Travis Neliton

Hello Friends!

Well this blog has been written much more reactive than proactive observing the past few trading days and now seeing the Feds are committing to purchasing $500 billion worth of mortgage backed securities between Jan 5th and June 30th. Just in the first 3 days, Jan 5th-7th, it was announced the Feds purchased $10.4 billion in those 3 days, which that amount makes sense as there are about 120 trading days remaining between now and June 30th, at an average of $4 billion a day to spend it all by June 30th.

What this has done has caused mortgage backed securities, (MBS) to become much more valuable as they really cannot sustain a loss when the Feds are pumping so much money into the market. MBS are traded just like stocks are like Intel or Google would be. They are offered at a price that declines and rises depending on global events, trending lines, stocks rallying and other technical factors. Often it is misunderstood that when MBS are priced higher or become more value, it would make sense that rates go up, but the inverse is true. The more valuable the MBS, the lower the rate. Hence the reason a 30-yr mortgage is currently pricing in the upper 4% range as well as an APR creeping into the upper 4% range as well.

There are several theories out there as to when you should refinance. I am sure you have heard anything from the new rate would have to be at least 1% lower than you currently have, sometimes we hear 1.5% lower, etc. But there are many factors to consider when refinancing. The basic, most common is called a "rate and term" refinance. This simply is obtaining a lower rate from your current rate with no other objectives such as non-preferred debt consolidation, cash out for investment, an adjustable rate mortgage that is about to expire, consolidating an first and second loan you used to purchase your home among many other reasons I am finding with my clients daily.

With that being said, I strongly encourage you to contact me as well as tell those people you care about to contact me for a complementary consultation so I can "adopt their mortgage". Often times other mortgage brokers will view the closed loan as just that, a closed loan that is not managed or reviewed annually. If it is not properly managed as it should be like any asset or debt, you could miss an opportunity like now where rates are at all time lows. If the mortgage is under my team's management, I can react when the right window of opportunity appears that falls in line with your short and long term financial goals we identify in our strategy session.

The final thought is that there really is no "cheap" place to get mortgages as I mentioned they are purchased like stocks, so when you see an advertised rate that looks too good to be true, most likely it is. The simple analogy or question you must ask would be "are you able to buy Intel Stock from a discount broker at a lower price than from the open market? "No, so that should be something you consider when you are possibly enticed by a rate that is way outside of other quotes or advertisements you may receive.

I could go on and on about the huge amount of savings over time with refinancing into the interest rate environment we are in currently but everyone's situation is more unique then you'd think so an hour or two of upfront planning with me I feel would definitely be worth your time when considering a mortgage redesign. Me and my team are here to answer any of your questions. Thank you for all of the recent support and questions, it has been an unbelievable blessing in what had been a tough market.

Be Blessed!