Charlotte Mortgages

Charlotte Mortgage Rates get worse today and investors lose PMI altogether!

The loss of PMI for investors mean that going forward buying an investment property will require a 20% minimum down payment.  90% financing was still available but without the mortgage insurance the loan doesn’t exist.

Mortgage rates worsened again today.  I think there are many buyers out there that think rates are dropping and they should wait… NOT TRUE.  Rates have been getting worse for over a week now, and show no signs of turning around.  I am puzzled at what is driving the bond market right now other than investors don’t want to touch anything with the word “mortgage” in it.

Normally a “flight to quality” would mean investors sell their stocks and buy bonds.  Right now investors don’t have any more confidence in mortgage bonds than they do in stocks.  I think it’s a little nuts because with Uncle Sam backing Fannie and Freddie, mortgage bonds offered by those two are almost risk free.

In coming days, mortgage rates are likely to drop and if you aren’t ready to take advantage of it fast, you might miss the opportunity.

When rates drop, they typically hit a bottom rather quickly and then correct back higher within days.  Just like the stock market, the mortgage bond market tends to go too far in either direction and then pull back some when big swings come.  That means that rates might get insanely low for just a day or so and then moderate out fast.  If rates were to hit 4.5%, are you ready to act???

I don’t know where are going and neither does anyone else for sure, but based on current market trends I could easily see some all time low rate coming soon.  If you are working with a lender that has you on the short list, you might not be able to cash-in on those low rates when they hit.

If you are interested in being on our “VIP Rate Drop List” just give me a call today at 980-721-7478.  It doesn’t cost you anything except a few minutes of your time and if rates drop you are first in line to take advantage of what could be a once in a lifetime opportunity!

Here is a brief update on what mortgage interest rates are doing in Charlotte, NC.

6.00% is still available, but probably not for long.  The MBS market has been moving in wrong direction for a couple days and rates are going to suffer.  Loan size and credit score are the main factors affecting the actual rate a consumer will receive and depending on both rates for 30 Year Fixed programs will range between 6.00% and 7.00% right now. 

ARM pricing is horrible. 

JUMBO rates are in the high 7% range to low 8% range. 

This is NOT a rate quote.  If you would like a quote please call Olan Carder at 980-721-7478. 

An accurate rate quote is based on property type, loan size, credit score, loan purpose and loan to value ratio.  Do not accept instant rate quotes or get rates online as those rates will not be accurate to your specific situation.  With a five minute call you can start the FREE process of applying for pre-approval, obtaining an accurate rate quote and getting a Good Faith Estimate of all the costs associated with buying a home.

Is the proposed Bail-out Plan a good idea?

First let’s try and understand the problem.  There is a lot of confusion out there about who needs help, why they need it and who stands to gain from this plan.  I don’t have all of this mess figured out but I can give an overview that might help the average consumer understand what’s going on…

Many lenders are in big trouble and if Banks are short on money then they can’t lend money to the people who need it (like homebuyers).  Banks are running out of money to lend.  Let me explain…

Banks lend money to home buyers to purchase a home.  The banks get their money back to continue lending by packaging the loan into a bond and selling it to bond investors.  The bond interest is gauranteed so even if the homeowner doesn’t make their payments the bond has to be honored so in reality even though the bank got their money back to continue lending they are still at risk the loans they make.  Foreclosed properties take time to sell, so if you have enough of them out there it can tie up the banks’ money and cause a big problem.  Even worse, since this credit crisis has become so well publicized investors stopped buying the bonds for the bad loan products a long time ago, so the banks with huge amounts of money tied up in these risky loans just have them sitting there on their books and can’t get their money back to keep lending. 

KEY - If banks can’t replenish their money to lend it again, they can’t grow or make new profits and eventually will fold.  NO MONEY = NO BANKS = NO LOANS = GREAT DEPRESSION! (we all would prefer to avoid this one!!)

Here is a practical example of how the bail-out can work…

“ABC BANK” has $40 Billion in bad loans.  The U.S. Government would pay them a largely discounted value to buy these bad loans.  Let’s say it is 65 cents on the dollar so to buy $40 Billion in loans the government only pays $26 Billion.  The government then can take its time with selling the loans, selling the foreclosed homes, collecting the payments, etc… The U.S. can even realize a profit on this deal if the right price is paid upfront.  “ABC Bank” has a loss of $14 Billion but frees up $26 Billion is cold hard cash!  This can at least get some of the biggest banks back in the game, lending money and doing business. 

Bill Gross, head of PIMCO (runs largest bond fund on earth), stated today on CNBC that according to his numbers the U.S. could end up making 6-8% profit on every dollar spent!  He said these numbers were conservative.  Bank in the 1980’s, the government stepped in to solve the savings and loan crisis and ended up making money in the end.  This would be similar except that in this case the government is not taking over debts but buying them.  The upfront price is the key to the U.S. taxpayer making or losing money on this deal long term.

Will this plan solve the problem?  No one knows the answer to that question over the long term.  There is a careful balance when it comes to credit.  Make getting a loan too hard, and the economy can shrink fast.  Make loans too easy (like what has happened here) and the whole credit system can fail.  We have to ensure the health of the lending system so there are banks to lend, but credit must be available at a reasonable level for homes and cars to sell.  This plan can and will get money flowing again, and at least for the short term that is a big win for the economy and the housing market!

Good news for homeowners as Fannie-Freddie Bailout extends cheaper loans for buyers!

In my business you learn one thing fast, people don’t care nearly as much about the total price of a house as they do about the cash out of pocket and monthly payment.  Monthly payment is king, and that is one more reason the housing boom existed… aggressive financing sells houses!  Offer lower rates, and therefore lower payments to potential home buyers and you will sell more homes. 

Many arguments are coming about the bailout plan and whether it solves the long term problem… I don’t care right now.  It is the right thing to do right now and let me tell you why.  Let’s say a man has ruined his body with poor eating habits over many years and is now at the brink of death.  Changing his lifestyle is the long term solution but if you don’t get him to the emergency room immediately he will die!!!  Fannie and Freddie were taking to the emergency room and are now stable… the lifestyle change can be addressed a little later.

Now that Fannie and Freddie have been taken over by Uncle Sam, the bonds they sell are virtually risk-free.  Fannie-Freddie keep money available for home buyers by taking mortgage loans from lenders and giving them their money back to go lend out again.  Banks only have so much money to lend and Fannie-Freddie make sure they aren’t going to run out of new money to lend.  then they turn around and replenish their cash by selling mortgage bonds.  These bonds are guaranteed by Fannie-Freddie so that even if the actual mortgages they are based on do not perform, the bond holder still gets their money.  Fannie-Freddie were losing so much money there was going to be a point that they weren’t going to be able to honor all their obligations.

Now that problem is solved.  The U.S. Government has now stepped in and eliminated the risk of a Fannie-Freddie collapse.  That means the bonds they sell are virtually risk-free and what happens when an investment has lower risk?  It yeilds a lower rate!  The lower the risk the lower the rate. 

Monday mortgage rates dropped almost 1/2 point!   That is huge!  This buyer’s market in Charlotte, NC will NOT last much longer.  If you want to buy in the Charlotte market you need to act now and take advantage of these awesome rates.