Chadstroma
Footballguy
Yea, they hoover up servicing rights to try to sell again later. A lot of the sucky lenders are big buyers in the servicing rights as that is how they do customer acquisition.
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Mortgage Rates (3 Viewers)
- Thread starter MechEng
- Start date
Poke_4_Life
Footballguy
I think you're being quick with the timing. I feel like it will be 2 years before prime is back to where it is now.
Mortgages are always the first point of inflexion in rate changes. Meaning home sales will slow before anything else in the economy. I'm sure they have already slowed to some extent, but around me real estate is still red hot.
Time will tell. I do feel like we're headed to a recession.
Chadstroma
Footballguy
I generally having been telling people 1 to 2 years in terms of expecting to refinance with a preface that I don't own a crystal ball.
The economy is stalling and I think it will nose dive fast. I think the Fed start buying bonds again which will push long term rates down (mortgages). The Fed Funds Target rate (prime) doesn't directly impact mortgage rates.
ghostguy123
Footballguy
Chadstroma said:
Thanks for all that. You're a beast.
To answer some of the questions, she started July 2020. Maybe 15-20 hours a week since then. Worked at pizza hut and now subway, new job starts next week at Sheetz earning more, like 14 an hour. I don't know if she is considered a full time employee as of yet but she will work full time hours. Hourly pay for all the jobs she has done, minimal tips.
We did the credit builder last night and she has a 200 secured card coming. You said get two of those??
Discover denied her for a credit card yesterday.
As for the secured loan, so go to the bank(Huntington) and ask about that? Making sure it's reported to all credit bureaus, correct?
Ideally she would like to be able to purchase a home maybe by Christmas time, however I did tell her this process may take a full year, so she may not be able to start school till next fall, which isn't the end of the world.
Fun fact, last night she said the greatest thing I have ever heard her say....."I want to have more money than all the other people I know that are my age"
FreeBaGeL
Footballguy
-OZ- said:got called about refinancing. I told him sure, if you can beat my current rate. He laughed when I told him the deal but then proceeded to try to sell a HELOC at a flexible 7-8%. That was my turn to laugh.
HELOC's should not be nearly that high. Did he mean Home Equity Loan, and not HELOC (home equity line of credit)?
HELOC's are typically variable rates that are some small percentage over prime, and adjust with prime. Prime rate is much lower than actual fixed rate loans right now. My HELOC even on a 2nd home (should be able to get even better terms on a primary) is prime + 0.09%. Prime is still in the 4's so HELOC should be pretty easy to find in the 4's right now, though of course, variable.
Home equity loans are more commonly fixed rate so maybe he was talking about that?
-OZ-
Footballguy
He might have misspoke but I asked about HELOC, he mentioned variable and currently between 7 and 8 percent. I didn’t dig further.
Chadstroma
Footballguy
Is Sheetz a food service place? If so then she would have the two year work history and then going full time could use the full time hours to calculate qualifying income if she could get a VOE (verification of employment) from the employer showing full time employee.
Yes, two of the credit builder cards.
The hard thing about Discover is that they are so conservative on underwriting. I bet it was the income they had an issue with. Alternatively, have her find a student card, I am sure Huntington has one, and apply for that.
On all the credit cards... have her use no more than 10% of the line amount and then pay off in full each month. Rinse and repeat until at least after the mortgage is done.
Yes, you want to make sure the secured loan is reporting monthly to all three credit bureaus. If not then it is pointless and do not do it. If so, then you can do that instead of the Self or Credit Strong.
Technically, the tradelines are suppose to be a year old but I have not had any issues in the past getting loans done with less than 1 year tradelines like this so this winter should work.
With her focus on buying a place at this age... she is well on her way!
madshot31
Footballguy
Chadstroma
Footballguy
Fun.
One thing that I really don't get in the whole mortgage ecosystem is the servicing rights and why it makes sense to buy and sell the servicing rights as they are often done.
Chadstroma
Footballguy
Does anyone care to hear about some drama/comedy in the mortgage industry? It has to do with memes, CEO's of large lenders sending ridiculous emails and now a price war.
PinkydaPimp
Footballguy
Chadstroma
Footballguy
I am all out of sugar momma and young single heiress options but I will get you helped out.
Chadstroma
Footballguy
Ok... here we goooo...... bare with me, I will have to do a lot of explaining versus just telling a story...
It all started with a group of guys (friends of mine) who have a sense of humor and decided to start a FB group for mortgage related memes. The group blew up and now has about 40K people in the industry and related industries in it. Memes are not known as being warm and fuzzy humor but for some reason some people with less than thick skin decided to join.
One thing that gets many brokers (who many like me really want to do good for their customers- helping them financially flourish as well while making a living) mad is with some retail lenders because there is a dirty little secret. That dirty little secret is that they can charge higher margins on govies (govies = government backed loans which are FHA, VA and USDA) than brokers can. The most brokers can get paid on a govie is 275 bps (275 bps equals 2.75% of the loan balance) now brokers don't get mad that they can't make more money (most are lower than the 275bps anyways) but they get mad at how some of these retail lenders, and this on particular one is known for this, take advantage of those who use these products which is often under served communities, economically disadvantaged people and military vets. These retail lenders can legally charge and do margins of 400-500 bps.
One of my group of friends came from a large retail mortgage lender and has less than positive views about that particular lender largely because he does a lot of VA business and hates how this lenders screws over our vets. There were some memes made that poked fun at them... it set off a meme war. Memes were made (I may or may not have partaked in the making of some memes) going back and forth. At some point, a Loan Officer from this retail lender who does a lot of VA business responded to a meme about how this lender does so much for vets which then another broker (a guy I didn't know before) pointed out that it was pretty ridiculous to crow about how you help vets by giving back with checks of charity (aka marketing) when you routinely charge them with 400-500 bps in margins. Apparently this LO goes and runs to the CEO of her lender and cries about it. Now it gets good....
This CEO, instead of doing what most CEO's would do and ignore it, maybe give a pep talk and go on doing CEO type of stuff decides to send a company wide email about this. The email is hilarious. My 6th grade daughter could put together a better email. Grammar, sentence structure, punctuation... I mean, it is a trainwreck. It is not something you would ever expect a CEO of a large mortgage lender to write and then send out to the company.
He talks about this meme group and then about "a mental shift" before going into an "old saying" (which is actually a Bible verse) then goes into "what are we going to do? What is the point?" and proceeds to tell his employees to take screen shots and send those to the compliance and/or legal team because "they are going after licenses" and then mocks the production of the broker who dared point out their hypocrisy. He then offers another "old saying" saying if you don't put another log on the fire then the fire goes out. Then "period." and his signature line followed by "sent from my iPad".
Another secret... a lot of retail LO's are thinking of changing to the broker channel.
I am in a close knit FB group that is basically some of the highest producing brokers, people of influence and even CEO's in the industry. (I really have no business being in there but when you know people, you know people). Someone in the retail lender sent one of the people in this group a screen shot of the email. That broker then posted it in this group. One of the people in this group is Anthony Casa. Casa started AIME which grew from a movement he started called BRAWL. AIME is now the professional trade association for brokers. I have known him for a while and we affectionately joke with him about having an "inoperable filter" (it is even on his Linkedin profile right up there with CEO, founder, etc stuff). Casa posts it publicly and blasts the CEO. Now, let me tell you... Casa started a fairly new brokerage and his main focus is to recruit retail LO's to come join the company. Casa is very intelligent, very driven, very savvy and plays chess while others are trying to figure out their first checkers move. He knows what he is doing.
The meme group EXPLODES with more memes basically all mocking this CEO. They are numerous and hilarious. The moron talked about not putting logs on a fire and threw an atomic bomb on the fire. But then it gets better...
Casa trolls him on linkedin. Way ahead of his prey, he put a trap out there and then the quarry ran right into it. The CEO announces to his company that they will match any loan estimate from Casa's company (that is a huge lowering of their normal rates as they are generally half to a full percentage higher or more) Of course, this gets right to Casa pretty much as soon as it is announced. Casa, takes it further and tells his company that if going against this retail lender, they will charge 0 for corporate margin, which means that the retail lender has to reduce their rates even more. This all ends up with direct interaction between the two on linkedin which is EXACTLY what Casa wanted as it spreads his message of recruiting even more to those connected with this CEO. Someone even responded to his post saying that they never heard of his company before and he responded... that was the point. Now you have. So... now consumers will get even better rates... even from the dipstick retail lender. Casa is getting his message of being able to get more pay, close loans faster and give their customers lower rates/cost to steal more LO's. And now Casa just released a t-shirt that he is giving out to any LO's they go on his companies weekly discovery calls (recruiting calls) which is the picture of this CEO ala the barstool sports firegoodell clown shirt.
It is such good entertainment. Hopefully it is as interesting to you guys as it is me and I didn't just waste your time. I also likely have not been able to do this justice in retelling it.
It all started with a group of guys (friends of mine) who have a sense of humor and decided to start a FB group for mortgage related memes. The group blew up and now has about 40K people in the industry and related industries in it. Memes are not known as being warm and fuzzy humor but for some reason some people with less than thick skin decided to join.
One thing that gets many brokers (who many like me really want to do good for their customers- helping them financially flourish as well while making a living) mad is with some retail lenders because there is a dirty little secret. That dirty little secret is that they can charge higher margins on govies (govies = government backed loans which are FHA, VA and USDA) than brokers can. The most brokers can get paid on a govie is 275 bps (275 bps equals 2.75% of the loan balance) now brokers don't get mad that they can't make more money (most are lower than the 275bps anyways) but they get mad at how some of these retail lenders, and this on particular one is known for this, take advantage of those who use these products which is often under served communities, economically disadvantaged people and military vets. These retail lenders can legally charge and do margins of 400-500 bps.
One of my group of friends came from a large retail mortgage lender and has less than positive views about that particular lender largely because he does a lot of VA business and hates how this lenders screws over our vets. There were some memes made that poked fun at them... it set off a meme war. Memes were made (I may or may not have partaked in the making of some memes) going back and forth. At some point, a Loan Officer from this retail lender who does a lot of VA business responded to a meme about how this lender does so much for vets which then another broker (a guy I didn't know before) pointed out that it was pretty ridiculous to crow about how you help vets by giving back with checks of charity (aka marketing) when you routinely charge them with 400-500 bps in margins. Apparently this LO goes and runs to the CEO of her lender and cries about it. Now it gets good....
This CEO, instead of doing what most CEO's would do and ignore it, maybe give a pep talk and go on doing CEO type of stuff decides to send a company wide email about this. The email is hilarious. My 6th grade daughter could put together a better email. Grammar, sentence structure, punctuation... I mean, it is a trainwreck. It is not something you would ever expect a CEO of a large mortgage lender to write and then send out to the company.
He talks about this meme group and then about "a mental shift" before going into an "old saying" (which is actually a Bible verse) then goes into "what are we going to do? What is the point?" and proceeds to tell his employees to take screen shots and send those to the compliance and/or legal team because "they are going after licenses" and then mocks the production of the broker who dared point out their hypocrisy. He then offers another "old saying" saying if you don't put another log on the fire then the fire goes out. Then "period." and his signature line followed by "sent from my iPad".
Another secret... a lot of retail LO's are thinking of changing to the broker channel.
I am in a close knit FB group that is basically some of the highest producing brokers, people of influence and even CEO's in the industry. (I really have no business being in there but when you know people, you know people). Someone in the retail lender sent one of the people in this group a screen shot of the email. That broker then posted it in this group. One of the people in this group is Anthony Casa. Casa started AIME which grew from a movement he started called BRAWL. AIME is now the professional trade association for brokers. I have known him for a while and we affectionately joke with him about having an "inoperable filter" (it is even on his Linkedin profile right up there with CEO, founder, etc stuff). Casa posts it publicly and blasts the CEO. Now, let me tell you... Casa started a fairly new brokerage and his main focus is to recruit retail LO's to come join the company. Casa is very intelligent, very driven, very savvy and plays chess while others are trying to figure out their first checkers move. He knows what he is doing.
The meme group EXPLODES with more memes basically all mocking this CEO. They are numerous and hilarious. The moron talked about not putting logs on a fire and threw an atomic bomb on the fire. But then it gets better...
Casa trolls him on linkedin. Way ahead of his prey, he put a trap out there and then the quarry ran right into it. The CEO announces to his company that they will match any loan estimate from Casa's company (that is a huge lowering of their normal rates as they are generally half to a full percentage higher or more) Of course, this gets right to Casa pretty much as soon as it is announced. Casa, takes it further and tells his company that if going against this retail lender, they will charge 0 for corporate margin, which means that the retail lender has to reduce their rates even more. This all ends up with direct interaction between the two on linkedin which is EXACTLY what Casa wanted as it spreads his message of recruiting even more to those connected with this CEO. Someone even responded to his post saying that they never heard of his company before and he responded... that was the point. Now you have.
So... now consumers will get even better rates... even from the dipstick retail lender. Casa is getting his message of being able to get more pay, close loans faster and give their customers lower rates/cost to steal more LO's. And now Casa just released a t-shirt that he is giving out to any LO's they go on his companies weekly discovery calls (recruiting calls) which is the picture of this CEO ala the barstool sports firegoodell clown shirt. It is such good entertainment. Hopefully it is as interesting to you guys as it is me and I didn't just waste your time. I also likely have not been able to do this justice in retelling it.
Chadstroma
Footballguy
Happy National Mortgage Broker Day!
Senor Schmutzig
Footballguy
@Chadstroma Was talking to a Canadian co-worker about mortgages and he brought up the concept of "porting a mortage". For those that might not know, porting or transferring the mortgage is possible if you want to move your existing mortgage over to another property. I had never heard of that so I had to look it up and it seems that it is more common in Canada. Both him and his girlfriend had separate mortgages on two different properties that they end up porting to a new house they purchased a few years ago.
For someone with very favorable terms on an existing mortgage, the ability to port would be fantastic in the current market if you wanted to move. Without the ability to port, may people are shackled to their existing home if they needed to pay off one mortgage and start from scratch when buying another property (at a considerably higher rate). It doesn't appear that there is too much of it in the US, if at all. I'm assuming that new loan origination makes a lot more money for the lender which is why porting isn't common here but the alternate theory is that more people would be active in the housing market if they COULD port their existing mortgage or were aware of it.
Thoughts? Is it more common than I thought but I just wasn't aware of it?
For someone with very favorable terms on an existing mortgage, the ability to port would be fantastic in the current market if you wanted to move. Without the ability to port, may people are shackled to their existing home if they needed to pay off one mortgage and start from scratch when buying another property (at a considerably higher rate). It doesn't appear that there is too much of it in the US, if at all. I'm assuming that new loan origination makes a lot more money for the lender which is why porting isn't common here but the alternate theory is that more people would be active in the housing market if they COULD port their existing mortgage or were aware of it.
Thoughts? Is it more common than I thought but I just wasn't aware of it?
Last edited by a moderator:
The Z Machine
Footballguy
That sounds like an awesome thing for consumers. I bet it's illegal in the US.
Chadstroma
Footballguy
Foreign mortgage lending is a whole different game. I haven't spent much time learning much about them but when I have it is usually followed by a quick "wait... what?"
I know this is a thing in Canada and I think the UK too. As best to my knowledge, this isn't a thing in the US.
It has been one of my arguments that inventory will continue to be tight and be a contributing reason why housing values will not crater along the lines of something like 2008. Values will and are declining but as I give the analogy of it is like the Lambo taking the foot off the gas and going from 200 mph to 80 mph. That is quite a bit of a decline but it still going fast. Homeowners are going to be reluctant to give up an under 3% rate to get a 5% rate on a new home and meanwhile there are a lot of people wanting to buy.
I do believe rates will drop significantly in a 1-2 year window. If I was looking to make a move, I would not be as worried about the rate as I would the property and value. If I get a good buy now then I can worry about the rate later (assuming I can qualify for it all).
Wondered the same a few months ago but everything I’ve read says this is not a thing in the US mainly because of the Due on Sale clause in most conventional US home loans. One potential option that is similar is Substitution of Collateral, where you can take your old mortgage with you to the new property (if the lender agrees.) Not a well known strategy though and I’ve only heard of it mainly when you own a 2nd property free and clear that is worth more than the original property that your are moving the loan to (or in the case of owner financing and not bank financing.) Might could do this on a new purchase but would require a pretty flexible lender to agree to it (or if owner financed written into the terms.)
Some loans are Assumable though and this is starting to make a small comeback. This would be where you assume the existing loan when buying a new house. However it’s limited to FHA, VA, USDA, and some conventional ARM loans and there are hoops to jump through. Most US fixed rate conventional are not assumable.
Chadstroma
Footballguy
The seller would have to agree to these too and I don't think many sellers with no familiar ties to the buyer would want to. I can't say that I have ever been involved with any transactions like this but I would think it would be similar to a loan modification which I have never heard anyone say "That was an awesome experience!" doing one. The seller has no incentive to do so... at least not in a market like this where there are still plenty of people willing to buy their house for much more than they paid for it and they can move on and do whatever they want.Wondered the same a few months ago but everything I’ve read says this is not a thing in the US mainly because of the Due on Sale clause in most conventional US home loans. One potential option that is similar is Substitution of Collateral, where you can take your old mortgage with you to the new property (if the lender agrees.) Not a well known strategy though and I’ve only heard of it mainly when you own a 2nd property free and clear that is worth more than the original property that your are moving the loan to (or in the case of owner financing and not bank financing.) Might could do this on a new purchase but would require a pretty flexible lender to agree to it (or if owner financed written into the terms.)
Some loans are Assumable though and this is starting to make a small comeback. This would be where you assume the existing loan when buying a new house. However it’s limited to FHA, VA, USDA, and some conventional ARM loans and there are hoops to jump through. Most US fixed rate conventional are not assumable.
Yes, have to get the seller to agree to it, so going to be a tough sell over other offers. At least here in Colorado there is a section for loan assumption in purchase contracts, but I feel confident saying 99% of agents would have no experience with it and probably bungle explaining it to a seller. I believe you as the buyer also have to go thru underwriting with the existing lender with no guarantee they agree, plus potentially you pay some extra fees and possibly have to renegotiate the rate (it’d still be low but not necessarily the exact same rate the seller has depending on your credit vs theirs, etc.)
Best bet to pull this off is probably in a privately negotiated sale or either offering a premium on your purchase offer or going after a house that has gotten no interest.
Chadstroma
Footballguy
FHA for sure is doing a regular loan app on assumptions. I do not remember about VA though.
There are reasons why this is not a mainstream thing.
Chadstroma
Footballguy
Biggest drop in mortgage loan apps in 20+ years.
STEADYMOBBIN 22
Footballguy
Sand
Footballguy
Chadstroma
Footballguy
Nugget
Footballguy
Are there options for new home purchases with very little money down? I’d prefer not to sell stocks at this point in the cycle, but a house opportunity may come up that is to good to pass up.
Chadstroma
Footballguy
FHA 3.5% down.
Conventional 3% down. Affordable programs (qualify by income) has decent rates but can do without just higher rates. 5% otherwise.
VA and USDA can do 0% VA is for vets, USDA is for rural areas and has income limits.
DPA (Down Payment Assistance) programs that you end up paying for it in the rate.
fruity pebbles
Footballguy
Are you always paying PMI if you’re not putting 20% down? Whether monthly, upfront or in the rate somehow?
Nugget
Footballguy
Chadstroma
Footballguy
Do you mean a recommendation with a lender or whether to do it or not or?Nugget said:
Chadstroma
Footballguy
FHA always has MIP- Mortgage Insurance Premium. It is on there for thr life of the loan with anything less than 10%. 10% or more doen it will come off in 11 years. Also, a funding fee.fruity pebbles said:
VA has no Mortgage Insurance ever but does have a one time funding fee (unless waived for disability).
USDA has a guarantee fee and a funding fee.
Conversational has no funding fee but under 20% has PMI- Private Mortgage Insurance. It can be removed after an appraisal showing 80% LTV or better, automatically when payments reach 78%, request if at 80% with added payments and refi. Also, you can do lende paid PMI which is just added into the rate which I don't advise because it is automatically life of the loan.
Chadstroma
Footballguy
And the Fed raising rates by .75% does not mean mortgage rates went up by .75%
flapgreen
Footballguy
Chadstroma
Footballguy
Prime Rate will go up 75 bps, which means things like HELOCs and credit cards will go up.
Mortgage rates are not directly impacted by what the Fed does. The biggest factor to mortgage rates is the 10 year treasury.
flapgreen
Footballguy
Chadstroma
Footballguy
Improved.
https://www.cnbc.com/quotes/US10Y
Generally, when the yield goes up then mortgage rates go up. When yields go down, rates go down.
-OZ-
Footballguy
M1 going to 4.25% on their Borrow account, twice the rate from January. Still not a bad rate for a margin account but now high enough where I’ll pay it off this year.
Chadstroma
Footballguy
Chadstroma
Footballguy
It will be come all the way back down in the not too distant future.
Chadstroma
Footballguy
I have been preoccupied today (you can see my vacation thread for the why behind that) but catching up on social media... a broker friend of mine just said she locked someone in a 30 yr conventional in the 4's with no points. So... good progress on rates.
FairWarning
Footballguy
Chadstroma
Footballguy
Yup... regardless of how the administration wants to change the definition and act like everything is fine, we are in a recession.
They don't say it but rate hikes is all about killing the economy to keep inflation in check.... as soon as inflation comes down, rates will come down as well to give the economy CPR.
Chadstroma
Footballguy
It is official... I am now at a new brokerage: UMortgage.
This is awesome for a few reasons... even lower rates as a brokerage, fasters closings, better overall experience, better technology and operating in almost all states and soon to be all states. I will be adding licensing in a couple more states but for those I am not licensed in, I can legally get something out of it when I refer within the company to one of my colleagues.
I am very excited. It is a total level up of my game and will let me help a lot more people. If you or anyone you know has any mortgage needs- regardless where they are... you guys know who to reach out to!
This is awesome for a few reasons... even lower rates as a brokerage, fasters closings, better overall experience, better technology and operating in almost all states and soon to be all states. I will be adding licensing in a couple more states but for those I am not licensed in, I can legally get something out of it when I refer within the company to one of my colleagues.
I am very excited. It is a total level up of my game and will let me help a lot more people. If you or anyone you know has any mortgage needs- regardless where they are... you guys know who to reach out to!
The Z Machine
Footballguy
GLLLLLLLLLLLLL Chad
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