Million Dollar Mortgage Pain

[one_muggle]

Rather than an orderly decline (in business, not rates) the mortgage market appears to be undergoing convulsions. It seems even the rational 20 percent down, fixed rate loans are getting a taste of the Cruciatus Curse.

(from http://www.cnbc.com/id/20107397)
So just for fun, I ran a search on a jumbo 30-year fixed rate mortgage today, for $500,000, with 20% down on my imaginary home, no points on the mortgage. Here’s what I found:
Wells Fargo: 8%
Countrywide: 7.39%
Bank of America: 7.94%
BB&T: 6.88

And,
“They’re pulling themselves out of the market to regroup,” is what one of my mortgage broker buddies told me on the phone this morning when I asked how in the heck Wells Fargo could raise rates on a 30-year jumbo fixed rate mortgage from 6 7/8% to 8% overnight. A jumbo is anything over $417,000, and given today’s home prices, that’s going to hit an awful lot of borrowers.

[Bugs]

I recall a time, not so long ago, when $500k could readily buy a reasonable house in La Jolla. Now it’s barely enough for a 50-year old house in El Cajon.

[Bugs]

I recall a time, not so long ago, when $500k could readily buy a reasonable house in La Jolla. Now it’s barely enough for a 50-year old house in El Cajon.

[beanmaestro]

Okay, but after the dust settles, and the surviving lenders rinse off, don’t you expect that there will be secondary demand for jumbo loans that are otherwise conforming?

In the short term, everyone is covering their head, but in the mid-to-long term, the secondary market should be competing for a prime jumbo loan with full docs and 20% down. And so the jumbo loans should reach a happy medium, no?

[beanmaestro]

Okay, but after the dust settles, and the surviving lenders rinse off, don’t you expect that there will be secondary demand for jumbo loans that are otherwise conforming?

In the short term, everyone is covering their head, but in the mid-to-long term, the secondary market should be competing for a prime jumbo loan with full docs and 20% down. And so the jumbo loans should reach a happy medium, no?

[Arraya]

bean,

I agree, there has been a serious disconnect from common sense in the lending industry for a long time and now it seems to be over correcting in the opposite direction leaving many quailified borrowers in the dust.

As you stated in the long term they should find a comfortable medium…IMO

[Arraya]

bean,

I agree, there has been a serious disconnect from common sense in the lending industry for a long time and now it seems to be over correcting in the opposite direction leaving many quailified borrowers in the dust.

As you stated in the long term they should find a comfortable medium…IMO

[bsrsharma]

Bugs,

Don’t despair, those times will be back. Without non-conforming mortgages, homes will become shelters rather than “investment properties”. Your $500K will buy a lot again.

[bsrsharma]

Bugs,

Don’t despair, those times will be back. Without non-conforming mortgages, homes will become shelters rather than “investment properties”. Your $500K will buy a lot again.

[fromnj]

I am not sure what is right, but it is sure that the rate is getting up…

I chose the highest rate from the quote retruned from the query.

selected 30 year fixed
http://www.amerisave.com

Loan Purpose: Purchase
Property Use: HOME
Property Type: SINGLE
State: CA
Purchase Price: $625,000.00

Combined Loans
Total Loan Amount: $500,000.00
Blended Rate: 7.217%
Blended APR: 7.217%

1st Mortgage Loan
Loan Amount: $416,250.00
Interest Rate: 7.125%
APR: 7.125%
Product: 30 Year Fixed

2nd Mortgage Loan
Loan Amount: $83,750.00
Interest Rate: 7.675%
APR: 7.675%
Product: 15 Year Balloon

[fromnj]

I am not sure what is right, but it is sure that the rate is getting up…

I chose the highest rate from the quote retruned from the query.

selected 30 year fixed
http://www.amerisave.com

Loan Purpose: Purchase
Property Use: HOME
Property Type: SINGLE
State: CA
Purchase Price: $625,000.00

Combined Loans
Total Loan Amount: $500,000.00
Blended Rate: 7.217%
Blended APR: 7.217%

1st Mortgage Loan
Loan Amount: $416,250.00
Interest Rate: 7.125%
APR: 7.125%
Product: 30 Year Fixed

2nd Mortgage Loan
Loan Amount: $83,750.00
Interest Rate: 7.675%
APR: 7.675%
Product: 15 Year Balloon

[HLS]

The questions that are asked on most of these websites are usually just a few basics, and you are purposely MISquoted rates to get you to apply.

Once they get the application, eventually you find out that you don’t qualify for what you think, but they got the lead, and some people stay with them. Sometimes you don’t find out the rate until after you have paid for an appraisal. It borders on fraud IMO.

Without the answers to about 20 questions, it’s not possible to give someone an accurate quote, and even with the answers, it can still be difficult.

The conditions to get loans funded many times are frustrating. Up to the underwriter.

By the way, If you know that you want a 30 year loan, why would you even want a no cost loan ? Worst thing that you could probably do.

Of the OP quotes, BB&T’s are obviously the most misleading.
I don’t believe that rate exists today for a “no cost” jumbo loan, or even close, nor do I believe that Wells would offer 6.875 the previous day.

I’m NOT saying that I don’t believe that is what you saw. I’m saying that I don’t believe they would fund the loan.
Even if they locked it, it prob wouldn’t get approved.
Just my 2c.

[HLS]

The questions that are asked on most of these websites are usually just a few basics, and you are purposely MISquoted rates to get you to apply.

Once they get the application, eventually you find out that you don’t qualify for what you think, but they got the lead, and some people stay with them. Sometimes you don’t find out the rate until after you have paid for an appraisal. It borders on fraud IMO.

Without the answers to about 20 questions, it’s not possible to give someone an accurate quote, and even with the answers, it can still be difficult.

The conditions to get loans funded many times are frustrating. Up to the underwriter.

By the way, If you know that you want a 30 year loan, why would you even want a no cost loan ? Worst thing that you could probably do.

Of the OP quotes, BB&T’s are obviously the most misleading.
I don’t believe that rate exists today for a “no cost” jumbo loan, or even close, nor do I believe that Wells would offer 6.875 the previous day.

I’m NOT saying that I don’t believe that is what you saw. I’m saying that I don’t believe they would fund the loan.
Even if they locked it, it prob wouldn’t get approved.
Just my 2c.

[fromnj]

Thanks HLS

My wife looked up the rate from our main bank [Affinity credit union] for 30 year fixed for 500K last night. It was about 6.875% (60 day lock-in) with about $3700 fees or 6.910% APR. As you mentioned, we may not get this rate, but at least we could know the ball park. We used this bank once before and we may use this bank again if we cannot find the better one.

As you mentioned again, it may not be wise to use builder’s mortgage company, but we will check.

[fromnj]

Thanks HLS

My wife looked up the rate from our main bank [Affinity credit union] for 30 year fixed for 500K last night. It was about 6.875% (60 day lock-in) with about $3700 fees or 6.910% APR. As you mentioned, we may not get this rate, but at least we could know the ball park. We used this bank once before and we may use this bank again if we cannot find the better one.

As you mentioned again, it may not be wise to use builder’s mortgage company, but we will check.

[Author]

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