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Apache is functioning normally

June 9, 2023 by Brett Tams

Perhaps one of the most confusing aspects of getting a mortgage is knowing who you actually pay once the thing funds. And to that end, when your first mortgage payment is due.

While Bank X may have closed your loan, an entirely different company could send you paperwork and a payment booklet. What gives?

Well, this highlights the difference between a mortgage lender and a mortgage servicer.

Mortgage Lender vs. Mortgage Servicer

loan servicer

  • The bank or mortgage lender processes and funds the home loan
  • Once it closes it may be sold off to a loan servicer or retained in portfolio
  • The job of a loan servicer is to collect monthly mortgage payments
  • And manage escrow accounts if your home loan has impounds

As noted, a mortgage loan servicer, also known simply as a loan servicer, is the company that collects your monthly mortgage payments.

They also manage your escrow account if your home loan has impounds, collecting a portion of property taxes and homeowners insurance each month, before making those payments on your behalf when due.

So really, there’s a good chance you’ll deal with your loan servicer a lot more than your mortgage lender, who may have only been in the picture for a month or so while your loan was originated.

You see, many mortgage lenders focus on loan origination as opposed to servicing, so they’re happy to fund your loan and quickly sell it off for a profit, then rinse and repeat.

The same goes for mortgage brokers, who fund your loan on behalf of a wholesale mortgage lender, which also may sell off the loan to a different servicing company shortly after it closes.

Further complicating all this is the fact that your mortgage lender could also be your loan servicer because some big banks and mortgage companies can profit from it.

One thing mortgage companies figured out in recent years was that keeping in touch with their past customers was a great way to generate repeat business.

But if they sell all their home loans off to other companies, they may lose out if mortgage rates fall and these customers are ripe for a mortgage refinance.

There are also mortgage subservicers, companies that perform loan servicing tasks on behalf of a lender, instead of completing those things in-house.

Anyway, without getting too convoluted here, it’s important to note this distinction between lender and servicer so you know who you’re dealing with.

And to ensure you’re sending monthly mortgage payments to the right place!

What Do Loan Servicers Do?

  • Collect monthly mortgage payments
  • Manage escrow accounts (property taxes and homeowners insurance)
  • Provide customer service if borrowers have any questions
  • Generate loan payoff statements
  • Perform loss mitigation (loan default, loan modifications, foreclosure, credit reporting)
  • Ensure compliance with federal, state, local regulations

The list above should give you a better idea of what loan servicers do, and why banks and lenders may choose to outsource these things.

If you have any questions regarding your home loan post-closing, it’s generally best to get in touch with your loan servicer as opposed to your mortgage broker or lender.

They should be able to answer any questions you have, whether it’s knowing where to send payments, how to make extra payments or biweekly mortgage payments, loan amortization questions, and so on.

Additionally, if having payment troubles in the future, your loan servicer should be the one to call to discuss options.

Remember, the lender is typically just there to help process and close your loan, then hands off the reins to a servicer from there.

Mortgage Servicing Transfers

  • Many home loans are transferred to loan servicing companies shortly after funding
  • You should receive a letter within 15 days of your loan being transferred
  • The new company’s contact information should be prominently displayed
  • It will also include the date when the old servicer will no longer accept payments
  • And the date when the new servicer will start accepting monthly payments

One of the most important things to do after your mortgage closes is to take note of who your loan servicer is.

Unfortunately, mortgage servicing rights are frequently transferred shortly after your loan funds, which can make it confusing to know who to pay.

Add in all the junk mail you might receive as a new homeowner (like mortgage protection insurance) and it could get really murky.

The good news is lenders and loan servicers must adhere to certain rules regarding the transfer of servicing rights.

After your mortgage funds, look out for a letter in the mail from the entity that closed your loan regarding a servicing transfer. You may also receive a letter from your new loan servicer as well.

It should clearly explain who will be processing your mortgage payments going forward, and is required to be sent 15 days prior to your loan’s servicing rights being transferred to the new servicer.

The letter should include all the relevant contact information you’ll need to ensure payments are sent to the right company at the right time.

Take note of when they’ll begin accepting payments, and when the old company will stop accepting payments.

In my opinion, it doesn’t hurt just to call the company and make sure everyone is on the same page before you send your payment, just to avoid a mess.

If you do make a payment mistake, there are some protections in place if it’s within 60 days of the servicing transfer, per the CFPB.

During this time, the new loan servicer can’t charge you a late fee or mark the payment as late if your payment was sent to your old servicer by its due date or within the grace period.

Who Are the Top Mortgage Servicers in the Country?

1. Quicken Loans
2. Regions Mortgage
3. Huntington National Bank
4. TD Bank
5. Chase
6. M&T Mortgage
7. SunTrust Mortgage (Truist)
8. Bank of America
9. Guild Mortgage
10. Citizens Mortgage

Quicken Loans was the highest-ranked mortgage servicer for the seventh consecutive year in 2020, per the latest U.S. Primary Mortgage Servicer Satisfaction Study from J.D. Power.

Both USAA and Navy Federal actually have higher rankings than all the companies listed above, but don’t meet the survey’s award criteria.

In other words, you should have a very good customer experience with those two companies as well.

Who Are the Largest Mortgage Servicers in the Country?

These are listed in alphabetical order since I don’t have figures available to rank them by total servicing volume. But they are some of the largest mortgage servicers in the country.

All of these companies service billions of dollars in home loans for customers, which they either originated themselves or acquired from other banks and mortgage lenders.

If you have a mortgage, there’s a good chance one of the companies on this list handles your loan servicing.

Tip: Always take the time to make sure you’re actually dealing with your loan servicer and not some phony entity.

Source: thetruthaboutmortgage.com

Posted in: Mortgage Tips, Refinance, Renting Tagged: About, All, amortization, Bank, banks, before, best, big, borrowers, Broker, brokers, business, CFPB, chance, closing, collecting, companies, company, Compliance, country, Credit, Credit Reporting, Customer Experience, customer service, escrow, Escrow accounts, experience, Fall, Financial Wize, FinancialWize, foreclosure, fund, funds, future, getting a mortgage, good, grace period, great, Guild, home, home loan, home loans, Homeowner, homeowners, homeowners insurance, house, How To, in, Insurance, job, lenders, list, loan, Loan origination, Loans, Local, Loss mitigation, Make, make a payment, making, manage, mess, mistake, More, Mortgage, Mortgage Broker, mortgage lender, mortgage lenders, mortgage loan, mortgage payment, mortgage payments, Mortgage Rates, mortgage refinance, Mortgage servicer, mortgage servicing, Mortgage Tips, new, new homeowner, News, Opinion, or, Origination, Other, paperwork, payments, place, PRIOR, property, property taxes, protection, questions, Rates, Refinance, right, Sell, Servicing, survey, taxes, time, usaa, volume, will

Apache is functioning normally

June 9, 2023 by Brett Tams

In 2019, one out of every 100 homes were purchased by an iBuyer, short for instant buyer, per a new report from real estate brokerage Redfin.

While it doesn’t sound like iBuying is catching on, consider the fact that the number is up nearly double from 0.6% in 2018.

And about 10 times higher than it was back in 2016, when virtually nobody sold their home via an iBuyer service.

Also recognize that iBuying at scale is a very novel concept, and a business that big household names have just recently got involved in.

Some of the larger names in the space include Offerpad, Opendoor, RedfinNow, and Zillow Offers.

Simply put, an iBuyer will purchase your home for a fee somewhat similar to what a real estate agent would charge, only to rehab it and list it weeks or months later to a new buyer.

The advantage is you don’t need to find an agent, list it, stage it, hold open houses, and deal with uncertainty from prospective buyers.

In essence, you can consider these iBuyers institutional home flippers.

If they streamline their operations enough to lower costs, they might grow even more popular and eventually displace thousands of real estate agents.

iBuying Most Common in Raleigh

iBuyer share

While iBuyers still account for a tiny piece of the overall pie, they snagged a whopping 7.3% share of home sales in Raleigh, North Carolina last year.

That was nearly double the 3.9% share reported in 2018, a testament to both the viability of iBuying and the good fit cities like Raleigh present to such companies.

Per Redfin chief economist Daryl Fairweather, places like Raleigh are “iBuyer sweet spots” because they are affordable, have newer housing stock, and are easy to price because many of the homes reside in homogeneous tract neighborhoods.

Raleigh is also a city poised to see home price growth, another important detail iBuyers have to consider when looking to turn a profit.

Lastly, it has been a pilot city for many iBuyers, who aren’t live in all cities across the United States just yet.

Similarly hot was Phoenix, AZ, where iBuyers scooped up 5.9% of homes for sale, followed by Charlotte and Atlanta (tied at 5.2%), and Las Vegas (4.1%).

iBuyers had a market share of 3% or more in 11 markets nationally, and at least 1% share in 21 total markets.

Again, because iBuyers haven’t rolled out to all cities nationwide, the numbers are still a bit scattered and lopsided.

In terms of volume, iBuyers purchased the largest number of properties in Phoenix (5,200+), followed by Atlanta (4,300+) and Houston (2,100+).

iBuying Surged in Tucson During the Fourth Quarter

iBuyer market share saw its biggest year-over-year increase in Tucson, AZ, where the number rose from 3.1% of homes in the fourth quarter of 2019 from zero a year earlier.

Again, this may reflect companies moving into new markets, but it also shows how quickly they are gaining traction and beating out traditional agents.

The second biggest increase was in Denver, CO, where the iBuyer share rose to 2.7% from 0.4% the year before.

Despite growing popularity, iBuyer market share did fall year-over-year in select markets, including Las Vegas (-3.4%), Phoenix (-1.2%) and Orlando (-1.0%), compared to Q4 2018.

However, Orlando was the only metro area to see its share fall on an annual basis from 2018 to 2019, declining from 2.6% to 2.2%.

iBuyers Like to Buy Homes on the Cheap

iBuyer median price

As noted, iBuyers tend to be interested in mid-market homes that are easily bought and sold, but there’s still quite a range nationwide.

The most expensive markets in 2019 were Riverside, CA, Denver, CO, and Portland, OR, where these companies purchased homes at a median $391,000, $386,000, and $377,000, respectively.

The cheapest markets included Tucson, AZ, Jacksonville, FL, and Atlanta, GA, where the median was $201,000, $202,000, and $212,000, respectively.

Overall, iBuyers paid a median $269,000 for the homes they purchased, up three percent from 2018, but well below the national median of $306,000 in January.

In every housing market other than Riverside, CA and Orlando, FL, iBuyers paid below the metro-area median.

In terms of unloading the homes once purchased, iBuyers were able to sell homes 15 days faster in 2019 than they did a year earlier, this despite the typical home sale taking two days longer.

iBuyer-owned properties were listed on the market for a median 38 days in 2019, compared to 53 days in 2018.

Meanwhile, a non-iBuyer home spent a median 37 days on the market last year, compared to 35 in 2018.

If iBuyers get better at what they do, it might become a more practical solution for home sellers, assuming these companies pass the savings onto consumers.

Source: thetruthaboutmortgage.com

Posted in: Mortgage News, Renting Tagged: 2, 2016, About, affordable, agent, agents, All, atlanta, az, before, big, brokerage, business, Buy, buyer, buyers, ca, charlotte, Cities, city, companies, Consumers, double, estate, expensive, Fall, Financial Wize, FinancialWize, fl, ga, good, Grow, growth, hold, home, Home Price, home price growth, home sale, Home Sales, home sellers, homes, homes for sale, hot, household, Housing, Housing market, housing stock, houston, iBuyers, in, jacksonville, Las Vegas, list, Live, LOWER, market, markets, metro area, More, Mortgage, Mortgage News, Most Expensive, Moving, neighborhoods, new, north carolina, offers, open houses, Opendoor, Operations, or, Orlando, Other, percent, Phoenix, pie, pilot, Popular, present, price, Purchase, raleigh, Real Estate, real estate agent, Real Estate Agents, real estate brokerage, Redfin, rehab, rose, sale, sales, savings, second, Sell, sellers, short, space, stage, states, stock, tract, traditional, tucson, united, united states, volume, will, Zillow

Apache is functioning normally

June 9, 2023 by Brett Tams

Mortgage rates are rising, refinances are trending, and older news is looming. Let’s cover all of it in this week’s Mortgage Monday update!

Rates Update

Last week, mortgage rates hit their highest since October 2019 – but let’s rewind a bit. For the week ending February 3, Freddie Mac actually reported generally stable rates from the average lender. Like many experts, they believe our economic recovery following Omicron will result in rate increases; what their weekly survey didn’t account for, however, was last Friday’s market changes.

On February 4, the US Bureau of Labor Statistics released their monthly jobs report for January. In short, things are looking up – there were significant job increases last month even in the face of Omicron – and markets were forced to respond. A return to a better economy will also inevitably mean a return to higher rates, and last week’s mortgage rate increases are already reflecting that.

We’ll likely see Freddie’s PMMS catch up with last week’s rate spike on Thursday. But for now, get in touch with your Total Mortgage loan officer if you’ve been considering a home purchase or refinance. Rates are rising faster than ever and are projected to continue doing so, especially after the Fed’s recent hinting at further increases in March.

Refinances are Trending as Rates Rise

Because rates are rising, refinance numbers are up and trending. In late January, mortgage refinancing accounted for 57.3 percent of applications in The Mortgage Bankers Association’s Refinance Index. As rates rise, the window to refinance at something lower naturally closes; we predict that refi numbers will continue along this trend through February until mortgage rates hit pre-pandemic levels.

In the meantime, our door is always open if you’re looking to refinance. The opportunity to do so is certainly dwindling, so be sure to act fast and get in touch with us. Find your mortgage banker today!

Older, But Still Important News

The Federal Housing Finance Agency (FHFA) announced upcoming fee increases for certain Fannie Mae and Freddie Mac home loans. Effective April 1, 2022, upfront fees for these options will have the following increases:

  • Upfront fees for high-balance loans will increase between 0.25 and 0.75 percent.
  • Upfront costs for second home loans (non-primary residence) will increase between 1.125 and 3.875 percent.

These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.

Last month, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit. To learn more about these changes and your new borrowing options, get in touch with your Total Mortgage loan officer.

In Closing

So far, 2022 has shown us just how reactive the markets (and mortgage rates) can be. In just a couple of months, rates have gradually shifted to their highest in years – meaning that the historic lows we’ve been used to seeing are now behind us. If homeownership is one of your goals for the year, it would be best to act sooner than later. Contact us at any time to get started!

As always, we’ll continue to monitor mortgage rates, industry news, and more to keep you informed. Enjoy the rest of your week!

Source: totalmortgage.com

Posted in: Refinance, Renting Tagged: 2022, About, Administration, All, Applications, average, balance, best, borrowing, Bureau of Labor Statistics, buyers, closing, couple, economic recovery, Economy, experts, Fannie Mae, Fannie Mae and Freddie Mac, fed, Federal Housing Finance Agency, Fees, FHA, FHFA, Finance, Financial Wize, FinancialWize, first-time home buyer, Freddie Mac, get started, goals, historic, home, home loans, home purchase, homeownership, Housing, housing finance, in, index, industry, Industry News, job, jobs, jobs report, Learn, loan, Loan officer, Loans, LOWER, market, markets, More, Mortgage, Mortgage Bankers Association, mortgage loan, mortgage monday, MORTGAGE RATE, Mortgage Rates, mortgage refinancing, new, News, opportunity, or, pandemic, percent, PMMS, Prices, Purchase, rate, Rates, Refinance, refinancing, return, rise, second, second home, short, single, stable, statistics, survey, the fed, time, trend, update, value, will

Apache is functioning normally

June 9, 2023 by Brett Tams

Depending on which rate tracker you look at, mortgage rates decreased, moved sideways or increased on a week-over-week basis.

Since June 1, the yield on the benchmark 10-year Treasury moved up 18 basis points to close at 3.78% on Wednesday.

But the spreads remain abnormally wide, and that likely contributed to the divergent movements among different trackers that use different methodology. The normal spread between the 10-year Treasury and the 30-year fixed-rate mortgage is between 150 and 200 basis points; no matter which tracker is used, they currently are in the 300 basis point range.

Freddie Mac’s Primary Mortgage Market Survey, which takes in rates on submissions to its Loan Product Advisor automated-underwriting system, reported an 8 basis point decline in the 30-year fixed-rate mortgage to 6.71% for June 8 from 6.79% one week prior. For the same week in 2022, the 30-year FRM averaged 5.23%.

NMN060823-Freddie Mac rates.png

The 15-year FRM fell to 6.07% from 6.18% week-to-week but rose from 4.38% on a year-over-year basis.

“Mortgage rates decreased after a three-week climb,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective home buyers.”

Optimal Blue, a division of Black Knight, reported the 30-year conforming mortgage at 6.746% as of June 7, based on data submitted to its product and pricing engine. That compared with 6.719% on May 31; on June 1 it fell to 6.649% before tracking higher over the following days.

Zillow’s rate tracker, based on offers, was at 6.61% on Thursday morning, unchanged from the morning of June 1, and down one basis point from the previous week’s average.

“After some mild oscillations, mortgage rates are right where they were this time last week as investors await more conclusive signs of progress on inflation and monetary policy,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement issued Wednesday night. “Last week’s stronger-than-expected employment report caused Treasury yields — and mortgage rates that follow them — to increase.”

But the services sector slowed down in May, according to the Institute for Supply Management purchasing managers’ index report. The price component had its weakest reading in two years, which is likely to be seen in the next Consumer Price Index reading.

“Cooling inflation and a general economic slowdown would put downward pressure on long-term interest rates like the 10-year Treasury yield,” Divounguy said.

On Wednesday, the Mortgage Bankers Association reported a 10 basis point decline in the 30-year FRM to 6.81%.

“The housing market has gotten off to a slow start this summer due to higher mortgage rates, low inventory and economic uncertainty,” a Thursday morning statement from MBA President and CEO Bob Broeksmit said. “The labor market continues to be exceptionally strong, which could bring more buyers back into the market once rates move away from their recent highs.”

Divounguy forecasts that mortgage rate movement should remain muted over the next seven days, “but upward bias remains as investors await next week’s CPI inflation report and Federal Open Market Committee forward guidance.”

Source: nationalmortgagenews.com

Posted in: Mortgage Rates, Refinance, Renting Tagged: 15-year, 2022, 30-year, advisor, affordability, average, before, black, Black Knight, blue, Bob Broeksmit, buyers, CEO, Consumer Price Index, cooling, data, Economy, Employment, Federal Open Market Committee, Financial Wize, FinancialWize, fixed, Forecasts, Freddie Mac, General, home, home buyers, home loans, Housing, Housing market, in, index, Inflation, interest, interest rates, inventory, investors, labor market, loan, Loan Product Advisor, Loans, low, Low inventory, market, MBA, Monetary policy, More, Mortgage, Mortgage Bankers Association, mortgage market, MORTGAGE RATE, Mortgage Rates, Move, offers, Optimal Blue, or, Originations, Other, points, president, Press Release, pressure, price, PRIOR, rate, Rates, right, rose, Sam Khater, sector, summer, survey, time, tracking, Treasury, Underwriting, Zillow

Apache is functioning normally

June 9, 2023 by Brett Tams

Economic data is one of the most basic and reliable inputs for the bond market.  The bond market, in turn, dictates day to day interest rate movement.  In general, weaker economic data pushes rates lower and that was today in a nutshell.

Weekly Jobless Claims came in at the highest levels since 2021 and the bond market reacted immediately.  It wasn’t a huge move in the bigger picture, but enough to counteract the jump to higher rates seen on Wednesday.

Bigger volatility remains a bigger risk surrounding next week’s Consumer Price Index data on Tuesday and the Fed Announcement on Wednesday.

Source: mortgagenewsdaily.com

Posted in: Refinance, Renting Tagged: 2021, Announcement, basic, bond, Consumer Price Index, data, fed, Financial Wize, FinancialWize, General, in, index, interest, interest rate, jump, LOWER, market, Mortgage, Mortgage Rates, Move, price, rate, Rates, risk, the fed, volatility

Apache is functioning normally

June 9, 2023 by Brett Tams


With high mortgage rates deterring unnecessary borrowing, a whopping one-third of U.S. home buyers are buying homes in cash, the highest share in close to a decade, according to a report Wednesday from Redfin. 

In April, 33.4% of buyers across the country dipped into their cash reserves, up from 30.7% from a year ago and the highest level since 2014. 


With interest rates at a 15-year high, it’s no surprise that cash purchases are now accounting for a larger share of deals, with buyers who would rely on mortgages shunning the market far more than their cash-spending counterparts. 

Case in point, across the 40 most populous U.S. metros the report analyzed, overall home sales were down 41% year over year in April, while all-cash sales logged a smaller 35% decline. 

The 30-year fixed-rate stood at 6.79% as of Wednesday, close to November’s high of just over 7%, according to lending giant Freddie Mac. 

“A home buyer who can afford to pay in all cash is weighing two potential paths,” Redfin senior economist Sheharyar Bokhari said in the report. “They can use cash to pay for the home and avoid high monthly interest payments, or take out a loan and pay a high mortgage rate. In that case, they could use the money that would have gone toward an all-cash purchase to invest in other assets that offer bigger returns, which could partly cancel out their high mortgage rate.”


Of course cash buyers can still be deterred by high interest rates and may decide that their money is better spent on investments that benefit from higher returns, the report said. 

Meanwhile, buyers who can’t afford to pay in all cash “also have two potential—but different—paths,” Bokhari said. “They can avoid a high mortgage rate by dropping out of the housing market altogether, or they can take on a high rate. That discrepancy is the reason the all-cash share is near a decade high even though all-cash purchases have dropped: Affluent buyers have the choice to pay cash instead of dropping out of the market.”

A smaller “but still noteworthy reason” for the increase in all-cash sales is competition among home buyers, the report said. A chronic lack of homes for sale in certain areas is motivating some shoppers to make an all-cash offer to beat out the other potential buyers.

Source: mansionglobal.com

Posted in: Renting Tagged: 15-year, 30-year, All, assets, borrowing, buyer, buyers, Buying, choice, Competition, country, Deals, Financial Wize, FinancialWize, fixed, Freddie Mac, home, home buyer, home buyers, Home Sales, homes, homes for sale, Housing, Housing market, in, interest, interest rates, Invest, investments, lending, loan, Make, mansion global, market, money, More, Mortgage, MORTGAGE RATE, Mortgage Rates, Mortgages, november, offer, or, Other, payments, Purchase, rate, Rates, Redfin, returns, sale, sales, Spending, weighing

Apache is functioning normally

June 9, 2023 by Brett Tams

The housing market is getting stranger by the day.

While affordability has arguably never been worse, prices are rising and there are virtually no homes for sale.

This is making it difficult for both housing bulls and bears to make the case for a boom or a crash.

When all is said and done, we might just experience a stagnant market that fails to keep up with inflation.

And a severe economic downturn in the housing industry due to a lack of sales volume.

New For Sale Listings Hit Seasonal Low in June

new listings

First things first, new real estate listings are off a whopping 25% from a year ago, according to a new report from Redfin.

This covers the four-week time period ending on June 4th. Just 89,249 homes were listed.

And the real estate brokerage noted that new listings fell in all metros analyzed.

The declines were the most pronounced in Las Vegas (-42.3% YoY), Phoenix (-40.9%), Seattle (-40.4%), Oakland (-39.8%), and San Diego (-37.2%).

These happen to be areas that saw massive home price appreciation, then big home price corrections.

It seems homeowners are now staying put in these areas, perhaps as they come to terms with the inability to make a move from a financial standpoint.

Ultimately, the mortgage-rate lock in effect continues to make it both unfavorable and sometimes impossible for existing homeowners to move.

Simply put, selling your home with a 2-3% mortgage rate, only to buy one with a 7% mortgage rate, doesn’t pencil.

And rents aren’t cheap either, so it’s not a viable option to sell and rent for much less.

Active Real Estate Listings Are Falling When They Typically Rise

active listings

Meanwhile, active listings (the number of for-sale homes available at any point during the period) declined 4.6% from a year earlier.

This was just the second decline in 12 months, the first being a week earlier when actives fell 1.7%.

Redfin noted that active listings were also down month-to-month at a time of year when they typically rise.

Because of the lack of new listings, the total number of homes on the market fell to its lowest level on record for an early June.

Long story short, there is no housing inventory, which is somewhat good news because there aren’t a lot of buyers either.

As noted, affordability isn’t great with mortgage rates at/near 7% and home prices still historically high.

This explains why the median home sale price was down just 1.6% from a year ago at $379,463.

That represented the smallest decline in the past three months as many markets that were down year-over-year begin to turn things around.

Housing Supply Is Up Slightly from a Year Ago

available supply

While new listings and active inventory are down, housing supply inched up a bit from last year.

As of June 4th, supply was at 2.6 months, which is the amount of time it would take to clear inventory at the current sales pace.

But while it’s up 0.5% from a year ago, it’s still well below the 4-5 months that represents a healthy, balanced housing market.

The reason it’s higher is because homes are sitting on the market longer and taking more time to receive offers.

Again, you can blame affordability for this as there are fewer eligible buyers out there. And perhaps fewer who are interested even if they can afford it.

About a third of homes that went under contract received an accepted offer within the first two weeks on the market, down from 38% a year ago.

And homes that sold were on the market for a median 28 days (the shortest span since September), but much longer than the record low 18 days a year earlier.

So it’s clear the housing market isn’t thriving at the moment, but due to a continued lack of inventory, prices remain sticky.

But that could change if mortgage rates remain elevated during the softer part of the calendar year (summer/fall/winter).

Still, the resilience of home prices continues to exceed expectations and defy the housing bears.

Read more: When will the housing market crash again?

Source: thetruthaboutmortgage.com

Posted in: Renting Tagged: 2, About, active, affordability, All, appreciation, big, brokerage, Buy, buyers, clear, crash, economic downturn, estate, existing, expectations, experience, Fall, Financial Wize, FinancialWize, good, great, healthy, home, Home Price, home price appreciation, home prices, home sale, homeowners, homes, homes for sale, Housing, housing industry, Housing inventory, Housing market, in, industry, Inflation, inventory, Las Vegas, Listings, low, Make, making, market, markets, More, Mortgage, MORTGAGE RATE, Mortgage Rates, Move, new, new listings, News, oakland, offer, offers, or, Phoenix, price, Prices, rate, RATE LOCK, Rates, Real Estate, real estate brokerage, Real Estate Listings, Redfin, Rent, rise, sale, sales, san diego, seasonal, seattle, second, Sell, selling, Selling Your Home, september, short, story, summer, time, under, volume, will, winter

Apache is functioning normally

June 9, 2023 by Brett Tams

Mortgage Q&A: “Why are refinance rates higher?”

If you’ve been comparing mortgage rates lately in an effort to save some money on your home loan, you may have noticed that refinance rates are higher than purchase loan rates.

This seems to be the case for a lot of big banks out there, including Chase, Citi, and Wells Fargo, which while enormous institutions aren’t necessarily the leaders in the mortgage biz anymore.

In fact, today Quicken Loans is #1, followed by United Wholesale Mortgage in the #2 spot, then a mix of these big banks and nonbanks, including loanDepot, Caliber Home Loans, and others.

So why is that some of the big guys list “purchase rates” and “refinance rates” separately, with different pricing, points, and APRs?

Well, for starters a home purchase is not the same as a mortgage refinance, though both processes are very similar, and the underlying loans themselves aren’t much different.

Ultimately, a home purchase loan is for someone who has yet to buy a property, whereas a mortgage refinance is for an existing homeowner who wants to redo their home loan.

We know they are different objectives, but if the underlying loans are both 30-year fixed mortgages with the same loan amounts, the same borrower credit scores, and the same property types, why should rates be any different?

Home Purchase Mortgages Default the Least

default rates

There are three main types of mortgages, including home purchase loans, rate and term refinances, and cash out refinances.

The first is self-explanatory and was already explained above, the second is simply redoing your current mortgage by obtaining a new interest rate and loan term, without changing the loan amount.

The third type results in a larger loan amount at closing because you’re pulling equity from your home, which a layman should assume would be the riskiest transaction.

After all, if a borrower now owes more debt, and maybe even has a higher monthly mortgage payment as a result, their default risk should rise.

Simply put, when you pull cash out of your home, you increase your outstanding loan balance, increase your loan-to-value ratio (LTV), and reduce your available home equity, that’s riskier.

This in theory should result in a higher mortgage rate to compensate for increased risk. And guess what – that is indeed the case. Cash out refinance rates are the highest, all else being equal, for basically all banks and lenders.

At least something makes sense around here…

A Rate and Term Refinance Sounds the Least Risky, Doesn’t It?

refinance rates

Now, a rate and term refinance should result in the least amount of default risk because the borrower is likely reducing their monthly payment in the process.

This happens via a lower interest rate and possibly a lower outstanding balance (paid down since origination) spread out over a brand-new loan term.

That leaves us with home purchase loans, which you’d think would be less risky than a cash out refinance, but not as risky as a rate and term refinance, since it’s ostensibly a first-time home buyer or someone in a new property.

If you were the bank, you’d probably want to give a new, cheaper loan to the seasoned homeowner who has been paying their mortgage for years as opposed to the first-time buyer or even a move-up buyer taking on more debt.

But for one reason or another, some banks and mortgage lenders offer the lowest mortgage rates on home purchase transactions.

The Lowest Mortgage Rates Are Offered on Home Purchase Loans

The reason boils down to DATA. Despite the fact that the actual loan characteristics (such as FICO score, LTV, and DTI) would indicate the lowest default rates on rate and term refinances, it is purchase loans that perform the best.

One possible reason why is because of faulty appraisals on refinances, which perhaps overvalue properties.

Regardless, purchase mortgages default the least, followed by rate and term refinances, and finally cash out refinances, the last of which actually makes sense.

Interestingly, the loan characteristics also indicate that cash out refis and purchase mortgages should default at about the same rate, yet they are priced the furthest apart.

And again, that’s because in real life, not expected default rates, purchase loans default the least and cash out refis default the most.

Lowest: Home purchase rates
Slightly Higher: Rate and term refinance rates
Highest: Cash out refinance rates

So when you compare mortgage lenders, you might often find that purchase rates are the cheapest, followed by rate and term refi rates, and finally cash out mortgage rates.

There’s no question cash out refinances cost the most – this is the norm amongst all banks and lenders to my knowledge.

But not all banks/lenders offer different rates for purchases and rate and term refis.

How Much More Expensive Are Refinance Rates?

  • Big banks tend to advertise higher refinance rates vs. purchase rates
  • Some lenders don’t differentiate between purchase rates and rate and term refi rates
  • Or simply charge slightly higher closing costs on refinance transactions
  • Rates may be .25% to .375% higher on refis but pay attention to points charged and loan assumptions

I looked around and found that Chase, Citi, and Wells Fargo offer lower home purchase rates, while Quicken Loans offers the same exact rates for purchases and rate and term refis.

Quicken even says this in their fine print: “Based on the purchase/refinance of a primary residence with no cash out at closing.”

In other words, a purchase or rate and term refi are priced the same.

Clearly this matters when shopping around for a mortgage, so take notice of who is charging more/less for certain transaction types and choose accordingly.

One last thing – pay attention to the assumptions lenders make when they list their rates. It could also be that you’re not comparing apples to apples, if there are different loan amounts, LTVs, credit scores, mortgage points, and so on.

But know refinance rates are higher because they default more than purchase loans, and that requires a higher price to compensate for heightened risk, plain and simple.

Source: thetruthaboutmortgage.com

Posted in: Mortgage Rates, Mortgage Tips, Refinance, Renting Tagged: 2, 30-year, About, actual, All, Appraisals, assumptions, balance, Bank, banks, best, big, Buy, buyer, Caliber Home Loans, chase, Citi, closing, closing costs, cost, Credit, credit scores, data, Debt, DTI, equity, existing, expensive, fico, fico score, Financial Wize, FinancialWize, first-time home buyer, fixed, home, home buyer, home equity, home loan, home loans, home purchase, Homeowner, in, interest, interest rate, Leaders, lenders, Life, list, loan, loanDepot, Loans, LOWER, Main, Make, money, More, Mortgage, mortgage lenders, mortgage payment, mortgage points, MORTGAGE RATE, Mortgage Rates, mortgage refinance, Mortgage Tips, Mortgages, Move, new, offer, offers, or, Origination, Other, points, price, property, Purchase, Purchase loans, Q&A, rate, Rates, Real Life, Refinance, rise, risk, save, second, shopping, simple, time, Transaction, united, United Wholesale Mortgage, value, wants, wells fargo

Apache is functioning normally

June 9, 2023 by Brett Tams

At least not yet…

As you probably know, the Fed slashed the federal funds rate to near-zero yesterday afternoon to prop up the economy as it contends with the growing coronavirus pandemic.

If you read the headlines, you might falsely assume the Fed just slashed mortgage rates by a full percentage point.

Combined with the half-point cut two weeks ago, you might be led to believe that mortgage rates are now truly rock bottom.

But in reality, those actions had nothing to do with consumer mortgage rates.

Those rate cuts were intended to help banks borrow from one another to ensure they maintain minimum reserve requirements.

When that key rate is lowered, the money supply rises and lending to businesses and consumers increases, thereby spurring economic activity.

That’s the whole point.

Didn’t the Fed Just Lower Mortgage Rates?

  • The Fed rate cuts have no direct impact on mortgage rates
  • They can serve as a guide for long-term rates, but the federal funds rate isn’t your mortgage rate
  • Your mortgage rate didn’t just drop by 1%
  • But the MBS buying program known as QE4 should lead to lower mortgage rates for consumers over time

Ok, great, so how does this affect mortgage rates?

Well, the Fed also announced the purchase of at least $200 billion in agency mortgage-backed securities (QE4), which is intended to bring down mortgage rates.

However, and this is a biggie, long-term fixed mortgage rates weren’t anywhere close to zero when they announced the news.

They actually hit record lows two week ago, which set off a refinance frenzy, and in turn caused an oversupply in the market.

Simply put, mortgage lenders were over capacity, and when there’s too much supply and not enough demand, prices must be adjusted.

In the case of mortgage rates, prices went up to stem demand.

This phenomenon is also driven by the fact that most mortgage lenders bundle and sell off their mortgages almost immediately after origination to investors.

If there are too many of these bundles of mortgages, known as mortgage-backed securities (MBS), floating around, prices must go down.

Or, mortgage rates must go up to make them more attractive to investors seeking higher yields.

And that’s why mortgage rates shot up after hitting record lows.

It also explains why the Fed took direct action to buy MBS, which will level the supply/demand imbalance.

In short, the Fed has agreed to be a major buyer of MBS, allowing mortgage lenders to lower mortgage rates again.

When Will Mortgage Rates Fall to 0%?

  • Mortgage rates probably won’t ever go to 0% or anywhere close
  • Despite European banks offering 0% rates or even negative rates
  • The Fed’s QE4 program should stabilize and lead to lower mortgage rates
  • Whether they return to record lows depends on what else goes on in the world over the next several months

Now remember, mortgage rates weren’t anywhere near 0% last week.

In fact, many lenders had raised rates so rapidly that the near-3% 30-year fixed rates were now actually closer to 4%.

If you’ve been following mortgage rates recently, you’ll know that a 4% 30-year fixed mortgage rate is nothing to get excited about.

Not only does it feel very average, it probably is high to a lot of homeowners. And it’s not just emotional.

There are plenty of homeowners out there with sub-4% interest rates, so for these millions of borrowers, there will be no financial incentive to refinance.

When lenders collectively raised rates last week, they effectively reduced the refinanceable population by millions of individuals.

The good news is that should also work to limit MBS supply, and when coupled with the Fed buying MBS, push mortgage rates lower.

The problem is mortgage rates are nowhere close to zero, as they are in European countries, where they are even being offered below zero (negative rates).

So really, the Fed’s move is intended to keep the secondary market for mortgages intact, first and foremost.

To ensure that mortgage rates don’t rise further, crushing an industry that seemed primed for a windfall.

In other words, the first step here is stabilizing mortgage rates and erasing some of last week’s damage.

The next step is trying to rally back down to the record lows seen two weeks ago.

From there, the 30-year fixed would still be perched at/above 3%, so a rate of zero or anywhere close to it would still be worlds apart.

And if you believe the head of the nation’s largest retail mortgage lender, Quicken Loans, we won’t even see 30-year fixed mortgage rates fall below 3%.

So regardless of what the Fed is doing, you might want to temper your expectations.

That being said, we could test new all-time lows eventually, but it’s probably going to take some time to play out.

Lenders have no intention of getting caught out twice, so they’ll be very hesitant to lower rates significantly at the moment.

If we’re able to resolve the coronavirus in the meantime, that could actually work against interest rates, assuming the economic damage is less than what’s baked in and we get back into gear.

In summary, yesterday’s Fed announcement is excellent news for mortgage rates, but it’s going to take time and favorable conditions for mortgage rates to even get back down to 3% again.

Source: thetruthaboutmortgage.com

Posted in: Mortgage News, Mortgage Rates, Renting Tagged: 30-year, 30-year fixed mortgage, About, action, All, Announcement, average, banks, Borrow, borrowers, Buy, buyer, Buying, Consumers, coronavirus, Economy, expectations, Fall, fed, fed rate, Federal funds rate, Financial Wize, FinancialWize, fixed, funds, good, great, guide, homeowners, impact, in, industry, interest, interest rates, investors, lenders, lending, Loans, LOWER, Make, market, MBS, money, More, Mortgage, mortgage lender, mortgage lenders, Mortgage News, MORTGAGE RATE, Mortgage Rates, Mortgages, Move, new, News, or, Origination, Other, pandemic, play, Prices, Purchase, rate, Rates, Refinance, retail mortgage, return, rise, Secondary, secondary market, securities, Sell, short, The Economy, the fed, time, will, work

Apache is functioning normally

June 8, 2023 by Brett Tams

With significant increases in mortgage rates and application volumes, 2022 is already showing us the effects of the Federal Reserve’s expedited tapering plan. Things are moving fast, so let’s get right into this week’s update with the latest mortgage industry news.

Rates Update

In the week ending January 13, Freddie Mac reported some of the largest average mortgage rate increases in recent months. According to Freddie’s PMMS, loan products across the board showed increases of upwards of 0.2 percent – bringing rates to their highest since early 2020. Our predictions:

  • Refinance opportunities could be disappearing. Should mortgage rates continue to increase, the window to refinance at a lower rate will subsequently close. Acting sooner than later will benefit you in the long run, so be sure to contact your Total Mortgage loan officer to get started.
  • Mortgage application volume will increase. On January 12, the Mortgage Bankers Association (MBA) reported a 1.4 percent increase in mortgage applications from the week prior; this increase will likely continue in the coming weeks as buyers take advantage of the market before further rate hikes.

As always, we’ll continue to keep you updated as the market develops and mortgage rates shift. The Federal Reserve’s next meeting on January 26 will likely shed more light on the above as we close out the month. For now, contact us if you have any concerns or are ready to lock in a rate before they continue to rise.

Older, but Still Important News

Even with this recent spike in mortgage rate numbers, let’s not forget about older news that will still hold prominence in the months to come.

Earlier this month, the Federal Housing Finance Agency (FHFA) announced upcoming fee increases for certain Fannie Mae and Freddie Mac home loans. Effective April 1, 2022, upfront fees for these options will have the following increases:

  • Upfront fees for high-balance loans will increase between 0.25 and 0.75 percent.
  • Upfront costs for second home loans (non-primary residence) will increase between 1.125 and 3.875 percent.

These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.

At the start of the month, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit. To learn more about these changes and your new borrowing options, get in touch with your Total Mortgage loan officer.

In Closing

Despite everything, the market is still in a favorable place for buyers – but for how much longer? Even in the face of Omicron concerns, mortgage rates are rising and are only expected to continue doing so throughout the year. If you’ve been waiting for the perfect rate, now may be one of your last chances to lock it in; contact us to get started and stay tuned for next week’s Mortgage Monday update!

Source: totalmortgage.com

Posted in: Refinance, Renting Tagged: 2, 2022, About, Administration, Applications, average, balance, before, borrowing, buyers, closing, Fannie Mae, Fannie Mae and Freddie Mac, Federal Housing Finance Agency, Federal Reserve, Fees, FHA, FHFA, Finance, Financial Wize, FinancialWize, first-time home buyer, Freddie Mac, get started, hold, home, home loans, Housing, housing finance, in, industry, Industry News, Learn, loan, Loan officer, Loans, LOWER, market, MBA, More, Mortgage, mortgage applications, Mortgage Bankers Association, mortgage industry news, mortgage loan, mortgage monday, MORTGAGE RATE, Mortgage Rates, Moving, new, News, or, percent, place, plan, PMMS, predictions, Prices, PRIOR, products, rate, Rate Hikes, Rates, ready, Refinance, right, rise, second, second home, single, update, value, volume, will
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