New mortgage rules cost you money

 Regulations, Residential Mortgage  Comments Off on New mortgage rules cost you money
Nov 262014

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By G. Steven Bray

I read an interesting article the other day that claimed that all the new mortgage regulations have saved you money. Feeling richer? What a bunch of bull.

Every honest analysis I’ve read about the effects of the new regulations, and by honest I mean ones that aren’t poorly disguised advertisements like this one I read, shows the regulations have increased costs by 30 to 50 percent. Sure, as the article states, you can get a no-closing-cost mortgage now, but you could do that before the regulations went into effect. And do you really think everyone loves you so much they’re all working for free? All those costs, those higher closing costs, are getting built into your interest rate. I recently read a report that estimated the regulations have added as much as 0.5% to the interest rate of every mortgage. Over the life of a $200,000 loan, that means you’re paying an extra $20k because of the new regulations.

Now, I’m not suggesting we overlook the excesses of the last decade, but I am calling bull**** for what it is. Maybe it’s time we become more careful about the excesses of regulation.

Rate update: Holiday week could be time to lock rate

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Holiday week could be time to lock rate
Nov 242014

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By G. Steven Bray

Holiday weeks can be tricky for mortgage rate watchers. Light trading volume means that a couple big trades can move rates quickly and seemingly without reason. The movement could be in either direction, so if you’re floating your rate, watch for an opportunity to lock this week. As often as not, rates will rebound in the following week.

But if rates wanted a reason to move, this week is full of economic data. Of course, this assumes bond markets care about economic data again. Tomorrow brings an update of 3rd quarter GDP, consumer confidence, and some housing data. If anyone is still working on Wed, the personal income data could be interesting given that many analysts blame the lackluster economic recovery on negligible income growth.

But what’s really important this week is setting your DVR to record conflicting football games and formulating your Black Friday plan. In between, I hope you get some quality time with your family. We’re thankful you watched today and wish you a very happy and safe Thanksgiving holiday.

Rate update: Ground hog day visits mortgage rates

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Ground hog day visits mortgage rates
Nov 172014

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By G. Steven Bray

If you think you’ve heard this before, well, you have. Mortgage rates last week barely budged, which is okay given that we’re still close to the lowest rates of the year. And the week ahead looks like it could be another snoozer. The only scheduled event really likely to spark market interest is the mid-week release of the minutes from the last Federal Reserve meeting. Markets will look for evidence that the Fed has suppressed feelings about the strength or weakness of the economy. In particular, it will be interesting to see the Fed’s thoughts about how a strengthening dollar and global economic weakness might impact US growth.

So, could rates go any lower? It’s certainly possible, but I suggest caution if you’re betting on this outcome. Most US economic indicators are positive, which tends to push rates up. It seems that the market eye has an unusual focus on overseas issues. Should its gaze return to our shores, rates could bump up rather quickly.

Act quickly if using USDA home loan

 Loan Programs, Owner-occupied, Residential Mortgage  Comments Off on Act quickly if using USDA home loan
Nov 122014

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By G. Steven Bray

If you’re using a USDA RD loan to purchase a home this fall, Fri, Nov 21st is a very important date. At the close of business that day, USDA will stop accepting applications for the remainder of Nov. If your loan has not been approved by USDA, you will need to sign new application documents, and the effect could add a week or two to your loan processing time.

USDA has adopted new regulations for its RD program, and it doesn’t want to maintain two processing systems. Thus, it will stop taking applications after next Fri and clear out its queue. This may not be a trivial task given the backlog of applications in some areas. On Dec 1st, USDA will start accepting applications under the new regulations.

If you have a pending application, check with your lender on its status. If your lender needs any documentation from you, act on that request urgently. The new regulations aren’t likely to harm your chances for approval, but if you have an early Dec contract date, the delay in processing could bust your closing.

Rate update: Expecting little movement

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Expecting little movement
Nov 102014

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By G. Steven Bray

Last week’s jobs report showed that the economy continues to plod along, and rates – well, they got better. This counterintuitive result seems due to two factors.

First, markets bid up rates early in the week based on rumors the jobs report would wildly exceed expectations. When it didn’t, traders had to unwind their positions, which caused rates to fall.

Just as likely an explanation is simply market forces at work. Among these forces is bond traders’ focus overseas. European economies still appear to be weakening as does China. When world growth slows, the US will experience some spillover effect, and that helps keep a lid on interest rates.

The only important US economic data this week, not that the market has paid much attention to data lately, is the retail sales report on Fri. Otherwise, absent a new crisis, market forces probably will continue to dominate the direction of rates, which should translate into relatively benign rate movement.

Rate update: Leaking up

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Leaking up
Nov 032014

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By G. Steven Bray

After hitting multi-month lows last month, mortgage rates have been leaking slowly upwards. It’s hard to pinpoint exactly why. Maybe rates are following the stock markets, which are hitting record highs again. But the last time stocks rallied, rates were 1/4% higher, so that seems to bust that correlation.

Maybe it’s US economic data, which generally has been positive. However, rates hardly moved on the days when data was released.

Maybe it’s European economic data, which has been stinky. We saw better correlation here when rates were falling.

Maybe markets are uncomfortable that rates dropped so much last month and simply are leaking away some of those gains.

Whatever the cause, it’s a risky market for floating your interest rate with big events this week. The European Central Bank meets Thurs, and the jobs report is Fri. Both have moved rate dramatically in the past. Float safely, my friend.