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Mortgage Rates (2 Viewers)

Ted Lange as your Bartender said:
And to think I was a tad bit miffed because I finished my refinancing just ahead of the big covid rate downturn.  But I got 3% for a 15-year, so it’s fine
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I felt like I missed the low when I got my 2.375% 15 year last year but, I see 15 years at almost 4% now for the same closing costs (about break even for me aside from escrow type stuff). Feel very fortunate. When we get our retirement place going to have to make sure we’ve got the cash. Might have to keep this place and rent it. Probably clear a couple grand a month including the principal being paid down. Never really thought about keeping it.

 
Are rates really at 5% now?

Say for example good credit, 20% down on a 250k home, 30 year loan.  What rate would I expect to pay?

 
ghostguy123 said:
Are rates really at 5% now?

Say for example good credit, 20% down on a 250k home, 30 year loan.  What rate would I expect to pay?
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Yes, really. Just above or just below 5% is where most loans are at now. Rates have been volatile up and down for the last couple of months but with a definite trend up. 

 
I did come in to say this... I had a first today and something I never expected. I had a FBG referral for a friend (THANK YOU!) and discussed what I could do. I was able to comfortably beat what he had already but then he heard back from his bank and they beat me.  :shock:

For a loan that isn't a jumbo or CRA loan, this is the first time this has ever happened. I have heard it happening to some other brokers too. 

It seems that they have a ton of over capacity (employees hired to work the refi boom) that they have not let go of yet. Also, they are still paying .03% on deposits so they can keep the loans on the books and make more money than selling on the secondary market. 

I guess moral of the story is that though it is VERY unusual, if you are in the market for a mortgage, it is worth talking to a bank right now even if it isn't a jumbo loan. (I can't believe that I just said that)

 
To think I started with a 30 year fixed at 6.25 in 2005 and I thought that was good. First refi got it down to 4.25 and second got it down to 2.375. Crazy!

 
Posted in a group for consumers but something many even within the financial services industry get confused. It is written for a customers to understand. 

:::Fed, Interest Rates and Mortgages:::

The news came out yesterday that the Federal Reserve increased the Fed Funds rate by .5%. This actually does not impact mortgage rates directly but what it does impact is the Prime Rate. The Prime Rate is the most commonly used index for consumer debt such as credit cards, equity lines of credit, etc. It also impacts car loan rates. 

Whatdoes affect mortgage rates is that the Fed announced that it will reduce its balance sheet. What this will do is have the impact of raising the 10-year treasury bonds and that 10-year treasury is the single most powerful influence on mortgage rates. As the yield on the 10-year bond increases, mortgage rates normally follow. Shortly after the announcement. Bond yields dropped significantly and correspondingly, mortgage rates improved. Today, yields increased and mortgage rates worsened. 

Why is the Fed taking action? The Fed is trying to take action to control inflation (inflation is simply the rise of prices on most things) as we have seen the highest inflation in several decades. 

What does this mean to you? First, if you have credit card or other consumer debt where the rate is not fixed, your rates will go up soon and that means the cost of your borrowing will increase. Other borrowing will get most costly as rates increase as well. Mortgage rates are likely to continue to rise as well as noted above.

 
@Chadstroma With interest rates climbing and limited inventory causing a supply problem, pricing is going to continue to rise. Are 35- or 40-year fixed rate mortgages going to become more common? I'm talking in places like California and/or Florida where things are spiraling out of control.

 
Senor Schmutzig said:
@Chadstroma With interest rates climbing and limited inventory causing a supply problem, pricing is going to continue to rise. Are 35- or 40-year fixed rate mortgages going to become more common? I'm talking in places like California and/or Florida where things are spiraling out of control.
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The starting point to answer this is to first understand that this is a feature on a mortgage that would make it a non-QM loan (QM = Qualified Mortgage). QM is a safe harbor for lenders to protect them from litigation as well as intended to protect consumers. No loan can be a QM loan with a term over 30 years. So, you can not have a conventional or government backed loan (VA, FHA, or USDA) that has a term over 30 years based on the current rules. 

Non-QM loans are more expensive. Most of the non-QM loans offered now are tied into investment type of products, interest only or some other non-QM feature.

Lenders will start to get nervous. It is likely some will not last to the next refi boom (I think in a year or two) and we can see it with large amounts of layoffs. We are seeing more and more creative loans coming to the market in order to compete. Is it possible a lender will try to get more aggressive with a 40 year term non-QM loan? Sure. But it make it really viable, they would have to lower the expense to be closer to a QM loan. As it is now, the difference in cost eats up most of the payment difference by extending the loan out. Though I don't put it out of the realm of possibility, I don't think it is likely either. 

As an aside, I am starting to pick up on anecdotal evidence that things are starting to cool off. For example, realtors may say that instead of getting 20-30 offers on a listing in a couple of days, they are getting about 10. Inflation, higher rates, a slowing economy... we will likely see demand slow. Supply and demand is still so heavily slanted to a sellers market and supply doesn't seem to be changing much that demand will have to change significantly. Of course, if people start losing their jobs, they make be inclined to sell their homes instead of losing it which could help supply. But as this all happens, what will the government/fed do? More fiscal and monetary policies designed to get the economy going again. Rates will go back down. I would be shocked if there wasn't more 'free money' handed out similar to what we saw with COVID checks etc. Historically in recessions real estate prices actually appreciate. There are some that didn't, the last Great Recession being the most stark on considering that recession was caused by real estate and the bubble preceding it bursting. 

So.... no, I am not expecting that much. ARMs on the other hand, are becoming much more popular right now. 

 
culdeus said:
You ok?
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All good. 

I locked a VA purchase at 4.7% on a 45 day lock (should be CTC in two weeks but the contract was longer than 30 days) thursday.... same loan/lender would have been at 5%. A more than 25 bps jump in one day is just nasty gross. 

 
I've never done a HELOX or home equity loan before. I'm about 2O months into a 15 year refi at 2.5%. probably have at least $400k in equity.

Obviously I'm not looking to touch this mortgage with the state of rates, etc.

What's the best way to access some cash to put back into the home? I'd like to do some landscaping and maybe some minor upgrades inside the house itself. Not really planning on moving at least for the next 5 years. Could be longer.

 
cap'n grunge said:
I've never done a HELOX or home equity loan before. I'm about 2O months into a 15 year refi at 2.5%. probably have at least $400k in equity.

Obviously I'm not looking to touch this mortgage with the state of rates, etc.

What's the best way to access some cash to put back into the home? I'd like to do some landscaping and maybe some minor upgrades inside the house itself. Not really planning on moving at least for the next 5 years. Could be longer.
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A HELOC is the way to go. 

Check with local CU's and smaller banks in your area they tend to have the best options. 

 
Capella said:
Think HELOC rates are around 8.5% right now :no:  
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Most have intro rates and then the rates will drive back down in the near future (my confidence level on this is high). If you want to access equity, this is really the option you have. Refinancing cash out makes no sense. 

There is another option that is not widely out there that I know of onw brokerage has teamed up with a company that you can access cash out and you basically give up a share of your home. I don't know the specifics of it all but if you really wanted to know could resch out to the owner of the brokerage to get more details since he is a good friend and they are in some 25ish states or so now. 

 
Capella said:
Think HELOC rates are around 8.5% right now :no:  
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BTW... if you are looking at HELOC rates in the 8's... you need to go somewhere else. 

Even the HELOCs I do which I don't compete against CU's... I do HELOCs that clients have high DTI, low credit score or need a higher CLTV (like 95%)... and mine are in the 6's and I tell people that don't need that extra help to go to a CU which you should easily be in the 4's. 

 
Chadstroma said:
BTW... if you are looking at HELOC rates in the 8's... you need to go somewhere else. 

Even the HELOCs I do which I don't compete against CU's... I do HELOCs that clients have high DTI, low credit score or need a higher CLTV (like 95%)... and mine are in the 6's and I tell people that don't need that extra help to go to a CU which you should easily be in the 4's. 
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I’m not looking for anything. Friend did one the other day and told me it was 8.25. Was surprised when he said that. 

 
Capella said:
I’m not looking for anything. Friend did one the other day and told me it was 8.25. Was surprised when he said that. 
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So.... your friend got screwed. 

Even Equity Loans are in the 6's and like I said, the stuff I have access to which is your bank or CU would get in the 7's as the highest. 

I can't even imagine what the scenario is for your friend that makes any sense. 

Good credit, normal CLTV and DTI- a decent line amount with a good CU. Should be able to be 4%

 
Chadstroma said:
So.... your friend got screwed. 

Even Equity Loans are in the 6's and like I said, the stuff I have access to which is your bank or CU would get in the 7's as the highest. 

I can't even imagine what the scenario is for your friend that makes any sense. 

Good credit, normal CLTV and DTI- a decent line amount with a good CU. Should be able to be 4%
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Yea I have no idea. Just casually came up in a chat the other day, I didn’t really follow up. 

 
Chadstroma said:
So.... your friend got screwed. 

Even Equity Loans are in the 6's and like I said, the stuff I have access to which is your bank or CU would get in the 7's as the highest. 

I can't even imagine what the scenario is for your friend that makes any sense. 

Good credit, normal CLTV and DTI- a decent line amount with a good CU. Should be able to be 4%
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My CU is at 4.00%

 
Just got quoted 5.625% on a new 30 year for a place we really like. 

I refi'd about 20 months ago to 2.625% at my current house.  We'd use savings for the new down payment and then do a big lump (recast?) once we sell the current place. 

 
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The Z Machine said:
Just got quoted 5.625% on a new 30 year for a place we really like. 

I refi'd about 20 months ago to 2.625% at my current house.  We'd use savings for the new down payment and then do a big lump (recast?) once we sell the current place. 
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Make sure the lender will do a recast since not all will. 

 
matttyl said:
Where’s a 30 fixed these days?
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I am not a fan of this kind of question (no offense to you for asking, I get it) because there are so many variables to what goes into a rate to spit one out that has into account all those variables but if you are going to get a mortgage right now, it will have a 5 or 6 in to start off depending on all those specifics. 

 
BassNBrew said:
Why don't you rent out the old place?  You'd have to pry 2.625% debt out of my cold dead hands.
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No ####. It’s looking like my 2.25%/30 is the best financial move I’ve ever made. Too bad mortgages don’t transfer when you move. 

Chadstroma said:
So.... your friend got screwed. 

Even Equity Loans are in the 6's and like I said, the stuff I have access to which is your bank or CU would get in the 7's as the highest. 

I can't even imagine what the scenario is for your friend that makes any sense. 

Good credit, normal CLTV and DTI- a decent line amount with a good CU. Should be able to be 4%
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Yikes. 2.75% with M1. Although that could rise too. 

 
-OZ- said:
No ####. It’s looking like my 2.25%/30 is the best financial move I’ve ever made. Too bad mortgages don’t transfer when you move. 

Yikes. 2.75% with M1. Although that could rise too. 
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2.25% mortgage is kind of a no brainer... I am kind of worried about the full careers worth of financial decisions now. 

Friday and today have been two horrible. Today actually has made Friday's nastiness look like a good day. https://www.cnbc.com/quotes/US10Y this tells the story... you can play around with the time frame but the higher the yield on the 10 year the higher rates on mortgages go. Check out the 5 day to get a good feel for it. 

A lot of MLO's will be drinking heavily tonight. 

 
@Chadstroma so with all this HELOC talk I have a question about mine.  I purchased last July with a 30 conventional maxed @2.7 and a heloc for the rest.  My understanding of the heloc was its 3 point above the base interest rate.  How does that work when rates rise has they have?  Also how easy is it to refinance a heloc?  Is this advisable with rates where they are?   TIA!   

 
dkp993 said:
@Chadstroma so with all this HELOC talk I have a question about mine.  I purchased last July with a 30 conventional maxed @2.7 and a heloc for the rest.  My understanding of the heloc was its 3 point above the base interest rate.  How does that work when rates rise has they have?  Also how easy is it to refinance a heloc?  Is this advisable with rates where they are?   TIA!   
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The "base" interest rate would be the index rate. And then your margin is 3 points above that (which is high). Almost all HELOC index rates use the prime rate (I saw almost just because I have not seen all HELOCs but I have never seen one not use the prime rate as the index). The current prime rate is 4% which would mean your current rate is 7%. 

Most HELOCs have no closing costs. They do often have prepayment penalties (in this case not paying to $0 but closing) so you will want to check on that and find out exactly what you are dealing with. 

The next thing are your options. With good credit, low LTV, an a decent line amount you should be able to get your margin much lower or no margin. 

HELOCs are variable and as mentioned above, they are all tied into the same index so the difference is really going to be in your margin. Some HELOCs do have 'lock' features, where you can lock a balance. Those locks will always be a higher rate. At this point, I am not sure locking in a rate right now with a HELoan or HELOC is the right move. 

So, overall, yes, you can refinance a HELOC and they are relatively easy to do. The new one likely will not cost you anything but you need to check on what the cost of closing the old one would be. If there is a cost like I think there would be then you need to calculate what your savings would be from the lower interest versus the cost of closing it to figure out if it makes sense for you. If it doesn't then the next best option is to pay what you can into that to bring the balance down as quickly as you can (assuming you have no other debts with higher interest rates). 

To sum up... it may or may not be worth it to you. Lot's of variables to work through. 

 
Chadstroma said:
The "base" interest rate would be the index rate. And then your margin is 3 points above that (which is high). Almost all HELOC index rates use the prime rate (I saw almost just because I have not seen all HELOCs but I have never seen one not use the prime rate as the index). The current prime rate is 4% which would mean your current rate is 7%. 

Most HELOCs have no closing costs. They do often have prepayment penalties (in this case not paying to $0 but closing) so you will want to check on that and find out exactly what you are dealing with. 

The next thing are your options. With good credit, low LTV, an a decent line amount you should be able to get your margin much lower or no margin. 

HELOCs are variable and as mentioned above, they are all tied into the same index so the difference is really going to be in your margin. Some HELOCs do have 'lock' features, where you can lock a balance. Those locks will always be a higher rate. At this point, I am not sure locking in a rate right now with a HELoan or HELOC is the right move. 

So, overall, yes, you can refinance a HELOC and they are relatively easy to do. The new one likely will not cost you anything but you need to check on what the cost of closing the old one would be. If there is a cost like I think there would be then you need to calculate what your savings would be from the lower interest versus the cost of closing it to figure out if it makes sense for you. If it doesn't then the next best option is to pay what you can into that to bring the balance down as quickly as you can (assuming you have no other debts with higher interest rates). 

To sum up... it may or may not be worth it to you. Lot's of variables to work through. 
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Excellent info, thanks Chad.  

 
dkp993 said:
Excellent info, thanks Chad.  
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Again, check some CU's you can join or belong to for the best rate options. Not all CU's are great in equity but the ones that are will destroy big and mid sized banks in them. Some community banks and very small regionals can be very good as well. 

 
Chadstroma said:
Again, check some CU's you can join or belong to for the best rate options. Not all CU's are great in equity but the ones that are will destroy big and mid sized banks in them. Some community banks and very small regionals can be very good as well. 
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Thanks.  I’ve been with a CU for 20+yrs (car loans are with them now), they don’t carry my heloc as the person I used for my loan went with a different one for some reason.  My credit is good (hovers around 780ish) but as my CU held the loans on my home I lost in the 2008 crisis I wonder if they would still hold that against me?  

 
BassNBrew said:
Why don't you rent out the old place?  You'd have to pry 2.625% debt out of my cold dead hands.
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I considered it but I want to be out from under this place.  There's a roof leak that I just can't fix without ripping off the rooftop deck and redoing the whole flat roof.  That's gonna be like $40k these days. 

 
The Z Machine said:
I considered it but I want to be out from under this place.  There's a roof leak that I just can't fix without ripping off the rooftop deck and redoing the whole flat roof.  That's gonna be like $40k these days. 
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Flat roofs suck but roof top decks are awesome.  There's a silicone material that can go over the EDM (assuming it's not shot).

PM me if you want this post deleted as you should probably delete yours.

 
dkp993 said:
Thanks.  I’ve been with a CU for 20+yrs (car loans are with them now), they don’t carry my heloc as the person I used for my loan went with a different one for some reason.  My credit is good (hovers around 780ish) but as my CU held the loans on my home I lost in the 2008 crisis I wonder if they would still hold that against me?  
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Possible. It is up to the lender. Some will blackball you forever for any loss incurred on a previous loan (Chase for example) others won't hold it against you. It is completely up them. 

 
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