The days of super low interest rates are now behind us. Over the last two years, we have seen 30 year rates as low as 2.5%. That's just plain nuts. During that period, I refinanced over 50 of you TBH brothers and another 25 purchases/construction loans. And I enjoyed working on every one of them! I'm sorry if you procrastinated and missed the refi boat.
A few points to ponder as we have moved into the 4% range and higher.
1. Mortgage lenders love low rates and refinances. It's bonus money but is always temporary. I ask that you not view me as "The Refi Guy". The bulk of my business is home purchases, lot loans, and interim construction loans. I'm here for you when one of those are needed! Do you have questions? Call me. I love to help, I love to educate. 512-203-5869.
2. Is there any reason to even mention "refinance" now that rates are up??
YES!
A. If you are in an adjustable rate mortgage (ARM) you need to talk with a lender pronto. Rates may not be sexy now, but you could be in for hurt if you let your fixed term end over the next year or two and begin adjusting.
B. If you are challenged with current and snowballing debt, a cash out refinance is still worth a look. Cashing out at 4%+ to pay off 18% credit cards might make good sense. It might also make good sense to do the same through a home equity line of credit (HELOC). I can help you make that decision.
3. How high will rates go? I always tell people I can answer that with 50% certainty. It's the same certainty that the "smart people" that write for yahoo finance or mortgage news daily have. At the end of 2019, rates were in the mid 4s. All those smart people insisted we'd see rates in the 5s or higher by the end of 2020. What happened? Rates dropped quickly into the 3s and low 3s at the beginning of the year. Forget Covid, we were in the middle of a refi boom by the time the March 2020 Covid madness started. Bottomline, the unknown is as likely to drive rates as fed decisions are.
Always here if you need me.
Trey Powers
City Bank Mortgage (a TEXAS Bank)
512-203-5869
trey@treypowers.com
NMLS#1294913
Rest of the article......
Freddie's survey showed an increase from 3.55 last week to 3.69 this week. This assumes a best case scenario 30yr fixed with 0.8 points paid upfront. I don't love the idea of building points into rate indices if points can change over time. I'd rather just adjust the rates to reflect the points since there's reliable math for that purpose.
For example, at most lenders right now, you'd pay 1 point to drop the rate by 0.25%. If Freddie made that adjustment, their 3.69 would rise to 3.89. But remember, that would have applied to Monday/Tuesday based on Freddie's methodology. Lo and behold, the rates I calculate every day were at 3.87% and 3.89% on Mon/Tue respectively.
All that to say that our daily rate is reliably in line with the industry standard, but on an up-to-the-hour basis (I adjust mid-day if rates change) as opposed to once a week. I never go to lengths to explain this reliability because it's one of those "is what it is" sort of things in my mind. I only do it today because our daily rate is quite the departure from Freddie in addition to being just a hair above a significant psychological ceiling.
In case it wasn't already clear based on the headline, the average is currently up to 4.02%. Keep in mind that is is an average among top tier scenarios. It means that some lenders are quoting 3.625% and others are up to 4.375%. Adding any complexity to the scenario would mean a different rate. Also keep in mind that lenders are MUCH more widely stratified than normal, which is often the case when we've seen as much volatility as we have so far in 2022.
A few points to ponder as we have moved into the 4% range and higher.
1. Mortgage lenders love low rates and refinances. It's bonus money but is always temporary. I ask that you not view me as "The Refi Guy". The bulk of my business is home purchases, lot loans, and interim construction loans. I'm here for you when one of those are needed! Do you have questions? Call me. I love to help, I love to educate. 512-203-5869.
2. Is there any reason to even mention "refinance" now that rates are up??
YES!
A. If you are in an adjustable rate mortgage (ARM) you need to talk with a lender pronto. Rates may not be sexy now, but you could be in for hurt if you let your fixed term end over the next year or two and begin adjusting.
B. If you are challenged with current and snowballing debt, a cash out refinance is still worth a look. Cashing out at 4%+ to pay off 18% credit cards might make good sense. It might also make good sense to do the same through a home equity line of credit (HELOC). I can help you make that decision.
3. How high will rates go? I always tell people I can answer that with 50% certainty. It's the same certainty that the "smart people" that write for yahoo finance or mortgage news daily have. At the end of 2019, rates were in the mid 4s. All those smart people insisted we'd see rates in the 5s or higher by the end of 2020. What happened? Rates dropped quickly into the 3s and low 3s at the beginning of the year. Forget Covid, we were in the middle of a refi boom by the time the March 2020 Covid madness started. Bottomline, the unknown is as likely to drive rates as fed decisions are.
Always here if you need me.
Trey Powers
City Bank Mortgage (a TEXAS Bank)
512-203-5869
trey@treypowers.com
NMLS#1294913
Rest of the article......
Freddie's survey showed an increase from 3.55 last week to 3.69 this week. This assumes a best case scenario 30yr fixed with 0.8 points paid upfront. I don't love the idea of building points into rate indices if points can change over time. I'd rather just adjust the rates to reflect the points since there's reliable math for that purpose.
For example, at most lenders right now, you'd pay 1 point to drop the rate by 0.25%. If Freddie made that adjustment, their 3.69 would rise to 3.89. But remember, that would have applied to Monday/Tuesday based on Freddie's methodology. Lo and behold, the rates I calculate every day were at 3.87% and 3.89% on Mon/Tue respectively.
All that to say that our daily rate is reliably in line with the industry standard, but on an up-to-the-hour basis (I adjust mid-day if rates change) as opposed to once a week. I never go to lengths to explain this reliability because it's one of those "is what it is" sort of things in my mind. I only do it today because our daily rate is quite the departure from Freddie in addition to being just a hair above a significant psychological ceiling.
In case it wasn't already clear based on the headline, the average is currently up to 4.02%. Keep in mind that is is an average among top tier scenarios. It means that some lenders are quoting 3.625% and others are up to 4.375%. Adding any complexity to the scenario would mean a different rate. Also keep in mind that lenders are MUCH more widely stratified than normal, which is often the case when we've seen as much volatility as we have so far in 2022.
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