Truth is, you are NOT going to refinance that loan anyway!

But WHY are the rates so low, and how long will they stay down???

They are low because for the first time the Feds are actually MANIPULATING the FIXED RATE HOME LOAN MARKET.  In my 23 years as a loan originator, I have never seen the Feds do what they are doing.

BACKGROUND: The Federal Reserve raises and lowers the Federal Funds Rate and the Discount Rate. This affects the cost for banks to borrow  from the Feds.  That then impacts the cost of short term borrowing for consumers (ARM’s for the most part).  Fixed rates are affected by the price of long term bonds.  Bonds are considered a safe place to put money.  You don’t get the same return as stocks, but you are at least sure of your return. In fact, BONDS AND STOCKS COMPETE FOR AVAILABLE MONEY.

This is what affects mortgage rates, because bonds and mortgage back securities are similar in nature, they are similar in this respect.

The Feds do not control the price of bonds, which means they do not control mortgage backed securities, which means they do not control fixed rates. Got it?

Now stay with me because…

IT IS A COMMON MISCONCEPTION THAT THE FEDS  CAN CONTROL, OR COULD EFFECT, LONG TERM FIXED RATES, BUT THEY DON’T, THEY HAVE NOT, THEY CANNOT…..THAT IS, UNTIL NOW!!!!!!!!!!!!!!!!!! 

From now until the end of the year, the Feds are actively buying existing mortgage backed securities. Because there is this huge buyer of BONDS, IT MEANS THE YIELD IS LOW.  Normally the yields must be high, to attract a buyer, but the Feds are buying so much ($1,250,000,000,000) it keeps the yields, and the rates low. That is 1.25 TRILLION dollars. 

NOW FOR THE GREATEST PART!!!

THIS IS WHY YOU READ THIS POST….

You might think, “GREAT!” more bailouts! But that is not true, the money will come back to us, because they are buying securities yielding 5.5%.  So, by buying these securities they drive rates down (big buyer remember?) AND THAT WILL CAUSE THESE 5.5% RATES TO REFINANCE TO 4.5%, AND THE FEDS WILL GET THEIR MONEY BACK!!!

BRILLIANT!!!!

So, in a nutshell that is why Danville mortgage rates are low.

UNTIL THE END OF THE YEAR….

So now is the time to apply for your 4% rate loan,  as next year will be too late!

Click on the “apply” or call me to discuss your specific scenario!!!

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Yes, it’s true!  Stated income lending is currently available through me, in the state of California, once again.  I knew it was just a matter of time before we would see investors return to the market, and THAT TIME IS NOW!

This is NOT the old “Fog a Mirror, get a loan”, stated income.  This is more of a “Common Sense” type of lending, that we really NEED to get our real estate market moving again.  Why do we need it?  Because many of our home buyers are self employed.  Self Employed people use accepted tax strategies to lower their tax liability.   That whole segment of buyers has been unable to qualify for thier mortgage, and have been sitting on the sidelines until now.

Here is how it works.  Self employed people must have 3 years in the line of work.  The income that is declared must be reasonable.  What is reasonable? That means if you make $20K a month, you better have more that $5K in your bank, and a better than 700 credit score.

For a salaried person, we MUST verify that you are employed.  The income used is 90% of the high income as indicated on Salary.com.  This proves “reasonablness”. 

Of course there are more guidelines, and each loan is looked at pretty closely (aren’t they all?!?!)

For details, or to run your scenario by a nationally known loan originator, shoot me an email, or give me a call, and we will get your deal closed.

All the best- Mike

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1)  If you are not committed to learning about our ever changing mortgage market, you are doomed to fail.  Clients need a reliable and  knowledgeable source for loan information, if you are not that source, they will go elsewhere.

2)  Now more than ever you need to put yourself in the shoes of the client.  No matter what stage you are in the process with your client, understand that they are probably very concerned about the process, and how things are going.  I would suggest you over communicate, because that builds trust and will keep everyone calm.

3)  When you don’t know the answer, don’t fake it.  Clients know that things have been changing fast, so just find out the answer and get back to them fast. It builds trust and you will never have to say you were mistaken.

4)  Manage expectations better.  Often times people don’t care if the loan is approved in 4 days or 5 days.  So tell your clients it will be six days, and when it is “only” 5, you will look like a hero.

5)  Don’t let anyone put you in a bad position.  When I think of the most stressful times in this business, it is usually when we are doing a purchase loan, and the Realtor has written an offer with unrealistic contingency periods, and is asking you to perform.  To be a real “partner” to agent, and the transaction, you need to be honest with them and get the contingency parameters lengthened, or else pass on the transaction.  Don’t let them put you in the “stress zone”.  These days desperate Realtors are doing crazy things to make deals happen, so be careful how you handle those situations.

6)  Get every buying client pre-approved no matter what.  With the underwriter.  Anyone serious these days will wasn’t to know that they are fully approved, so help them get there.  Just writing a letter on their behalf is of no value these days, for you, the Realtor, or the client.

7)  Be faster than the Gazelle.  A short mortgage sales story that I think about almost everyday goes like this, “Every morning in Africa a Gazelle wakes up.  He knows that he must run faster than the fastest lion or he will be eaten. Every morning  in Africa a lion wakes up.  He knows that he must run faster than the slowest gazelle or he will starve to death.  It doesn’t matter whether you are the lion or the gazelle, when you wake up in the morning, you better be running.”

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After a strong start Monday and Tuesday, mortgage markets suffered alongside stock markets in the latter half of last week, leaving mortgage rates higher on the week overall.

Market losses were especially steep Friday and mortgage rates headed into the long weekend on a strong uptick.

Regardless, the reasons that mortgage rates rose last week are ancient history, in most respects. 

Today, the new presidential administration begins and economic expectations reset.  Mortgage bond traders are now looking at Capitol Hill and wondering what the pending stimulus package will look like, and how many dollars will it include.

This is an important time for home buyers and rate shoppers, too, because stimulus is generally believed to be harmful to mortgage markets.  This is for two reasons:

1. Stimulus draws money to the stock market from the bond market, pressuring bond prices down and, therefore, mortgage rates up.
2. Stimulus requires the “printing of money” which devalues the U.S. Dollar and everything denominated in it.  This includes mortgage bonds and rates respond by rising.

In other words, as the scope of the stimulus package increases, it becomes more likely that mortgage rates will rise in 2009.

Aside from Beltway Politics and commentary, there isn’t much to impact mortgage markets this week.  We’ll see the latest earnings from a handful of financial firms and tech bellwethers including Google, Microsoft and IBM.  And, on Thursday, we’ll be treated to some housing data from December. 

But, with expectations set so terribly low for everything economic, markets will likely shru

After a strong start Monday and Tuesday, mortgage markets suffered alongside stock markets in the latter half of last week, leaving mortgage rates higher on the week overall.

Market losses were especially steep Friday and mortgage rates headed into the long weekend on a strong uptick.

Regardless, the reasons that mortgage rates rose last week are ancient history, in most respects. 

Today, the new presidential administration begins and economic expectations reset.  Mortgage bond traders are now looking at Capitol Hill and wondering what the pending stimulus package will look like, and how many dollars will it include.

This is an important time for home buyers and rate shoppers, too, because stimulus is generally believed to be harmful to mortgage markets.  This is for two reasons:

1. Stimulus draws money to the stock market from the bond market, pressuring bond prices down and, therefore, mortgage rates up.
2. Stimulus requires the “printing of money” which devalues the U.S. Dollar and everything denominated in it.  This includes mortgage bonds and rates respond by rising.

In other words, as the scope of the stimulus package increases, it becomes more likely that mortgage rates will rise in 2009.

Aside from Beltway Politics and commentary, there isn’t much to impact mortgage markets this week.  We’ll see the latest earnings from a handful of financial firms and tech bellwethers including Google, Microsoft and IBM.  And, on Thursday, we’ll be treated to some housing data from December. 

But, with expectations set so terribly low for everything economic, markets will likely shrug off any data that doesn’t scream that the recession is over.  Instead, be on alert to lock a rate.  In a changing political environment, mortgage rates can move quickly and it’s best to be prepared.

The rate you’re quoted in the morning won’t likely be available by the afternoon.

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Everyone knows that video is the best way to get your point , because it allows you to express your information in a clear way, and with correct emotion, and tone.  This is important. Have you ever noticed how when you read an email, depending on which word you put emphasis on, it can change the meaning of the message? That is because the words do not “emote”, it is the reader who brings the emotion, not the WRITER!!!

Well with  video there is no chance of miscommunicating your message, but until now there has been no easy, professional, COST EFFECTIVE way to advertise your services to the marketplace, UNTIL NOW!

David Jacobson, from RealTours, offers Danville Realtors a unique way to advertise their listings and services using professional video for a fraction of what it has cost in the past.  I don’t know HOW he does it, I am just glad he does!  Take a look under my VIDEO HIGHLIGHT tab to see an example of his great work. 

To contact David, be sure to visit his website www.realtoursamples.com for details!!!

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For a professional Realtor the winning edge is about doing the little things that make the biggest difference. The little things that in the long run add up to a lot! Most fail in this area because they are not convinced it’s the little things, they still believe it’s the big things.

Take note, it’s the little things that add up or what we call stack up, otherwise known as the stacking effect.

Take reading for example, most cannot be bothered as they attempt to bite off too much at one time…the 10 minute theory is a great way to see the stacking effect in action.

First of all, “readers are leaders” and “those that do not read are no better off than those that cannot read,” it becomes a self enforced illiteracy. Reading is vital to growth as humans; it collapses timeframe’s and compresses decades of information into days of time.  If one reads for 10 minutes a day, that’s 70 minutes a week or 280 minutes a month, which translates into 4.5 hours a month of reading. Now 4.5 hours is not a whole lot of reading, yet with the stacking effect in action, it’s 54 hours a year and that’s a lot of reading…all for 10 minutes a day.

Put this principle into play with doing a closed eye process right before bed with your dreams and visions in play or writing in your journal or engaging with your spouse at a deeper level. Most are financially broke at the end of life, not because they did not have enough along the way, they had literally million, yet nothing left, why? Because they simply did not invest $10 bucks a day, they lived under the illusion they would start to invest when they had more money that was a lie or a myth. When they finally get the “more” money their car breaks down or the washer machine goes defunct, you know the story.

This simple principle goes with prospecting, reading, investing in ones marriage, building relationships or anything that has the ability to grow. Imagine putting almost 50 hours a year into your marriage, writing in your journal or developing your skill sets??

We are talking here about the miracle of compounding growth and Albert Einstein described compound growth as the eighth wonder of the world.  You do not notice the growth right at first, whether it be the $300 bucks in savings or the 10 minutes of nightly reading, yet down the road it’s hardly recognizable. The winning edge is doing the little things that add up to the big difference, it’s the sharpening of the ax. Abraham Lincoln said to sharpen the ax, not to cut longer.

Take the 10 minutes to sharpen; you’ll be glad you did.

What is an area of your life that if you were to invest 10 minutes a day into your life would have a complete turnaround? what area of your business? what area of your relationships? What about your health?

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Although diverse products have evolved to help many individuals,  the problem of achieving a 20% down payment eludes nearly 1/2 of all homebuyers.  Without a 20% down payment, purchasers are required to pay Private Mortgage Insurance (MI).  Lately there has been a lot of focus on 80-10-10 loans as an alternative to paying MI.  An 80-10-10 avoids MI by using an 80% first mortgage, a 10% second mortgage and a 10% down payment from the borrower.  Buyers have been programmed to avoid MI but are the alternatives really better?

I have found that when we compare the differences between paying MI or choosing the 80-10-10, the monthly payment usually ranks as the borrowers highest priority.  Since MI is an extra fee, most buyers assume it will result in a higher monthly payment.  That is not necessarily the case since the second mortgage portion of the 80-10-10 is usually at a higher rate.  Additionally, the rate may be variable on that 2^nd mortgage loan and may have a shorter amortization period.  The result is that total payments between MI and the 80-10-10 are very close with the possibility of either program being slightly less expensive on a monthly basis.  However, there are a few hidden factors that most borrowers do not consider:

¨ One major benefit of paying MI is that you may be able to have it removed from your loan if your home appreciates in value. While lenders are not required to drop the MI coverage even if you can demonstrate greater than 20% equity in your home (based upon appreciation), you do stand a reasonable chance of having the MI removed.

¨ The biggest benefit from MI for some borrowers could be the fact that the lender will be more accommodating when it comes to approving your loan. With the extra insurance on the loan that MI offers, lenders can overlook some borrower shortcomings or make more exceptions since the loan is safer to approve. This is a critical benefit for borderline borrowers.

• ¨ The payment for MI is now tax deductible, and there are new creative ways to finance MI for a tax deduction. While it looks like the 80-10-10 is a better choice from a tax benefit perspective, there is a possible future tax woe for users of the 80-10-10 option. Current tax laws allow the deduction of a second mortgage up to $100,000. This also applies to future refinances when cash is taken out of the new 1^st mortgage that exceeds the original 1^st mortgage amount. That means that you are eating up that tax deduction. If you think that you will never use the $100,000 amount in the future, think again. This equity can be used for college costs, purchases, cars and debt consolidation. You may max out your deduction if you use that equity in the future.
• ¨ There will be more choices with MI since some lenders will not offer a 2^nd Mortgage, causing the borrower to find and coordinate a separate source to fund the 2^nd mortgage. The result could be a higher interest rate first mortgage if you avoid MI.
• ¨ The 80-10-10 is really 2 different loans so there are 2 separate sets of papers, closings and payments resulting in more hassles.
• ¨ The current Jumbo limit is $729,750 in Danville and loans above this amount are charged a higher interest rate. The increase is as much as 1.0-1.5%. If you can use the 80-10-10 to avoid both the Jumbo limit on the first mortgage and MI, then it would really benefit you to select the 80-10-10.

While the debate may continue, it is my opinion that tax deductible MI is the better choice for most borrowers unless the 80-10-10 helps the individual avoid paying the Jumbo premium.

Some borrowers are so intent on making a 20% down payment in order to avoid either option that they liquidate their retirement funds to do so.  Cashing in your IRA or 401K is a terrible mistake.  Tax deferred retirement plans are one of the best tools individuals have for a secure future.

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We are a value oriented company.  We receive our referrals to clients because we add tremendous value to our referral partners.  We expect value from our wholesale partners in return.  DO NOT assume that we care about your niche product.  The person before you already told us that they can do a non-owner, stated, cash-out, over a million, with a 580 score for a non resident alien.  The only problem is we have never done that loan and never will.  Don’t waste the precious little time you have with our professional loan officers talking jibberish. 

Plan on developing a relationship if you want any business from us.  If you think we are going to send you a loan in our pipe because you just happened to walk through the office you are sadly mistaken.  We work mostly on purchase transactions and we will not risk our reputation with a Realtor for .125% or .25% more in rebate.  It is not worth it. 

Please be respectful if we are on the phone or in a meeting. We plan our days pretty tight, and if we spend 10 minutes talking with everyone that comes through the office, we will not have time for our clients.  I recommend that you make appointments with your target loan officers and then have a real meeting to determine what our needs might be.  Then, if we really need that loan mentioned above, you can tell us about it.

Frankly, we are doing a fair amount of business without you or your company’s help.  That means if you want to do business with us, plan on earning our trust, and then adding tremendous value to our loan officers. No one here makes a “fast buck” and you won’t either, plan on paying your dues.

Our company supports those individuals who help us.  Do you want to score huge brownie points and earn the loyalty of the managers?  Refer us good people.  This business is full of shady companies, but CMF is the place professionals love to work.

In return, we will be happy to respect you, learn about your products, and develop a long term profitable relationship with you. We will also be sure to tell our friends in the office how special you really are.

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