This goes back to what I have said time and time again but every 1% increase in interest rates reduces your buying power 11%. This is one of the reasons you are seeing so many articles about why now is the time to buy.
You have to take a look at this chart from KCMBlog.com illustrating the impact of interest rates on your mortgage payment. Interest rates will go up and when they start to you will see a large increase in a short period of time.
Did you ever see an ad on TV for a car and couldn’t believe how low the monthly payment was so you rushed to the dealership to find out it was too good to be true? The same thing happens with mortgage interest rates.
The purpose of an advertisement is to get you to call and there is an asterisk for just about everything. If it is too good to be true it normally is and if you don’t read the fine print you could end up hurting yourself.
In the world of mortgage interest rates lots of times the quoted rate includes paying discount points to buy the rate down, requires a large down payment, has an unrealistic timeframe for the interest rate lock period (the shorter the lock period the better the interest rate), etc. And sometimes someone advertises an interest rate that doesn’t yet exist hedging the market hoping rates improve and even worse they are purposely quoting a rate below what they can offer knowing you most likely won’t be getting a loan that day.
You have to be so careful especially in the Fort Lauderdale and South Florida area where mortgage fraud runs rampant. The most important thing to understand is that a mortgage is much more than an interest rate and no matter what product or service you are buying if it’s cheaper you are giving something up. With a mortgage you won’t know if that is service, advice, expertise, or honesty until it’s too late.
Mortgage-backed securities, which move interest rates, are trading higher right now which is good for interest rates. Interest rates paying NO Points in Fort Lauderdale and South Florida are as follows today on a $400,000 purchase price, 740 credit score, 25 day lock period, primary residence, single family detached home, with escrows are:
Contact me for interest rates on Jumbo Mortgages and Adjustable Rate Mortgages (ARMs) in Fort Lauderdale and South Florida. Rates are subject to change without notice.
I hate to keep copying and pasting content but KeepingCurrentMatters.com does such a great job. As I have mentioned so many times before the interest rate is not the most important part of your mortgage.
I have seen estimates stating that 29% of deals that go to contract and require a mortgage, don’t close. That number boggles my mind. It means that even after a buyer and seller come to terms on a sale (not an easy feat these days), 3 out of 10 transactions fall apart. What are some of the more common reasons?
It is clear by the numbers that closing loans can be more difficult today. However, with proper planning and integrity, many of the challenges can be dealt with early and successfully. Agents documenting values of the homes, loan officers doing complete reviews of the loan profile up-front, and everyone telling the truth helps get deals to a successful conclusion and avoids horror stories.
Mortgage-backed securities, which move interest rates, are trading unchanged right now. Interest rates paying NO Points in Fort Lauderdale and South Florida are as follows today on a $400,000 purchase price, 740 credit score, 25 day lock period, primary residence, single family detached home, with escrows are:
Contact me for interest rates on Jumbo Mortgages and Adjustable Rate Mortgages (ARMs) in Fort Lauderdale and South Florida. Rates are subject to change without notice.
I have written about this topic many times and that the days of shopping for a mortgage are gone. Making sure you are dealing with an expert and someone who is honest is what is most important. Jack Guttentag who writes a lot of mortgage related articles and an industry expert seems to agree with me now.
In his article “5 Truths About Mortgage Shopping” he states that “I confess that it took awhile before I realized this myself. Over the years, I wrote several articles on “how to shop for a mortgage,” which I am now in the process of revising. The corrected title will be more like “how to minimize the loss from having to select a lender without knowing that lender’s price.”
He goes onto to say “The textbook analysis of competition assumes that buyers can buy at the prices quoted by sellers. In the mortgage market, however, lenders have no obligation to lend at the price they quote until they lock, which may take days or even weeks. In the meantime, the quoted price is very likely to change with the market, which is very volatile. Quoted prices are reset every day and sometimes during the day. ”
Unfortunately in the Fort Lauderdale and South Florida real estate and mortgage market there is a lot of fraud and some will quotes interest rates that don’t yet exist to try and get your business. This is why the interest rate you quoted doesn’t matter, it’s what you are locked in at that does. I highly recommend reading his article.
It seems more often than not borrowers that are looking to purchase or refinance in the Fort Lauderdale and South Florida area “shop around” for the lowest rate because that’s what everyone tells them to do.
As I have mentioned time and time again, your interest rate is not the most important thing when getting a mortgage but at the end of the day many will fixate on this. The Wall Street Journal reported a few weeks ago about how the interest rates people see are 64 basis points (.64%) lower than what they end up getting.
There is another great article from Amy Hoak’s, “Why you can’t get the lowest mortgage rate,” that does a great job explaining it too. It’s interesting we are beginning to see more and more of these articles. Could it be because so many people get taken advantage, hmmm?
Average rates in Freddie Mac’s survey include average discount points paid for the mortgage. But not everyone is willing to pay points.
For the week ending Oct. 27, rates on the 30-year fixed-rate mortgage averaged 4.1%, but that rate required an average 0.8 point to get it. A point is 1% of the mortgage amount, charged as prepaid interest. Read more: Rates on 30-year mortgage slide to 4.1%.
Unless you’re going to live in your home for a very long time, paying points often doesn’t make sense, said Greg McBride, senior financial analyst for Bankrate.com.
“Where the investment pays off is if this is a loan you’re going to have for a long period of time. You’re making an investment of money now to pay the points to get the benefit of a lower monthly payment for years to come,” he said. “The more years you have of that lower monthly payment, the greater return on that initial investment of points.”
I thought they went down? They did when the Fed initally announced their “Operation Twist.” If you haven’t locked in your mortgage interest rate on the refinance or purchase of your Fort Lauderdale or South Florida home on late Wednesday afternoon or Thursday morning your interest rate just increased. Many think that interest rates might fall further than they already did as soon as the Fed made their announcement. No one knows what the future holds but if you lock your interest rate in you win no matter what interest rates do.
By locking in your interest rate you are putting a ceiling or a cap on the maximum rate you will get assuming your loan closes within the number of days on your lock. If rates improve dramatically you can look to renegotiate your interest rate lower. Every bank has their own renegotiation policy so make sure to consult with your Mortgage Professional.
Most do not understand how interest rates work even those in the business. Mortgage-backed securities are what move interest rates and when they improve rates can get better. However, when rates improve the banks don’t always pass those savings onto you.
Make sure to speak to a Mortgage Professional when it comes to locking versus not locking and don’t believe everything you read or become greedy because you could lose a great rate.
If you are in the market to refinance your current mortgage or purchase a home in Fort Lauderdale and South Florida now is the time to do it. Interest rates dropped dramatically yesterday and today due to the Fed’s announcement of “Operation Twist” which is the Fed’s selling of $400 billion of securities under 3 years maturity to buy a like amount in the 6-30 year range. The market was expecting this but not the move to reinvest principal payments into agency mortgage backed securities.
“Fed officials have become more concerned about the health of the mortgage market in recent months, with senior officials, including Mr. Bernanke, urging the rest of the government to find ways to support the sector. There has been growing concern in the mortgage industry in recent weeks that even as U.S. Treasury yields have been declining, mortgage rates haven’t fallen as much, preventing many homeowners from refinancing their home loans. The difference in yield between a 10-year Treasury note and a conventional 30-year mortgage has widened by almost half a percentage point……. Full Article
Although I continue to touch on this topic I wanted to post what KCMBlog.com had to say about “How To Pick Your Lender” because it can be perceived that I am biased when you are deciding on your Fort Lauderdale and South Florida lender.
The 3 things they want you to consider are:
“Too many people stay focused on quoted rates and fees and neglect to see the whole picture of what is needed from a lender. Look for great communication, superior information and education, understanding of the local market and someone who looks at your application as something more than a number. Be prepared to pay a little more to get a better experience (even though it might not cost you any more)….in the long run, lowering stress can be more important.”
These are the 3 things I continue to comment on and what you also need to consider when choosing who you want to work with.
Located in South Florida, Justin Miller has established himself as a leader in the mortgage community for his expert advice and understanding of the current real estate climate. Contact him.
Jonathon Becker (Coastal Credit Clinic): Justin- GREAT blog post! This is a HUGE questions many of my clients h...
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Phil Himes: You are so correct! Many of my clients are currently looking at purch...
Stock quote: Good blog post, nice efforts. It couldn’t appear to have been penned a...
Upside Down Guy: This sounds like a great program for someone like me but my lending in...