[carlover]

We just closed on a plan 1 in Silhouette in December for $670K. We used their lender (Countrywide) to get a 20K incentive but are in the process of refinancing because their rates were rediculous to say the least. I’m not sure what their current incentives are but the pricing hasn’t changed since Spring. For negotiating just know that the builder doesn’t have that much unsold inventory so don’t expect them to be ready to throw in the towell on price. Last I heard they only had 4 unsold homes.

[carlover]

We just closed on a plan 1 in Silhouette in December for $670K. We used their lender (Countrywide) to get a 20K incentive but are in the process of refinancing because their rates were rediculous to say the least. I’m not sure what their current incentives are but the pricing hasn’t changed since Spring. For negotiating just know that the builder doesn’t have that much unsold inventory so don’t expect them to be ready to throw in the towell on price. Last I heard they only had 4 unsold homes.

[carlover]

We just closed on a plan 1 in Silhouette in December for $670K. We used their lender (Countrywide) to get a 20K incentive but are in the process of refinancing because their rates were rediculous to say the least. I’m not sure what their current incentives are but the pricing hasn’t changed since Spring. For negotiating just know that the builder doesn’t have that much unsold inventory so don’t expect them to be ready to throw in the towell on price. Last I heard they only had 4 unsold homes.

[carlover]

We just closed on a plan 1 in Silhouette in December for $670K. We used their lender (Countrywide) to get a 20K incentive but are in the process of refinancing because their rates were rediculous to say the least. I’m not sure what their current incentives are but the pricing hasn’t changed since Spring. For negotiating just know that the builder doesn’t have that much unsold inventory so don’t expect them to be ready to throw in the towell on price. Last I heard they only had 4 unsold homes.

[carlover]

We just closed on a plan 1 in Silhouette in December for $670K. We used their lender (Countrywide) to get a 20K incentive but are in the process of refinancing because their rates were rediculous to say the least. I’m not sure what their current incentives are but the pricing hasn’t changed since Spring. For negotiating just know that the builder doesn’t have that much unsold inventory so don’t expect them to be ready to throw in the towell on price. Last I heard they only had 4 unsold homes.

[carlover]

We purchased a home in 4S Ranch in August and are closing next month. In our contract the loan contingency clearly specified that if we no longer qualified for the loan then we could cancel AND get our deposit back. Why people enter into this contracts without reading COMPLETELY through them is beyond me. Yeah they are boring, but spending a few hours bored to death is worth the understanding.

[carlover]

We purchased a home in 4S Ranch in August and are closing next month. In our contract the loan contingency clearly specified that if we no longer qualified for the loan then we could cancel AND get our deposit back. Why people enter into this contracts without reading COMPLETELY through them is beyond me. Yeah they are boring, but spending a few hours bored to death is worth the understanding.

[carlover]

We purchased a home in 4S Ranch in August and are closing next month. In our contract the loan contingency clearly specified that if we no longer qualified for the loan then we could cancel AND get our deposit back. Why people enter into this contracts without reading COMPLETELY through them is beyond me. Yeah they are boring, but spending a few hours bored to death is worth the understanding.

[carlover]

We purchased a home in 4S Ranch in August and are closing next month. In our contract the loan contingency clearly specified that if we no longer qualified for the loan then we could cancel AND get our deposit back. Why people enter into this contracts without reading COMPLETELY through them is beyond me. Yeah they are boring, but spending a few hours bored to death is worth the understanding.

[carlover]

We purchased a home in 4S Ranch in August and are closing next month. In our contract the loan contingency clearly specified that if we no longer qualified for the loan then we could cancel AND get our deposit back. Why people enter into this contracts without reading COMPLETELY through them is beyond me. Yeah they are boring, but spending a few hours bored to death is worth the understanding.

[carlover]

The original poster was hoping for a quick veto of this bill by the president. But, like it or not, with a vote of 348-72 that is impossible. Congress needs to have a 2/3 YES vote to override a presidential veto or 0.66%, but the bill passed the house with an 83% YES vote.

That being said this still has to go through the Senate and get consolidated into a single bill which could take some time.

[carlover]

My 5 year arm which doesn’t reset until September, 2010 is based on the 1 year treasury CMT plus 2.75%. The current rate is 4.625%, and the adjustment caps are 2% annually and 5% lifetime. So the cap on my rate increase in September, 2010 would be 6.625%. If 1 year treasuries hold where they are today (around 4%) then it doesn’t make a difference because that would give me a rate of 4+2.75 = 6.75% which is higher than the cap of 6.625%.

This is only one example so please don’t try to extend this to the entire rest of the market. Saying the interest rate cut will make no difference is a bit of a stretch as it will still allow a lot of buyers to refinance into a fixed rate product. But there are a lot of people underwater, or soon to be and things could get ugly because they won’t have the option to refinance.

[carlover]

30 year conforming rates will be down by at least 1/8 of a point tomorrow on average. Take a look at what happened to the Freddie Mac RNY (basically their required rate to purchase a loan) when the Fed Funds Rate dropped.

http://ww3.freddiemac.com/ds1/sell/sffrny.nsf/frmDisplayRNY?OpenForm&prevRNY=02:00PM&RN=7544

At 2PM, before the Fed announcement the rate for a 60 day lock was 6.19%, at the close today after the Fed announcement the rate was 6.03%.

Still anyones guess on what will happen to Jumbo loans but I would expect them to ease by at least 1/8 as well. In the past I haven’t seen a shift in rates like this without a corresponding move down in the 10 year treasury yield. So this reinforces what I posted earlier, that long term mortgage rates may still come down due improved liquidity reducing the historically high premiums on long term mortgage rates relative to treasury yields

For more discussion of this topic, see my original post a few weeks ago at:

http://piggington.com/when_to_lock

[carlover]

HLS,

Federal Funds rate is basically an extremely short term target rate (overnight). As such it has the greatest effect on short term loans. 3 year arms will see a larger downward influence than 5 year arms, and the correlation on a 30 year loan is basically non existant. The rate cut may indirectly lower 30 year rates through improved liquidity and willingness to lend by banks.

Since I despise statements made without data to back them up:

3 year arm history for the last 5 years, note that it mostly tracks federal funds rate, although there is a lot of interim volatility. The correlation is there but not direct, a 1% change in federal funds rate only results in around a 0.5% change in the 3/1 Arm rate:
[img_assist|nid=4842|title=3 year arm|desc=3/1 Arm mostly correlates with Fed Funds Rate|link=node|align=left|width=466|height=424]

5 year arm history for the last 5 years, again it mostly tracks the federal funds rate. However the relationship is even less direct, with 1% change in rates resulting in around a 0.25% in 5/1 Arm rates:
[img_assist|nid=4843|title=5/1 Arm and Federal Funds Rate|desc=|link=node|align=left|width=466|height=424]

30 year conforming history for the last 5 years. There is really no correlation here, a better estimator for long term mortgage rates are 10 year treasury yields as advocated by SD Realtor. After the rate cut today 10 year treasury yields dropped by only about 1 basis point so don’t expect to see a huge change in conforming rates. That being said rates may still come down more than usual given the higher than historical premiums over treasury yields:
[img_assist|nid=4844|title=30 Year Conforming Rates|desc=|link=node|align=left|width=466|height=424]

[carlover]

Jumbo borrowers are not the issue when it comes to defaults, their default rates are still extremely low. That being the case, where is the bailout??? It’s merely allowing Fannie Mae and Freddie Mac to take reasonable risks and operate more as free market corporations. I don’t see this as a bail out but as a way to restore confidence to the market and bring jumbo rates back to a reasonable premium. Currently certain regions (non-contiguous areas of the US such as Alaska, Hawaii, etc.) get Fannie Mae and Freddie Mac loan limits that are 150% of what the rest of us get?

Making the connection that you are paying for MB’s hummer or flipper’s MB is a stretch by any means.

To give due disclosure I am looking for a mortgage right now and would greatly benefit if the conforming loan limits were raised.

My 2 cents…..

[Author]

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