA Loans - Experience & Knowledge at its BEST !!!
________________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
I heard 5.00% today...that is amazing!
Bo
This is a great post. I never thought of a lender switching underwriters and pocketing the money. Thanks for the heads up.
BO.... . yes ano.. depending on what it was costing you today. Best bang for your buck, 5.5% with zero points. But yes, it was a huge drop... about 3/4% early today, before we lost close to a half point by closing.
SHARON.... . brokers will do this more than ever, because they don't have a true relationship with their lenders, depending on how many they are signed up with. I am a banker and we have a closing ratio with most of our investors. But at certain times, I can break locks with an investor, if I need to save a deal. Or in today's case, if I could make a whole more without the borrower knowing. Just today's pricing difference from yesterday? On a $250,000 loan, I could pocket an additional $5,000. That's how big the swing was.... In any case, my pleasure...
Jeff...let's hope this noodle sticks to the wall! I hope and pray that will, but the trendy response to all government action so far has been a brief "high" followed by a killer hangover.
Lets hope the buyers get out there and BUY!
Great attention grabber with that headline! Hopefully interest rate like this will help business but I have to tell you that it never ceases to amaze me;the absurd under handed things some lenders do and when not downright unethical just slimy and self serving. I can always count on you for the real story!
I also dropped by to wish you a Happy Thanksgiving!
I received several emails from Lenders yesterday all letting me know to get my buyers off the fence. They are all folks I trust. Jeff, I was amazed at the drop, if it wasn't for no doc being gone I would re-finance. I wonder how long this will last. Scary...but good for today.
Hi Jeff,
Great point: "Again, if you have applied with a lender in the last 3 weeks to 4 weeks and you didn't receive a phone call from your loan officer. hhhhhmmmm"
I really hope that this gets the market going, and I am sure it will help, but I don't think that this rate decrease is gonig to have the results that everybody is hoping for.
At any rate - thank for the post and Happy Thanksgiving!
Jeff - Great information Jeff. Let's pray those interest rates get the buyers out there here in Michigan!
RICH.... . hey, you and I both know that this could change back halfway just by Monday. I sent an e-mail to a few of my mortgage contacts also yesterday morning telling them that rates would drop drastically before they came out and to lock them... that it could correct itself partially up by next week. Sure enough, we lost almost a half a point by the end of the day. Now that was a little more in an 1/8% in change, but if you were quoting people on short profit margins, then you had to change the rate and or points on them already.
PAT.... . well, as many have said, I don't think that huge drop will get people to jump off the fence. Many are scared about our economy. Besides, even before the drop in rate, it was still and still is a great time to buy. Rates were already low and so were home prices... just my .02.
RUSSELL.... . well, if that is one thing that I have learned, grab attention like every other Joe, Tom, Dick, and Harry, but then follow it up with facts and the truth and not just misleading or false advertising. I see so much of it out there, it's sad... I came across an online advertisement that I meant to place in this post, that was scary on how it read... I will do a post on this later today. thanks
MISSY.... . damn, you didn't get an e-mail from me? Seriously, I already know that you work with one LO that you really trust... so that's good. I just hope this post was an eye opener for those that are dealing with loan officers that don't follow up, for what ever reason. My biggest point in this was that if the borrower didn't get a call yesterday, that is scary on two different levels. But yes, the large drop was a huge surprise.
MARK.... . I truly don't think it will get the market going as much. I might bring a few more buyers out, but it's a tight crunch for many and the holidays. Besides, these rates will move back up some, just as they did this summer when we saw rates change like a half of a percent in a day or two, but a week later, go back up. Part of this is to help keep us away from deflation, but this happens when rates kind of go back up. I wrote a post on inflation vs deflation... And I think Bernanke has a good idea of what he is doing...
And Happy Thanksgiving to you also... thanks
TAMI.... . well, I just don't think it will spark it as many hope. From my knowledge and experience, even though I have never experienced a market as this one, it will only get some confused depending on how some market this huge drop... and depending on what happens the next 5 business days or so... time will tell.
Hopefully we'll see a huge stimulus to our business...don't be surprised if we see part II soon to follow.
Jeff: Thank you. Yes, it's a great time for us to contact our database and let them know. I'm hopeful rates will stay low and think they will for the next 60 days or so.
LARRY.... . I am not 100% sure what you mean by this....a part II of what? More business? More refinances? Just as I mentioned to everyone on Tuesday, when rates dropped quickly, don't get to excited, it will correct itself. And it did by a whole point by next morning.. but then a 1/4 pt better that afternoon. So, we gains about a whole 2 pts better on Tuesday and by mid Wednesday, we were only better by 1 11/4 pts.. sure, better than nothing.... but it will be a yo yo out there...
PAUL.... . well, great time, but with caution to the wind. I see them going up and down in the next 60 days and will be back to where they were several weeks ago. .. I say this for many reasons... thanks
Thanks, Jeff. I hope you had a nice Thanksgiving. I wouldn't be surprised if rates stay low through the Holidays and then rise again 1/2 point after the first. We'll see. I agree with you about volatility. It's a part of our world these days!