Lots of questions about todays interest rates In Edmond and Oklahoma City, this just in from one of my preferred lenders The Bomar Team
Looking to Refinance?
6 Important Things To Know

1. Refinancing an FHA Loan – Most people do not know that if you currently have an FHA loan, you will be charged interest through the end of the month no matter what day of the month you pay it off. This is crucial – if you are currently in an FHA loan, and your lender schedules the closing date in the beginning of the month, or even in the middle, you are going to pay interest on your new loan from closing until the 30th/31st, but you will ALSO pay interest on your old loan through the end of the month. Per day Interest can run anywhere between $20-$100 per day (depending on loan size), so if you close too early you could literally waste one to two thousand dollars in interest that is not necessary.

2. Refinancing an FHA Loan, pt 2 – When you purchased or refinanced into an FHA loan previously, you paid an ‘Up Front Mortgage Insurance Premium’ – otherwise called an FHA Funding Fee. If you are refinancing into a new FHA loan, you are entitled to a partial refund of your previous FHA Funding Fee. This could be anywhere between $500-$3,000, and it is important that your lender takes this into account.

3. Streamline Refinancing – If you are currently in an FHA or VA loan, you will not have to requalify for a new one. By virtue of the fact you were qualified before, you automatically qualify for a new FHA or VA loan as long as you are only lowering your interest rate (not getting cash back). So, just because your job or income situation has changed, don’t count yourself out. The only thing that would really be a problem is if you haven’t made your mortgage payments. But a Streamline Refinance is essentially a “everyone qualifies’ refinance, and no employment, income, or assets are even listed on the loan application.

4. True Payback? – Many people look at interest rates as a “shiny red car”, and unfortunately are all too willing to take a refinance option simply because there is a low rate along with it. This may sound cliché, but there are many other factors that need to be considered for you to decide whether you should refinance or not. A $200 per month savings is great – but what if it adds 3 years onto your mortgage, and raises your balance by $5,000? It might still be worth it, but it might now. A lot of it depends on your future plans, and how long you will stay in your house. Make sure that your lender calculates how long it takes for you to recoup the costs of refinancing, to see if it makes sense in light of your future plans.

5. Appraised Values – Although we are seeing values hold steady for the most part in Oklahoma, that isn’t always the case in every neighborhood. Before you spend $300-$400 on an appraisal, your lender should do you the courtesy of checking with an appraiser to make sure your house will still appraise high enough to refinance. 8 times out of 10, you’ll have nothing to worry about, but the other 2 times it would be really bad to spend that much money on an appraisal only to hear that the house won’t appraise, and the refinance will not work. Of course, an appraiser can’t be held to giving a “comp check”, but it at least gives everyone a good idea of whether it makes sense to order a full appraisal, to get the true appraised value at this time. Additionally, I would recommend working with a lender who has a say in who the appraiser is, as opposed to one who has their appraisal orders assigned out in a round-robin fashion.

6. Market Volatility – Neither the government, nor the Fed, sets mortgage rates…they are determined every day by what yields investors in the bond market are willing to receive to invest their dollars into mortgage pools. This can change a LOT from day to day. We have seen rates at 5.5% (or lower) only 3 times this year. Once in January/February, once in June/July, and right now. Both of the other two times, the low rates lasted about 2 weeks. Even with a slight increase in rates on Monday December 22nd, interest rates are still at all time lows. If you can take advantage of this, I would recommend it. Although there is a possibility for rates to go lower, but they can’t possibly go too much lower than the levels they are at now. But also, there is also a possibility that rates go higher, and there is much room for them to increase.

Now of course, you could always buy a newer home, just give me a call :) Heidi

Great rates for New Construction

Are considering building, NOW is the time. This just in from our preferred lender The Bomar Team "We just wanted to let you know that rates are really good this morning. If you have anyone in the works, closing more than 60 days out, we are setting up quite a few folks with some 6 months locks with float down options. If you have anyone that you think would be beneficial, we would love to help (we are doing an FHA today on a 6 month lock at 5.0%). " To get yourself preapproved for this, call the Bomars today at 445-5445.

Consider a Turner and Son Home view at www.turnerandsonhomes.com.

This is quite a savings, if you want to pick your lot, and start building your home, call Heidi at 285-2856 today. You can be in a new home in less than 6 months, and Turner has great new plans starting at $85/ft. We even have programs to help sell your exisiting home. Dont miss this opportunity. As always our models in Frisco Ridge and Lone Oak are Open 1-6 weekends, and Deer Spring and Hidden Prairie are currently by appt.

News from Edmond Cornerstone Lender - The Bomar Team

There has been quite an uproar about “4.5% Interest Rates” here recently. Apparently, someone suggested it in a meeting as a possibility to help the market out, the suggestion got published, and now there are many, many people starting to hold out for better rates to come.

I wanted to send an email out with my thoughts on it, and hopefully that will help all of us be better prepared when asked about it. I hope this isn’t too long or too technical, but I think it is good for you to not only have an answer for this question, but also to know they “why” behind it.

First of all, mortgages are pooled up as a securities, and sold back and forth every day. When a 6.0% bond sells for more than it’s worth, then it actually pays less than 6.0% (It pays 6.0% interest on $100, but you actually paid $102 for it, thus you are making 4% on $102, not 6.0% on $100). So, the higher the prices on Mortgage-Backed Securities, the lower the yield. The lower the yield, the lower the rate that borrowers have to pay. In order for the US Treasury to drive rates down by buying mortgage-backed securities (which is what was mentioned), the only way to do this is by simply buying up A LOT of mortgages. How much is “a lot”? Well, the federal government would have to enter into the market with such a huge amount of money that it begins to swallow up the all of the supply, causing prices to rise. And, as the prices rise, it will draw in more supply (old mortgages to be sold, or new mortgages created as refi’s or purchase), and then the demand will have to again increase to outstrip that supply.

The average trading volume of mortgage-backed securities (for January through August of 2008) is $344 Billion per day. Yes, Billion with a B. That isn’t just new mortgages, but also trading back and forth of old mortgages that are still alive. That means, for the government to affect market rates, they would have to put a TON of money into the system…possibly more money than they have put in anything else. $344 Billion per day equals a Trillion in about 3 days. And, as the interest rates/yields on mortgage backed securities go down, a lot of private money will simply leave the market place, meaning the treasury will have to increase its buying of MBS even more to not only continue to drive prices up, but also suck up the supply of the sellers that enter due to the unreasonably high prices, and also buy up enough to compensate for much of the demand from private money exiting, due to the returns being too small.

In short, to manipulate the markets in any way that has a long-lasting effect would be something so incredibly enormous, I am skeptical that it could be pulled off. If attempted, I can’t possibly see how rates could stay that low for longer than a week, simply because the supply of mortgages would sky-rocket, and the demand simply would not be there unless the government increased it’s buying even more.

There are option that is more likely is for some pool of “special mortgages” that only certain people qualify for – whether it be low-income housing, purchases in a distressed market, etc. The key here is that it would be very limited, as opening up that cheap of money to the general public would create such a flurry of activity, the money would be gone very, very quickly.

So, hopefully this helps explain the situation a little better. Right now, rates are extremely low – at their historical lows. For a customer to hold off and wait for something better is truly looking a gift horse in the mouth. But, it happens all the time…someone goes from 6.0% down to 5.5%, and they think they’ll hold out for 5.375…only for it all to shoot back up to 6.0% within a day or two!