Jim’s Soap Box
Arizona Real Estate Newsletter – November 08
GOOD NEWS – A handful of my prayers were answered today as rates plummeted into the mid 5’s. It is the largest single day reduction in rates I have seen in the last 20 years. The refinance mini-boom I was predicting in September may have arrived this morning with the Feds public commitment to infuse another $800 billion into residential lending organizations.
The goal of my newsletter is to provide educational material mixed with Jim’s unsolicited yet fascinating opinion on the Arizona housing market and real estate ownership in general. If you would like me to address a specific topic in the future, please email it to me and I will respond in the following newsletter.
The Federal Reserve
Nov. 25 (Bloomberg) – this was the lead article from Bloomberg.com this morning
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.
The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a program of $200 billion to support consumer and small-business loans, the Fed said in statements today in Washington.
With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.
The Fed will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae.
“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Fed said.
Analysis
The news released this morning is absolutely killing 10 & 30 year bonds. Being that Bonds and 30 year Mortgage notes traditionally have a congruent relationship, mortgage guys (like me) love it when Bonds are in the tank! As of 9:30am this morning (AZ time) the yield on the 10 year Treasury bond is the lowest I have ever seen it (possibly ever) at 3.13%. And the 30 year Treasury bond is also hitting the tailpipe at 3.64%. This is great news for homeowners- Mortgage rates are down!!
Call to Action
The last 3 times this calendar year when rates dipped into the mid to high 5’s it was short lived. I hope that today’s rates have some sustainability but I doubt it. If recent history repeats itself, we have about 2 or 3 days before it jumps back up!
Here are my rates on Nov 25th. These rates assume that you are a perfect borrower*. If you are not that perfect borrower – rates are still very good.
30 year fixed 5.625% (no points)
30 year fixed 5.250% (paying one point)
I know it is 2 days before Thanksgiving, and you’re thinking about oyster dressing, the In-laws, black Friday, & the spread of the Cardinals Eagles game – but you owe it to yourself to call or email me if this can help you.
If these rates cannot help you because you currently have a lower rate – then you really have something to be thankful for this year.
HAPPY THANKSGIVING!!
*** If you know someone who would benefit from my educational newsletters, please forward their name and email address to me and I will add them to our educational circle.
All Best!!
Jim
JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham
Showing posts with label Rates. Show all posts
Showing posts with label Rates. Show all posts
Tuesday, November 25, 2008
Monday, October 27, 2008
Jim's Soap Box (October 08)
Jim’s Soap Box
Arizona Real Estate Newsletter – October 08
THE GOOD NEWS – New home sales rose 2.7% Nationwide in September – according to the Associated Press. This came as a surprise to many who thought it was going to drop again after an awful August where new home sales dropped 12%. This bounce-back of volume did not really shock me but the reason I mention this to you is that the West was the driving force in September sales. Here is the breakdown of that National average by region.
West +22.7%
South +0.7%
Midwest - 5.7%
East -21.4%
I find this exciting because the fastest cure for the Southwest to get out of this declining market funk is to reduce available inventory. And unsold new homes make up a large percentage of that inventory here in Arizona.
The goal of my newsletter is to provide educational material mixed with Jim’s unsolicited yet fascinating opinion on the Arizona housing market and real estate ownership in general. If you would like me to address a specific topic in the future, please email it to me and I will respond in the following newsletter.
The Prime Rate
The Feds have recently lowered the Prime rate by .5%, and there is widespread speculation that they will lower it again on the 29th of October. This upcoming reduction should be another .5% bringing the prime rate to a net 4%. This will tie the lowest prime has ever been (with 2003). I will admit that this will not solve all the credit problems, but it does reduce the interest payments for those people with current Home Equity balances they cannot refinance.
Other economic experts say that a .5% cut will not have any real effect on the market. But, if a larger cut happens (say .75% to 1.00%) lowing the prime rate into the 3s, it will have a more significant impact on the credit crunch. I guess they are giving a lot of weight to the “New Historic Low” headlines newspapers would give it.
What does that mean to 30 year rates??
The overall goal of this maneuver is to reduce interest rates on the prime side and on the 30 year fixed side (bond market). The last time they predicted a large cut in prime (Feb 08), the 30 year rates came down briefly in anticipation of the prime cut before the event itself. Once they cut Prime, the 30 year rates went up almost a half a point in one day. Will that happen again this time… who knows? My advice to people who are holding out on a transaction to see rates drop (on 10/30) is “don’t get burned.” If you have the rate to make something happen today you should lock in and pull the trigger.
The Election & Who is to Blame
With all of the current campaigning for the presidency, there has been some outstanding finger-pointing by both parties accusing the other for the housing debacle. I have seen everything from White Paper articles, Blogs, video magazines, news reports, and political internet ads accusing all kinds of individuals for our current Economic problems. I have seen “hard evidence” that the following people are solely to blame for this credit crunch issue; Jimmy Carter, Bill Clinton, George W Bush, Indy Mac, Oprah, Oil Companies, every Democrat that ran for public office since 1977, the French, the Director of Freddie Mac, Freddie Mercury (Freddie Mac’s nephew), and even yours truly – Jim the subprime Loan Shark. This may seem a bit sarcastic, because it is.
In my opinion, as someone who has been in the trenches of the housing market for the last 7 years, there are probably well over 100,000 people who should shoulder the blame for this problem. The common denominator for these 100,000 people was simply greed. There were not enough level heads when the housing market was going really good to restrain the lenders & Wall Street.
I am not absolving Realtors, Appraisers, Loan Officers, Underwriters, Lenders, Borrowers, and the like for their part. However, what about the CFO of the A.I.G. Insurance company? What was his motivation to not diversify his portfolio into other vehicles except for Moderate Risk Mortgage Backed Securities? Was it Greed? I would bet on it.
If you wish to wrap your brain around the US financial numbers of the last 10 years I have an unbiased report with lots of good charts and graphs. It is a report from Casey Research called “The Crisis in Pictures”. You do not have to be an MIT graduate to read it (but an MIT graduate did give it to me – thanks Laura). Please respond to this email, requesting a copy of the report, and I will send it as a PDF. I highly suggest reading it if you have the 10 minutes to spare.
*** If you know someone who would benefit from my educational newsletters, please forward their name and email address to me and I will add them to our educational circle.
All Best!!
Jim
JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham
Arizona Real Estate Newsletter – October 08
THE GOOD NEWS – New home sales rose 2.7% Nationwide in September – according to the Associated Press. This came as a surprise to many who thought it was going to drop again after an awful August where new home sales dropped 12%. This bounce-back of volume did not really shock me but the reason I mention this to you is that the West was the driving force in September sales. Here is the breakdown of that National average by region.
West +22.7%
South +0.7%
Midwest - 5.7%
East -21.4%
I find this exciting because the fastest cure for the Southwest to get out of this declining market funk is to reduce available inventory. And unsold new homes make up a large percentage of that inventory here in Arizona.
The goal of my newsletter is to provide educational material mixed with Jim’s unsolicited yet fascinating opinion on the Arizona housing market and real estate ownership in general. If you would like me to address a specific topic in the future, please email it to me and I will respond in the following newsletter.
The Prime Rate
The Feds have recently lowered the Prime rate by .5%, and there is widespread speculation that they will lower it again on the 29th of October. This upcoming reduction should be another .5% bringing the prime rate to a net 4%. This will tie the lowest prime has ever been (with 2003). I will admit that this will not solve all the credit problems, but it does reduce the interest payments for those people with current Home Equity balances they cannot refinance.
Other economic experts say that a .5% cut will not have any real effect on the market. But, if a larger cut happens (say .75% to 1.00%) lowing the prime rate into the 3s, it will have a more significant impact on the credit crunch. I guess they are giving a lot of weight to the “New Historic Low” headlines newspapers would give it.
What does that mean to 30 year rates??
The overall goal of this maneuver is to reduce interest rates on the prime side and on the 30 year fixed side (bond market). The last time they predicted a large cut in prime (Feb 08), the 30 year rates came down briefly in anticipation of the prime cut before the event itself. Once they cut Prime, the 30 year rates went up almost a half a point in one day. Will that happen again this time… who knows? My advice to people who are holding out on a transaction to see rates drop (on 10/30) is “don’t get burned.” If you have the rate to make something happen today you should lock in and pull the trigger.
The Election & Who is to Blame
With all of the current campaigning for the presidency, there has been some outstanding finger-pointing by both parties accusing the other for the housing debacle. I have seen everything from White Paper articles, Blogs, video magazines, news reports, and political internet ads accusing all kinds of individuals for our current Economic problems. I have seen “hard evidence” that the following people are solely to blame for this credit crunch issue; Jimmy Carter, Bill Clinton, George W Bush, Indy Mac, Oprah, Oil Companies, every Democrat that ran for public office since 1977, the French, the Director of Freddie Mac, Freddie Mercury (Freddie Mac’s nephew), and even yours truly – Jim the subprime Loan Shark. This may seem a bit sarcastic, because it is.
In my opinion, as someone who has been in the trenches of the housing market for the last 7 years, there are probably well over 100,000 people who should shoulder the blame for this problem. The common denominator for these 100,000 people was simply greed. There were not enough level heads when the housing market was going really good to restrain the lenders & Wall Street.
I am not absolving Realtors, Appraisers, Loan Officers, Underwriters, Lenders, Borrowers, and the like for their part. However, what about the CFO of the A.I.G. Insurance company? What was his motivation to not diversify his portfolio into other vehicles except for Moderate Risk Mortgage Backed Securities? Was it Greed? I would bet on it.
If you wish to wrap your brain around the US financial numbers of the last 10 years I have an unbiased report with lots of good charts and graphs. It is a report from Casey Research called “The Crisis in Pictures”. You do not have to be an MIT graduate to read it (but an MIT graduate did give it to me – thanks Laura). Please respond to this email, requesting a copy of the report, and I will send it as a PDF. I highly suggest reading it if you have the 10 minutes to spare.
*** If you know someone who would benefit from my educational newsletters, please forward their name and email address to me and I will add them to our educational circle.
All Best!!
Jim
JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham
Tuesday, January 22, 2008
What did todays rate cut mean??
Today’s prime rate cut of .75% means that mortgage rates are going to continue to drop even lower,.. Right? Not Necessarily!!!
As much as I hope that rates continue to drop for homeowners, this rate cut does not mean that the 30 year rates will go down immediately. Rates have actually dropped significantly over the last 3 weeks on the assumption that the Feds were going to drop the Prime rate at least .50% (and some speculated that it might be as high as 1%). Had the Feds only dropped the rate .25% today, rates would actually have gone up today due to the over speculation from the previous weeks.
Please note that 30-year fixed rates correlate directly to long term bond yields, not the Prime rate. Thus, the outlook for the future of our economy is the most important factor in what 30 year rates do today,.. And unfortunately that is very subjective.
SO WHAT DOES THAT MEAN TO YOU??
The good news is that rates are as good as they have ever been in the last 6 years. If you need to refinance out of an ARM do it now. In fact, my advice for the last 6 years has been pretty consistent, regardless of the market. IF IT MAKES SENSE TO REFINANCE OR PURCHASE TODAY – DO IT. These markets are very difficult to predict, and loan programs are changing (for the worse) every day. I would rather you Ieave .125% on the table by refinancing now, than losing .25% by waiting too long, or worse… losing your ability to refinance.
Arm yourself with knowledge!
Jim
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
As much as I hope that rates continue to drop for homeowners, this rate cut does not mean that the 30 year rates will go down immediately. Rates have actually dropped significantly over the last 3 weeks on the assumption that the Feds were going to drop the Prime rate at least .50% (and some speculated that it might be as high as 1%). Had the Feds only dropped the rate .25% today, rates would actually have gone up today due to the over speculation from the previous weeks.
Please note that 30-year fixed rates correlate directly to long term bond yields, not the Prime rate. Thus, the outlook for the future of our economy is the most important factor in what 30 year rates do today,.. And unfortunately that is very subjective.
SO WHAT DOES THAT MEAN TO YOU??
The good news is that rates are as good as they have ever been in the last 6 years. If you need to refinance out of an ARM do it now. In fact, my advice for the last 6 years has been pretty consistent, regardless of the market. IF IT MAKES SENSE TO REFINANCE OR PURCHASE TODAY – DO IT. These markets are very difficult to predict, and loan programs are changing (for the worse) every day. I would rather you Ieave .125% on the table by refinancing now, than losing .25% by waiting too long, or worse… losing your ability to refinance.
Arm yourself with knowledge!
Jim
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
The Next Refinance Boom is Here
THE GOOD NEWS ABOUT RATES!!
Despite all of the recent well reported real estate related woes, I have great news for everybody. RATES ARE DOWN! And truth be told, rates are actually way down. Rates are currently better than anything we have seen in the last 3 years, and by the time you read this, they could be at an all time low for the last 10+ years!
The reason they are so good today is really difficult to pinpoint. There are really dozens of reasons, but my market advisors are saying that these low rates are influenced from the speculation that the Fed will continue to lower prime (which is a good guess).
Here are my rates on Jan 15th. These rates assume that you are a perfect borrower*. If you are not that perfect borrower – rates are still very good.
30 year fixed 5.625% (no points)
15 year fixed 5.000% (no points)
5 year ARM 5.375% (interest only) (no points)
5 year ARM 4.875% (interest only) – (paying one point)
Please give me a call (or email) to explore if this is a good time to refinance. Aside from the many that will refinance during this rate spike, this is a fantastic time to purchase investment property.
All Best!!
Jim
*Perfect borrower is generally someone with a 700+ credit score and can document their income (tax returns/paystubs) and reserves (bank statement/401K). Also, the perfect borrower will have a 20%+ equity position in their home.
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham
Friday, December 28, 2007
Bush's subprime rate freeze problem
President Bush recently signed legislation to freeze the introductory 2 year "teaser rate" on all subprime loans for an additional 5 years. The rate freeze will apply to loans taken out between January 1, 2005, and July 30, 2007, and scheduled to rise in 2008 and 2009. This is designed so that on the 25th month of a 2/28 subprime ARM your interest rate does not adjust (up) and increase your monthly payment by $100s of dollars.
Truth be told that this is nothing more than a political move. It looks like Bush is doing something substantial, but it really has no impact. This is what my father likes to call "Air & Scenery", because it really cannot help nearly as many people as they are predicting.
Consider this; one of the criteria to qualify for the rate freeze is to not have been 30 days late since the current loan has been in place. There were so many good 100% financing programs available 1 year ago that good borrowers did not have to get subprime loans for these purchases. I would speculate that 75% (or more) of the subprime loans originated 2 years ago were for legitimate subprime borrowers who had sub 600 FICO scores.
I would venture to guess that well over half of these people have been late on their mortgage in the last 18 months.This means that of all the subprime loans that are "targeted" for this interest rate relief - over 50% of them will not qualify due to their mortgage history.
This does not even consider the other criteria for this rate freeze. The sad truth is that probably less than 25% will get any benefit from this maneuver.
Arm yourself with knowledge!
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham
Truth be told that this is nothing more than a political move. It looks like Bush is doing something substantial, but it really has no impact. This is what my father likes to call "Air & Scenery", because it really cannot help nearly as many people as they are predicting.
Consider this; one of the criteria to qualify for the rate freeze is to not have been 30 days late since the current loan has been in place. There were so many good 100% financing programs available 1 year ago that good borrowers did not have to get subprime loans for these purchases. I would speculate that 75% (or more) of the subprime loans originated 2 years ago were for legitimate subprime borrowers who had sub 600 FICO scores.
I would venture to guess that well over half of these people have been late on their mortgage in the last 18 months.This means that of all the subprime loans that are "targeted" for this interest rate relief - over 50% of them will not qualify due to their mortgage history.
This does not even consider the other criteria for this rate freeze. The sad truth is that probably less than 25% will get any benefit from this maneuver.
Arm yourself with knowledge!
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham
What is Locking a loan really mean?
What does it mean when a lender "Locks your Loan".
A common misconception people have of the locking process goes something like this,… The lender/broker asks you if you want to lock in the rate at 6% for 30 days. You agree, and then the broker calls the bank and tells them to set aside X dollars at 6% for the next 30 days. And now that you are locked, you do not have any options to “change” you loan scenario. Be aware my friends, this is not true.
To lock a loan is basically an agreement to a specific “point in time” with a lender. A good way to envision your lock is to write down the date and time that you agreed to lock your rate. Now you and the end lender have agreed to do business under the market conditions surrounding that specific lock time. If you locked right now for 30 days then you would be granted pricing on December 28, 2007 at 9:14 am for the next 30 days regardless of what happens to the "market".
Lenders can have hundreds of different loan programs available every day, and the price that bank is willing to pay brokers for loans are constantly changing. This locking freezes all of the prices given at that time, and keeps them all available to you. So, what does that mean to you??
You have the ability to change many different things in regards to your loan that do not break the lock. You can change the loan amount. You can extend the lock period (for a fee). You can change the loan program (from a fixed to an ARM). You can even change the rate if you wish.
In changing the rate you are not altering how much the end lender is paying the broker for that loan. However, you can "buy down" the rate by paying your broker a fee, or you can raise your rate and have your broker pay for some of your closing costs with the additional money he/she will get for your loan.
So why is this important??
If your loan officer tells you that you cannot change aspects of your loan because you are “already locked” – that is usually not true. This could be a red flag that you are getting into a suspect loan. Be sure to ask direct questions about your lock, and if the answers you get are unclear or vague, you should probably look for another loan officer.
Arm yourself with knowledge!
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham
A common misconception people have of the locking process goes something like this,… The lender/broker asks you if you want to lock in the rate at 6% for 30 days. You agree, and then the broker calls the bank and tells them to set aside X dollars at 6% for the next 30 days. And now that you are locked, you do not have any options to “change” you loan scenario. Be aware my friends, this is not true.
To lock a loan is basically an agreement to a specific “point in time” with a lender. A good way to envision your lock is to write down the date and time that you agreed to lock your rate. Now you and the end lender have agreed to do business under the market conditions surrounding that specific lock time. If you locked right now for 30 days then you would be granted pricing on December 28, 2007 at 9:14 am for the next 30 days regardless of what happens to the "market".
Lenders can have hundreds of different loan programs available every day, and the price that bank is willing to pay brokers for loans are constantly changing. This locking freezes all of the prices given at that time, and keeps them all available to you. So, what does that mean to you??
You have the ability to change many different things in regards to your loan that do not break the lock. You can change the loan amount. You can extend the lock period (for a fee). You can change the loan program (from a fixed to an ARM). You can even change the rate if you wish.
In changing the rate you are not altering how much the end lender is paying the broker for that loan. However, you can "buy down" the rate by paying your broker a fee, or you can raise your rate and have your broker pay for some of your closing costs with the additional money he/she will get for your loan.
So why is this important??
If your loan officer tells you that you cannot change aspects of your loan because you are “already locked” – that is usually not true. This could be a red flag that you are getting into a suspect loan. Be sure to ask direct questions about your lock, and if the answers you get are unclear or vague, you should probably look for another loan officer.
Arm yourself with knowledge!
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
http://www.communityfirstfinancial.com/
http://www.jimcunninghamcff.blogspot.com/
http://activerain.com/jcunningham
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