Mortgage Rates (1 Viewer)

[-OZ-]

How much does it cost to have escrow set up and how much each year during the loan?

I never even realized it was optional at any point.

Escrow is just giving the mortgage company a free loan, having them hold on to your money to pay insurance and taxes. It shouldn't cost anything. 

I wouldn't recommend everyone get rid of it, but if you could pay your taxes and insurance out of pocket easily, or budget/ plan for those expenses, you don't need escrow. The risk of not using it is simply that you could be late or fail to pay either expense and that could put your home at risk. (Which presumably is why the mortgage companies use it, it's safer for them too)

I got rid of it mostly because I like having a known expense, I pay the exact same payment every month from here until the house is paid off. (Could always increase the payment if I wanted) and I don't have a problem paying taxes (less than $2k/year) or insurance (roughly the same)

 

[brun]

Escrow is just giving the mortgage company a free loan, having them hold on to your money to pay insurance and taxes. It shouldn't cost anything. 

I wouldn't recommend everyone get rid of it, but if you could pay your taxes and insurance out of pocket easily, or budget/ plan for those expenses, you don't need escrow. The risk of not using it is simply that you could be late or fail to pay either expense and that could put your home at risk. (Which presumably is why the mortgage companies use it, it's safer for them too)

I got rid of it mostly because I like having a known expense, I pay the exact same payment every month from here until the house is paid off. (Could always increase the payment if I wanted) and I don't have a problem paying taxes (less than $2k/year) or insurance (roughly the same)

FWIW - Some states can require a lender to pay interest on your escrow account, e.g. New Hampshire. However, I believe there may be conditions under which the interest requirement does not apply. I don't know what those conditions might be and today's low interest rates are not enough to compel me to find out.

 

[Buckna]

Lender for the buyer on our investment property asked for an 11 day (7 Bus day) extension yesterday because they are slammed with refi activity. I get it, and all lenders are probably slammed right now but I’m tempted to tell them to pound sand. One of the reasons we took this buyer’s offer is the lender said the couple was already through underwriting and could do a quick close. Every day we don’t close costs me money and I have 3 other offers waiting on the wings (but unfortunately no all cash offers so I am probably stuck either way.)

 

[Chadstroma]

How much does it cost to have escrow set up and how much each year during the loan?

I never even realized it was optional at any point.

No cost. 

 

[Chadstroma]

Rates: 

Overall, rates are exceptionally low. I mentioned before that the single biggest factor to mortgage rates is the 10 year treasury. Right now, we are at a yield of .767%, I think we dipped to .66% as the now all time low. Previous to this the all time low was around 1.3% (I can't remember exactly). What we are seeing right now is that mortgage rates are not following the 10 year treasury for two big reasons. This is pretty much across the board in both retail and wholesale, the typical spread of what you expect from retail and wholesale remains. Those reasons are the following. 

1) Every lender is overloaded. Pipelines are full. People are working OT. Turn times are increasing. Many lenders will use the rates as a way to ensure quality control on their pipelines and take a larger margin anyways. 

2) MBS are not being bought up. To encourage buyers a larger premium needs to be offered versus market conditions would otherwise allow. 

What does this mean? I am advising my clients at this point to apply (if they have not yet) and then float. Floating means you do not lock in the rate with the application. Why? I expect the downward pressure of the treasury yield to win out at some point. We should see some volatile movement on rates. If you are sitting on the fence and then rates drop where you want to apply, you may end up missing the boat. As I mentioned before, everyone is behind... an application and submission which use to take me 1-2 days is now taking 3-4 days. Further, if you have your application in and the 'work' on the loan is done then you can lock in for a shorter lock (which saves money) as well. Apply, get your loan ready, wait and then be ready to lock in is what I am telling my clients to do. 

I am still happy to connect any FBG to a broker or if I can help, help them directly myself. 

At this point, there are very few mortgage holders out there that shouldn't at least look at their options. Your friends and family should be too. Feel free to give out my info to them if they want assistance from me or me to refer to a good broker. If myself or my brokerage isn't licensed in their state (IL, IN, WI, CA, WA, FL, and VA), I will refer them to someone good: 

Chad Masters 

NMLS 960505

Market Place Mortgage Corp

(708) 400-1799

cmasters@marketplacemortgage.com

Alternatively, an online resource for them to search a www.FindAMortgageBroker.com if they are more comfortable with that. It will show brokers within a 25 mile radius. 

 

[Zegras11]

Rates: 

What does this mean? I am advising my clients at this point to apply (if they have not yet) and then float. Floating means you do not lock in the rate with the application. Why? I expect the downward pressure of the treasury yield to win out at some point. We should see some volatile movement on rates. If you are sitting on the fence and then rates drop where you want to apply, you may end up missing the boat. As I mentioned before, everyone is behind... an application and submission which use to take me 1-2 days is now taking 3-4 days. Further, if you have your application in and the 'work' on the loan is done then you can lock in for a shorter lock (which saves money) as well. Apply, get your loan ready, wait and then be ready to lock in is what I am telling my clients to do. 

My lender has me floating right now on the refi of a SFH rental that was at 5.20.   We are at 4.0 right now, but she thinks it will go lower.  Appraiser was there last Tuesday.

 

[belljr]

Will I find anything below 3.375?

 

[joey]

Will I find anything below 3.375?

My broker is quoting 3.25% but I’d be paying $600-ish in points to get down from 3.375%. For my situation that $600 is easily earned back by the total savings over the life of the loan. 
that said, we’re standing by to hopefully land 3.25 without points. 

 

[NutterButter]

Rates: 

Overall, rates are exceptionally low. I mentioned before that the single biggest factor to mortgage rates is the 10 year treasury. Right now, we are at a yield of .767%, I think we dipped to .66% as the now all time low. Previous to this the all time low was around 1.3% (I can't remember exactly). What we are seeing right now is that mortgage rates are not following the 10 year treasury for two big reasons. This is pretty much across the board in both retail and wholesale, the typical spread of what you expect from retail and wholesale remains. Those reasons are the following. 

1) Every lender is overloaded. Pipelines are full. People are working OT. Turn times are increasing. Many lenders will use the rates as a way to ensure quality control on their pipelines and take a larger margin anyways. 

2) MBS are not being bought up. To encourage buyers a larger premium needs to be offered versus market conditions would otherwise allow. 

What does this mean? I am advising my clients at this point to apply (if they have not yet) and then float. Floating means you do not lock in the rate with the application. Why? I expect the downward pressure of the treasury yield to win out at some point. We should see some volatile movement on rates. If you are sitting on the fence and then rates drop where you want to apply, you may end up missing the boat. As I mentioned before, everyone is behind... an application and submission which use to take me 1-2 days is now taking 3-4 days. Further, if you have your application in and the 'work' on the loan is done then you can lock in for a shorter lock (which saves money) as well. Apply, get your loan ready, wait and then be ready to lock in is what I am telling my clients to do. 

I am still happy to connect any FBG to a broker or if I can help, help them directly myself. 

At this point, there are very few mortgage holders out there that shouldn't at least look at their options. Your friends and family should be too. Feel free to give out my info to them if they want assistance from me or me to refer to a good broker. If myself or my brokerage isn't licensed in their state (IL, IN, WI, CA, WA, FL, and VA), I will refer them to someone good: 

Chad Masters 

NMLS 960505

Market Place Mortgage Corp

(708) 400-1799

cmasters@marketplacemortgage.com

Alternatively, an online resource for them to search a www.FindAMortgageBroker.com if they are more comfortable with that. It will show brokers within a 25 mile radius. 

So I would just call my broker and say I want to apply but float and he'll be cool with that?    How long can I put off locking in a rate?

 

[Chadstroma]

So I would just call my broker and say I want to apply but float and he'll be cool with that?    How long can I put off locking in a rate?

They should be... I am not sure why they wouldn't be... 

Indefinitely in theory though after time some docs will need to be updated with current docs. 

 

[Phil Elliott]

10 year just dropped below .5%.  There isn’t always a direct correlation to the 10 year. This is crazy. Thx to Chad’s referral we turned our app/docs in on Friday. 

 

[belljr]

My broker is quoting 3.25% but I’d be paying $600-ish in points to get down from 3.375%. For my situation that $600 is easily earned back by the total savings over the life of the loan. 
that said, we’re standing by to hopefully land 3.25 without points. 

Thanks. I refied about I think 7 years ago and 3.375 is my rate on 30.  Just wasn't seeing anything definite lower.   

 

[joey]

Thanks. I refied about I think 7 years ago and 3.375 is my rate on 30.  Just wasn't seeing anything definite lower.   

I will say that I've found this calculator to be invaluable during this refi process:

https://www.calculator.net/mortgage-payoff-calculator.html?cloanamount=250000&cloanterm=30&cinterestrate=3.375&cremainingyear=23&cremainingmonth=0&cadditionalmonth=0&cadditionalyear=0&cadditionalonetime=0&cpayoffoption=original&type=1&x=0&y=0#loanterm

(plug in your number, of course. I just used a generic number for the original loan amount)

I keep 2 tabs of that page open in my browser: 1 tab with my current info (with an eye on the critical # of "Remaining Payments") and 1 tab with the new info.

I then put the amount in "Repayment with extra payments" to bring the new, lower payment in line with my current payment. If I can get the Remaining Payments # on the new loan to be < my current loan, then it's worth it to refi over the life of the loan.

Since you're 7 years into a 30, I think you'll find that the rates will need to dip more than 1/2 ro 3/4 of a percentage point to be "worth it".

 

[stlrams]

I will say that I've found this calculator to be invaluable during this refi process:

https://www.calculator.net/mortgage-payoff-calculator.html?cloanamount=250000&cloanterm=30&cinterestrate=3.375&cremainingyear=23&cremainingmonth=0&cadditionalmonth=0&cadditionalyear=0&cadditionalonetime=0&cpayoffoption=original&type=1&x=0&y=0#loanterm

(plug in your number, of course. I just used a generic number for the original loan amount)

I keep 2 tabs of that page open in my browser: 1 tab with my current info (with an eye on the critical # of "Remaining Payments") and 1 tab with the new info.

I then put the amount in "Repayment with extra payments" to bring the new, lower payment in line with my current payment. If I can get the Remaining Payments # on the new loan to be < my current loan, then it's worth it to refi over the life of the loan.

Since you're 7 years into a 30, I think you'll find that the rates will need to dip more than 1/2 ro 3/4 of a percentage point to be "worth it".

Thanks so I just did assuming 3.25% on 10 year fixed and its says I'm done in 8 years with extra payment vs 8 years 5 months I have left.  Currently at 4.125.  I don't think it worth it - right?

 

[joey]

Thanks so I just did assuming 3.25% on 10 year fixed and its says I'm done in 8 years with extra payment vs 8 years 5 months I have left.  Currently at 4.125.  I don't think it worth it - right?

yeah, you're in an interesting phase of paying back your current loan where you're probably paying MOSTLY principal and very little interest, so late in a loan's payback period.

To me, the bottom line is the Remaining Payments line in that web page since it "ignores" history and simply says "from this point forward, how much money will actually come out of my pocket to pay this off" so it's a great way to compare scenarios of a new loan vs. one you're already X years into.

@Chadstroma or other mortgage experts should chime in if they disagree.

 

[-OZ-]

Thanks so I just did assuming 3.25% on 10 year fixed and its says I'm done in 8 years with extra payment vs 8 years 5 months I have left.  Currently at 4.125.  I don't think it worth it - right?

Would that be with any fee rolled in? 

I'm a pretty simple guy, I want to see how much I'll pay total (including any fee rolled in) and compare to the status quo. If I'd pay less with the refi, and I'm willing to bet I'd stay in the house long enough to recoup, I'd do it. 

It sounds like yours is close enough where the benefit isn't significant enough for the hassle. (Not to mention any out of pocket costs)

 

[stlrams]

Would that be with any fee rolled in? 

I'm a pretty simple guy, I want to see how much I'll pay total (including any fee rolled in) and compare to the status quo. If I'd pay less with the refi, and I'm willing to bet I'd stay in the house long enough to recoup, I'd do it. 

It sounds like yours is close enough where the benefit isn't significant enough for the hassle. (Not to mention any out of pocket costs)

I didn’t include fee since didn’t know exactly how much.  That’s the conclusion I came to was the benefit small so why bother.  

 

[Chadstroma]

This is bonkers. 

Lenders are swamped. Capacity is stretched both in terms of ability to handle the loans and their warehouse lines (the lines of credit the lenders use to fund loans before they can sell to secondary market and take off their books). We are seeing rates move up even though the normal indicators of mortgages have dropped down even further. 

The largest wholesaler in the country started the day off with rates lower than Friday... then had two price increases, a price decrease and then another price increase. (It is not unheard of to have a mid day price chance... most days don't though. You typically will get one change or two and usually in the same direction). 

I have heard of one lender that has officially STOPPED taking refinance applications. 

I still think the best course of action is to apply and float... when the pipelines ease and the warehouse lines have room prices should go down based on market conditions. There should be some better than current lock periods ahead. (But I could be wrong, make your own personal judgement for what is right for you. You can't go broke making profit). 

I am going to continue to try to catch up on things and then crawl into the fetal position.

 

[Lacey]

This is bonkers. 

Lenders are swamped. Capacity is stretched both in terms of ability to handle the loans and their warehouse lines (the lines of credit the lenders use to fund loans before they can sell to secondary market and take off their books). We are seeing rates move up even though the normal indicators of mortgages have dropped down even further. 

The largest wholesaler in the country started the day off with rates lower than Friday... then had two price increases, a price decrease and then another price increase. (It is not unheard of to have a mid day price chance... most days don't though. You typically will get one change or two and usually in the same direction). 

I have heard of one lender that has officially STOPPED taking refinance applications. 

I still think the best course of action is to apply and float... when the pipelines ease and the warehouse lines have room prices should go down based on market conditions. There should be some better than current lock periods ahead. (But I could be wrong, make your own personal judgement for what is right for you. You can't go broke making profit). 

I am going to continue to try to catch up on things and then crawl into the fetal position.

Makes sense and why I haven’t heard anything in several days since applying.

 

[Dan Lambskin]

Been working with chads Michigan guy, got approved and just locked in 2.625% on  15 year

bought it down to that but made sense, was less than 4 year payback, don’t see me moving in that timeframe and can’t imagine re-if to anything lower in that timeframe either

And honestly of something came up where I had to move in the next few years I’m not gonna sweat $2K in points

appraisal still pending, so not a done deal yet but everything looking good

should close right around the time my original 30 year would have had 15 years left 

 

[schlesinj]

The corporate market is shut down and if liquidity slows we may see another 2008 crisis.   Hopefully, this is a short term problem, but the Russia/Saudi oil war isn't helping either.

Spreads can certainly widen despite rates being at ridiculous lows.

 

[need2know]

Rates going up again at my lender.  15 year back at 3

 

[One]

Locked yesterday morning. 

30 year fix,  2.875 - no cash out 

Previously at 3.875

 

[bcat01]

Locked yesterday morning. 

30 year fix,  2.875 - no cash out 

Previously at 3.875

Nice.  Rates at my lender just went up .25% this morning.

 

[fruity pebbles]

Largest gap between 10 year treasury and 30 year mortgage rates since the 2008 financial crisis. 

 

[TheDirtyWord]

Secured 3.25% on a 20 year cash out refinance...

 

[joey]

Locked yesterday morning. 

30 year fix,  2.875 - no cash out 

Previously at 3.875

wow. I'm trying to get to 3.25% without any origination fees and that's tough these past couple of days. Things are creeping back up so may have missed my window...

 

[Chadstroma]

Most of the last 10 days or so have been like being in quicksand. Today, I finally have made progress on catching up (not fully caught up) 

Here is where we are at.... 

We are totally in uncharted and unprecedented territory. For the week + mortgage rates which normally are mostly impacted by the 10 year treasury have decoupled. Even though yield has gone down and keeps below 100 bps, mortgage rates have gone up. My advice has been to float on loans right now. I still believe that... but honestly, my BP was going up today starting to second guess myself as I see my rates continue to go up. I listened to a couple of smart people in the know today... the CEO of the largest wholesaler in the country, a guy who basically called what we are seeing back in Oct and a few brokers I know who I value their thinking.... and I heard echoes of my thinking which put me at ease. 

Essentially the thinking is that mortgage rates will eventually follow normal patterns and fall back down. The are a few reasons but the biggest is what an industry magazine put this way "So, why are the rates so high? Last week, HousingWire spoke to numerous lenders, mortgage brokers and other mortgage professionals who hinted that some lenders may be keeping their mortgage rates above where they could be in an effort to control the demand for mortgages. Put simply, many lenders are so busy right now trying to process the loan applications they’ve already received that they’re pushing their interest rates well above the prevailing market rate so they can actually deliver on the loans they already have in their pipeline." There is some hedging and MBS stuff too going on but overall, as the dust settles I still think it will go down and unless there is a huge reversal in the 10 year treasury, we could be seeing all time low rates... then again, as rates drop, applications will increase and we could see the same push of rates back up. 

 

[flapgreen]

Bump 

 

[ghostguy123]

So I refinanced too early?  And didn't switch to bonds early enough?

 

[CR69]

So I refinanced too early?  And didn't switch to bonds early enough?

No this has nothing to do with mortgage rates. See last week when they still went up after the rate cut. They’ll normalize at some point but rates are crazy right now, higher than before the dip and with points!

 

[Chadstroma]

Fed Funds Rates does not directly impact mortgage rates. 

In short, I think this puts more downward pressure on getting rates down. This is all never before type of stuff so we need to see what happens. 

 

[mr roboto]

Could the uncertainty get so bad that Bank simply don’t want to take on additional mortgages at this point?

 

[fruity pebbles]

Feels like mortgage brokers are price gouging right now lol. 

 

[Chadstroma]

Could the uncertainty get so bad that Bank simply don’t want to take on additional mortgages at this point?

No. 

What has happened has been a convergence of things like the MBS market not buying up because of fears of Early Pay Offs and capacity issues which has seen an unprecedented amount of loans being worked on pushing rates up. 

The actions today should help ease up liquidity in the MBS market (more so about the bond buying program than the Fed Funds change). 

The real issue is the ability to get loans done. Can we get verification of employment done? Are Title companies working? Are appraisers working? On top of the capacity issues of lots of loans, there is work at home programs happening, does productivity go down and add to those issues? 

 

[Chadstroma]

Feels like mortgage brokers are price gouging right now lol. 

Brokers are fixed on what we can charge. Wholesalers have real market issues that drove rates up. First and foremost is the MBS market. 

 

[CR69]

No. 

What has happened has been a convergence of things like the MBS market not buying up because of fears of Early Pay Offs and capacity issues which has seen an unprecedented amount of loans being worked on pushing rates up. 

The actions today should help ease up liquidity in the MBS market (more so about the bond buying program than the Fed Funds change). 

The real issue is the ability to get loans done. Can we get verification of employment done? Are Title companies working? Are appraisers working? On top of the capacity issues of lots of loans, there is work at home programs happening, does productivity go down and add to those issues? 

Yep. This is why I'm not sleeping lately and smoking more than normal. 

On top of all the other stuff of course. 

 

[RJS113]

The real issue is the ability to get loans done. Can we get verification of employment done? Are Title companies working? Are appraisers working? On top of the capacity issues of lots of loans, there is work at home programs happening, does productivity go down and add to those issues? 

This is what I’m worried about. I’m buying a house, and scheduled to close on 3/31. Appraisal came in last week, and is currently being reviewed by PNC’s collateral underwriters, and then will be sent to underwriting review for the clear to close. Almost at the finish line, but I’m very nervous. 

 

[george]

Attempted to refinance with Chase on Friday.  Currently 8 years in on a 30 year mortgage at 3.625.   55% LTV balance.  Credit score over 800.  Fees/points they wanted were way too much to move forward on refinance.  $6000-$12000 .  Guess I’ll wait and retry in a month or so.   

 

[Chadstroma]

Attempted to refinance with Chase on Friday.  Currently 8 years in on a 30 year mortgage at 3.625.   55% LTV balance.  Credit score over 800.  Fees/points they wanted were way too much to move forward on refinance.  $6000-$12000 .  Guess I’ll wait and retry in a month or so.   

Don't go to a bank l, especially a big one like Chase unless you are doing a jumbo. 

Also, their closing times are likely ridiculous on refi. Have not heard about Chase but Inknoe others are 90 or 120 days to close.

 

[CR69]

Don't go to a bank l, especially a big one like Chase unless you are doing a jumbo. 

Also, their closing times are likely ridiculous on refi. Have not heard about Chase but Inknoe others are 90 or 120 days to close.

Have you looked at bond prices yet this morning? Might be in for another long week...

 

[Chadstroma]

Have you looked at bond prices yet this morning? Might be in for another long week...

The bond buying move and the market have made a huge impact. It is already tough and now on top of that I have kids at home (near impossible to get work done) and..... yea.... not might. It will be a long week. 

 

[fruity pebbles]

You gotta think at some point everyone’s refinanced in the 3s. Been there multiple times for long periods of time. 

 

[Ted Lange as your Bartender]

I’m sure this is the last thing on everyone’s minds right now, but thought this was an interesting read on why the Fed’s latest cut won’t impact mortgage rates all that much

https://twitter.com/mdtrades12/status/1239902213562040320?s=21

interested to see if this matches @Chadstroma’s experience.

As for me, I got cleared to close on Friday, now just waiting for title to balance things out.  My broker described my situation as “Indiana Jones sliding under the concrete door and grabbing his hat before it closes”.

 

[Phil Elliott]

About 10 days ago had all our docs uploaded to a referral from @Chadstroma in Texas. We are at 4.25, so not bad. Rates are back up but ready to jump if they drop.

 

[Chadstroma]

I’m sure this is the last thing on everyone’s minds right now, but thought this was an interesting read on why the Fed’s latest cut won’t impact mortgage rates all that much

https://twitter.com/mdtrades12/status/1239902213562040320?s=21

interested to see if this matches @Chadstroma’s experience.

As for me, I got cleared to close on Friday, now just waiting for title to balance things out.  My broker described my situation as “Indiana Jones sliding under the concrete door and grabbing his hat before it closes”.

First... that is a damn good line... I am going to steal it. 

Second, yes, the Fed Funds rate DOES NOT directly impact mortgage rates. They do influence the broader market and can be a downward pressure on rates by essentially changing appetites (in normal times) for MBS. Yes, the bigger factor that the Fed announced on Sunday was the MBS buying to add liquidity and as noted that may not be enough. The fear right now on MBS is on EPO (Early Pay Offs) which significantly reduce the value of the MBS bought. So, in order for lenders to sell these MBS they must increase rates for them to be attractive to the investors which is keeping rates higher than they normally would be based on all the normal indicators like the 10 yr treasury. 

I am still expecting the larger market forces to bring rates down from where they are now (which is roughly about where they were a couple of weeks ago but still higher than they were about 3 weeks ago) and feel the Fed will act more if needed. They know that no matter what, we are heading into a recession and they know that once the virus thing is out of the way they are going to need consumers to refinance and be able to spend more back into the economy to get it going again. 

 

[Chadstroma]

About 10 days ago had all our docs uploaded to a referral from @Chadstroma in Texas. We are at 4.25, so not bad. Rates are back up but ready to jump if they drop.

Yea, I have many loans right now in pipeline floating and waiting for a good opportunity to lock in. My one advice is do not try to call the bottom... because you can't. I can't. Really smart guys who focus on this for a living can't. Get an idea of what is a good rate to lock in and be ready to lock it if you hit it. You can't go broke taking a profit. 

 

[Phil Elliott]

Yea, I have many loans right now in pipeline floating and waiting for a good opportunity to lock in. My one advice is do not try to call the bottom... because you can't. I can't. Really smart guys who focus on this for a living can't. Get an idea of what is a good rate to lock in and be ready to lock it if you hit it. You can't go broke taking a profit. 

Yes, no way trying to time the bottom. if we were a few days earlier we could have jumped on a rate around 3 or less. If I get a rate that’s 3.25 or under we could bite but if it doesn't happen that is fine too. Thx for all your help.

 

[fruity pebbles]

Given the rates around 4 now, I’ve gotta think refinance applications have slowed down considerably. 

 

[Chadstroma]

Given the rates around 4 now, I’ve gotta think refinance applications have slowed down considerably. 

Still depends... I got some low 3's and some well into the 5's. I am getting people interested to apply, get the ball rolling and then float for now. Purchase was picking up as the season comes but now I wonder how that will play out with the whole virus.