Category: ‘Refinance’

Mortgage Rate Update

June 3, 2013 Posted by Andre Hemmersbach

I thought it would be timely to send you a financial chart that quickly shows you how much rates have moved over the last 4 weeks. The move has been pretty dramatic and started with some good job numbers in the begging of May.  The real catalyst however has been Fed Chairman Ben Bernanke’s comments regarding the Federal Reserve’s continued commitment to purchase Mortgage Backed Securities (MBS) in the wake of the stronger economic outlook. Low Mortgage Rates have been artificially supported by the Federal Reserve through heavy purchasing programs which have now come into question. The chart below shows bond prices, which are inverse of rates (red days means higher rates, green days means lower rates).

Please call me if you need further explanation of the current rate environment or need an update on how this affects your specific qualifications or payment amounts. 

MBS Chart

MBS Chart

Ferderal Reserve Paves Way For Lower Rates

January 26, 2012 Posted by Andre Hemmersbach

Wednesday’s Federal Reserve statement made mortgage rates drop right back to the record lows from several weeks ago. Since we hit that low, traders have been looking for some sort of clear direction on where the market would move next. The lack of rate positive news had made rates steadily creep higher over the last 3 weeks. Yesterday the Fed released a statement confirming they would continue to buy bonds and keep rates low until 2014. This statement coupled with low inflation reports are starting to make Quantatative Easing #3  ( QE3 ) rumors perculate through the bond market.

The market reacted positively with mortgage rates moving all the way back down to previous records. Strange as it may seem some investors were caught off guard with the big drop in rates, as the Fed’s actions are actually inflationary. Gold prices closed up over $35 dollars an ounce yesterday confirming that some investors believe inflation will be an issue. The reason the move to lower rates  is surprising is that  inflation is the mortal enemy of low rates and usually short-term moves by the fed like the one mentioned above would be trumped by longer term inflation fears.  

What does this mean to you? Don’t fight it!  Wall Street typically trades on rumors and sells on news. So the rumor of the Fed continuing to make money easily available is good for rates today but as soon as it is confirmed look for rates to spike.

Take advantage of today’s historically great affordability and low rates. If you have been thinking of buying a home, your new mortgage payment could be lower than the going rents in your market. If you already own a home with a good mortgage or have paid on your current mortgage for a long time, please let me help you look into a shorter term mortgage. It could save you thousands of dollars over the life of you loan.

Please let me be of assistance in helping you answer questions about financing your home.

Temporary Loan Limits Extended

October 11, 2010 Posted by Andre Hemmersbach

President Obama signed yet another bill that will make a push to help stabilize our housing market. The bill extends the temporary loan limits until the end of 2010. The regular loan limits vary from area to area and are at $417,000 for single family residences in Los Angeles and Orange Counties. Loans greater than the conforming loan limits “Jumbos” or “Non Conforming Loans” generally carry a higher interest rate and therefore make those types of loans less affordable.

The extension has received praise from N.A.R. (National Association of Realtors) and C.A.R. (California Association of Realtors) as the higher conforming ca mortgage loan limits combined with the tax credit have helped stabilize the real estate markets.

The maximum temporary loan limits are as follows:
■1 Unit – $729,750
■2 Units – $934,200
■3 Units – $1,129,250
■4 Units – $1,403,400

Refinance Strategies That Pay

September 10, 2010 Posted by Andre Hemmersbach

Just because rates are lower does not mean that you will save money doing a refinance. Careful consideration should be given to a number of factors. If your loan officer is not asking the following questions while discussing a refinance, find a loan officer who you know and trust to help you make a solid financial decision: How long you have had your current loan? How long you are planning to stay in the property? Does it make sense to pay points or do a “No closing cost loan”?
Working with an experienced loan officer that can figure out your total cost over your financial time horizon is extremely important. Also understanding your loan balance at the end of that time horizon is a consideration that must be examined if you want to make a wise decision.
The following are a couple of refinance strategies we are advising our client to consider depending on their personal objectives.
Cash-In Refinance: In last year’s fourth quarter nearly one third of all refinances had principle reductions.
This is where a borrower actually pays “cash-in” instead of the standard “cash-out” transaction to lower the balance of the current loan. The idea is that you may get a better return for your money in your mortgage savings than you would in an investment account. Two scenarios where this could save money is in the removal of Private Mortgage Insurance (PMI) and lowering your loan amount from a “Non-Conforming Loan” (greater than $729,750) or a “Jumbo Loan” (greater than $417,000).
Term Reduction: Rates are so low that some borrowers can actually keep their payments very close to the same level they now have but go to a 15 year term. This not only saves in over all interest expense over the life of the loan but usually nets the client another half of a percent off the current 30 year rate.
Refinance and invest the savings: As a loan officer that uses a consultative approach to my business, I always explain options. My clients are amazed when I show them the long term benefits of refinancing to a lower rate and then continuing to pay the old payment. It’s absolutely astonishing what happens when you super amortize (prepay) your loan.
I would be honored to help you review your mortgage and create a personalized plan for your financial situation.