Rate Lock Advice and Mortgage Market Update
November 20, 2009, 10:15 PT
RATE LOCK ADVISORY
Lock Advice: FLOAT With CAUTION
The Float with Caution recommendation is only because rates have been down for a while and they almost always adjust in the other direction after a long run.
MBS prices are up +3/32.
No economic data will be released today.
RATE NOTES:
When MBS prices are up, Rates are down.
Lock advice can change throughout the day .
Good economic news = Bad Rate News.
National Average Fixed Rate Mortgage
Down 0.01% at 4.98% on Nov.20
Fannie Mae Mortgage Backed Securities
MBS Opened at 4.513% Down 0.004%.
10 Year Treasury Currently 3.360% Up 0.01%
DJI Stocks $10,289.52, Down -42.92, -0.42%
European and Asian Markets Down -0.758%
Nymex Crude Oil Currently $76.70 Down $0.76
Take 5 minutes to watch this humorous and educational video... The big bailout banks find another way to rip off the consumer ... just in a nick of time for them, but not for us. See TBWS Video
Rates 11-20-09, 8:30 AM PT
30 Year Fixed to $417,000
Rate 4.500% Point 1.250, APR 4.665%
APR Based on $350,000 Loan at 80% LTV
Above Rate can be locked for 30 days.
Call for Quotes on FHA and VA loans With Detailed Good Faith Estimates.
No Application or Credit Report required
President signs the First Time Buyer Tax Credit Extension Read Story
Bill Introduced to Increase FHA Down Payment to 5.00% from 3.50 Read Story.
WHAT IS MORTGAGE APR, Can You Explain It? APR Demystified and APR Predators Exposed
First, lets demystify Annual Percentage Rate (APR).
Mortgage APR was designed to allow consumers to use one standardized number to compare each lender's rate for the same type of loan while rate shopping. It is supposed to represent the borrower's cost and it works like this.
If I lend you, $10,000 and, I charge a $500 Bump-ta-Bump Fee, you will actually receive $9,500, however you must still repay me $10,000. Mortgage APR is my real yield and your real cost on this loan.
We agreed that you will repay the loan at 8% interest on $10,000, HOWEVER you only received $9,500 therefore I will earn more than the 8.0% interest rate I charge on $10,000. In this case, my yield (APR) is 9.799% on the $9,500 you received.
APR is the lender's yield on dollars actually lent ($10,000 minus $500 = $9,500); in this case, the lender's yield (APR) on $9,500 is 9.799% (APR is computed as if the above example is a 30 year loan)
The $9,500 also represents the Amount Financed in the Truth In Lending (TIL) disclosure.
For those of you who use spreadsheets the Rate Function will find APR. Use the Amount Financed for Loan Amount and use the monthly payment on the actual loan amount.
Fees that must be subtracted from a mortgage loan to properly calculate Amount Financed for APR
NOTES: Fees Not used in APR calculation; third party fees such as appraisal and credit. APR can only be compared on loans of the same type and amortization period
How Do APR Predators Work?
Many sophisticated borrowers shop interest rates by searching for lowest APR which, if property stated, is a valid way to compare similar loans. Unfortunately, APR is not always stated properly.
How is advertised Mortgage APR is misstated?
Rate - Points - Fees are all interdependent
The best way I can explain this is show various Rate - Point - Fee combinations where the lender is making the same gross profit on each combination.
In the examples below, we will use a $200,000 loan amount and Lender gross profit of $1,000, on a day when the Lender's cost for a 5.000% rate is par (0 point).
Best Rate: $1,000 Lender profit in various combinations of points and fees
|
Rate |
Fees |
Points |
APR |
Profit |
|
5.000% |
$1,000 |
0 |
5.044% |
$1,000 |
|
5.000% |
$500 |
0.250 |
5.044% |
$1,000 |
|
5.000% |
$0 |
0.500 |
5.044% |
$1,000 |
Lowest Fees:
You pay $0 points and fees and Lender's investor pays the lender $1,000 for the higher rate.
|
Rate |
Fees |
Points |
APR |
Profit |
|
5.125% |
$0 |
0 |
5.125% |
$1,000 |
The point here is that lenders design their loans to provide talking points for their sales staff (loan officers). They all require a certain profit margin and it is not important the way the loan is structured as long as the closed loan delivers their required profit margin.
This illustration also points out the value of correctly stated APR as a way of comparing mortgage loans. For the sake of these illustrations, prepaid interest was not used. If 15 days PP was calculated it would have increased each APR by 0.019%.
Rate Lock Advice and Mortgage Market Update
November 19, 2009, 3:00 PT
RATE LOCK ADVISORY
Lock Advice: FLOAT With CAUTION
MBS prices are up +1/32.
Jobless Claims were close to expectations.
RATE NOTES:
When MBS prices are up, Rates are down.
Lock advice can change throughout the day .
Good economic news = Bad Rate News.
National Average Fixed Rate Mortgage
Unchanged at 4.99% on Nov.19
Fannie Mae Mortgage Backed Securities
MBS Opened at 4.517% Up 0.005%.
10 Year Treasury Currently 3.340% Down -0.02%
DJI Stocks $10,332.44, Down -93.87, -0.9%
European and Asian Markets Down -1.392%
Nymex Crude Oil Currently $77.46 Down $2.12
Take 5 minutes to watch this humorous and educational video... The big bailout banks find another way to rip off the consumer... just in a nick of time for them, but not for us. See TBWS Video
Rates 11-19-09, 11:00AM PT
30 Year Fixed to $417,000
Rate 4.500% Point 0.875, APR 4.637%
APR Based on $350,000 Loan at 80% LTV
Above Rate can be locked for 30 days.
Call for Quotes on FHA and VA loans With Detailed Good Faith Estimates.
No Application or Credit Report required
President signs the First Time Buyer Tax Credit Extension Read Story
Bill Introduced to Increase FHA Down Payment to 5.00% from 3.50 Read Story.
Rate Lock Advice and Mortgage Market Update
November 19, 2009, 11:05 PT
RATE LOCK ADVISORY
Lock Advice: FLOAT With CAUTION
MBS prices are up +1/32.
Jobless Claims were close to expectations.
RATE NOTES:
When MBS prices are up, Rates are down.
Lock advice can change throughout the day .
Good economic news = Bad Rate News.
National Average Fixed Rate Mortgage
Unchanged at 4.99% on Nov.19
Fannie Mae Mortgage Backed Securities
MBS Opened at 4.517% Up 0.005%.
10 Year Treasury Currently 3.350% Down -0.01%
DJI Stocks $10,284.91, Down -141.4, -1.36%
European and Asian Markets Down -1.392%
Nymex Crude Oil Currently $77.35 Down $2.23
Take 5 minutes to watch this humorous and educational video... The big bailout banks find another way to rip off the consumer ... just in a nick of time for them, but not for us. See TBWS Video
Rates 11-19-09, 11:00 AM PT
30 Year Fixed to $417,000
Rate 4.500% Point 1.000, APR 4.648%
APR Based on $350,000 Loan at 80% LTV
Above Rate can be locked for 30 days.
Call for Quotes on FHA and VA loans With Detailed Good Faith Estimates.
No Application or Credit Report required
President signs the First Time Buyer Tax Credit Extension Read Story
Bill Introduced to Increase FHA Down Payment to 5.00% from 3.50 Read Story.
Rate Lock Advice and Mortgage Market Update
November 18, 2009, 2:00 PT
RATE LOCK ADVISORY
Lock Advice: FLOAT With CAUTION
MBS prices are -2/32 slightly above 9:45 ET pricing of -3/32. MBS prices reached a low of -5/32.
CPI came in a little higher than expected, while Housing Starts fell short of the consensus.
RATE NOTES:
When MBS prices are up, Rates are down.
Lock advice can change throughout the day .
Good economic news = Bad Rate News.
National Average Fixed Rate Mortgage
Unchanged at 4.99% on Nov.18
Fannie Mae Mortgage Backed Securities
MBS Opened at 4.512% Up 0.042%.
10 Year Treasury Currently 3.370% Up 0.04%
DJI Stocks closed $10,426.31, Down -11.11, -0.11%
European and Asian Markets Down -0.051%
Nymex Crude Oil Currently $79.65 Up $0.51
Take 5 minutes to watch this humorous and educational video... The big bailout banks find another way to rip off the consumer... just in a nick of time for them, but not for us. See TBWS Video
Rates 11-18-09, 8:30 AM PT
30 Year Fixed to $417,000
Rate 4.625% Point 0.875, APR 4.763%
APR Based on $350,000 Loan at 80% LTV
Above Rate can be locked for 30 days.
Call for Quotes on FHA and VA loans With Detailed Good Faith Estimates.
No Application or Credit Report required
President signs the First Time Buyer Tax Credit Extension Read Story
Bill Introduced to Increase FHA Down Payment to 5.00% from 3.50 Read Story.
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Make Experience Your Advantage. Bill has closed thousands of home loans since 1970 as a FHA and VA Specialist. Bill's mortgage classes have taught lending to hundreds of loan officers and Realtors.
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