Archives for June 2015

New Home Sales May 2015

According to the Census Bureau and HUD sales of new homes increased 2.2% compared to April to rate of 546,000 units. May’s numbers we’re nearly 20% higher than May 2014. These numbers were significantly higher then industry estimates. Sales in the Northeast were the big driver and the West had moderate increases. The report stated there were 206,000 new homes for sale at the end of the reporting period, just over a 4 month supply.
The median price of a new home sold in May was $282,800 and the average price was $337,000. The median and average prices of homes sold in May 2014 were $285,600 and $323,500.  California mortgage interest rates in May were aggressive which sparked an uptick in loan volume.

Delinquencies and Foreclosures Rose in May

According to Black Knight Financial there was a slight increase to foreclosure activity in May. The delinquency rate rose 3.95% from the previous month and currently stands at 4.96%. It’s the second month we’ve seen that delinquencies greater than 30 days increased. The total number of loans that are 30 days or more late (but not in foreclosure) stands at 2.5 million, which is lower YoY (326k). There was also a decrease in serious delinquent loans not in foreclosure.
Foreclosure inventory declined for the month to 794,000 units. Last year foreclosures were just over a million units

Mortgage interest rates and The Bund

As you may have noticed mortgage interest rates have moved higher in recent weeks.  For both purchase interest rates and refinance interest rates were seeing across the board increases for all fixed rate products.  Adjustable rate mortgages have seen virtually no adjustments during this period.  30 year fixed to 10 year fixed have all seen increases as California refinance loan volume continues to be moderate.  So what’s going on?

Now that the Fed news is old news we can look at the Bund – the German equivalent of the U.S. 10 year treasury.  It seems our treasury market is following the Bund and has actually had some influence for weeks now.  Up one day; down the next….just like the Bund.  And while Mortgage Backed Securities don’t always follow the moves of the treasury market; lately they have and this is one of the reasons why we’re seeing such mortgage interest rate volatility.

Key Mortgage Terms

Below is a list of key mortgage terms everyone should know before moving forward with a new mortgage.  To help obtain the lowest interest rate on your next California mortgage loan be sure to take the time to understand mortgage terminology.  Refinance or purchase; it’s important to understand the various terms used before, during and after the process. A borrower with a good understanding of mortgage terms will be in a better position to secure a low interest rate mortgage:

JB Mortgage Capital, Inc.1003:  This is the official mortgage loan application; established by Fannie Mae -“FORM 1003”, that the industry uses.  It lists your interest rate, personal information and property information.

Borrower docs:  Your income, asset and other personal documentation that’s need during the mortgage process.  This is also might include your insurance declarations page, mortgage statement and other items needed during the approval process.

Loan Program:  The loan program is the mortgage loan term and the interest rate structure you chose to move forward with.  A 30 year fixed rate; 15 year fixed rate, 7/1 ARM, 5/1 ARM etc.  These are all loan programs.

Points:  A point is a fee equal to 1 percent of the loan amount. A 30-year, $250,000 mortgage might have a rate of 4 percent but come with a charge of 1 point, or $2,500. A lender can charge a partial point (ie 0.25, .50 etc) or a full 1, 2 or more points. There are two kinds of points: discount points and origination points.  Some lenders don’t charge direct points and some do.  Points do not include all Lender Fees associated with underwriting and processing nor 3rd party fees.

Lender Fees:  Other than points; lenders sometimes charge administrative fees such as underwriting and processing. Some charge junk fees like “expedited processing” or something similar

3rd party fees:  These fees include the title and escrow fees, credit report and appraisal fees.

Pre-Approval:  This just means the Loan Officer has reviewed your loan application and documentation and based on that information believes you will be approved for a loan.  Generally initial interest rates are disclosed along with terms. If you want the best California mortgage rates; make sure you get a pre-approval done!

Approval:  This is issued by an underwriter and the underwriter issues a list of conditions with the approval that need to be cleared for the loan to close.

DTI:  Debt-To-Income ratio.  Very important to the mortgage process and specifically the underwritten approval. This is the percentage of a borrower’s income that goes towards paying debts.  When an underwriter computes the DTI they include all debts along with the home (property taxes and insurance are factored in).

PITI:  Principal, Interest, Taxes and Insurance – your total house payment that is used to compute DTI.

Closing:  This is when you sign loan docs and the loan is ready to fund and record.

Funding:  The lender has wired out funds and requested the title company record the new loan.

Recording:  The mortgage is recorded with the county; and the refinance or purchase process is over.

If you are looking to refinance your current mortgage or purchase a new home; contact us today for a no cost/no obligation quote at 1-800-550-5538.

Is it time for an Adjustable Rate Mortgage?

***2017 UPDATE AT THE BOTTOM
With fixed mortgage rates near 2015 highs; should a borrower consider an Adjustable Rate Mortgage (ARM) over a Fixed Rate Mortgage (FRM)?  Low California mortgage rates are obtainable even though we’re in a volatile period for interest rates and currently the best options are in the Adjustable Rate Mortgage loan programs.  An “A” paper borrower can obtain a zero point 7/1 ARM in the low 3% range right now which is significantly below a 30 year fixed rate.

mortgage interest rateA 7/1 ARM has a fixed interest rate for seven years….it can’t change during the period.  After that it adjusts once a year for the remaining 23 years.  However most borrowers either sell their home or refinance every 5-7 years so for most people these loans are a fantastic option.  Adjustable Rate Mortgage loans typically have no pre-payment penalty as well.  California mortgage rates can change daily and if you find fixed rates a bit on the high side; consider an adjustable rate mortgage.  And if you have questions or want to receive a quote on a adjustable rate mortgage (or fixed!)  please be sure to contact us directly at 1-800-550-5538.  Our top rating with the Better Business Bureau and the Business Consumers Alliance shows that we not only have low rates but also top notch customer service.

SPRING 2017 UPDATE:

Adjustable rate mortgages are attractive right now; with fixed rates pushing above 4% after the November move higher post presidential election.  Most adjustable rate mortgages are based on the 1 year LIBOR index and that has been increasing slightly over the last few years.  And most of the time you’ll see a margin on 2.25% – 2.50%.  Any questions about the index and margin don’t hesitate to ask.