Mortgage Rates Newsletter - Market Analysis

Provided courtesy of: http://www.mortgagenewsdaily.com/reports/mortgage_rates/archive

Small Reprieve For Recent Rate Spike
Tue, 23 Jan 2018 20:58:06 GMT - Mortgage rates finally managed to move lower in a small but meaningful way today--something they haven't done in more than 2 weeks! During that time, we've seen average mortgage rates improve on 2 occasions, but in both cases, the gains were small (some lenders even went slightly higher). That's the good news. There are two caveats . The first has to do with the size of today's improvement. While it is indeed bigger than recent examples, many prospective borrowers will find it underwhelming. In isolated cases, it may get a loan quote down to the next .125% of a percent lower, but most quotes will simply have slightly lower upfront costs (while the rate itself remains unchanged). Looked at another way, we could say apart from yesterday, today's rates are the highest in more than 9 months. The
Mortgage Rates Set Another 9-Month High
Mon, 22 Jan 2018 22:31:00 GMT - Mortgage rates pushed up to yet another 9-month high today--something that's become all too common in the past few weeks. Just as troubling is the fact that 10yr Treasury yields--the bigger, more important neighbor that shares the street with mortgage rates--are operating at their highest levels since early 2014. Mortgage rates aren't directly tied to Treasury yields, but big momentum in Treasuries tends to spill over. Incidentally, both Treasuries and MBS (the mortgage-backed-securities that underlie mortgage rates) were roughly unchanged today. The problem is they were much weaker on Friday afternoon and mortgage lenders didn't fully adjust for that fact with Friday's rate sheets. That left them with a bit of catching up to do this morning. In other words, lenders needed to push their rates
Worst Week Since June for Mortgage Rates
Sat, 20 Jan 2018 00:37:23 GMT - Mortgage rates remained at 9-month highs today, with most lenders in worse shape than yesterday. In the morning, the sky hadn't yet fallen, the average lender was right in line with yesterday's 9-month highs, but at least we weren't any worse off than yesterday. Things changed in the afternoon as bond markets weakened abruptly. Many lenders issued negative reprices, thus leaving the average lender noticeably higher than yesterday. Today's weakness makes this the worst week for rates since late June and one of only 3 weeks with as much of a rate spike since 2016. For the third day in a row, I'm repeating the same mantra: any time we're pushing long-term highs, it's a good idea to remain defensive in terms of locking vs floating. The saving grace is that long-term highs typically precede extended
Be Careful With News on Mortgage Rates Today
Thu, 18 Jan 2018 21:48:33 GMT - It's Thursday, which means Freddie Mac released its weekly update on mortgage rates . This is typically not that big of a deal because mortgage rates don't tend to move enough in the short term to expose the shortfalls of Freddie's methodology. To be perfectly fair to Freddie, their methodology is fine for those who want a once-a-week look at rates and who aren't currently in the process of shopping for a mortgage or home. Unfortunately , much of the consumer-level interest in mortgage rate news comes from those who are in the process of shopping from a mortgage or home! Granted, they're not seeking out Freddie's rate survey, but they do tend to come across internet news that cites Freddie's data as a source. Enter the pitfalls. Freddie's survey deadline is Wednesday for any given week and
Mortgage Rates Highest in 9 Months
Wed, 17 Jan 2018 21:13:29 GMT - Mortgage rates were only moderately higher today, but the move was enough to officially bring them to the highest levels since the Spring of 2017. In other words, most lenders' rate quotes are fairly similar to recently bad days (like last Wednesday), but in terms of outright costs, you'd have to go back 9 months to see anything worse. There was precious little by way of overt motivations for today's move. Whereas rates have a longstanding history of responding to economic data and other events that speak to the economy/inflation/etc., many of the recent movements have had more to do with arcane considerations among bond traders than the aforementioned history. The timing of today's weakness is unfortunate as rates were just starting to look like they might be reinforcing recent ceilings. To
Private Mortgages

Private Mortgages

5 tips for doing a private mortgage

It's tough to find certificates of deposit that pay 2% a year. But if you're a bank lending to 30-year fixed-rate mortgage borrowers, you can earn 4%. At I Want a Better Mortgage, our specialists can help cut through the red tape and help you succeed in getting the loan you want.

Wouldn't it be great to be a bank?

Pros and cons

When Pittsburgh accountant and attorney James Lange bought his mother's house, he paid her half the purchase price over time, using what's often called a family or private mortgage. The transaction, he says, "worked out beautifully."

Yet he sounds a note of caution. "With this one, I've seen more problems than good situations," Mr. Lange warns. "If it's a choice between making a car payment and paying Dad, the kid will make the car payment, because Dad isn't going to foreclose."

Failing to pay is clearly the biggest potential problem—and it could have financial reverberations. If the child miss's payments, the parents will likely want to make it up to their other children, either by making gifts or adjusting their estate plan.

Even if the child pays on time, the deal may create family tension, perhaps because the parents start questioning the child's financial decisions or because the child fears their disapproval. On top of this, the child's regular mortgage payments won't help his or her credit score. To set up the private mortgage, you may need legal help—and the attorney involved could charge a hefty sum, given that this isn't your typical real-estate deal.

Set against these pitfalls are some key advantages. "It saves on closing costs and private mortgage insurance," notes Allan Roth, a financial planner in Colorado Springs, Colo. "I've set it up as a win-win, where the kid gets a low-cost mortgage and the parents get cash flow. But I've also done it as a wealth transfer, so you charge the lowest interest rate the government allows."

Five Tips

I have mentioned the notion of private mortgages to many folks, and the reactions are all over the place. Some think it's financially foolish. Others find the idea clever. Are you among those who are intrigued? Here are five tips:

You have to charge interest

To avoid tax headaches, you need to collect at least a minimum amount of interest, which is the IRS's "applicable federal rate."

You'll need a promissory note

This spells out the terms of the mortgage, including the interest rate and the repayment period.

You'll need a deed of trust

Also known as a mortgage or security deed, this establishes that the loan is secured by the property and the lender has the right to take the property back, should the borrower fail to pay. For your son or daughter to deduct the loan's interest payments, the deed of trust needs to be recorded with the appropriate local authority.

All this might sound complicated, but there's a four-year-old firm, National Family Mortgage, that will do the necessary paperwork for $725. The Waltham, Mass., company will also oversee payments for a fee of $15 a month and up, including providing monthly statements and annual tax reporting. "For a lot of families, it's all about keeping this relationship as business-like as possible," says National Family Mortgage's chief executive, Timothy Burke.

Get title insurance

Your child should talk to his or her attorney about getting title insurance, but you might save money by not bothering with a separate lender's policy, Mr. Burke says.

Think through the risks involved

As a rule, if your child couldn't qualify for a mortgage from a bank, you probably shouldn't be lending, either. Sure, there may be circumstances that you know about that perhaps a bank would be reluctant to consider. For instance, maybe your daughter is about to graduate and start a well-paying job.

You also shouldn't write a private mortgage if you can't afford to lose the money involved.

Pros and cons of private-mortgage loans

The problem for most borrowers in recent years hasn't been low mortgage rates, it has been the strict lending requirements imposed by most lenders. If you're having trouble qualifying for a conventional mortgage, a private-mortgage lender may be an option.

Private money funds, also known as "hard money," usually come from private investors or private lending companies who are willing to loan homebuyers money to purchase a specific property.

Homebuyers can often find these lenders by joining a real estate investment club in their area, Martin says, but these loans are most often secured by home investors. Unfortunately, not every homeowner will be successful getting money from a private lender.

Here are the pros and cons regarding private mortgage loans:

Pro: Easy to qualify

The loans could be a great option for homebuyers who are not able to qualify for a traditional mortgage because of less-than-perfect credit, debt or for self-employed individuals who can't always provide proof of a steady income.

The underwriting of the hard money loan is not so 'person' focused as it is 'property' focused. A person with poor credit can get a hard money loan if the project shows a likely profit."

Con: Short payback period

Private loans aren't paid back over 30 years like a traditional mortgage. Many private-money lenders expect the loan to be repaid within an extremely short time period, such as six to 12 months

Private lenders are often looking for a quick return for their money, and they usually aren't set up to service a loan for several years the way a typical mortgage company is.

For this reason alone, most homebuyers should look elsewhere for mortgages.

Pro: Great for 'flippers'

However, you might consider such a short repayment period if you plan to sell or "flip" the house within that timeframe, or expect to be able to qualify for a conventional refinance within a few months after acquiring the property.

If you plan to make extensive renovations in a short time period that will boost the value of the home, it is possible that you could sell or refinance the property fairly quickly.

Pro: Geared toward 'fixer-upper' properties

Homes that need extensive renovations generally can't qualify for conventional mortgages, no matter how good the borrower's credit is. In those cases, private money can play an important role, he says.

Some vacant homes may have been vandalized or someone may have stolen the plumbing. A private lender could step in and provide financing to get the house in sellable condition, and then "flip" the house.

Con: High interest rates

Interest rates are much higher with private-money lending than with conventional loans, Curtis says. In fact, mortgage rates are sometimes more than double typical 30-year mortgage rates, often 12 to 20 percent per year, he says.

Mortgage rates are so high because private lenders don't usually require perfect credit. Loans from private lenders are generally secured by the property in question, so it's usually not as important to the lender if the borrower has pristine credit.

Pro: Short approval process

If you have a house that you believe is a candidate for a private loan, the approval process often takes just a couple of weeks, as opposed to 30 to 45 days for a conventional loan.

For many borrowers, getting a loan that quick is a good tradeoff for higher interest rates. Private money lenders don't require a long drawn-out loan process like a conventional mortgage does.

If you have a house you want to rehab, and you feel that you could improve it enough to boost its worth in a short period of time that would allow you to pay off a private loan and replace it with a conventional refinance or sale, then getting a private loan is a viable option.

As long as you understand the caveats and do your research, it is possible to successfully secure a property without a conventional loan.

Having problems securing a mortgage? You're not alone. There are many reasons why someone may fall outside of the borrowing guidelines of institutional lenders. At iWantaBetterMortgage, we can help find the right lender for you.

Whether you have less than perfect credit, a reduced income, or a life event that has impacted your current financial situation, a private mortgage may be an option for you.

We'll sit down with you and discuss your current situation, and we'll look into financing options that may be suited to your needs.  Star your search at I Want a Better Mortgage.

 

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