Mortgage market update

13SECSS

13SECSS

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Hey guys, as I always like to keep everyone posted when there is a opportunity to save money, here is the latest mortgage and housing news. As of the last few weeks, the 10 year treasury bond, which plays a lot on long term mortgage rates, has fallen to near 2012 / 2013 numbers, which means long term rates have fallen.

With the lower rates and values increasing in some places over 40% in the last 24 months, now may be a great time to looking into saving some money. For example, I have a client that bought a foreclosure in early 2013, when he purchased, he took a FHA mortgage as it allowed for very low down payment. His monthly FHA insurance is 218.00 per month. His home was bought for 196,000 in Spring of 2013, it just appraised at 235,000 allowing us to refinance him into a conventional mortgage, saving home over 200.00 per month as he no longer has FHA PMI insurance.

Most people don't think they have 20 percent equity, so they feel that can not eliminate their PMI. That is very far from the truth. If a home has 5% equity, we offer a conventional loan program " lender paid pmi" this program allows for a borrower to refinance their current loan, with as little as 5 percent equity. They can refinance into a conventional loan with lender paid pmi. The rate is tad higher on this program, but allows the borrower to save tens of thousands of dollars over the life of the loan, not to mention hundreds of dollars per month.

Please feel free to call me 313-701-2771 or email me [email protected] and Id be happy to run any loan options for you and see if we can save some money just in time for Christmas.

Thanks for the time guys.

Steve
 
hmmmm..we have our home listed and will be in the market very very soon. Hopefully this works out for us....
 
But his rate is higher. This allows for higher mortgage interest deduction vs a lower payment plus a separate PMI payment. Evidently the math works out better for him in this case.

Sent from my MotoX using Tapatalk.
 
Yes, that is correct. Its not that the loan DOES NOT have pmi, it has pmi, its just paid in a lump sum by the lender, to the PMI company instead of monthly by the client.

For example: If you have 740 credit and you purchase a home for say $200,000 and put down 5%, your total monthly pmi charge is $128 per month. In 10 years, your would have paid out $15,360 just in PMI. If you do the 'lender paid pmi" with say a mortgage rate of 4.75 compared to 4.50 without lender paid pmi, your principal and interest payment is $1598 at 4.50 and you would pay $128 on top of that. With lender paid pmi, the rate is 4.75. Your payment would be $1625 total. This is only $27 more per month. If you pay $27 more per month for 10 years, that equals $3,240 compared to $15,360 that you would pay in PMI. Any which way you cut it, the savings is huge both monthly and long term.

My ultimate goal is this.... I hope that any client I did a FHA loan for over the last few years, now has 20% equity and they can refi into the lowest rate possible and not have to worry about lender paid or pmi at all! In most cases, if the home was bought in 2009, 2010 , 2011 or 2012, and bought at a good deal, there will more than likely be a 20 percent equity. My home in Novi went from 227,000 in 2007 to 155,000 in 2011. The home just appraised for 235,000. Most areas in Oakland county have seen anywhere from a 20 percent to as much as a 50 percent gain in value since the bottom in 2009.
 
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Anthony said:
I'll try with you again Steve. Last time. $100 a month wasn't worth it
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Sounds good. We will give it our best shot to save as much as we can.

It really all depends on what you long term goal is. For example, some clients are only concerned with money saved each month, and is some cases, clients are concerned with how fast they can pay down the loan. if you can save 200 per month in payment by eliminating and you take the 200 a month saved, and put it toward the loan balance each month, you now are knocking down the balance at a rate of 2400 more per year, as the 200 you were paying before was doing nothing but paying PMI, but now you are going to put it toward principle each month. Its all in what your goals are!!!!
 
13SECSS said:
Yes, that is correct. Its not that the loan DOES NOT have pmi, it has pmi, its just paid in a lump sum by the lender, to the PMI company instead of monthly by the client.

For example: If you have 740 credit and you purchase a home for say $200,000 and put down 5%, your total monthly pmi charge is $128 per month. In 10 years, your would have paid out $15,360 just in PMI. If you do the 'lender paid pmi" with say a mortgage rate of 4.75 compared to 4.50 without lender paid pmi, your principal and interest payment is $1598 at 4.50 and you would pay $128 on top of that. With lender paid pmi, the rate is 4.75. Your payment would be $1625 total. This is only $27 more per month. If you pay $27 more per month for 10 years, that equals $3,240 compared to $15,360 that you would pay in PMI. Any which way you cut it, the savings is huge both monthly and long term.

My ultimate goal is this.... I hope that any client I did a FHA loan for over the last few years, now has 20% equity and they can refi into the lowest rate possible and not have to worry about lender paid or pmi at all! In most cases, if the home was bought in 2009, 2010 , 2011 or 2012, and bought at a good deal, there will more than likely be a 20 percent equity. My home in Novi went from 227,000 in 2007 to 155,000 in 2011. The home just appraised for 235,000. Most areas in Oakland county have seen anywhere from a 20 percent to as much as a 50 percent gain in value since the bottom in 2009.
Click to expand...

So what would the total refi cost be on the home of this value?
 
93-bucket said:
So what would the total refi cost be on the home of this value?
Click to expand...


Every loan is different, as if you choose to have an escrow account, the majority of the cost involved will come from setting up a new escrow account. Below, is a est of a loan I just closed today for 200,000

Mortgage costs 1450
Title insurance 571 (state calculated)
Title closing fee 199
Appraisal 375-395

Summer taxes for escrow 1255 (6 months to set up escrow is closed in Oct)
Winter taxes for escrow 450 (6 months to set up escrow if closed in Oct)
Home owner ins for escrow 445

Lender credit for Motown muscle members $500

Total to refi 200,000 loan with 2600 per year in taxes and 753 per year home owners insurance = $4,265.00

The 4265 that it will cost based on the above scenario can be washed almost to 0 as explained below.

If you close on the refi in first part of the month, your new payment will not be due until 50 days from then. If you skip 2 house payment at say 2600 total, you can apply that to the new loan when the first payment is due, that takes the total cost to refi from 4265 down to 1665.

After you refinance and we pay off your current loan, your current lender has 30 days to refund your current escrow account. My client above, had 1244 in his escrow, which he will apply to the new mortgage at time of first payment. The 1244 escrow refund, along with the 2 payments that he skipped and applied to new loan at time of new payment, his true cost to refi was $421. He saved that amount after making 2 house payments. In the first year, he will save 2,000 in money paid to PMI.

A lot of clients don't do the above, so the savings and true costs of a refinance will change on every deal. The client above wanted to eliminate pmi, as his goal was to save 200 per month, but still pay the same payment with the new loan, which will pay his loan off 2400 faster each year.
 
I got to refi on my (rental)... whats the rates? Looking at 30 year, owe $80k, $2600 tax/ins.. credit score, 800, 810, 820.. currently at 5.5% Help!
I think you did this house 7 years ago?
 
Steve is the man, answered all my questions with getting my first mortgage.

Is it too soon for me to refi Steve? :lol:
 
ReiKo said:
I need to get off my ass and re-fi...
Click to expand...

I know we looked into doing it back several month ago, but something came up. If you think your going to be there a while, id do it sooner than later, as rates will do nothing but head up from what I am seeing in the near future. Give me a call if you need anything.
 
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