Comments on: Mortgage rates jump: lock in now, or wait?

By: Anonymous

Anonymous — Thu, 11 Jun 2009 02:02:52 +0000

unfortunately when I called to lock last week, the loan officer convinced me not to. My rate was 5.37 (with a .25 discount). so what happens? steadily gone up since then to today's rate of 5.9. wtf. everything would have been perfectly fine as I figured closing costs and monthly payments on 5.5 anyway. now I'm looking at 100's of dollars in differance.

By: Elizabeth, Encino, California

Elizabeth, Encino, California — Fri, 05 Jun 2009 04:49:52 +0000

If your LTV is more than 105% on 1 st loan or first Trust Deed than you should try to do Home Affordable Modification.
To see if you might be eligible for this go to the website http://www.makinghomeaffordable.gov
You can do loan modification by yourself or you can take mortgage broker that has more experience, but they charge a fee, maximum allowable in California is $3,600.00. 75% of this is refundable if you do not get loan modification. This is very complex and requires documentation like loan application and listing all of your personal living expenses, assets and all liabilities. Also hardship letter, authorization to your broker. Lender should help you to lower your monthly payments by the means of extending amortization or lowering your interest rates or forgiving you part of principal or any combination of all above. You can get get very low interest rate for several years.
The best example to get this loan modification wuld be financial hardship like rate is switching to full amortization from interest only.
Other example, decreased income due to other factors: divorce, illness etc.
Try to be honest with lender and do not expect lender that he will forgive you more than house is worth at the present time. Lender will always compare potential sales proceeds from foreclosure to actual loan modification. If you can not afford to pay for you mortgage, the best way is to sell property short. It mens that your mortgage balance is more than selling price and lender has to approve this. This is the best for you because your credit score will not be so bad and lender will forgive you part of the loan.
Good lack.
Elizabeth-Mortgage Broker and Real Estate Broker- California, Encino

By: cjbowker

cjbowker — Wed, 03 Jun 2009 17:27:03 +0000

This just shows you have to be proactive. You can't sit back and try to be reactive in a fluctuating environment. You need to seize the opportunity when it is there. If you wait you might be too late. Act now.

By: J in Colorado

J in Colorado — Wed, 03 Jun 2009 09:51:35 +0000

Forgot to expound on this point – if you have a 2nd – Heloc or whatever – the full credit line is counted against your LTV, not just your balance… so if you borrowed $8K on a $50K line like we did, the whole $50K generally counts against your LTV.

By: J in Colorado

J in Colorado — Wed, 03 Jun 2009 09:48:41 +0000

Am signing next Monday, 4.625% fixed 30 year, total fees and closing cost payback in 20 months. My wife and I both have 800+ credit as noted in other comments, but our LTV is about 85%… so you don't have to be perfect. Of course the 85% includes $42K on our credit line we haven't borrowed, so we're a shade over 72% counting net secured debt. Am glad we locked a couple weeks back, will save $300 per month.

By: Paul, Marysville, Wash

Paul, Marysville, Wash — Tue, 02 Jun 2009 06:15:44 +0000

Alright , I work in this crazy environment as a loan officer.
1. If you are upside down – you can only do the 105% program if your loan is Fannie mae- then the loan still has to be run through the lender's system. ( you can payoff just a 1st and leave the 2nd open – if the 2nd agrees to subordinating ( allowing the new mortgage to be a 1st mortgage ) You are not required to have mortgage insurance if you do not have it right now ( that is rule of thumb )

Best scenario works with customers who were at 80% loan to value and now find themselves at 85% to 105% –
2. Rates are still better than most years in the past 30 years – Do not wait be happy if you better your situation ( rule of thumb get a 1% reduction if you are just refinancing and not selling your home in next 3 years ) 3. Take the closing costs and divide it by how much you save monthly- that will give you a good idea example:$ 6000 closing / $200 savings – it is taking 30 months to make up those closing costs – general way to look at it!( never count the taxes, insurance, interest per day , HOA – these are pre paids – you will pay those anyway – )
4. Most think that the housing market is about at the low point buy now – I think we are at 3 months to 9 months and we will bounce. The bottom line getting a great rate,a home and potentially 8k back on taxes (for you new homeowners – 1st time- owner occupied in the last 3 years – Check with IRS for qualification.)

You really are in the best position!

By: erock kansas city, mo

erock kansas city, mo — Mon, 01 Jun 2009 21:44:46 +0000

If I was a floater…I would be living in Fairfield, Iowa…haha! keep on floating!

By: bob southbury ct

bob southbury ct — Mon, 01 Jun 2009 20:49:31 +0000

I locked in a 15 year at 4.5% – not worried.

By: Jose, Calgary, Alberta - Canada

Jose, Calgary, Alberta - Canada — Sun, 31 May 2009 06:08:22 +0000

Hi, I am living in Canada and actually I have an open variable rate mortgage contract ( The math formula of my variable interest rate is: Prime – 0.75 ) till 2013. As the actual canadian prime is 2.25% my current interest rate is
2.25 – 0.75 = 1.5% I know that the inters will go up, but still if the prime goes up, for example to 5.0 % my interest variable rate will be 5.0 – 0.75 = 4.25% that still is low

Currently Canadian banks are given around 4.0 fixe rate for 5 years contract

I should lock it now? Or wait, and if wait, when should be the moment (prime rate value) when I should lock my interest rate?

By: John, Montana

John, Montana — Sun, 31 May 2009 05:35:09 +0000

I'm taking a big risk and buying a new home (2nd home for child to use during school). I know I should wait to get a better price. I am trading 3% on cash savings for an effective rate of 2% after taxes on lost interest. Expecting rates to increase prices may drop for a while, but the coming inflation, I am hoping prices will recover or better than my loss of interest in four years. It's all my risk, no bank, no government! The high prices are another form of tax that I should not have had to pay if not for the government intervention!

By: Jim, Kahului HI

Jim, Kahului HI — Sun, 31 May 2009 02:09:13 +0000

The rate is important however make sure you ask how much is the cost to secure the rate. Rates don't move, 5% is always 5%. The questions is how much does it cost! If your mortgage banker cannot answer this with confidence seek out a new lender.

By: John, Hampton Virginia

John, Hampton Virginia — Sat, 30 May 2009 21:35:28 +0000

I locked at 4.46 about 2 months ago. Had to get two appraisals, so my rate lock expired. Well – I went round and round with the lender, and they finally paid the additional 3/8ths point to extend my rate lock. I'm happy (this is a refi). Stick to your guns, and keep em honest. Best of luck!

John

By: LaFonda Truth or Consequences, N.M.

LaFonda Truth or Consequences, N.M. — Sat, 30 May 2009 20:15:51 +0000

Wow………it's like my nana always said…nothing good ever comes from a 'floater', it's best to just flush it away and let it go…..

By: pudding, Los Angeles CA

pudding, Los Angeles CA — Sat, 30 May 2009 18:45:46 +0000

First rule as a Mortgage Broker/Banker is to always disclose information and options upfront along with pointing out the consequences of not locking. You can never be a hero but you can easily become a goat if you don't follow this practice. Nobody outsmarts the market movement since the attachment to the bond market makes interest rates volatile even in the most stable of environments.

There are different situations in different parts of the country with regard to speed of a refinance. If you are in California it could take longer since there are far more originations going on there than other places. Also, real estate market conditions play a role. The loan to value (LTV) is a factor of pricing most loans and as volume has increased the appraisal reviews take longer and they tend to be conservative as well. It makes a difference if you have 50% equity vs. 20% or less. Having an appraisal value be cut by the reviewer is happening a great deal in alot of places.

Another factor is the timing for the close of escrow. The end of the month is always the toughest.

Rate lock periods are a huge factor. Do not expect to close your refinance in 30 days. 45 days is about right and that is from the time you have your applciation completed and documentation submitted to the lender as well. It can happen quicker but Wells Fargo for example as of the last week in May was 19 days in underwriting and 3-5 days for approval of conditions. Those turn times are from the date the loan has been fully processed and submitted not from the date you fill out the application.

*Keep in mind that the spreads on the rate pricing is priced so that it is more difficlut to lock for expected rates prior to submitting the loan. Rate pricing for 25 days has been far better than 40 days by a larger spread than usual etc. That has varied from day to day however.

The stability of the rates hasn't been terrific. Since rate 1st dropped at the end of March the rates have bounced up and down due to bond market fluctuations, etc.

As of May 1st there are new appraisal restricitons which are a huge over reach IMO. They prohibit the lender/broker from choosing the appraiser. This can be very costly to the client in the end. Often times to get the best rate a broker will need to keep options open as to whome to submit to. Some underwrite more quickly, and others may have better rates. Some loans need to change programs based upon developing info.

There are new loan programs that allow the same rates with higher loan to values (less equity than 80% ltv or 20% equity) There are restrictions on many of these. These new loan progams may require taxes and insurance to be impounded but they do allow up to 105% loan to value for a rate and term refinance at great rates.

As far as the rate you get, it is hard to pick the bottom. There is never a way of knowing if you might be able to do better until the time has passed. The bond market is improving the last 2 days of the month so they may be moving back down but lets see.

By: Mike Dallas, TX

Mike Dallas, TX — Sat, 30 May 2009 00:53:07 +0000

To address a couple of issues I have read. You do not need a credit score of 800 and 50% LTV. I locked at 4.75 for 60 days on 5/9 with Wells on a refi of 75k. My credit score is 745 and LTV is 80%.

Also, I am not buying the fact that lenders are causing the increases by dragging their feet due to volume. I went on vacation for two weeks and sent in my papers(emails actually) for documentation on Tuesday and Wednesday, called today to see if all was well and the lender rep said it was in already in underwriting. Not to mention she has personally answered the phone EVERY time I have called!

If you are having problems you might want to change brokers/lenders.

I do hope the rates decline again however, since hopefully the extra funds folks have(165/mo in my case) would hopefully be used to juice the consumer economy.

By: LYokoyama San Carlos CA

LYokoyama San Carlos CA — Sat, 30 May 2009 00:00:06 +0000

Call it luck or 20 years of experience. Tuesday morning my client wanted to put her refi on hold. I managed to show her that an .125 to a .25 in interest rate increase could make a big difference in the origination points she has to pay. To make a long story short we managed to lock a 30 year fixed rate at 4.875%.
Hoping to get documents next week.
The Lenders are really really picky!!!! We originators have
to make sure all the "I"s are dotted and our "t"s cross otherwise they manage to add a new condition right after you've cleared
another.!!!!!!

By: Blake Sparkes, Columbus, OH

Blake Sparkes, Columbus, OH — Fri, 29 May 2009 19:16:28 +0000

I locked yesterday at 4.625% with MI Financial, on a new build that would have been tens of thousands of dollars more expensive 5 years ago. To boot, the loan is assumable. While the lender may not qualify a buyer at this rate in 10 years if I sell, it's still a nice selling tool. The bottom line is that I am happy.

By: Dan, Madison, WI

Dan, Madison, WI — Fri, 29 May 2009 19:13:24 +0000

Earlier this week, California announced a second straight month of rising prices for home sales. In my state of Wisconsin, the developer started booming.

Today's announcement that first time home buyers can use the $8000 tax credit toward their down payment, means housing prices will be going up even more.

We were fortunate to lock in a refi at 5% on a 30-year. The banker told us they expect rates to be over 6% this fall.

By: Jeremy, McLean, VA

Jeremy, McLean, VA — Fri, 29 May 2009 18:34:22 +0000

I would much rather pay a higher interest rate on a reasonably priced house than buy a house now at an inflated price because interest rates are at historic lows. Why? Even though your monthly payment is the same, when you go to sell your house the new buyer won't get that great interest rate you got and won't want to pay the inflated price you paid back in 2009 since his interest rate is >8%.

By: Bill Storm , San Diego, CA

Bill Storm , San Diego, CA — Fri, 29 May 2009 18:16:37 +0000

Rates have gone up because of a new spin on the economy that would have us believe that this current “recession” will require a recovery period no greater than the last few we've been through. That's like comparing the recovery time of a patient who just underwent a knee replacement to one who just had both legs amputated and a heart transplant. Just because we can sing “Pennies From Heaven” doesn't mean that will make them start falling. If refinancing and home buying can't lead us out of this mess, this will be a long stay in the hospital. For this to happen 4.5% mortgage rates are not a luxury; they are mandatory. There are probably thousands of loans right now in the pipeline that have just been frozen with the rate increases this week. Where do we think the recent spending was coming from? Now because the market is listening to its own hype, it's choking its own lifeline. Rates will go down because they must, even with delays created by the current spat of nonsense. Don't listen to “how good a 5.5% rate is after all.” That was only true a few years ago when nearly everyone refinanced and got one. It simply won't do the trick today.