Put it all together and it’s clear that the experts have no better idea about the future than you or I. Their guesses are educated ones, but they’re guesses nonetheless.
A terrific example of how poorly experts can predict the future comes from a Wall Street Journal performance analysis of 1,700 mutual funds.
In 2008, only one earned a positive return. That one fund represents zero-point-zero-six percent of all tracked mutual funds. Surely, the fund managers of the other 99.94% didn’t expect to post negative returns on the year.
So, before you use predictions about the demise (or recovery) of the broader economy to make “personal economy” decisions, consider that the oft-quoted experts have a hugely better track record in analyzing the past than the future.
All we know for sure right now is that home prices are, in general, lower than at the time point last year, and mortgage rates are, too. By 2010, both could be lower still.
Or they may not.
Tucson mortgage rates are at an all time low at Sunstreet Mortgage.
For its last move in an action-filled year, the Federal Reserve announced it will begin buying its pledged $500 billion in mortgage-backed securities next month.
For home buyers and mortgage rate shoppers, the timing couldn’t be better.
Because December 31 is one of Wall Street’s most thinly-traded days of the year, low volume is exaggerating the announcement’s impact on mortgage markets.
Mortgage rates are lower this morning.
However, you may not have much time to act. Few mortgage lenders permit after-hours rate locking and bond markets close at 2:00 PM ET for the holiday. If you miss today’s Fed-fueled low rates, markets re-open Friday for your second chance.
Give Tyler Ford and Todd Abelson of Sunstreet Mortgage a call today to talk about lowering your mortgage interest rate, lowering your monthly mortgage payment, skipping a payment, and getting a little cash back from your current impound account. Call 520-331-LEND (5363) today.
In late-November, the Federal Reserve pledged $600 billion to buy mortgage-backed securities. The announcement drove down mortgage rates and started the Refi Boom.
Then, the Federal Reserve made a second series of statements after its scheduled meeting last Tuesday, causing mortgage rates to plunge again. This started the Refi Boom’s second wave.
Because of the surge in refinance activity, mortgage lenders are “backed up”; initial file reviews are taking up to 12 business days in some cases.
Typically, this process takes 2 days.
Underwriting delays are problem for refinancing Americans because when a mortgage rate is locked, it’s most often locked for 30 calendar days — the standard Rate Lock Agreement contract length. If the mortgage doesn’t close within those 30 days, the applicant must either pay an “extension fee” to preserve the lock, or risk losing the rate altogether.
30 days may seem like a long time, but let’s consider a few external variables:
December 24, 25, and 26 plus January 1 and 2 are lost to holiday
December 27, 28 plus January 3, 4, 10, 11, 17, and 18 are lost to weekends
This leaves 13 days to get from Application to Closing, and of those 13 days, 12 of them are being spent on the initial review. A 30-day rate lock, in other words, may be an inadequate agreement with some mortgage lenders. A 45-day agreement may be required instead.
Typically, 45-day rate locks carry higher rates or higher fees, versus their 30-day counterparts. This amounts to a “tax” on borrowers, a result of the nation’s rush to refinance en masse.
As always, the best way to preserve a rate lock is to be as responsive as possible to the process. Return paperwork when asked, schedule appraisals immediately, and arrange to signing closing paperwork on the first available day.
With mortgage rates low, application volume — and underwriting turntimes — should remain high into early-2009.
With the exception of Sunstreet Mortgage. We have in-housing underwriting and can get things done quickly so give Tyler Ford or Todd Abelson a call at 520-331-LEND (5363).
Mortgage markets improved last week for the second week in row. After the Federal Reserve said it would use “all available tools” to stimulate the economy, traders responded by driving mortgage rates to 50-year lows.
It didn’t last long, however.
After bottoming out early-Wednesday morning, mortgage rates trended higher all the way into Friday’s closing. It was the third time in 2008 that a sharp mortgage rate drop lasted less than one full day of trading.
Many Americans took advantage of the historically-low mortgage rates, locking in new home loans below 5 percent. And, in general, these homeowners shared 4 characteristics:
Credit scores of at least 720
At least 20 percent equity
Relatively low debt versus household income
Ongoing relationship with a loan officer
Now, the first 3 bullet points are easy-to-understand but it’s the fourth one that really mattered — it’s the trait that got people “real-time access” to low rates the moment they published.
After all, it wasn’t until Thursday morning that the press ran its stories about “4.5 percent mortgage rates” and, by that time, mortgage rates had already retreated — by as much as a full percentage point in some cases. Thursday morning’s news was a half-day too late.
Still, mortgage rates do remain low.
This week is trade-shortened and thick with data. In addition to two pieces of housing news and a consumer sentiment survey, we’ll get a look at the Federal Reserve’s preferred Cost of Living index. All four data points are expected to validate the recession, so don’t expect mortgage rates to move much.
Instead, the biggest threat to mortgage rates this week is momentum. If mortgage rates tick higher Monday and Tuesday, expect that to continue Wednesday into the 2:00 P.M. market close and then to resume again Friday.
Markets are closed Thursday for the federal holiday.
During the holiday season, retailers bombard shoppers with at-the-register offers to “open a charge card and save 15%”.
It’s an immediate money-saver, but for Americans in the market for a new home loan, taking advantage of the in-store savings could be a long-term loser.
This is because new credit card applications are damaging to credit scores. According to myFICO.com, “new credit” accounts for 10 percent of a credit score; recent applications may signal weakness in a borrower’s profile.
Meanwhile, conforming mortgage lenders make rate adjustments for low credit scoring applicants. As an example, a home buyer with a 20 downpayment and a 715 credit score would face an interest rate adjustment of 0.125%.
Below 700, the adjustments are even worse.
It’s okay to take advantage of in-store savings during the holiday season, but be aware of how it may impact your credit score. If you’re not applying for a new home loan in the next six months, chances are that you’ll be alright.
But, if you will need a new home loan, consider whether saving 15 percent on a $200 purchase is worth it if the long-term cost is paying an extra 0.125 percent on your new mortgage.
Lately I have been getting a ton a calls in regards to this question:
“My property value has gone down but my property taxes have not gone down. How can I get my property taxes reduced to reflect its current value?”
This is a great question and yes something can be done to lower your property taxes. It is a process but worth doing.
A couple of years ago I went through the process and was able to get my property taxes lower.
All the info you need to know about appealing your property taxes is on the Pima County Assessor’s Office website. The appeal need to happen between January 1 to March 1 for the next tax year. So now is the time to start the process. For more info on how the process works simply click here.
There are also services that will appeal your property taxes for you for a small fee. Google “appealing property taxes in pima county az” and a list of these service providers will come up on the right side of the page under the sponsored links.
When it comes to mortgage rates, sometimes it’s better to “act now”.
On Tuesday, mortgage rates fell to their lowest levels in 4 years. It happened because the Fed said it would “employ all available tools” to resuscitate the economy.
On Wednesday, however, the markets had second thoughts.
After considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date, suddenly, traders grew fearful that U.S. government action would devalue the dollar and lead to inflation — the enemy of low mortgage rates.
As a result, mortgage markets unwound.
At first, the exit was a slow and orderly. Then, without warning, investors began a full-on sprint for the exits. By the end of the day, mortgage rates were higher by as much as a half-percent. Nearly all of Tuesday’s big gains were erased.
Sharp rate drops tend to be followed by immediate bounce-backs, it seems.
But, unfortunately, not every would-be refinancing homeowner saw the increase coming. While those that locked at the first opportunity to save money are sitting pretty today, the rest that “waited for rates to go lower” are likely kicking themselves about it.
Going forward, mortgage rates may fall, or they may not. We can’t possibly know. But we’ve now seen the pattern 3 times now — when mortgage rates plunge like they did Tuesday, they rarely stay that low for long. When you find a rate you like, get in and get locked as soon as possible.
Sleeping on it for even one night may end up costing you dearly. Give Tyler Ford and Todd Abelson of Sunstreet Mortgage a call to see if refinancing makes since for you. We are Tucson’s top mortgage lending team and will put your best interests first!
Did you know you pay more towards principle and build equity quicker with a lower interest rate?
Take advantage of historically low interest rates by refinancing today. You will saving thousands of dollars over the life of your loan.
Give Tyler Ford and Todd Abelson of Sunstreet Mortgage a call today by dialing 331-LEND (5363) for a FREE refinance analysis. We will prepared a detailed break down of what your monthly savings would be should you refinance plus show you how much you will save over the life of your loan.
There is no obligation! Give us a call today. We will beat Wells Fargo, Country Wide, Long Mortgage, Nova, or any other lender in Tucson.
Indeed, the incoming administration may be leading the sudden sentiment shift; its stimulus package is expected to top $1 trillion over the next 24 months and put thousands of unemployed Americans back to work. The widespread press coverage of this story may be one reason why Consumer Sentiment rose off its all-time low, despite the economic evidence that tougher times may still be ahead.
So, as markets shift their attention away from fundamentals and towards the government, mortgage rates are benefiting and refinance activity is gaining steam.
This week, the government should be the top story again. On Tuesday, the Federal Open Market Committee will adjourn from its 2-day meeting and is widely expected to lower the Fed Funds Rate by a half-percent to an all-time low of 0.500 percent. This move, too, is meant to stimulate the economy.
But it won’t be what the Fed does that matters; it will be what the Fed says.
In the 2:15 P.M. press release, Fed Chairman Ben Bernanke is expected to outline measures by which the Federal Reserve will stabilize the economy. If markets consider the moves to be “enough”, stock markets should soar and mortgage rates should suffer. However, there may be specific verbiage for providing mortgage relief, in which case, mortgage rates would fall.
Other noteworthy data scheduled for this week include the Cost of Living Index and Housing Starts, but neither should matter much to mortgage rates. For now, it’s all eyes on the government.