This Week’s Highlights:
- Last call for last chance refinance
- Monthly payment vs advertised interest rates
- Brian’s epiphany: writing a winning offer
Last call for last chance refinance?
The Federal Reserve is buying up $6-billion of mortgages every day to keep mortgage rates artificially low. As the economy continues to heal, they’re not going to have to do that anymore. Once that artificial support for low mortgage rates is gone, mortgage rates are going to creep up.
I’m not saying the door is closing, but for all the procrastinators or gamblers out there, I would rather, we get that refinance opportunity locked in now than hope for a lower rate because if the Mortgage Bankers Association or Fannie Mae is right, the door is closing on historic low rates. It’s just a matter of how fast is it closing?
Don’t get caught with your fingers in the door.
Monthly payment vs advertised interest rates
We’ve had this multiple time, past customer who we help with a cash out refinance in the fall at a rate of 3.375% with very little down—I think it was a no loan cost deal—and our rationale at the time was, after six months the cash out refinance loan pricing stain goes away, which is stupid, right? It’s like, Oh really? This was a risky loan, but now six months later, you refinance it again. That’s less risky. It’s just dumb folks, but it’s the way it is.
Anyway, we will with the no cost option in the fall, because Hey, if rates are the same, we’re going to be able to lower your rate! Possibly, down to 2.99%. We sent out some quotes and the borrowers are decide that they only want to do this if we can get the rate down to 2.5%. Well, that bus has left the station. In fact, that bus was never at the station.
Despite what you might see on your Facebook feed, or a crazy email from lending tree, 2.5% APR on a 30-year fixed loan with no points ain’t happening. So we need to recalibrate. Now. I said, “you know what, I get it? You would like a home run. But , uh, we’re maybe gonna get you a single or a double here.” We’re going to be able to shave some years off your loan and help you accumulate equity faster.
I wanted to meet her where she was and she had gotten emails about two and a half percent rates. I’m like, well, here is a two and a half percent option, it’s called a 15-year. Sometimes it just takes that clarification because that was helpful to her, She saw that that the payment was probably six or $700 more per month than her 30-year fixed rate.
You can always pay it faster, but you can’t pay slower. You can always make 30-year into a 15-year on your own.
Lock in your rock-solid pre-approval before rates continue to rise—click here to get started. A major client win!
Brian’s epiphany: writing a winning offer
I was talking with one of the top real estate agents in Waukesha County about market conditions and what it’s taking to write a winning offer. We’re working with one of her buyers and they want to write an offer on a potential home. And she was telling me that even up into the $800,000 price range, it is a hyper competitive market.
What she’s seeing is that the winning offers almost never have an appraisal contingency.
So, in this example, the buyer who was working with this particular agent, they were actually looking at a $400,000 home with 10% down, which would require them to bring $45,500 to the closing. We can still approve that loan and have them bring $44,000 to closing. The difference is that their monthly mortgage payment, are you ready, is going to be $34 higher.
So absolutely no difference in the cash needed to close. I’m keeping the loan amount the same. It’s simply going to get priced in the mortgage world as a 5% down loan now, instead of 10%, because mortgage lenders based the down payment and the risk on the lower of the two purchase prices or the appraised value.
So folks, if you want to work with a mortgage lender that really helps you understand all your options and for goodness sake, real estate agents, let us help educate your buyers as to their real options. And then put together that offer and the rock solid guaranteed pre-approval to go with it so that you win .
There’s more than one way to win an offer. Let us help.
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