What is the interest rate today?

 “So, what is the interest rate today?”  I’ve been asked this more times than I can count.  It’s always difficult to answer because there are so many variables…What loan type? Term? Credit score? Loan to value? Investment property?  2^nd home?  Primary residence, etc.  You could go to a lenders website or Bankrate.com but what I tell people, including realtors, is…Ask Freddie.  Freddie Mac puts out a weekly interest rate survey that gives you a quick average at a glance.  After all, most people don’t want more questions…they just want a number.  Here's a number or two:

More than you ever wanted to know about interest rates…Ok.  You’ve been warned.  Here goes:  

Interest rates for mortgages can and do change daily.  If it’s a volatile day they can change mid day.  And more than once.  It makes for an interesting challenge trying to quote interest rates on a day when things are changing rapidly.  Usually that’s due to stronger than expected economic news or world events.  Bad news for the economy typically translates into good news for rates.  It’s an inverse relationship…except when it’s not.  That’s the frustrating thing about trying to guess the direction of interest rates.  It’s like trying to guess the weather.  We know how accurate that little system is!

A person’s mortgage interest rate is also tied to several individual factors.  Things like your particular credit score can mean a big difference in rate compared to the next person in line.  Other common pricing adjustments reflect the risk to the lender.  For example a non owner occupied home (a rental) requires a higher interest rate than an owner occupied loan when all other variables are held even.  It’s interesting to note that even different parts of the country offer slightly different rates.  I get rate sheets from several different wholesalers every day and they nearly always adjust their pricing based on region.  So a person in Idaho may be quoted an ever so slightly different rate than someone in Texas.  Think of it like car insurance.  Your driving record, what you drive and where you drive it all impact your auto insurance rates.  Similar idea for mortgages.  It’s all about risk. 

Here’s a couple more things a lot of people don’t understand about mortgage rates:

#1 – There is a range of rates available to you at any given time.  It’s a question of cost.  So, you may be able to choose between a pretty wide range of rates based on what you wish to pay, or not pay, in closing costs.  People often assume there is one rate for a particular day.  There is always a range to choose from and the lowest rate is rarely the best deal.  A good loan officer should help guide you to the best choice for you. 

#2 – How long your rate lock is good for can have an effect.  The longer the lock term the higher the cost.  Lenders will often offer to let you “lock in” your rate for 30 days.  Or 15, 21, 45 or 60.  You then have that many days to get your loan closed.  It doesn’t do any good to take the 15 day lock in if it’s going to take 45 days to close your loan.  And while some lenders will allow you to extend your lock period for unforeseen delays they likely won’t do it for free.  Again, best to have an experienced loan officer walk you through it.

So, if you just want a “number” and don’t really need to know all the details a quick reference point is the Freddie Mac Weekly Rate Survey.  I try to post it to our website and our facebook page every week.  You can Click Here for a link as well.

Eric Lundberg - NMLS #261588

President, Chinook Mortgage Ltd - NMLS #261588

Eugene, OR.

541.302.3210

www.ChinookMtg.com

100% Gift on Conventional Loans

For over 20 years we’ve been telling realtors that your borrowers have to have at least 5% down of their own funds on conventional loans.  Well, no more.  Fannie Mae now allows all gift funds on conventional loans!  That is really good news that should open the door for many a borrower this year.  Conventional loans are usually a better deal for your borrower and are certainly easier on property appraisals.  

There is no pricing adjustment and yes, you can get mortgage insurance just like normal. 

One thing to be careful of here is to remember, at least at present, this only applies to Fannie Mae loans and not Freddie Mac.  Most of time this won't make a difference but in some cases it can.  For example I just had a cosigner deal that had to go Freddie Mac because Freddie will basically blend all income/debts when calculating debt ratio's where Fannie Mae wants the occupying borrower to stand on their own (or nearly so) debt ratio wise.  So, don't assume you can use all gift funds when you have a cosigner.  But don't worry, you can still go FHA if you have a cosigner AND all gift funds.  

Because lack of funds to close is the single biggest barrier to home ownership in our country this should go a long way to helping put people, especially first time buyers, into homes.   

A last note on gifts.  I've noticed a small but growing trend in grandparents helping their grandkids buy their first home.  When I interview a prospective buyer that "doesn't have anything saved yet" I always ask if a gift from a relative might be a possibility.  They usually say no straight away but I'm surprised by the growing number of buyers who come back (often shocked themselves) when grandma and/or grandpa offer to help them with the down payment.  And now we can put that good deed to good use with a conventional loan.

I love good news in any form but especially when it helps put people in homes...


Eric Lundberg - NMLS #261588

President, Chinook Mortgage Ltd - NMLS #261588

Eugene, OR.

541.302.3210

www.ChinookMtg.com

Top 10 reasons to LOVE Federal VA Home Loans

Eric's Top 10 reasons to LOVE  Federal VA Loans:

1 – Zero down payment required up to $417,000.

2 – No private mortgage insurance.

3 – Seller (or Lender) may pay all buyers closing costs/pre paids.

4 – Relaxed credit standards compared to other loan types.

5 – Seller is not required to pay any points.

6 – Lower interest rates than many other loan types.

7 – Energy Efficient Mortgage add on available to improve home.  To see our other blog on the EEM program Click Here.

8 - An assumable loan if veteran sells later on.  A big advantage if rates rise over time.

9 – Jumbo VA loans available over $417,000 w/some down payment required. 

And my personal favorite…

10 – Seller is allowed to pay up to 4% of the sales price towards any buyer debts and may even buy veterans gifts like a microwave, fridge, etc.  Think about the possibilities for a minute…the seller is allowed to pay off buyers debts so they may qualify to buy the home!  They can even payoff a veteran’s judgments and collection account(s).    

And here's 5 more just for good measure:

11 - 1 in 4 buyers can go VA.  Don't be afraid to ask.  We ask every client, every time.  Men AND women.

12 - Flexible property types.  I have 20+ years of examples of deals that went VA that never would have closed FHA.  Some still leave me shaking my head... An old farmhouse w/a "seasonal creek" running through the middle of the basement?  Loan closed.  True story.  

13 - A lifetime entitlement.  Lots of misconceptions about this one but federal VA loans allow a veteran to use his/her entitlement multiple times over their lifetime.  In simplest terms a vet buys home #1 with a VA loan, sells it after a few years and then buys home #2 with a new VA loan, sells it after a few years, repeat...There is even an allowance that let's a veteran finance a home w/a VA loan, then later refinance it to another loan type (typically conventional after some equity develops) and then restore their entitlement so they can keep their first house as a rental and buy a new home using VA again.  This can only be done once however as VA is not designed to finance investment properties.

14 - VA offers a very good 5/1 A.R.M.  While many people shy away from variable rate loans VA protects the veteran and the lender by offering this hybrid A.R.M.  Fixed rate and payment for the first 5 years then it becomes variable.  I'm not a huge fan but I mention it in cases where someone plans to move or payoff their loan w/in 5-7 years.

15 - This really should be #1... What better way to say thank you to a veteran for their service than to offer them great service and a great loan when they buy their home?  

Eric Lundberg - NMLS #261588

President, Chinook Mortgage Ltd - NMLS #261588

Eugene, OR.

541.302.3210

www.ChinookMtg.com

Free Credit Report

Every person is allowed one free credit report per year.  Get yours at the official site at www.annualcreditreport.com.  Be careful of similar sites.  They want to charge you!  There are 3 national credit agencies (Transunion, Equifax, TRW) and each is required to offer you one free report per year...One technique is to pull just one of the 3 now, saving your others to spread throughout the year.  This way you can keep tabs on your credit over time w/out paying a service.  And don't worry, pulling your own credit report does not ding your score like a real inquiry for credit does.

  

You won't get your credit score for free though.  Even on the free site they are only required to show you your credit report.  You get to pay extra to see your score.  Credit scores are a whole other animal and I will save that for another blog post but suffice it to say they are critical to good financial health and in getting the lowest interest rate available from mortgages to credit cards.  You can pay extra for your score(s) at annualcreditreport.com or there are commercial sites that offer your credit score, typically in addition to credit monitoring.  I don't normally advocate paying for something you can get for free and yet I myself subscribe to MyFico.com. The site has some useful tips and a free or discounted trial if you find yourself curious.  Use it if you are planning a major purchase, like a home, to make sure you're on track to get the best rate possible.

If you have a real issue w/your credit or have a client that is "credit challenged" you might even consider a commercial site to help repair it.  Again, I tread even more carefully here because most credit repair companies are dubious at best and outright crooks at worst.  Here's one I came across that appears reputable Credit West Consultants.  They send us useful email tips on credit repair and score improvement in general.  Most of it is common sense but I've learned some neat tricks from them.  

Bottom line:  Review your credit report at least annually and keep your score as high as possible to keep your interest rates as low as possible.

Eric Lundberg - NMLS #261588

President, Chinook Mortgage Ltd - NMLS #261588

Eugene, OR.

541.302.3210
www.ChinookMtg.com