Archive for the ‘30Y fixed jumbo rates’ Category

Jumbo Mortgage Borrowers:Avoiding Mistakes of the Past

Friday, March 5th, 2010

Cross-Posted with

Over the years, I have had countless conversations with home buyers about their . From 2003 to 2008, a typical a cocktail party or a BBQ invariably went something like this:

Home-Buyer: We got a great deal on our new mortgage.
Me: Did you do a 30 year fixed jumbo loan or something more exotic?
HB: 30 year — at 4.5% !
Me:  Sorry, but that’s not 30 year fixed — rates are 6.5% today. That’s probably a 2/28, with a reset in 200X.
HB: No, we definitely asked for a 30 year fixed.
Me:  Well, that’s not what you got — its impossible to get that loan at that rate today.
HB: We’re good negotiators.
Me: are set by the bond market. Banks charge a mark up ABOVE the rates that they can borrow money. They can’t get 30 year money at 4.5%, so you can’t get 4.5%.  There is only so much negotiating you can do with the bond market.
HB: Well, its definitely a 30 year fixed.
Me: Please make the pain stop . . .

And so on.

Huge swaths of people, did not understand what they were buying, what it cost them, what their other options were, whether they could afford it or not.

I am not saying this to exonerate their ignorance — it is inexcusable in my opinion. Adults must take responsibility for their decision making, regardless of how foolish it may have been. That home buyers cannot figure out a basic financing document is beyond my comprehension. However, that is the way it is. We must acknowledge the simple reality, if we wish to avoid this problem in the future. That’s why we need to insure consumers understand what they are purchasing.

We are happy to see clients take a serious look at their current loan and the pros/cons of their various jumbo loan ARM refinance options vs the certainty of a refinance into a fixed jumbo mortgage. I think this a great change from the days of simply selecting the “cheapest” option of “no-points, no fees” on a jumbo 5/1 Interest Only ARM. Home owners realize their risks and are trying to make the most informed decision possible.  The prudent behavior by lenders and borrowers will result in much better jumbo loan performance and better lending standards in the future.

Now for the meat and potatos of this week. The trend was largely sideways action for products that aren’t deposit based. Our portfolio products dropped by .125-.25% across the product spectrum  for money good credits. Here is a sampling

5.625% paying 1 discount point

7Y ARM 4.50% paying 1 discount point

*In order to help customers compare similar jumbo loans, we use the following parameters in conducting our rate survey: A jumbo loan amount of $1m, sales price $1.3m. Each loan is a purchase transaction, 720 credit score, 30 day rate lock, taxes and insurance being escrowed, single family primary residence with fully documented income and verified assets(savings/investments).

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FDIC Warns Banks to Expect 2-3% Rate Increase

Friday, January 8th, 2010

Homeowners waiting for “the right time” to refinance/purchase should move up the timeline rapidly. The , Federal Reserve and other federal bank/credit union regulatory agencies are warning the banking industry today to prepare for an increase in rates from 2-4% over the next 1-2 years.This is a serious wake up call to people considering refinancing or purchasing a new home, especially for borrowers. The greatest increase would be immediately seen in products such as the 30Y and 15Y fixed jumbo loans which have become the loan structure of choice over the last year.

Given the historical fixed mortgage rate, dire fiscal position of the US Government forcing the US Treasury to borrower roughly 1.5 Trillion in 2010 and the recent warnings from various regulatory agencies; we firmly believe 2010 may offer the best  refinance opportuntity homeowners are likely to see over the next decade. For those purchasing a home this year strongly consider going with a fixed rate mortgage. Obviously, financial advice isn’t one size fits all but you can always error on the side of caution and lock in some of the best fixed mortgage rates in history.

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