SCARY ”MOVIE”: With the House passing the “sweeping Financial Reform” , and assuming it passes in the Senate (will the Rahm-anator be paying late night visits to Senators?) what is in store for the nation’s Lenders, and of course what is in store for YOU Mr. and Mrs. Borrower?  This legislation will give birth to to slew of Government regulators designed to protect the Consumers from themselves.  As of this writing, already in place,  there are a SLEW of Federal laws and statutes to protect the Consumer.   There are a SLEW of Federal Laws to protect against predatory Lending and shady Brokers.  There are a SLEW of Federally mandated disclosures that, if thousands of home buyers had bothered to read,  would have explained the pratfalls of the Pay Option ARM.   These are all good things..really. But enough is enough.  The Govt “boot” will now be on the throat (to borrow Obama’s term)  of Lenders and that my friend is a scary thought for the Free Market.  You know what is even MORE scary?  This quote from one of the House co-authors of the bill, Rep. Chris Dodd:  “No one will actually know how this works until it is in place…”    Be afraid. Be very afraid.

And more cheery news: Results from the HomeGain.com annual survey of Realtors nationwide has 37% of responding CA Realtors thinking home prices will increase in the near future.  That glass is half full!

*POV = Plain, Old Vanilla Home Loan: 30yr fixed, fully amortized, single family home, at least 20% equity, slightly lower rates and costs for those that use a Designated Driver this weekend.

All the News that pit to frint: Sorry! I am writing this blog while carrying out important hydration research for the historical society researching India Pale Ale.   On Monday the 28th of June, HomeGain.com will  release its National and Regional homeprice survey. With thousands of Realtor members all over the country, the input of national trends and local trends will be reflected as homeowners and Realtors opine on the state of the Administration and the results on home prices.

*POV = Plain, Old, Vanilla Home Loan: 30yr fixed, single family home, owner occupied, at least 20% equity, rate and term or purchase loans only, slightly higher fees and costs to DEAN WORMER grrrrrrrrrr!

California Mortgage Rates

SO…the Market it getting better, the planets have aligned, a mysterious bag of TARP money has landed in your assigned parking place and you are ready to take the plunge for home shopping.  GOOD!  I love it when folks buy houses.  But let’s do a little homework before you plunge into every website and open house for miles.  Sellers, by and large, are going to want to see strong offers and more importantly strong borrowers.  Your Realtor should be guiding you through this, however this is when you should be working with a Lending Professional.  There is plenty of time to bond with your Realtor later as the process unfolds.  “Get a pre-approval?”  No.  Well ok sort of. Syntax is at play here.   There is Pre-Approved and Pre-QUALIFIED.  Big difference.  I have seen “Pre-Approval” letters from Lenders that are just short of blank paper with cut up letters from magazines pasted on.  In other words they mean NOTHING.   Ask your Mortgage Professional to run the Fannie Mae Desktop Underwriter program for you.    This will require you furnishing somewhat detailed income and expense and asset information, but hey, the days of  Liar Loans are over, so you will be furnishing all that anyway.   The software program will then issue a standardized form, with a nice big “headline” at the top, which will hopefully say “Approve/Eligible”.   This means that the numbers have been crunched and barring any financial skeletons in the closet, you have a damn good chance of getting your Loan approved.

*POV = Plain, Old, Vanilla Home Loan- 30yr fixed, fully amortized, at least 20% equity, single family home, owner occupied, purchase or rate and term refi only, slightly lower rates and fees for all the Giants fans who BOO’d Tommy Lasorda at the game the other night.

In THIS corner…at about three years old, from all over the USA, RENT!  And in this corner, surviving the Mortgage Meltdown of about the same age is BUY! Let’s get readdddddy to rrrrumble!  So the debate goes on.  Real Estate Megasite Trulia has just fanned the flames with the tried and true Rent vs. Buy comparison, but also has a nifty little breakdown of what Cities come out at which end of the debate.   To simplify, they have come up with an index or formula to supposedly make this easier to figure out: (from the Wall Street Journal on this report)

The cross-over point is about 15 times annual rent, the company believes. In other words, as a rough rule of thumb, homes are probably fairly valued in a city when they cost about 15 times a year’s rent. So, for example, if you’re paying $10,000 a year to rent a place, think twice about buying a home that costs more than $150,000

Well that’s all well and good except…you have to factor in the Metro Area as well.  Ok so yeah, $150K will buy me a nice single family home in Tulsa, but in the large Metro Areas like San Francisco, all this will get you (if you are lucky) is a small Condo.  You MUST remember to factor in the Homeowner’s Association Fees which normally do not show up on all these spiffy “rent vs own” calculators.   This additional expense may be the “deal breaker” for Renters looking to buy as it will push their debt-to-income ratio over the top.

Bottom Line? BUY dammit!  I don’t make any money off Renters!  Seriously though..look at the big picture.  Rates are low and can probably only go up from here as we slide our way into turning into Greece.  Prices are low. Inventory is high.  It is still a Buyer’s Market.  Need I say more?

*POV = Plain, Old, Vanilla Home Loan: 30yr fixed rate, fully amortized, Single Family Home, Owner-Occupied, at least 20% equity, slightly lower rates and fees for the Giants’ Matt Cain because he ROCKS.

Today’s POV* came out and saw more than one Major Wholesale Lender repricing for the better.  Conforming rates at 4.875% with High Balance Conforming at 5.0%. SUPER Jumbos at 5.75%.  As always questions, scenarios or Sasquatch sightings can be sent to me at lololoans@yahoo.com

Now that I am done rendering unto Caesar what is Ceaser’s …ahem…cough…let’s clarify rate quotes.  Besides working for a Direct Lender, I also take an average of about 10 of my favorite “go to” Wholesale Lenders to get a good across the board average. Rates are always quoted at Par, and are absolutely guaranteed to be better than my buddy Miles with the green shirt pitching quick loans all over the media.

Lock that Boogie! Ok, the song was “Rock that Boogie” for all you Commander Cody fans but I digress.. Notice how I mention that most Lenders may ”reprice” during the day? They are hot on the heels of the day’s Financial Markets impact (notably the Bond Market) and can change their rates as many a 3-4 times a day. Keep this in mind when working with your Loan Professional as a quote an hour old can be obsolete. Remember to get that Rate Lock promise a) IN WRITING and b) NEVER pay up front to have a rate locked.   Get a 45 Day lock.  Getting loans through the minefield of requirements, disclosures and DNA testing now required it is pretty close to impossible to get a loan Funded 30 days from the Application, especially with the 3 day right of rescission on ReFis.

*POV = Plain, Old Vanilla Mortgage product: 30yr fixed, fully amortized, Single Family Residence, Owner-Occupied, at least 20% equity, higher rates and costs for that CLUELESS geezer driving around the Trader Joe’s parking lot…YOU know who you are!

So…was it good for you?  Rates have been steady and some will attribute that to the Federal Reserve Bank’s extraordinary move of purchasing Mortgage Backed Securities therefore adding stability to the Bond Market; however, this came to an end on the 31st of March. Already the Fed exit has had an impact on Mortgage Rates.  Uncertainty in the Market is probably what has had rates creeping up this last week so we shall all be waiting with baited breath as next week’s events and news items play out.

Heloc vs Cash out Refi:  No, this is not a Japanese monster movie from the 50′s. If you find yourself needing cash for reasonable items such as a new roof, College for the kiddies, new Kitchen etc but NOT for “mad money” to buy new shiny objects, then you will have to make the decision to go with a HELOC (Home Equity Line of Credit) OR to refinance your existing 1st mortgage with cash out to you at Close of Escrow. Remember, that as the Economy recovers, Interest rates stand to go UP and since the HELOC is based on the Prime Rate, not the Mortgage Bond rates, you stand to see that 3% rate go through the literal roof. The Cash out option allows you to get the cash, at today’s pretty good rates and fix the rate for 30yrs. Something to think about…

*POV = Plain, Old, Vanilla Home Loan: 30yr fixed, fully amortized, single family residence, owner-occupied, at least 20% equity. No witty tag-lines today, just a  Happy Easter, Passover and END of Spring Training to all!

Conforming jumped up to 5.125%.  SUPER JUMBOS inched back up to 5.75%.  As always comments, jokes, or Sasquatch sightings are welcome at lololoans@yahoo.com

Prepare YE!  Yes, a cost increase of Biblical proportions is on the way. Raise not, lest ye be raised. I am of course rambling on about the Upfront Mortgage Insurance Premium on FHA Loans.  They are going up from 1.75% of the loan amount to 2.25% of the loan amount for any FHA Case number assigned after the 5th of April so if you are leaning towards this loan, and don’t get me wrong it is still a great loan, best get thee to a Loan Officer!

It’s worth WHAT???   Which is pretty much the first response I get when advising a borrower on what value the Appraisal of their home came in at. (I just ended a sentance with a preposition..sorry MOM!)  Besides one’s FICO score, the Loan-to-Value or LTV is THE key driver in what rate and what cost you qualify for on your home loan.  Louis Cammarosano  (voted one of the Real Estate Industry’s top leaders by Inman.com in 2009) who runs www.HomeGain.comhas forwarded me the results of an exhaustive survey that Homegain submitted to their thousands of Member Realtors throughout the country for Q1 2010. Perhaps one can see the beginnings of a National trend starting from these regions? The survey is here:

 http://blog.homegain.com/homegain/1st-quarter-2010-home-prices-survey-regional/

*POV = Plain, Old Vanilla Home Mortgage: 30yr fixed, Single Family Home, Owner Occupied, at least 20% equity, Higher Rates and costs if caught returning home videos to Blockbuster.

Mar. 18, 2010 (FreeRateUpdate.com) -  Today’s rates for our POV* came out and saw a few major Wholesale Lenders reprice for the worse. Conforming Rates at 4.75% and Jumbo Conforming at 4.875%. SUPER Jumbos at 5.75% showing that rates are staying rock steady over the past couple of weeks. WHY is anybody’s guess. We shall see what happens when your Gov’t. stops its cash infusion into the secondary Market.

Build it, and they will come…

But it won’t be that easy. Here in the San Francisco Bay Area, the absolutely GREENEST place south of the Arctic Circle, home of of a Gov’t.  job title Green Czar you might want to consider something should you decide to go alternative housing construction. These would be houses a little…er….different…than your standard Ward and June Cleaver Rancher.  Houses made of Straw. Houses made of Mud. Houses made of recycled..stuff. Teepees. Even Houseboats!  In case you missed the memo, Lenders have gotten down right picky since the Great Mortgage Meltdown of a couple of years ago.  Getting a Construction Loan to build the Hut of your Dreams may be tempting,  but try Refinancing it to a better rate later on. Or let’s say you built it, ya lived in it, now you want to cash out and buy that Sailboat so you can crouch down at 10am and say “yep, the Sun is over the yardarm, Happy Hour time!”.  You may not be able to SELL it as getting a traditional Mortgage is going to be difficult. The key issue here is the Appraisal. Actually TWO key issues: 1) What are the comps? Not a lot of houses made of recycled coke cans in Danville? Hmmm…probably not. So this poses a problem for the Appraiser and trust me, when applying for a Loan, the Appraiser’s problem is YOUR problem. 2) The old HVCC.  Yes, this nasty little bit of Gov’t. regulation pretty much eliminates LOCAL Appraisers and hence any Appraisers that may be more prepared to handle the Appraisal of alternate forms of Construction.   The Journal had an interesting article on it – READ HERE :  so BEWARE of those Green Dreams!

*POV = Plain, Old, Vanilla Mortgage product: 30yr fixed, fully amortized, single family residence, owner-occupied, at least 20% equity, proof of purchase for Girl Scout Cookies 3 years in a row.

March 12, 2010 (FreeRateUpdate.com) - Rates for our POV* came out today and stayed without any major Wholesale Lenders repricing. Conforming rates (up to $417K) are  at 4.75% and Conforming Jumbos (up to $729,750) are holding at 4.875%. Super Jumbos (up to $2 million) are at 5.75% . Questions and comments are always welcome at lololoans@yahoo.com

My FICO score is WHAT????: Besides the Loan to Value ratio on the loan you are shopping, THE biggest qualifier is of course your Credit Score. The swing between 700 and 720 can mean thousands of dollars difference in interest paid over the life of the loan. It behooves all of us to keep a few simple things in mind. Do I WANT it or do I NEED it ? is of course question one when whipping out the old plastic… here is a good article from the Wall Street Journal for more tips. 

What is the perfect loan?  Any one my clients have of course! Ok, kidding aside there is of course no one flat answer to that one. If you are stretched or might be stretched an Interest Only is always a good bet. By paying the fully amortized payment each month, you can build equity AND you have the option of paying the Interest Only payment during a month or two when the old piggy bank is looking thin. “Empty Nester”? Kids gone (or will be shortly) and thinking of downsizing that big ol ramblin’ rancher for something smaller in the near future? A 5 year fixed is a great option as the rates are lower and you’ll be out of the loan before it switches to an ARM product.  Looking to build that equity back up wiki wiki now that home values just might be leveling off? A 15 year fixed builds your equity twice as fast as a POV* 30yr fixed. There is also a 20yr version as well. Don’t forget, when looking around, ask questions!

*POV = Plain, old vanilla Loan product: 30yr fixed, fully amortized, minimum of 20% equity, Single Family Residence, Owner Occupied, Purchase or Rate and Term ReFi only, brownie points for good hygiene and seeing a Dentist twice a year. 

For more info:  Email me at lololoans@yahoo.com

(FreeRateUpdate.com) – Rates for our lovable POV* Loan came out and 3 of my major Wholesale Lenders repriced for the better today. Which just reinforces the rest of this nugget o’ info.  If  you are shopping a loan JUMP on it now!  Conforming Rates at 4.75% with JUMBO Conforming at 4.875%.   True JUMBOS at 5.75%.   As always jokes, recipes and oh yeah, loan scenarios are welcome at lololoans@yahoo.com

Ok so which way is UP?I figure pretty gush darn soon there Cowboys and Cowgirrrlz. Reason being is twofold:   1)Coming soon to a meltdown near you,   YOUR U.S. Gov’t. will stop buying Mortgage Backed Securities.  Apparently the Government is out of money….but I digress.   This was all part of Economic Recovery Program number 38 and so far as been keeping interest rates low.  If I had to hazard a guess, I would bet that a) this program will stop in the next couple of months as scheduled and b) will result in Sputnik type rate increases and …2) Sheriff! Sheriff!! Come quick! Fannie Mae is bleeeedin’ to death!  The latest  earnings statement (and I use the term loosely) shows Fannie Mae with a 2009 Q4  net loss of 16.3 BILLION**.  And who, pray tell, is throwing the water wings keeping Fannie (and Freddie) afloat? Well it is you and I  Mr. and Mrs.  American Taxpayer.   Lacking the Economics wizardry of Ben Stein,   I cannot see how this could possibly go on at this rate.   If Fannie Flops, then the ripple effect to the Loan Market will make a Tsunami look like an ice cube dropped in a glass.

SURE this is bleak.  But better hearing it from me than in a dirty filthy back alley eh?

*POV = Plain, Old Vanilla Home Loan:  Par pricing, 30yr fixed rate fully amortized, Single Family Home, 20% equity minimum, slightly lower rates and fees for our newest San Francisco Broadcasting  Hall of Fame treasure Jon Miller!

** I can’t make this stuff up!

http://www.bloomberg.com/apps/news?pid=20601087&sid=alet_UTqF04M