Archive for the 'Interest Rates' Category
Video Interview: How the Fannie Mae/Freddie Mac Bailout Affects Buyers
Posted by Erica Vautier Liodice | Leave A Comment »
We’ve all heard the news, the Fed has officially bailed out Fannie Mae and Freddie Mac. Alright, now how does that affect me?
If you are shopping for a new home loan or considering refinancing an existing loan, it could have a profound effect on your buying power!
To better understand the Fed’s announcement and figure out exactly what it means for the housing market, we went to the experts. Kevin Kueneke, a Senior Loan Consultant at CW Mortgage, breaks down the news and explains what it means for San Diego.
Watch the video interview below and find out whether or not this news will change your buying power.
Want more information?
Read Kevin’s “First Take” on the Fed’s Announcement to Bailout Fannie Mae and Freddie Mac.
Do you have a Real Estate or Financial Question?
Send us an email and we will post a video interview with an expert answering it for you!
Related Posts: Buyers, CW Mortgage, Exclusive Properties, Financial news, Home Loans, Homeowners, Interest Rates, Mortgage News, Video Interviews
I’m Refinancing – Should I Let My Lender Pay My Closing Costs?
Posted by Paul Gonzales | Currently 1 Comment »
You have probably heard the radio and TV ads proclaiming “Absolutely No Closing Costs!” or “Refinance for just a flat $295 Fee!”. Your common sense tells you that nothing is free, certainly not from a bank or mortgage company.
Well, you are right. Lenders don’t work for free any more than you do. So how do they do it? They don’t – You do. That’s right, the costs are buried in your interest rate. So does it ever make sense to get a “no-cost” loan? The answer is “it depends”.
An example will make this crystal clear: Say you can get a $300,000 loan at 6.25% by paying your own closing costs of about $2,700. Your monthly payment would be $1,847 per month. At a higher interest rate of 6.625% the lender will pay the $2,700 in closing costs for you and your monthly payment would be $1,921 per month. Which offer should you take?
The answer is simple arithmetic: At the higher rate, you will save $2,700 right up front since the lender is paying the closing costs, but your monthly payment will be $74 higher. So if you divide your initial savings of $2,700 by the extra $74 per month that you’ll pay at the higher rate, the lender will get its $2,700 back in just over 36 months (three years).
Bottom line:If the lender pays your closing costs, you will be saving money as long as you keep the loan in this example for less than three years.
However, if you keep this loan longer that three years (with the extra $74 in interest each month) you could wind up paying far more than your original $2,700 in closing costs. For instance, after 4 years you will have repaid over $3,500 in extra interest; after 6 years over $5,300!
You get the idea. The correct answer is “it depends” on how long you think you will be keeping the loan. So the next time you are considering whether or not to pay your closing costs, ask your trusty lender to work the numbers for your particular situation – then you can make an informed decision. Remember, it’s not rocket science, just simple arithmetic!
Feel free to call or email me with questions regarding a refinancing strategy for you – (760) 746-7388 or [email protected]
Related Posts: CW Mortgage, Home Loans, Homeowners, Interest Rates, Mortgage News
Shopping for a Home Loan – Be Sure to Compare Apples to Apples
Posted by Paul Gonzales | Leave A Comment »
You’re a smart cookie, so you called five different lenders and “shopped” for your home loan. If you are like most folks, you asked “what’s your rate?” and each lender tossed you a quote. What’s your next move – do you go with the guy that quoted you the lowest rate? You probably shouldn’t and here’s why – you didn’t ask enough questions.
Interest rate quotes by themselves literally mean nothing. This is because, all other things being equal, you can get a lower rate by paying ‘points’ or other closing costs. On the other hand you may reduce or even avoid those extra expenses by accepting a higher interest rate. The problem you have when you ‘shop’ is that each lender is simply tossing you an interest rate without explaining what it will cost you to get it. They simply want to take you off the market with whatever you want to hear – they’ll clue you into the full picture later.
Your job is to get the full picture right up front! Here’s how:
- be very specific about the kind of loan you want (30 year fixed, interest-only payments etc.. Rates very depending on the type of loan you are seeking)
- When they quote you an interest rate, ask them if that particular rate requires your payment of any discount points, an origination fee or application fee.
- finally, ask them to give you an estimate of your final and total closing costs including an appraisal and credit report
A final word about interest rates:
Mortgage rates for all lenders are subject to the frequent and rapid changes in the financial markets. They can (and commonly do these days) change literally hour-by-hour, much as the stock market does. In recent months we have actually seen interest rates on mortgages rise and fall as much as a half of a percent in the same day. The point is that if you are leisurely “shopping” for the best deal over a period of several days or weeks, your information has already gone out of date and you have no basis for a sound comparison.
The key is to recognize that rates alone are only half the picture. You also need to know the costs involved in getting those rates and talk with lenders preferably on the same business day, so you can compare “apples to apples”, instead of “soup to nuts”. The bottom line, however, is still choosing to work with a lender whom you can trust and who will work hard to get you the best interest rate-and-cost package you can qualify for. And that may definitely not be the the person tossing out the lowest rate of the day!
Call me for a complete discussion of interest rates and costs on your next home loan! (800) 775-7334 or email me at [email protected]
Related Posts: CW Mortgage, Find A Home, Home Loans, Interest Rates, Mortgage News
100% Financing in California for Low to Moderate Income Borrowers – The USDA Rural Housing Loan Program
Posted by Paul Gonzales | Currently 1 Comment »
In the reality of the current mortgage market we find that low down payment loan programs have become scarce and difficult to qualify for. Except for a very few special government programs, zero-down payment programs today are virtually non-existent in states like California, Arizona and Florida.
One of those exceptional government programs still allowing 100% financing is under (of all places) the US Department of Agriculture. It is known as the USDA Guaranteed Rural Housing Loan Program. Of course, as with most such programs, there are program limitations and rules that must be met to qualify both the home buyer and the property.
Program Highlights
- 30-year fixed interest rate type loans (some can go a bit longer)
- maximum financing up to 100% of the purchase price
- the seller can contribute up to 6% of the purchase price to closing costs
- maximum loan amount is currently $417,000
- can be used to either purchase or refinance (no cash-out refinancing)
- no PMI or mortgage insurance required, however there is an up-front USDA fee of 2% for purchases, and 0.5% for refinances; both can be financed into the loan
Borrower Qualifications
As the title suggests, this program is intended to afford home ownership to individuals and families with low-to-moderate incomes as defined by the USDA. There are (of course) certain guidelines to meet as well as some nice features afforded the qualified borrower:
- income must be fully-documented by tax returns
- no “cash reserves” are required
- no minimum contribution from the borrower’s own funds is required
- credit history must be “reasonable” and is evaluated on a case-by-case basis
- the mortgage payment must be affordable, together with property taxes, insurance and other household expenses, again evaluated case-by-case
Property Requirements
This is the most distinguishing feature of the program. As the program title suggests, it is intended to focus primarily on “rural” parts of the country. That certainly leaves out a lot of territory where many people would choose to buy a home. However, there are some surprising areas, especially in Southern California, that are eligible. Some highlights:
- single-family residences only, occupied by the borrower
- the home must be “modest in size, design and cost”
- must meet local, state and federal building code requirements
- new manufactured housing, permanently installed, that meets HUD standards for construction and safety (for existing manufactured housing, only properties with an existing USDA-type loan or a bank-owned property formerly secured by such a loan can be refinanced or purchased under this program)
In summary, this program provides an affordable way for low-to-moderate income borrowers looking to purchase a home in a rural-development area. Use this link to go to the Housing and Urban Development website for more information on qualifying incomes and property locations.
for more information, call me at (760) 746-7388 or email me at [email protected]
Related Posts: CW Mortgage, Home Loans, Interest Rates, Mortgage News
Zero-Down VA Loans Up To $697,500 In San Diego County
Posted by Kevin Kueneke | Leave A Comment »
Continued good news from the recently passed Housing and Economic Recovery Act (HR 3221). The Veterans Administration (VA) has increased the VA guaranty amount. 
The VA will now guaranty up to 25% of the FHA one-unit high-cost county loan limit. This means that a veteran can borrow up to $697,500 in San Diego County with zero down payment. However, this $697,500 must include the VA Funding Fee (click here to see if funding fee is applicable). Effective January 1, 2009, the new VA zero-down loan limit will be 115% of the local area median home price which may be as high as $625,500.
You might ask then, through the end of the year, what is the maximum sales price in San Diego County? For a veteran with full entitlement and first time use of their guaranty, this equates to a sales price of about $682,800…with no money down! For reservists or national guard, the sales price would be about $681,100. If the veteran is exempt from paying the funding fee, then the sales price can be the full $697,500.
This is truly beneficial as it allows active duty servicemen, servicewomen, and veterans to purchase homes in high cost areas without having to come up with the standard down payment. Also, the mortgage interest rates are no longer set by VA so that the veteran can actually get a fair market rate. Keep in mind that the VA Funding Fee at these loan amounts is quite sizable since it is a percentage of the base loan. However, it is typically financed and can actually be paid by the seller.
Questions? Call me directly at (760)500-1919 or email me today to find out how much home you qualify for…it might be more than you think.
Related Posts: Buyers, CW Mortgage, Home Loans, Homeowners, Interest Rates, Mortgage News
