Mortgage rates have dropped down today with certain special lenders to 5.50% on a 30 year fixed. Hybrid 7/1 ARMS are down to 4.875% (all with 1% origination fee).
I am often asked "should we lock" prior to getting the application. I tell my buyers I am a subscriber to: http://www.mortgagemarketguide.com/bondquotes/index.html
I explain how the service works and how it has saved my customers thousands of dollars by locking in a loan ahead of pricey intra day price changes; or save them thousands more by floating ahead of price improvements. Not all brokers do this. I understand; however my thing is if I have already negotiated a price structure of say: 1% origination fee (1% of the loan) and I am getting .5% in additional compensation for delivering this loan to the investor and then I see the price improving by another .375% in fee what do I do?
Let's examine:
$300,000 loan at 5.625% today at .625% rebate to me + 1% origination fee = $300k x 1.625% = $4,875
The customer already says "yes Mike I want this loan." But I say . . . . . ."Just hold on a second"
Today for example, mortgage bonds rallied up 22 basis points. I got a notification from my friends at MMG to "float ahead of a price improvement. . . So I did and I told the client what I was doing.
- I got a lender "reprice" for the better of .25% in price about an hour later, so I locked in at 5.625%
- I then called my buyer and told them they are locked for 30 days and oh by the way . . .I am lowering my loan origination fee from 1.00% to .75% for no reason other than I am working hard to save you money and provide a valuable service and I have so far.
- They are thrilled. . . . let the good times and referrals roll.
Since there is absolutely no change in my income of $4,875, why would I get greedy when instead I can knock the clients socks off and have the opportunity to earn countless referrals?
This is good business: This is fun for both myself and my client.
Moving forward watch oil folks . . . . Mortage bonds hate hate hate inflation.
Core PPI (Producer price index) is in the headlines today having gone up only .02 vs. .04% expected; however the core PPI {taking out food and energy} came in at .04% vs. .02% expected 100% increase.
Mortgage bonds rallied from a sell off in stocks today but as the world (India & China) put more and more demands for energy and oil, analysts believe we may see $150 a barrel oil by year end and $5 - $6 prices for gasoline.
We may seen the last for cheap anything so stock up your costco, sams and walmart and refinance or buy at what will go down as one of the last great buyers' markets.
For more info: mortgageplanner@247refi.com
Mike
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