Time Is Running Out For Some Borrowers

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Time Is Running Out For Some Borrowers

This Mortgage Rates Report is a SPECIAL EDITION: Why it makes sense to refinance...TODAY.

If remortgaging has been on your mind, two things just happened which should compel you to do just that:

1- 30 year fixed rate mortgages dropped below 6% for the first time since October, 2005. While I am a staunch advocate of ARMs, as the least expensive mortgage, Wall Street seems to be rewarding the credit-worthy borrowers who are willing to lock-into a fixed rate mortgage. Wall Street may be trying to push people into locking into loans, because they believe that rates are dropping, but I think that a fixed rate loan under 6% is about as good as it gets.

2- Fannie Mae and Freddie Mac are about to make borrowers jump through more hoops...again. Next month, borrowers who do NOT have a FICO score of at least 680 will be assessed with a healthy penalty; 1-2% of the loan amount. What that means is that the interest rate charged could be as much as .75% higher than the rates offered to borrowers with stellar credit (or the cost of the loan will be 1%-2% more).

If you are holding out for lower mortgage rates, that may happen next month. You might be left out in the cold if your credit score isn't high enough. I've seen people who have perfect credit histories with a credit score under 680 so don't get cocky; this could happen to you ! While rates could drop another .25%, you could be forced into a rate that is .25 higher than you could get today.

ACTION PLAN: Call me today at 858-699-4590 for a mortgage rate review.

Posted by Brian Brady- Jumbo Mortgage Capital/San Diego on 12/03/2007 01:28 PM

Comments (28)

Originally posted at: America's #1 Mortgage Broker: Time Is Running Out For Some Borrowers

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28 Comments on Time Is Running Out For Some Borrowers

DEC

2007

Brian.... this is so true in regards to both aspects of what you mentioned. Hence why I think you will see even more FHA loans.... which I am writing about this by tomorrow.....

I agree. But, you know and I know and you know that I know that many, many, many home owners will wait and wait and keep waiting for "just the right time". Like they would actually know what the right time is.

I had a buyer drop out of the market this week because he saw that a foreclosure in the neighborhood was less expensive than the new home. He wanted the builder to compete in price with a foreclosure. Not going to happen.

He dropped out waiting for the builder to drop prices farther. This builder is not going to and I fully expect them to raise rates next month.

Buyers who try to outsmart the market just fool themselves.

Those who hesitate....it shall cost!

Yep, more folks are going to be paying the price of the ongoing subprime drama. I told my buyer database about these changes this week-it's kinda sad to me that big changes can occur without warning. And even sadder when buyers ignore the changes to their own detriment.

Brian, most importantly what are your thoughts on when these lenders are going to soften guidelines for jumbo priced loans or are we going to see even more tightening?

Mario,

I think that the answer is, neither. Rather than tighten guidelines, they will continue to employ the risk-adjusted pricing they're using now. We expect full-doc borrowers to get lowr rates in the next 2-3 months with no doc borrowers paying more.

Hi Brian,

Good info for consumers.

DEC

2007

Brian, thanks for getting the word out to consumers. Sitting "on the fence" right now is only going to cause some people to fall backwards off that fence.

Any clue about whether lower rates will finally translate to Jumbo loans.. seems as if they are still rather high..

Some of the portfolio lenders are in line, Kaye. I locked a 5/1 ARM for $600,000, the other day, at 5.75%

DEC

2007

Brian - this is like the buyers that are waiting and waiting. Meanwhile the market is getting worst. Maybe 2008 will bring about a change.

Okay PEOPLE - you have heard it from some VERY KNOWLEDGEABLE and RESPECTED industry experts (NOT the media, sheesh) - if you want to refinance or purchase a home and you are waiting for things to "get better" you'll lose unless you can wait several months or even a few years. Like Brian said rates are very very low right now on fixed mortgages, ARMs are still available but not as available as they were a few months ago. Lenn said it best - many of you will stand at the station waiting on a solid gold train ... baby, that train left the station and it's not coming back any time soon. NOW is the time to buy! NOW is the time to refinance. You can keep believing the media and talking heads and clueless politicians motivated by greed for your votes or you can believe these people and me who dedicate our lives to this industry.

Here, here! Let the buying and refinancing begin! :)

Brian - Sure hope this will also help to get some of the buyers off the fence who have been sitting on the sidelines. W sure are seeing some great opportunities.

I'm refinancing one of my investment properties now. Plenty of equity (which I am not touching) and good rates. Yippee!

Refinace now if you are going to do it and come out ahead. I agree.

Donna Zorn

Good advice. Refinance while the market is as it is.

DEC

2007

I agree in part (otherwise, if you have equity, and the ability to refi, you can always pay the rate down), but what about FHA? I see a migration towards FHA rather than Freddie and Fannie.

I got two calls yesterday from folks who are looking to refinance out of their ARMs. One has a 5.75 rate and since that's where 30 year fixed money is she'll probably just refi into the fixed product. The other person not so lucky since it looks like the condo value is down 18%.

Sent them both off to one of my favorite lenders locally.

aaaghhhh... I keep being logged out and don't notice until after I've commented! That would be me above...

Great Info I will be sharing this with my buyers.

Thanks Again

Adam

Brian, Where are you getting your information about jumbos improving over the next few months? Will you elaborate?

DEC

2007

This is really helpful information for our clients, thanks.

DEC

2007

Brian - talk to me about Jumbos! What do you think is going to happen in the next few months?

DEC

2007

Jumbo rates will narrow in relation to conforming, Lisa. Wall Street is starting to buy that paper, again. While I hear that Morgan Stanley is eschewing it (what's new?), Merrill, Lehman and Bear think there's a void that the portfolio lenders are cleaning up on.

Look for spreads to narrow after 1/1/08

Sounds good. Will you give up your source? :)

DEC

2007

Brian,

I think the fed is trying to create another 'wave' of refis...by getting people now to lock in at around 6%, so when rates fall to 4% they will be flocking to refi!!! The FHA 1 yr. ARM is still the best program going! IMHO, Thanks, Fran

Sounds good. Will you give up your source?

Not on a blog but I'll gladly let you listen in on conversations I have with my old trading buddies. Be forewarned though, those revelations are interspersed among talk about the NFL, Big East Hoops, Vegas bachelor parties of years past, and 20 year old college antics

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Brian Brady- Jumbo Mortgage Capital/San Diego

Del Mar, CA

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