5 Important Points To Consider When Looking To Borrow.
There’s almost no greater time that citizens are looking for commercial loans other than a down economy. Simultaneously, lenders have the opportunity to be selective about who they lend to when only a small portion of people will fit all of their needs to borrow.
One could seek out a commercial loan for a variety of reasons, be it a home loan, car loan, or other significant life event that simply cannot be avoided. It’s important that lenders and borrowers alike know the key components that will be considered when considering a loan.
According to Scotsman Guide, a resource for mortgage originators, there are five important points to consider when looking to borrow:
Credit score and history
Net Worth
Ownership Experience
Free Cash Flow
Liquidity
Many lenders will begin by evaluating your net worth and liquidity, which involves more than just subtracting liabilities from assets. In order to present yourself as a valuable borrower, lenders will want to see detailed financial statements of your spending and properties. These financial statements should also include all liquid assets, such as stocks and bonds.
In addition to these assets, it will also be important to show a potential lender your various types of ownership in the past. These past ownerships combined with past spending will amount to the ever-important credit score, which will be evaluated in any type of borrowing situation. The last important factor will be free flow cash, or, cash that’s left over once necessary expenditures have been attended to. A lender wants to know that borrower can have many options for supporting themselves, increasing they’re reliability to pay back the loan.
Worried that you might not meet all of these requirements? Stay tuned for our next piece on how to improve your credit and net worth.
When is the right time to finance a home?
The time to finance a home for the best rate could be now, as mortgage rates across the country have reached a low over the last 16 months at 4.12 percent, according to Freddie Mac.
This number is quoted for a 30-year fixed rate conventional mortgage, and since Jan. 1, people have been finding themselves able to afford about 8 percent more of a home in terms of quality. Las Vegas, in particular, may be experiencing their home rates flattening out as the median home price reached $200,000 in August, which is an almost 10 percent increase from the same time last year, according to a recent report from the Greater Las Vegas Association of Realtors (GLVAR). This is good news for home owners and buyers as the economy continues to recover from the recession that severely impacted the value of property nationwide.
Although property values increase as pricing begins to level, low mortgage rates are not necessarily available to everyone. Those who will see the lowest rates would be considered prime lenders, defined by Freddie Mac as a lender with a credit score over 740 and who can offer a 20 percent down payment. This, however, should not discourage those from financing a home.
If you’re interested in mortgage rates in the greater Las Vegas area, please contact Valley West Mortgage at 702-696-9900 or info@valleywestmortgage.com
Mortgage rates are on the rise. Here is why:
Mortgage rates have seen historic lows due to a long running bull-market in bonds. Specifically mortgage backed securities. The demand has surpassed the supply and has caused interest rates to drop to the lowest rates in the last 10 years. As the demands start to be fulfilled, mortgage rates will start to go up. The market is at it's turning point according to portfolio managers-some of whom are running the nation's largest bond funds. This means it is time to say goodbye to the longest bull market for bonds in history. The reason: growing worries about inflation. While it is not a problem right now, there are several strong economic factors that typically lead to higher prices down the road.
Rates are already starting to rise, even without the Fed. This week, Treasuries and Mortgage Backed Securities saw a sharp sell-off, bringing yields-which move opposite to prices-to their highest level since October. Rising yields, when coupled with inflation, are a double-whammy to the value of bonds. With job growth comes purchasing power and pricing pressure on businesses and consumers. Yigal Jhirad, portfolio manager for Cohen & Steers, thinks this pressure is already underway. While significant inflation and higher mortgage rates are still far down the road, it is clear that they are on the horizon. This is actually a good thing for housing. The housing market has always performed better in the "sweet spot" of mortgage rates which is in that 5.50% to 7.00% range.
What happened to rates last week?
Mortgage backed securities (MBS) lost -93 basis points from last Friday to the prior Friday which pushed mortgage rates significantly higher from the prior week and marks the second straight week of higher mortgage rates. We have received month after month of positive economic news which would normally pressure mortgage rates upward but due to global instability, mortgage rates have benefitted from strong demand in MBS which have offset the positive economic news. But bonds started to sell off in a big way last week which pushed mortgage rates higher. Why? Because banks started to dump their vast holdings of Treasuries and MBS. Banks had to hold on to capital while they were undergoing the Fed's "stress test". The "stress test" results were released last week and as a result, each bank definitively knew how much excess capital they had.This meant that they could finally liquidate their holdings of their very low yielding mortgage backed securities....this caused demand for MBS to fall off which pushed mortgage rates upward.
Falling rates help everyone
Las Vegas - It's going to happen again and again and Valley West Mortgage will keep reporting on it. Rates keep getting lower and lower. That couldn't make us any happier. Please Note: The actual interest rate you were quoted last week will have changed this week. Based on raw data from more than 20 leading lenders as well as feedback from the MBS Live community, the average Best-Execution rate, before rounding to the nearest eighth, hit its lowest level on record, 3.81%. Although 3.81% is closer to 3.75% than 3.875%, we won't declare 3.75% to be the Best-Execution champ until the average from our lender survey falls to 3.75 or lower, and we're not there yet. Please call your Local Mortgage Lender to find out more details.
Last week, we noted a high degree of stratification in rates as lenders responded to the bond market rally at different paces. This continues to be the case today, but perhaps to a slightly smaller extent. When we say that rate offerings are more stratified, we're talking about various lenders offering increasingly different rates to the same type of borrowers. Among some lenders in our survey, best-execution rates are still at 4.0%, while the bulk have moved down to 3.875% and 3.75%. The important point here is to not believe everything you read about mortgage rates these days, unless the source examines multiple lenders and offers the caveat that they can only report averages while individual experiences may vary.
For instance, several lenders are priced WORSE today than Friday. It's far more important to be working with someone you trust in a process that is more likely to hit its deadlines than to go overboard in pursuing the lowest possible quotes. In the current market, overfocus on lowest possible rates can lead to delays which can result in a higher rate than the one you were originally trying to avoid!
Pay off a 15 year mortgage loan in less than 10 years
CNN Money reports that the average 30 year fixed mortgage fell to 3.94%. These rates compare to the record setting rates we saw in early October. At the same time, the 15 year fixed mortgage fell to 3.21%, and the Five-year adjustable rate mortgages also plumbed new depths, hitting 2.86% for the week. This does not come as a surprise to many of our sites visitors that have been keeping up with the recent postings we have featured.
Mortgages are a tough thing to wrap a mind around. It should be as easy as saying "today's rate is this, that's what you get." Instead, there are scenario's that need to be examined, requirements to be met and money to be saved. With the national average falling to 3.94%, things might get a little easier. Freddie Mac's chief economist, Frank Nothaft, said that these rates will more than likely stick around until at least mid-2012. Valley West Mortgagewants to help our readers save money the best that they can. SO here is a tip.
Les Christie of CNN MONEY reports that "The low rates can translate into big savings for home buyers. Five years ago, a home buyer would have been lucky to land a 5% rate on a 15-year loan. On a $200,000 mortgage, that would have meant the borrower would have paid $1,582 a month. Should a borrower land a 3.2% rate on a $200,000 loan now, the monthly mortgage payment would come to $1,400 -- a savings of $182 a month." While this is true, I would like to tate a fact that could save your money money and time in the long run. Lets say that the previous situation applies to your situation. You were paying 5% on a $200,000 mortgage and are now at 3.2%. You are saving $182 a month. Your first initial thought would probably be that you now have extra money to spend on groceries, bills or gas. But here is an idea. If you took that $182 and made a separate "PRINCIPLE" payment, you could actually pay off your loan in less than 9 years. Now let's be clear about this. You would have to write the check to Mortgage Company that you are paying and clearly state on the check, that the check is to be paid to the PRINCIPLE on your mortgage.
While it's not a bad thing to want to pocket the money, being smart about paying off your loans and interets sure does help. See our recent posting about Mortgage Rates at their lowest, arguably to get a better understanding on how people claiming "RATES NOW" are lower then the same exact rates "THEN".
Mortgage Rates are at their Lowest, Arguably
When talking about the "Lowest Rate Possible" a strong, two sided debate always takes place. We have heard this argument take place, many times both sides make equal and valid points to their case. Either way, Valley West Mortgage is here to tell you some of the details involved with the phrase "Lowest Rates Ever!".
Earlier this fall, the beginning of October and even the end of September, rates were on average lower then they are today. That being said, in terms of the actual interest rate that's most likely to be quoted to an ideal-scenario borrower, it was 3.875% then and after a long time stuck at 4%, the most prevalent best-execution rate is once again 3.875%.
There are a couple things to keep in mind when thinking about a 3.875% Best-Execution rate.. 3.875% Best-Execution rates mean that this the most prevalent RATE for the best of qualified scenarios, while it considers the costs involved to obtain that rate. Those costs can vary quite a bit before a move up to 4.0% or move down to 3.75% would be justified. We're only just entering the very outer limits of 3.875%'s range of closing costs (on average, some lenders are already close to 3.75, some are still at 4.0 or higher). The point I am trying to make here with this article on Lowest Mortgage Rates is that with all this hype and exposure of the term "LOWEST RATES POSSIBLE" in the market today, it is a good idea to step back and take a look around. It is very important to know all the details. You might have a better scenario then you imagine, leaving you with more options to help choose a company that can move down to 3.75%. It is not that the rates have not been here before, or that you have not been warned numerous times about subject similar to this one. The fact is that many first time home buyers have no idea what they are jumping into - (Not Factual).
Many first time home buyers read a Mortgage Blog, maybe even a book or watch a video and then make a few calls hoping to get some kind of valid information, possibly hearing some of the same terminology they just read about. Valley West Mortgage is dedicated to helping all of our potential home buyers find all of the information needed to make a smart decision with their future. See our past blog about Loan Officers Should Always Provide Valid Contact Information. Our staff at Valley West Mortgage can prove their Authenticity, as well as our companies, before talking number.
NewFed Programs Help Mortgage Rates
This week, the Fed announced new measures to boost the economy. This sounds amazing, and like everything else we have heard in the last two years. So expectations are pretty low for much economic growth to result from the measures taken by the fed. but they did help push mortgage rates to historic lows. The lowest rates we have scene in the last 3 years, not to mention that the rates are bordering on lowest rates we have seen in the last 45 years. You heard it here. We are almost at the lowest rates in history.
The Fed released its statement Wednesday afternoon. The MBS markets then staged a very strong rally for several reasons. The Fed confirmed that there are "significant downside risks" to the US economic outlook. Slower economic growth reduces inflationary pressures, which is favorable for mortgage rates. The Fed then announced the widely expected "Operation Twist program." A program that will extend the average maturity of the Fed's portfolio by purchasing $400+ billion of longer-term Treasury Securities and selling an equal amount of shorter-term Treasuries. The third major element from the statement helping mortgage rates was a surprise to most investors. The Fed will begin to reinvest principal payments from its mortgage-backed securities (MBS) holdings in additional agency MBS. Until now, the Fed has been reinvesting the MBS principal payments in Treasury securities.
With roughly $885 billion in MBS holdings in the Fed's portfolio, these principal payments, along with Operation Twist, will create a significant source of additional demand for MBS. The impact of the announcement was priced in very quickly. Although the Fed has not yet begun to purchase securities under the new programs, investors have already factored in the expected impact of the added demand on MBS prices. Following prior Fed announcements about purchasing MBS, nearly all of the benefit took place right away.
Las Vegas mortgage rates
Rates have hit Rock Bottom. The lowest rates in recent years. Call Valley West Mortgage today (702) 696-9900 to reserve your low rate.
Mortgage Rates Are on the Rise!
We said it would happen and soon. Average rates have just passed 5%
What we don't know is how far or how fast this Mortgage Rate rise will be. Recent positive indicators for the economy have caused rates to rise. Mortgage Rates parallel Long-Terms Bond Rates and those always rise on positive economic news. It is more important than ever to have your Refinance or Purchase file in the hands of a competent Mortgage Professional! At Valley West Mortgage, we keep a very close watch on rates for our clients. While rates are clearly on the rise, they still have their ups and downs. We watch all of the rate change indicators for potential changes so we can lock rates at the best possible advantage for our clients.
The key to being ready to lock is having a complete file which is ready in every respect. With our clients help, and help from our Realtors on Puchase files, we do everything within our control to make sure that your file is complete, as quickly as possible. In this way, we won't miss any opportunity to secure the best terms possible! Give us a call today so we can help you to succeed even in this unstable market. Remember, Las Vegas is still one of the best buying opportunities in the entire country regardless of current rate fluctuations.
Call (702) 696-9900 or (888) 931-0007 and let Valley West Mortgage get you ready to close!
It Really is Better to Buy than Rent in Las Vegas!
On the upside...
A study was published today by Trulia, a major Real Estate watch site, and Las Vegas is #2 behind only Miami as the best place to buy rather than rent. I'm sure that this will be on most of our Local News stations by this evening. They love to cover the latest Las Vegas Real Estate news.
As we have said before, this is the best opportunity in years to buy a home in Las Vegas! Currently, rates have been fluctuating quite a bit due to market uncertainty. For the past two weeks, rates have finished slightly highger. Don't wait for home prices to "drop a little more" and then find yourself out of position because rates have gone up too much.
Call our professional staff and get the ball rolling today! That way, you will already have provided everything needed in order for us to lock your rate as soon as you have an accepted offer on a property.
Call (702) 696-9900 or (888) 931-0007 and let Valley West Mortgage get you ready to close!
