I want to take a step back from mortgage for a moment and talk about retirement. I’ve been talking to friends recently about retirement and what my wife and I have been doing to prepare for it. Our goal is to be retired-retired by 60 years old. I’m surprised to find out that some of them haven’t really given it a second thought. At our age, unless you’ve come into some sort of inheritance, I feel that saving for the future is imperative. The following article is a simple way to strategically save without significantly impairing your lifestyle now. The part about past, present, and future money had my wheels turning. Give it a read and let me know what you think. Also, if you are interested in consulting a professional to help you with your goals, I know the perfect people to refer you to. Give me a call.

How do I shop for my home loan?

It could be the most asked question I’ve had, but contrary to popular belief, shopping around for your interest rate is not the best way to ensure you get a great loan experience with competitive rates and fees. Instead I recommend you shop for your lender.

Here are a few things to consider:

• Get a referral- If you trust the referral, chances are you’ll trust the lender too.
• Know what are you looking for in a lender-
  • Do you want a local company?
  • Do you value someone you can meet with in person? fcide how you want to get to know your lender
  • Do you want to sign digitally, or upload your documents online?
  • What is your standard for communication?
• Reliability- pay attention to see if your lender does what they say they will do.
• Ask Around- If your referral is not enough, ask other clients of that lender how their experience was, or check online for reviews.

Check out my best advice for a great home loan experience every time.

Although lenders get interest rates from the same place (mortgage interest rates are largely based on mortgage backed securities sold on the bond market), they can vary from lender to lender. There are a few reasons for this.

Top Three Reasons Interest Rates Vary

Lack of Full Disclosure

This is the most common reason I see a variance in interest rates. When you are comparing lenders you must compare apples to apples! That means getting a loan estimate from the lenders you are comparing on the same day, and ensuring all the fees are present. The number one thing to look out for is the cost (This has many names- points, discount, buy down, origination, etc) of the rate offered. Also, be sure its the same program and product. Then you can see if the lower rate really is a good deal. If you are comparing me to another lender I will help you with this!

Buying Market Share

Sometimes lenders, especially big banks, will try to win a portion of the market and keep current customers. One way to do this is to run a special for a limited period of time, on a limited number of products. For example, a lender might offer a 30 Year Fixed loan for .5% lower than the rest of the market and make little to no money on the loan. To make up for that the lender may hike up interest rates after the promotion is over. It is wise to read the fine print with a discerning eye. Also keep in mind you will not get the service you get with a dedicated Mortgage Banker like myself who values their relationship with you. If you have a question about an offer like this I am always happy to help!

Niche Pricing

Some lenders build their business on certain mortgage products. Their pricing for those products may be undercutting the market, whereas their interest rates and/or fees will be higher on other products. One example of this is a lender who specializes in “Jumbo” loans. Those are loans over $560,000 in Washington state. This lender might have awesome rates on a large Jumbo loan, but higher interest rates on a Conventional loan amount.

Tune in below for more on how you can be sure you’ve got a good deal.

By far the question I hear the most about mortgage interest rates is “how can I keep track of whether they’re moving up or down?” The short answer is the bond market. Mortgage interest rates are largely determined by the sale of mortgage backed securities on the bond market. So if the bond market is doing well, on any given day, interest rates will go down. If the bond market is performing poorly, interest rates will go up.

Mortgage Interest Rates and the Bond Market

Bond Market Vs. Stock Market

The bond market moves opposite to the stock market. This is counterintuitive because, as Americans, we often think “hey the stock market is doing great so is everything else.” That is true for your investments, that is true for the American economy in general, but it is not true for mortgage interest rates. The bond market is considered a safer investment and thus is one made by investors when the economy is not doing well. That is why interest rates move down when the economy is not doing well, whether that’s on an isolated day, or over a long period of time.

The Fannie Mae Coupons

Fannie Mae Coupons are what we, as mortgage lenders, typically track everyday. If we see, for example, the Fannie Mae 3.5% coupon move up 40 basis points, that is a good day and we can expect an interest rate reduction. The opposite is true if that same coupon moves down 40 basis points.

Timing and economic climate

When considering the above, if the Fannie Mae coupon moved up 40 basis points in one day, that is generally great news for interest rates. However, if we are in a climate where the Fannie Mae Coupon is moving up 40 basis points everyday, we may want to wait to lock in. If we are in a climate where the Fannie Mae Coupon is moving less than 10 basis points a day, that was a banner day and it’s a good time to lock. Also to be considered is the transaction time period. Regardless of the above, if the loan is closing in a week, it’s time to lock. If we have 60 days, we may wait, if the economic climate is favorable.

If none of this makes sense to you, that is ok! You have a mortgage professional who will track the bond market’s movements and advise you on the best time to lock in your interest rate, for your specific program and product, within the time frame you are purchasing or refinancing.

One of the most misunderstood scenarios in lending- when and how to buy a house after bankruptcy or foreclosure. It is possible, but preparation is everything! Check out my video and give me a call for a personalized analysis of your situation! 🙂

A study conducted by Apartment List, a rental listing company, referenced in this Wall Street Journal article illuminates a very real tension at the heart of today’s housing market. The vast majority of millennials say they eventually plan to buy a home but the primary obstacle is they can’t afford it.

The reasons young people are falling behind include student loan debt, rising rents and the slow starts many got to their careers during the recession. These reasons combined with the rapidly increasing cost to buy in many housing markets across the country is placing home ownership out of reach for this generation.

The real issue up for discussion here is the choice/ability to save. Some of the statistics in the article indicate that only a small percentage of Millennials are able to save enough for a 10% down payment in the next 3 years.

Take a quick look at the article and let me know what you think. Is it really too hard for this generation to save enough money to buy a house or are they choosing to “experience” life in lieu of making the sacrifices necessary to save?

WSJ-Millennials Want to Buy Homes but Aren’t Saving for Down Payments

Hey Everyone!

In this edition of “Straight Talk” I talk about what are normal, and abnormal changes to your escrow account (the portion of your mortgage that is taxes, homeowner’s insurance, and mortgage insurance), Check it out! 🙂

I came across this New York Times article this morning in my Apple News feed. It piqued my interest as I spend much of my day talking to potential home buyers about mortgage options, down payments and interest rates. One of the greatest variables in the home buying process can be the amount of money available to use as a down payment.

The article does a great job summarizing some basic questions about down payment options and an even better job linking to various other articles that provide even more information for those seeking it. The main takeaways here are that a 20% down payment is not necessary when buying a new home and there are options available for putting as little as 3% down. The writer also highlights the fact that saving enough cash to put 20% down can take nearly 20 years and put a strain on your finances.

The best thing you can do when considering mortgage options is consult with an expert and determine which options are best for you, your family and your financial situation. This type of consultation is not something you can find on a Google search or with a spaceship mortgage. Let me know and I can help you make the right decision with your next home purchase.

How to Buy a New Home When You Don’t Have a Lot of Cash

Going through the process to obtain a mortgage can be very overwhelming. Often, the most overwhelming aspect of a mortgage is the confusion surrounding certain terms and ideas. An idea to become especially familiar with is the notion of a “mortgage point”. The following article defines a mortgage point and highlights how to effectively use your knowledge of them in your hunt for the right mortgage loan.

Getting Familiar with Mortgage Points

Dreaming of owning a home away from home you can escape to?

Read through these tips to help you reach you goal!