Colorado Home Mortgage Banking

Truth-in-Lending

 

The Federal Truth in Lending Disclosure is a federally mandated disclosure required with every loan application before the actual loan period begins.  Its primary function is to disclose the annual Percentage Rate, finance charges, amount being financed, total payments being made and finally your sales price or your refinance loan amount.

 

 

At the top of your disclosure you should see your information, the lenders information, address, and date the disclosure was prepared.

 

Next you will see the Annual Percentage rate.  The most complicated thing about the Truth-In-Lending disclosure is the Annual Percentage Rate.  The Annual Percentage Rate is the cost of your entire loan with all associated finance charges expressed as a yearly rate.  This rate will be different from your actual note rate being disclosed to you as the rate to lock in for you loan.  It will be higher and it will be the best indicator of what your annual mortgage rate for your new loan will be.

 

The next section shows the Finance Charge which can be quite intimidating at first glance.  Keep in mind this will be the amount of interest paid on the loan over the full term of the loan program.  The Velocity of money applies in this section as it is the cost of money over time. 

 

Amount Financed is simply the loan amount you are applying for.

 

Finally the total of all payments will be your Finance Charge plus your amount financed.  It will be much higher then what people expect.  It is important as you look at that number that again it is the money borrowed over time.  Take a look at what homes sold for 30 years ago in comparison to what they are selling for today.   You can easily see that the value of money is much lower today which makes the value of homes much higher.  Borrowers looking at a Truth-In-Lending type statement 30 years ago would have seen that total payment for around the same costs homes are today. 

 

The Next section will give you your payments and beginning/ending dates for the loan.  These payments will only include Principle and Interest and will not include taxes, insurance, HOA, or Mortgage Insurance.  On an Adjustable Rate Mortgage option it will give you the number of payments before your rate adjusts and then the total remaining payments.  These remaining payments will not calculate the estimated change in your payment do to an adjustment tied to the loan program.

 

Towards the bottom of the Truth-In Lending you will see the penalties associated with your loan for early payoff or payments received after the due date. 

 

The remaining items are normally left blank, but if you are interested in Credit Life or Disability the feature will typically be offered by the lender after the loan closes.

 

Flood Insurance

 

Though rare in the state of Colorado may still be required depending on where your property is located.  You will be notified by the selling agent if the home falls in a flood plain. 

 

You will also know that you are already in a flood plain by the amount of money paid to your home owners insurance.  Homes that are required to have flood insurance typically pay 3 to 4 times more in insurance then any similar homes not located in flood plains.

 

Though floods are rare flood plains are determined by the 100 year flood projections for any given area.  Because they are the number one natural disaster claims in the country lenders take it serious. 

 

Floods are created by a number of things but primarily from Storms, Melting Snow, Hurricanes, Water Backup, Dam or Levee Failure, or internal plumbing issues.  Regardless of the reason these claims can be quite costly to the insurance companies and that is why the premium for these programs run so high

 

In recent years the flood insurance programs have been tied to one or two major providers and have doubled since the floods in Louisiana and the Eastern States.

 

My recommendation is to be aware of the costs and make the best financial decision for yourself.  Although you may be in love with a home in a flood plain, typically they are tougher to sell and sell at a lower premium then homes not located in a flood plan.  Know the area and know the real estate market for that area before jumping on a contract.

 

Escrow

 

Escrows are collected at the time of closing and is done so as a courtesy to you.  Escrows simply put are funds collected for taxes and insurance premiums due on the home.

 

These premiums will be collected monthly and will help determine your total payment for the loan. 

 

Normally 14 Months of insurance is collected at closing on purchase transactions.  The first 12 months is sent directly to the home owner insurance providers and the remaining 2 months are put into a start up escrow account held by the lender.

 

Purchase transaction will typically require only 2 months taxes as the taxes for the previous year have already been paid by the sellers.  The sellers will also be responsible for all taxes up to the closing date giving you a fresh start day one of moving into the home.

 

Refinance transaction work a little differently, the total amount collected depends on when during the calendar year your closing takes place.  The appropriate insurance and tax premiums will be collected to ensure the lender has the funds to make payment when these premiums become due.

 

Some loan programs will allow you to pay your escrows on your own, but additional risk premiums will be added to your interest rate to deal with the risk of default do to unpaid taxes and insurance.  This is not advised and should be carefully considered before the decision to not escrow is made.

  

When Should You Refinance

 

A refinance by definition is a transaction that replaces your current loan with a new loan offering more favorable terms then your previous mortgage.

 

A refinance should only be done if there is a net tangible benefit for you and your family.  Lenders take it seriously and will only allow you to do the transaction if a benefit can be seen.

 

In the past the net benefit found in a refinance could be minimal and may have contributed to some of the housing problems people are facing today.

 

Things that are considered a net tangible benefit are:

 

Lowering your payment through an interest rate reduction

Stretching out your payment terms in order to lower your payments.

Moving your loan from an Adjustable Rate Mortgage to a Fixed Rate.

Debt consolidation: though your payment may be higher as long as your total monthly debt goes down a net benefit can be identified.

Court ordered refinance requirements normally associated with a divorce or separation between two people.

Death of one or more borrowers and in accordance to the estate’s wishes.

 

In short it has to make sense before you can refinance you loan.

 

You should consider a number of things while determining if refinancing is your best option.  Here are just a few of the things to keep in mind as you refinance:

 

Are the terms negotiated going to better my situation.

What are the closing costs and when will I break even on the loan based on those costs.

 

What will the real estate market look like in the near future?

 

Financing a Condo or Town Home

 

These transaction are very similar to normal financing options offered to single family residence, however there are some difference that need to be considered before making an offer.

 

Condo’s and Town House normally do not appreciate at the same rate as single family residencies. 

 

These homes also have Home owner associations who collect fees which in return increases your total monthly obligation in the property.

 

The benefit is that you do have outside entities that allow you to have some amenities currently not being offered in a normal single family residence such as pools, club houses, trash removal services, snow removal services, and up keep of common landscaping areas.

 

Condo’s and Town Homes can offer 1^st time homebuyers a less expensive way to own a home.

 

Lenders do analyze these properties much closer then normal single family home loans.  The reason for this is the amount of fraud and the amount of default associated with these loans.

 

The biggest fraud in Condo and Town Home purchases are investors purchasing the homes as primary residences only the rent them out immediately after purchasing the property.  For this reason investors require that the complex have at least 51% of the homes in the complex as owner occupied units.  If not the lender will automatically treat the transaction as an investment property.

 

 Default risk is associated with the slower then normal appreciation for the units.  When owners find that they have to move or simply have circumstance that require them to sell the property, an equity issue can arise.  The equity issue prevents the home owner from selling which increases the likelihood of default.

 

Finally it should be noted that Home Owner Associations are not know for their ability to serve the best interest of the complex.  Most of the horror stories I hear come from the fact that the Home Owner Associations are controlled by a select few that have their own interest in mind.  It is not a heavily regulated entity and should be carefully considered before making the decision to buy a Condo or Town Home.

 

Temporary Buy Down

 

Temporary Buy Down programs are offered by most lenders and can help lower your payments on a purchase transaction over the short term.

These programs should be looked at as a Partial Adjustable Rate mortgage that has a feature that will eventually go to a fixed rate.

 

The way a temporary buy down works is that for a period of two years your mortgage interest rate will be much lower then the eventual fixed rate being offered on this home.

 

The buy down must be purchased by you or the seller in your behalf in order to qualify.  The buy down has a cost associated to it. 

 

For example if you lock your rate at 6.5% and you have a 2/1 buydown in place your first year interest rate will be 4.5% and the 2^nd year will be 5.5% and year 3 – 30 will be set at 6.5%

 

The benefit of a program like this is that the seller or builders will offer the incentive to you to qualify you for more home at the time of purchase.

 

Be CAUTIOUS of this program, and most of all be aware of the negative aspects here are just a handful of them:

 

The interest rate offered in the buy down will typically start about .5% higher then the going rate in the market.  So you may have been able to lock in a rate better today then what your 30 year fixed rate will be at the end of the temporary buy down period.

The week’s headline economic report showed that inflation rose far more than expected in July, yet mortgage rates barely reacted and ended the week essentially unchanged. The July Consumer Price Index (CPI), the most widely watched inflation indicator, rose at the fastest annual rate since 1991. The core rate, which excludes the volatile food and energy components, rose at a 2.5% annual rate. The Fed’s perceived comfort level for core inflation is between 1.5% and 2.0%.

Mortgage rates usually move higher after an unexpected increase in inflation. This time they did not. Investors have started to expect that inflation levels will diminish later in the year and point to a couple of factors. First, slower economic growth in major global markets will reduce demand for goods and energy. In addition, a stronger US dollar will lower the cost of imported goods.

Even the Fed’s Stern, noted for his vigilant anti-inflation stance, stated that he expects inflation to come d own after the third quarter. To summarize, economic weakness at home and abroad, a stronger dollar, and a decline in oil prices offer hope that future inflation levels will be lower.

The Economic Calendar will be very light next week. The Producer Price Index (PPI) will come out on Tuesday. PPI focuses on the increase in prices of “intermediate” goods used by companies to produce finished products. Housing Starts will also be released on Tuesday. Leading Indicators and the Philadelphia Fed index will come out on Thursday

Colorado Mortgage rates are taking a pounding in the market today.  We have been concerned about the inflationary numbers for some time.  CPI (Consumer Price Index) and Core CPI both came in a lot higher then what the consensus had anticipated.  This increased data on inflation has sent Colorado Mortgage Rates back on an uphill climb.  I am expecting to see Colorado Mortgage Rates to increase about .125% to .25% by close of business today.  That will put the LOCK rate at 6.25%.  CPI is used to gauge changes in inflation and Colorado Mortgage markets tend to be extremely sensitive to unexpected changes to the reported numbers. As inflation and expectations of future inflation rates change, Colorado Mortgage markets adjust interest rates to reflect those changes.  Investors require higher returns on fixed rate bonds in order to justify the risk of holding them long term.  This is why inflation impact Colorado Mortgage bonds negatively.

 

In tough economic down turns, there are several reasons why inflation will work its way into the system.  Businesses increase prices in order to off set volume issues. Oil prices have hit historically high trading levels, making shipping of goods more expensive.  The level of competition begins to deteriorate as competitors exit the market because they lack the resources to stay in business.  This creates temporary demand for limited resources, which normally yields higher prices.  Colorado Mortgage Rates do not respond well to these pressures and the increases in Colorado Mortgage Rates are inevitable.  So the question I present today is how high will Colorado Mortgage Rates go in the short term (about 2-5 days), Mid-term (8-21days), and long-term (30-60 days).   

 

The Short term picture is easy to predict for Today.  We will not have a good day for Colorado Mortgage Rates as investors react extremely negatively to poor inflationary news.  The reaction will be exaggerated and some of the losses will be made up during the week.  This being said I expect a .125% Colorado Mortgage Rate increase by the end of the week.  So you are not going to be penalized to bad for not LOCKING in last week, but it will be a bit higher for your Colorado Mortgage closing this week.

 

The Mid-term picture is the toughest Colorado Mortgage rate trend to predict.  It is heavily impacted by headlines and economic data and does not follow any conventional cyclical terms seen in the Colorado Mortgage Market through out the year.  I still believe that we are over priced in Colorado Mortgage Rates due to investor’s fears of the current financial markets.  This being said inflation will continue to be a heavily watched indicator and it will take a lot of headlines to impact Colorado Mortgage rates enough to come down.  The Headlines we are looking for will be corporate profit issues.  This will be a major topic over the course of the year and will be the biggest influencer combating inflationary caused Colorado Mortgage rate increases.  I don’t see anything this year to indicate that profits will show the gains necessary to increase Colorado Mortgage Rates.  In fact most of profits reported so far have been positive for Colorado Mortgage Rates.  I believe that we will have periods over the next 3 weeks that will allow us to lock between 5.875% and 6.00%.  When this happens I will implement immediate Colorado Mortgage rate lock recommendations. 

 

The Long-Term picture is a little easier to predict as Colorado Mortgage Rates tend to show cyclical phenomenon’s.  Colorado Mortgage Rates typically peak for the year during summer months when demand is high.  The opposite is true during the winter months.  I expect to see Colorado Mortgage Rates to eventually hit the 5.75% range before the year is done and 5,.875% in the next 60 days. You can easily see that the range for Colorado Mortgage interest rates for the next 60 days will be between 5.875% and 6.375%, about a .5% movement.  The real impact on interest rates will be minimal, and will trend upward for the most part.  It will be important to keep watch so that you can LOCK you loan at the right time.  This is why having a good Colorado Mortgage provider is so important. 

 

Let me show you the cost savings by going with the right Colorado Mortgage provider.  Let’s say that you are unaware of the market and lock your loan at the worst possible time costing you .5% more on your Colorado Mortgage rate.  If you borrow $200,000 you will be paying about $1000 more a year.  The cost of interest will decrease over time but you can expect that you’re over all cost for locking at the wrong time will be around $22,000 on a 30 year Colorado Mortgage.  I think that this is significant enough to make sure you are working with the right people.

 

I would love a chance to earn your business and the business of anyone you might know in need of a Colorado Mortgage Loan.  I will have an article about FHA Loans and the Power that they have on the market today.  FHA Colorado Mortgage programs have been bailing the financial markets out of trouble for years.  It is very evident that they are doing it again.  Check that article out at www.colordaohomemortgageloan.net/news

 

Have a great day, Daniel

Colorado Home Loan Rates took a hard hit on Friday.  If you had a chance to lock your loan on Wednesday or Thursday you would have done well for yourself.  Colorado Home Loan Rates had been dropping for most of the week and if you haven’t heard yet the market took some hard hits on Friday.  Colorado Home Loan Rates jumped up about .375% to .5% in a single day washing away much of the Colorado Home Loan Rate gains experienced earlier in the week.  The reason for such a drastic increase in Colorado Home Loan Rates came from two different banking institutions.  Freddie Mac and Fannie Mae are the biggest Home Loan providers in the country.  They were established by the government to warehouse mortgage loans that are bought and sold on the Mortgage Backed Securities market.  Both of these wholesale lending institutions have come under fire recently as more and more mortgages have gone into default.  Investors became very concerned that the MBS market would also come under fire as a result of the instability facing these companies.  Colorado Home Loan rates responded accordingly late Friday by increasing their Rates.

 

The increase in Colorado Home Loan rates may have been a bit exaggerated on Friday and so far the market is re-adjusting itself.  The re-adjusting should fair pretty good for Colorado Home Loan rates, so we are implementing a FLOAT recommendation until about 4:00pm Mountain Standard time.  It will be important to check in with me during the next 4 hours if you are looking to lock today.  Eventually fears for what PPI will indicate tomorrow will work its way into the Colorado Home Loan rate market.  When this happens the gains we are seeing so far will start to go away.  We will want to LOCK at the right time, which should be sometime this afternoon.  The reason for the double recommendation today is that we still have some concerns about the inflationary reports due to come out on Tuesday and Wednesday.  CPI and PPI are the biggest movers of Colorado Home Loan rates stemming from economic data.

 

Economists pay the most attention to the PPI’s for finished goods, intermediate goods and crude goods. The PPI’s measure inflation of prices on the producers’ end and often that inflation gets passed onto the consumer and CPI. Inflationary pressures seen in PPI can help predict future pressures on consumer products’ prices.  When inflation runs high the value of a fixed rate bond decreases.  The decrease in value requires a higher interest rate premium to sell the bond.  Future bonds will also require higher interest rate premiums to attract new demand, and as a result Colorado Home Loan Rates increases to accommodate this demand.  CPI is used to gauge changes in Consumer paid inflation and Colorado Home Loan markets tend to be extremely sensitive to unexpected changes to the reported numbers. As inflation and expectations of future inflation rates change, the markets adjust Colorado Home Loan interest rates to reflect those changes. The effect of these changes is seen across all markets, equities, bonds and mortgage backed securities.

 

The final piece of information to be aware of is the failure of Indy Mac the 3^rd largest banking institution to fail in U.S. history.  The financial crisis is still in full force and Colorado Home Loan lenders are very aware of these issues.  Lenders are tightening up on their qualifying measures and though Colorado Home Loan Rates appear to be low, qualifying for that Colorado Home Loan programs has never been tougher.  Most realtors and mortgage providers that have been in the business for some time have found it difficult to understand the magnitude of these changes.  If you are in this category please let me know and I will be happy to answer your Colorado Home Loan questions.  Getting back to Indy Mac, late last week they experienced the same run on the bank that several Savings and Loans institutions felt in the 1980’s as the market collapsed on similar economic pressures seen today.  The Federal Reserve has jumped in again to reaffirm that federal depository insurance will cover losses from this bank.  The scary thing on this is that they will only cover $100,000 for each depositor.  People will loose money from this collapse. The full impacts of the mortgage crisis will not be felt until sometime next summer.  So it is more important then ever to work with people who understand the market and who actively participate in the market in order for you to get the best Colorado Home Loan available.

 

Please give me a call and allow me a chance to earn your Colorado Home Loan business. I have also written an article today that answers the question facing many Americans “What should I do when my Colorado Home Loan Rates is set to adjust.”  You can view that article at www.coloradohomeloanmortgage.net/news

 

Have a Great dayJ Daniel

Colorado Online Mortgage Rates may have hit its bottom end for the week.  I have had a Colorado Online Mortgage lock recommendation in place all week and no matter when you locked this week your Colorado Online Mortgage rate should have been pretty good.  We have had a lock recommendation at 6.0% and that is exactly where we have been locking in our clients. 

 

A variety of economic reports come out today, but none of these reports are real market movers.  Consumer Sentiment, which came out today, is used to gain insight into possible future consumer spending. It is almost identical to consumer confidence but it has two readings per month, preliminary and final readings. The consumer expectations portion is used for the leading economic indicators index.  The data pulled from this report gives investors a good indication on consumer spending behavior.  Colorado Online Mortgage rates tend to do a little better when spending predictions are down.  Likewise Colorado Online Mortgage rates tend to go up when Consumer confidence is high.  The reason Colorado Online Mortgage rates are affected is that investors believe that if spending is high, Corporate profits should also be high.  When profits are high investors tend to invest more in equities (stocks), which decreases the money available for bonds.  The movement seen in Colorado Online Mortgage Rates greatly depends on how high or how low the demands for bonds are.  Today’s report came in near historic low levels, but not as low as expected.  Colorado Online Mortgage rates should have reacted negatively, but so far it appears that the bond market is holding its own.

 

Another Economic Report released today was the current Trade Balance figures.  This report does not impact Colorado Online Mortgage rates severely but investors do look at this report for potential investment decisions.  The volatility in the monthly trade balance can play an important role in forecasts of GDP. Net exports are a relatively volatile component of GDP, and the trade report provides early clues to the net export performance each quarter. There are many complex links between the Trade Balance and MBS markets, and some work in opposite directions, so the net effect is difficult to predict.  Because of these inverse relationships it becomes a good report to monitor.  I monitor this report to help predict future Colorado Online Mortgage Rate movement.  However over the last year or so I have not seen any major movement, and normally headlines take center stage over this report as it relates to Colorado Online Mortgage Rates.  The Trade Balance did not come in as poorly as expected so we should have seen a little bit of negative movement in the market for Colorado Online Mortgage Rates.

 

The Final piece of data comes from the Headlines as the Stock Market appears to be plummeting into its worse closing in 3 years.  Investors see this as a very negative sign and they tend to reinvest in safer investments like bonds.  Colorado Online Mortgage rates will have very positive reactions to this, and did so this morning.  However, over the last couple of hours we have seen a drastic negative movement in the bond market as well.  I am not seeing exactly why yet with the data sources I have, but can only assume that we are seeing major news leaking into the Market that has investors scared to invest.  Colorado Online Mortgage rates will come up a bit if this trend continues through today.  Fannie Mae and Freddie Mac are the biggest two mortgage companies in the U.S. and account for about 50% of the total mortgage business.  Over the last 24 hours major fears have hit the stock market that these companies may have to file for Bankruptcy protection.  This is probably the biggest influencer in the Colorado Online Mortgage market, and has been the reason for the drastic 500 point drop in stocks over the last 24 hours.  The Federal Reserve came out late yesterday to state that they would intervene and will not allow these companies to fold.  This is good news for investors, but because of the magnitude of influence these companies will have on the financial markets it is clear why so many investors are running scared.  This should be a really good thing for Colorado Online Mortgage rates, but since it deals with companies tied to bonds it is playing havoc on both markets. 

 

I still believe that Locking your rate today will be the best Colorado Online Mortgage decision you make.  If you LOCKED a few days ago and lost out on the 1/8^th of a point you might have saved on your Colorado Online Mortgage Rate, don’t be alarmed you still got in at the right time.  The writing is on the wall and locking would be a good idea.  Please check out my other site www.coloradohomemortgageloan.net/news for information about how Colorado Online Mortgage rates are established.  Until then have a great weekend and give us a chance to earn your businessJ

 

Daniel

Colorado Home Loan Rates appear to be moving in the right direction today.  Pending home sales came in lower then expected which created some excitement in the Mortgage Backed Securities market.  So far we have seen some improvements in Colorado Home Loan Rates, but not enough to indicate a price improvement.  The good news is that Colorado Home Loan Rates will probably not have any increases on today’s headlines.  We implemented a LOCK recommendation yesterday, and we will maintain the LOCK recommendation today. 

 

This week will be a light week for economic data and it will not take much to send Colorado Home Loan Rates back up.  Investors are anticipating more bad news circling around unemployment, which means Thursdays Jobless Claims, should have some impacts on Colorado Home Loan Rates later this week.  Tomorrow we have no scheduled economic data to be released.  The Lack of data will force investors to monitor the equities market before making their buy/sell decisions for MBS. 

 

Ben Bernanke spoke in Virginia yesterday and he continued his tough talk about additional regulation in the mortgage lending markets.  His comments indicated that the shady practices used by lenders over the last few years, has been the biggest influencer in our current economic downturn.  He is proposing additional regulations on mortgage lenders to help improve the current performance of Mortgage Backed Securities.  Ben will present his recommendations to a senate sub-committee for review sometime next week.  Investors have not reacted negatively to the news and so far we have not seen any major impacts in the Colorado Home Loan markets.  Reform is needed and lenders do need additional regulation, but to what extent still needs to be debated. 

 

Colorado Home Loan Rates have always been impacted by risk.  Underwriters are the banks authority when assessing risk.  They are in charge of assessing what the risk is and whether the risk on the file should be considered for approval.  Colorado Home Loan Rates are influenced by the entire mortgage portfolio and the history of that mortgage portfolio.  In the past underwriters approved just about any Colorado Home Loan, which has drastically deteriorated the current performance of these mortgage portfolios. The result of loose lending practices has created a higher then normal risk premium being added to Colorado Home Loan Rates today.  Today underwriters are taking a tougher approach in approving Colorado Home Loan programs, which should return better performing portfolio’s in the future.  The risk on today’s loans is considerably lower then the risk premium being added to Colorado Home Loan Rates.  We are still paying for mistakes made over the last few years, and will not see the risk premium reduced for some time.  If the Federal Reserve implements additional restrictions and Colorado Home Loan Rates don’t improve, Lenders will ultimately reap the benefits in higher profit margins.  This is ok but eventually the savings should be passed back in the form of lower Colorado Home Loan Rates.

 

I am hoping that Lenders recognize the spread between Risk and current Colorado Home Loan Rates, but so far it appears that the spread is still fairly large.  In short you are paying more now because of the losses created by poor lending decisions 2 or 3 years ago.  We will not see any significant changes in the risk premiums added to Colorado Home Loan Rates until the portfolios perform better over time.  With all the restrictions currently put into place, we should see Colorado Home Loan Rates improve its risk premium over the next 12 to 18 months. 

 

Though the portfolio will improve its performance, it should be noted, that we have many other factors influencing the direction Colorado Home Loan Rates will go.  The biggest factor affecting Colorado Home Loan Rates is inflation.  This topic has been discussed in great detail here, but I want to remind you that it will be the biggest driver of Colorado Home Loan Rates over the next 6 months.  I have some real concerns about how much of an impact inflation will have and we have already begun to seen the impacts over the last 2 months.  The impacts have not come from actual inflationary reports, but from speculation of what is to come.  The real affect will be felt when economic reports begin to report the higher inflationary numbers.  Colorado Home Loan Rates are certainly expected to go up from its current levels.  We see some pockets of hope where Colorado Home Loan Rates drop or show some stability and that is the best time to LOCK.  We are experiencing that in the market right now, and should for the remainder of the week.  Next week on Tuesday and Wednesday, we will have our inflationary report numbers.   So if you can get into a good Colorado Home Loan Rate today, then LOCKING is a good idea.

 

Over the Last couple of months our inflationary numbers have been in line.  Most of that is not due to lower prices, but to lower spending.  Eventually people will spend again and prices at its current levels will create higher then expected inflationary pressure.  When this happens inflationary reports will come out high, which inevitably creates havoc on the Mortgage Backed Securities Market.  Colorado Home Loan Rates hate anything to do with inflation and rates will go up.   Next week if PPI or CPI comes in worse the expected, Colorado Home Loan Rates will climb.  Stay tuned to this site daily as updates are made on a regular basis. 

 

For your Colorado Home Loan decision it’s easy to find someone to help you, however it can be difficult to find someone who knows what they are talking about.  Please allow me a chance to work with your Colorado Home Loan; I have the knowledge to get you the best Colorado Home Loan available.  I have also written an interesting article about Brokers or Bankers at www.coloradohomemortgageloan.net/news let me know what you think.

Daniel     

Colorado Home Mortgage rates appear to be off to a rough start this morning.  The Mortgage Backed Securities market has lost some ground over the weekend and Colorado Home Mortgage rates are expected to be a bit higher today.  We implemented a lock recommendation last week and for those that locked your Colorado Home Mortgage rate it now appears that you made the right choice.  The market will be light this week which means the headlines will dictate the direction demanded on Colorado Home Mortgage rates.  Tomorrow we expect pending home sale figures to be reported and so far the consensus has indicated another decrease in home sales for the 2Q for 2008.  This is a drastic decreased expectation from what was reported last month.  If the report comes in better then expected Colorado Home Mortgage rates will jump up a bit.  Because there is such a huge difference in the Consensus and what was reported last I believe that the report will beat expectation.  So we will continue to hold up on our Lock recommendation.  Some Lenders may have put to much cushion on the Colorado Home Mortgage rate sheets in anticipation of a bad week.  Luckily we have access to all the lenders and we will ensure you do not get high with that Colorado Home Mortgage rate premium. 

 

The Pending Home Sales index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the new index looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.  This is important for Colorado Home Mortgage rates because It is designed to be a leading indicator of housing activity. Greater housing sector activity indicates a stronger economy, which is generally negative for Colorado Home Mortgage markets.  We are expecting a -3% increase versus a 6.3% increase reported last time the report came out.  Because of the 10% gap from one month to the other and the fact that we are still in our selling season, I believe the report is a bit to pessimistic.  This will result in an increase of Colorado Home Mortgage rates by late afternoon tomorrow, if investors have not already priced that in today.   The only other reports to look for this week will be the trade deficit report and the consumer sentiment.  Both reports are expected to come in poorly. 

 

It is interesting that with the dismal outlook being portrayed in the market that Colorado Home Mortgage rates appear to be higher then they should.  I have talked about the economic conditions many times in previous blogs, but we need to remember that this is not new territory for the Colorado Home Mortgage market.  We have seen this before.  We are experiencing many pressures in the inflation category due to the oil price shock, and we are experiencing a bad economic turnaround.  Both these indicators took place in the late 1970’s and early 1980’s.  What makes this go around so much better is that our Federal Reserve members are better prepared to handle the economic stimulus needed to get us back on track.  If we did not have the current pressure from oil causing un-needed inflation fears in the market, we would probably see Colorado Home Mortgage rates in the low 5% range on the 30 year fixed.   However inflation is devaluing the bonds and investors are demanding a higher return to buy them.  This is the biggest reason we see Colorado Home Mortgage rates higher then they need to be. 

 

We can’t blame ourselves for the higher oil prices; it is simply demand that has caused oil to increase to its highest levels ever.  The demand for oil is not even a domestic issue it is a global issue.  We are experiencing inflationary pressures that are out of our control.  The pressure is a direct result of global demand not domestic demand.  So the only way we can combat the issues is to understand where the pressures are coming from. The U.S is no longer the market movers in the global market place.  Because we are not the market movers we need to work on understanding and forecasting based on the pressures experienced in global activities versus domestic activities.  Colorado Home Mortgage rates will probably not see the low 5% range for some time to come.  Instead we need to prepare ourselves for the up and down cycles that will result from the continued global demand.  Like the U.S. other countries like China will slow down demand as prices go up.  We need to identify the cycles demanded in the global market to understand what the pricing cycles that makes its way into the domestic bond markets.  Once that is identified, we can then begin to accurately predict Colorado Home Mortgage rate trends.  In the meantime I will continue to monitor both the domestic and global influencers that affect our bonds markets before making any real Lock/Float recommendation. 

 

Please contact me with your Colorado Home Mortgage questions.  I have also included a piece on foreclosures that you can read at www.coloradomortgagebanking.com/news.

 

Daniel

Colorado Home Mortgage Loan rates have reached the inevitable Ceiling of resistance in the Mortgage Backed Securities market.  For those who do not know what the Colorado Home Mortgage Loan price Ceiling is will need to pay special attention to what is said next.  The bond market has certain price points that investors become very cautious at, and the demand curve changes when these price points are achieved.  However once the price point is penetrated a new pricing Ceiling will be defined.  Like a price Ceiling, bonds can also have a price Floor that will react in a similar manner.  The price floor or price ceiling is determined by the direction bond prices are going. 

 

Now that I royally confused you let me give you an example of what I mean.  Let’s say the price of a bond is $100 and investors begin to buy and sell those bonds depending on the demand.  All of a sudden something is reported in the economic data that favors bond prices and the $100 bond begins to rise; $101, $102, $104, $107 . . . and so on.  Obviously as the bond price increases, Colorado Home Mortgage Loan rates begin to decrease.  There is an Inverse relationship between bonds and Colorado Home Mortgage Loan rates.  Anyways, as the price of the bond increases it tends to increase fairly quickly, but at a certain price point investors change their demand.  The point where demand for bonds changes is the point where bonds hit the proverbial wall of resistance.  In this example that might be $110. This is a point that the market will not generate any additional demand for bond price increases. In the event this happens Colorado Home Mortgage Loan rates will be held in its place until something different happens in the market to create more demand.  In order to create more demand additional economic data will need to make its way into the market that favors Mortgage Backed Securities.  If this happens then the price ceiling barrier will be broken and a new price ceiling will be established.

 

How does that impact your Colorado Home Mortgage Loan rates today?  Well we are hovering right around that 6.25% and 6.0% range for the 30 year Colorado Home Mortgage Loan rate.  If we have additional economic news reporting, that favors Colorado Home Mortgage Loan rates we might see the 30 year fixed rate move below 6.0% again.  Right now we are just waiting for something to happen.  Today, we did not get the push we needed to break that point of resistance.  In a short week it is hard to determine what might be needed to see Colorado Home Mortgage Loan rates drop below that 6.0%.  We have a very big day on Thursday which will set the tone for Colorado Home Mortgage Loan rates for the month of July.  Historically the summer months have not favored Colorado Home Mortgage Loan rates, and so far history has repeated itself.  We are looking for any reason for rates to improve, but it seems that anytime we have nice improvements, inflationary pressures came back in the Headlines.  So we need to look at what will happen and when is the best time to react.  If you are looking to lock in your Colorado Home Mortgage Loan rate in the near future then LOCKING now would be a good idea.  Most lenders have priced in the improvements seen in the Colorado Home Mortgage Loan market last week.  You should be able to get 6.0% today, and if it is offered you should take it.  If you are looking to close your loan in the next couple of weeks then Floating until Thursday may pay off.  However the risk/reward ratio does not appear to favor you.  My recommendation for today is to LOCK.  You will be .25% better then anything last week and about .5% better then two weeks ago. 

 

I will be keeping a close eye on all the reports due to be released this week.  If you want a brief explanation remember to visit my other site: www.coloradohomemortgageloan.net/news if you have any Colorado Home Mortgage Loan questions please let me know.  I hope to service you in the near future.    

Colorado Home Loan rates will be improving a bit today as the stock market takes yet another hit for the day.  We have seen the equities market take about a 15% decrease in the last couple of weeks which would normally be great for Colorado Home Loan rates.  I stated a couple of days ago that we had a number of economic reports coming out which should impact Colorado Home Loan rates.  Consumer Sentiment, Core PCE, and Personal income reports all came out today.  I will discuss those reports and yesterdays reports at www.coloradohomemortgageloan.net/news right now just know that the economic data today was for the most part positive news for Mortgage Backed Securities.  When the price of Bonds goes up Colorado Home Loan rates tend to dropJ 

 

So the battle rages on with investors on which direction our economy is headed.  Investors are faced with a very difficult decision in their investment strategies.  If the Economy continues to spiral downward then equities will be a poor choice.  We are seeing that in the stock market right now.  Colorado Home Loan rates should have had huge improvements while the stock market dropped.  The improvements we should have seen were halted by the continued threat of inflation.  Inflation is the second obstacle facing investors today.  If investors invest in long-term fixed rate bonds, and inflation gets out of control, investors will loose value in their portfolios.  So the question is what should investors do.  If in fact investors choose fixed rate investments over equities, Colorado Home Loan rates will improve. 

 

In the short run it certainly appears that poor economic conditions remain a bigger concern then inflation.  The Federal Reserve continues to push its actions toward improving economic conditions, while talking about inflationary pressures.  This tactic is used to stimulate the economic activity, while trying to hold off inflationary pressures.  We are still facing some major obstacles in the next 18 months and will not be able to really account for the aftermath until a recovery in our financial system begins.  We can see the impacts of inconsistency in Colorado Home Loan rates already.  Based on our current Economic condition there is no reason why the 30 year fixed Colorado Home Loan rate should be any higher then 5.0% flat.  This is a huge difference from where we are at now.  We are pushing the envelop on anything below 6.25% for any Colorado Home Loan program.  Even though we are above the 6.00% range we believe that some relief is in store.

 

Colorado Home Loan rates should continue to see relief despite the current inflationary pressures seen in Oil.  Colorado Home Loan rates will improve, because the economic issues are out weighing the cost increases that contribute to inflation.  Though Colorado Home Loan rates will improve, they will not improve as much as they should.  $142 a barrel of oil, COME ON!!! Can anyone who promised to protect the American people from foreign threats not see that this is a threat to our financial system?  Of course not, we have a bunch of talkers in the senate that would rather debate each other to death versus actually doing something.  At least when the Republican Party had control of congress things got done, mind you it was not always the right decision, but at least something happened.  We have now experienced a two year downward turn since the democratic lead Senate took over and so far NOTHING has happened.  I guess as most of you can see I am a Republican, but I am also honest enough to know that there is good to both parties, regardless of your political affiliation you have, something needs to be done.  Colorado Home Loan rates will continue to be in a state of confusion until we fix some of the variables impacting our markets from abroad.  Colorado Home Loan rates like any other interest rate instrument would stimulate our economy back if in fact rates were low enough.  Inflation already has several momentum building influences when money supply becomes less expensive.  When we add the unsustainable cost increases of oil to our inflationary numbers, it becomes very difficult to combat economic issues.  The tools used by the Federal Reserve to help stimulate the economy are limited by the constant treat of inflation.  When inflation presents itself without Federal Reserve intervention we are limiting what can be done to help stimulate our Economy.  Oil needs to be address and it needs to be addressed now, otherwise we will be in this economic rut longer then we need to be.

 

Sorry about that tangent.  I do want to quickly express my appreciation for Ben Bernanke I have criticized him a bit in the past, but I believe he is doing all he can to help our economic systems.  He is faced with many difficult obstacles never seen in our economy before and so far he has done everything he can to ensure that our situation does not get any worse.  Regardless of what you think about President Bush, his economic stimulus package that gave Americans additional funds late April and May showed that at least he is willing to do something.  I am maintaining a FLOAT recommendation today and so far the MBS markets appear to be favoring Colorado Home Loan rates.  We have not seen any substantial decreases over the last few days, but we do not foresee any major reports that will drive Colorado Home Loan rates up.  Every time I watch Lender activity it appears that they are moving Colorado Home Loan rates up quickly and bringing them down slowly.  Right now we are seeing the momentum for Colorado Home Loan rates coming downward. 

 

Please give me a call about your Colorado Home Loan rates, and hopefully I did not offend anyone.  I really enjoy everyone’s perspective and can sometimes be opinionated.

 

God Bless and have a great weekend.

 

Daniel