This Week’s Highlights:
- Good and bad news for mortgage rates and the economy
- Potential headaches after your offer is accepted
- The pros and cons of gray market sales
April’s U.S. Economy Health
We learned that in the month of April, the U S economy created 266,000 new jobs, almost 75% less than projected for the month of April. Likewise, the unemployment rate ticked up a little bit to 6.1, but as we said last week, comparing economical data year over year isn’t necessarily the most accurate due to the lockdown. This means that there are still 4.1 million people not working compared to pre COVID February of 2020.
This data is important because not only do people need jobs to buy homes, but this also has an influence on interest rates. We have to remember that right now interest rates are artificially low because the Federal Reserve is actively keeping mortgage rates lower than they normally would be by purchasing anywhere from $5 to $6 billion a day, every day of bundled up mortgages. And so when you have this aggressive purchasing attitude on something that bears an interest rate, it keeps the interest rate down overall.
The big question is when will the economy be healed up enough for the Federal Reserve to remove that artificial support? When that support is removed, you can be sure to see mortgage rates will go up. According to Fannie Freddie and the Mortgage Bankers Association, we should start to see that support being removed some time before the end of this year.
Currently, the window of opportunity to refinance or buy is excellent. For example, with a $250,000, 30 year fixed rate with 20% equity, Accunet could provide a 2.99% rate as of the close of business on Friday, not only with no points, but we could pick up all of your closing costs too (typically $1,234). That said, Fannie and Freddie require us to charge a different rate if you’re refinancing because they don’t pay as much for those loans. On a regular rate and term refinance (where you’re not pulling any cash out, just refinancing the balance) you would have to pay the closing costs, even with the same terms.
A third option would be taking cash out at $250,000. If you still wanted that trophy rate, you’d have to pay the regular closing costs plus 1⅛ points. This would likely necessitate a higher rate, like 3.25%. All right. At the end of the day, rates are still great and the window of opportunity to refinance is open.
Potential headaches after your offer is accepted
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