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.

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 rates seem to be getting some relief today after the release of the Consumer Price index.  CPI measures real inflation, which has been the hot topic for Colorado Home Mortgage rates over the last 5 days.  Inflation fears have contributed about a .75% rate increase with Colorado Home Mortgage programs over the last week.  Colorado Home Mortgage rates have not been this high since August of last year, making the relief well over due.  It appears that the Mortgage Backed Securities market will trade higher today and over the weekend allowing some much needed relief in Colorado Home Mortgage rates.  How much relief will depend on how aggressive investors get, but the feeling right now is that the relief will come slowly.  We have one more inflationary report to be released for the month and that is Producer Price Index which will come out on Tuesday.  We will need to keep a close eye on PPI next week, if PPI reports in line with expectations, next week could be a good week for Colorado Home Mortgage rates.

 

Our biggest enemy right now was our best friend 6 months ago, and that is the Federal Reserve.  The Federal Reserve utilizes many techniques to move the market in the direction it chooses.  Colorado Home Mortgage rates are influenced by these actions.  The Federal Reserve has utilized a scare tactic over the last 10 days or so, by openly discussing serious concerns with inflation.  These speeches created some strong movement out of long term investments, which caused Colorado Home Mortgage rates to go up.  What investors now have to do is determine how much of the information being expressed by the Federal Reserve is fluff and how much is real.  Colorado Home Mortgage rates hate inflation and the most credible source for getting the information on inflation to us is the Federal Reserve.  So why question their intentions right?  Well the Federal Reserve is also responsible for lowering the risk of inflation.  By generating fear about inflation the Federal Reserve can slow down Economic progression.  This is one technique they use to reduce inflationary pressures.  I am not sure if that is the right approach, but it does work.  Tuesday will give investors the last piece of the puzzle for the month on inflation.  If Producers Price Index comes in as expected we should see next weeks Colorado Home Mortgage rates drop.

 

Colorado Home Mortgage rates are at a high point for the year, and it has become tougher and tougher to recommend a FLOAT or LOCK recommendation.  Based on today’s information and looking at where inflation came in at, I believe that FLOATING your loan is a good risk.  Investors need a little time to price back out of the safety zone currently seen in their Colorado Home Mortgage rates.  This means we have room to improve.  The economic news has also been good for Colorado Home Mortgage rates making a FLOAT recommendation that much easier to make.  Stay tuned for PPI that will come out on Tuesday.  We will be hoping that PPI reports at or below expectations.  We will give you the information as soon as we know.  In the mean time let me help you with your Colorado Home Mortgage questions and feel free to call me directly.  If you have time, check out www.coloradohomemortgageloan.net/news  I will be reporting on all the economic reports from today and their impacts.  All you really need to know though, is that the reports favored Colorado Home Mortgage Rate improvements and seem to be carrying enough momentum to get us through the weekend.  Until we write again have a safe and fun weekend.

 

Daniel 

Colorado Mortgage Rates are determined by the Mortgage Backed Securities market.  Most people refer to this market as the bond market.  The bond market competes with the equities market to attract demand from investors.  Colorado Mortgage Rates are determined by the demand shown in the bond market.  The relationship between Mortgage Backed Securities pricing and Colorado Mortgage Rates follow an inverse pattern.  The best way to look at the inverse relationship is to watch the price of bonds, when the price of bonds goes up, Colorado Mortgage Rates will fall.  This will also hold true as bond prices drop, Colorado Mortgage Rates will naturally go up.  This trend does not change for any reason, so what we have to look for in order to properly determine Colorado Mortgage Rates, are the factors that increase or decrease demand in the bond market.

 

Demand in the bond market will normally be determined by investor’s adversity towards risk.  Investors are inherently conservative and look for every opportunity to eliminate risk from their portfolios.  Colorado Mortgage Rates also use risk factors when determining its final rate which we will elaborate later.  Right now we will simply focus on the risk associated with investments.  Bonds are considered safe and sometimes risk free investments.  Because the risk is low the returns are also low.  Equities (Stocks) on the other hand will have high risk associated with them, but in order to compensate for the risk, stocks will need to offer a much better return.  Investors look at both markets and in times of bad economic progression bonds become a safer investment.  In times of good economic progression Stocks become a good investment.  Colorado Mortgage Rates will typically come in lower during low economic growth periods and likewise Colorado Mortgage Rates will suffer during good economic growth periods.  So if you simply want to get a feel of where Colorado Mortgage Rates are in relation to historical data look at what is going on in the economy.

 

What is going on in the economy is heavily monitored by investors when determining how aggressive they will be in buying and selling bonds.  Economic data reports are the primary driver of investor behavior in the markets.  These economic reports come out in a verity of formats.  Some that you may be familiar with are: GDP, Consumer Sentiment, Cost Price Index, and Jobless Claims just to name a few.  Colorado Mortgage Rates react immediately on the data released by these economic reports.  The economic standings are dictated by what is said in the data.  If the data says we are in an economic downward spiral investors quickly jump out of the equities market and reinvest in the bond market.  The increased buy demand drives to price of Mortgage Backed Securities up which drives Colorado Mortgage Rates down.  Obviously, Colorado Mortgage Rates have the opposite movement when the economic data released is better then expected.  This is how core Colorado Mortgage Rates are determined. 

 

The last component impacting Colorado Mortgage Rates are the loans risk parameters.  As I stated before investors demand a higher return when they take on more risk.  Colorado Mortgage Rates are no different in the returns required for the risk taken.  Colorado Mortgage Rates start off at a base risk factor.  Normally clients with a 720 or higher credit score, Full Documentation can be verified for their income, and a minimum of 20% down payment has been made will qualify under the least amount of risk.  These type of loans will certainly carry a low risk premium and will offer the best Colorado Mortgage Rates available.  Once the loan begins to add risk factors like 100% financing or credit scores below 720, Colorado Mortgage Rates begin to go up.  This is the most basic way to explain how Colorado Mortgage Rates are determined, and I would encourage you to contact us directly with any other Colorado Mortgage Rates questions you might have. 

Colorado Home Mortgage rates continue their up hill climb as new fears on inflation hit the market.  Colorado Home Mortgage rates reacted to Bernanke’s statements, which expressed concern for inflationary pressures.  He stated that we are not in jeopardy of hitting the inflationary numbers seen in the late 1970’s, which sent Colorado Home Mortgage rates into double digit levels.  He did state that his primary concern is price stability and inflation and that it will be the Federal Reserves primary objective to limit the impacts it my cause.  Colorado Home Mortgage rates did take a hit on investors concern about inflation.  It almost seems as if anytime the word inflation is mentioned by the Federal Reserve Colorado Home Mortgage rates begin to climb. 

We had only one economic report released and that was the Jobless Claims data.  This report does create some movement in Colorado Home Mortgage rates and today it was just enough to send rates back up for the 3^rd straight day.  Those who got into some of the long term locks we talked about early last month should be doing quite well.  We will continue to monitor the situation and let you know of any Colorado Home Mortgage rate movements.  Right now it appears that most of the bad news hitting the market has already done so.  At this time we will recommend that you FLOAT your Colorado Home Mortgage loan.  At last glance the Colorado Home Mortgage loan market appears to be making up some of the ground lost early this morning.  We will have to monitor the Employment numbers coming out tomorrow as this will definitely create some movement with Colorado Home Mortgage rates.  So far it appears that the month of June is shaping up like the month of May and Colorado Home Mortgage rates appear to be heading in the wrong direction.  Call me for you Colorado Home Mortgage questions.  If you are looking to close in the next week and just can’t hold on any longer on your Colorado Home Mortgage rate lock then make sure you lock at 6.0%.  The Colorado Home Mortgage originator will have to take a hit on their commission, but heck they should be thinking of you first and it is where I would lock my Colorado Home Mortgage rates today.

 

Colorado Home Mortgage rates will continue to be impacted by anything related to inflation and we will keep our ears open for anyone making any derogatory comments about inflation.  It is this type of talk that can send Colorado Home Mortgage rates back up to their three year high mark and it is not where we would like to be.  We still have options on Colorado Home Mortgage rates that can get you a Colorado Home Mortgage rate at or below 5.5%.  Finding it hard to believe? Well call me and I will explain.  The program requires no points and it is becoming a good solution to a time when Colorado Home Mortgage rates appear to have no cap in sight.  Remember to check out my other Colorado Home Mortgage site www.coloradohomemortgageloan.net to get the specifics on economic data being released.  Economic data moves Colorado Home Mortgage rates more then any other data released and should be understood before making a Colorado Home Mortgage lock decision.

Thanks Daniel

 

Colorado Home Mortgage rates appear to be hovering around the same rates given out on Friday.  Most of our Colorado Home Mortgage rate movement today will take place do to Headlines versus economic data.  The only report released today was the Leading indicators data which reports on a variety of economic factors, which predicts strength in the economy 6 to 9 months in the future.  This report does not play a major role when it comes to Colorado Home Mortgage rates, but it is monitored.  The reason the role is down played has to do with the fact that most of the indicators used in the Leading Indicator report have already been reported individually and have already made there impacts on the Colorado Home Mortgage Market.  The report did come in a bit higher then expected but so far has not created any pricing issues in the market.  Today’s Mortgage Backed Securities trading will hinge on Market headlines and so far the Market Headlines have not been good for Colorado Home Mortgage Rates.

 

We will have to wait and see what else is being reported in the news but here is what we have so far:  Lowes reported better the expected earnings, but has forecasted a warning about future earnings.  Initially this created some positive momentum for Colorado Home Mortgage rates, but the momentum did not last too long.  The big news today and probably for some time to come is the anticipation of Microsoft and Yahoo merging together.  This will be huge for the market, and the indication so far, is that they will be able to complete the merger in the near future.  Colorado Home Mortgage rates have been affected by the positive news.  Stocks are up over 100 points and as investors see opportunity in stocks they tend to utilize funds from long term investments.  Pulling money out of bonds will cause bond prices to drop and in return increase Colorado Home Mortgage rates.  The trick here is to predict what the next 48 hours will bring.  It’s hard to say so I will lean on the conservative side and recommend LOCKING. 

 

Colorado Home Mortgage rates should still be at 5.75% and it appears the risk/reward for floating may not me in your Favor.  The big news tomorrow will be the PPI report which is an inflationary report.  If the numbers on inflation are bad, and the stock market maintains its current momentum, we will see Colorado Home Mortgage rates jump.  With oil still trading at an all time high I just find it hard to believe that we will not see some inflationary pressure in the market.  As I said before, it is just too hard to predict what will happen in the next 48 hours.  Now if we look over the next 30 days or so we are getting reports from a variety of source that seem to indicate that we will not be out of the woods for some time.  The negative trends in the economy may be around even longer then we expect.  If that is the case we should have a good summer as it relates to Colorado Home Mortgage rates.  It is the ups and downs that can cost you money, and that is why it is important to have someone on your side predicting market trends.  Please call me with any of your Colorado Home Mortgage questions.  Remember to check out www.coloradohomemortgageloan.net/news for more specific information on the reports already released and tomorrows PPI.

Colorado Home Mortgage rates improved today on the release of several poor performing economic data reports.  These reports reminded investors that we are still not out of the woods yet.  Our economic situation seems, at least for the moment, uncertain about immediate recovery.  Colorado Home Mortgage rates always do better during uncertainty.  We had a rough week last week as it relates to Colorado Home Mortgage rates and much of what was lost last week has found its way back into the market this week.  We will continue to support a LOCK recommendation around 5.75%.  Today 5.875% would be a no cost lock; where as 5.75% would still carry a small cost.  Let’s give it another day or so before making any quick decisions, it appears that the data coming out still has some room to improve Colorado Home Mortgage rates over the next day or so.  We will maintain a FLOAT recommendation through the weekend.  I will certainly advise a LOCK if something big happens, but tomorrow’s economic data will more then likely reflect a similar negative message being communicated by the reports today.

 

Go to www.coloradohomemortgageloan.net/news to get the details on the specifics of each report released today, for those who just want the basics this is the site to keep book-marked.  Colorado Home Mortgage rates will be impacted by tomorrow’s economic releases.  Housing starts and Consumer Sentiment are both on the clock tomorrow and both reports are expected to come in negative.  Consumer Sentiment is a no brainer, as a whole people still believe we are in a tough situation and whether it is political, economical or local the problems still remain the same.  People do not have confidence that our economy is in a state of recover and instead believe that tougher times are ahead.  This will be reflected in the story told in the Consumer Sentiment data released in the morning.  Consumer Sentiment readings that come in low normally indicates low consumer spending.  When this happens a safer investment portfolio makes sense which will increase the demand for Mortgage Backed Securities.  Long story short it will allow Colorado Home Mortgage rates to drop for a third straight dayJ  We do have one negative possibility that could move Colorado Home Mortgage rates back up a bit and we know them in the investment world as profit seekers (read my other blog) they could be the red herring on any large movements expected in rates in the next 24 hours. 

 

Finally, we have the housing starts report, which normally this time of year begins to gain momentum.  Builders typically build more in the summer however the problem here is supply.  Right now with so many homes on the market adding additional supply is not profitable, which signals that this report like the previous 7 housing starts reports should come in low.  The question is did the experts predict the housing starts report appropriately.  We will see.  The Mortgage Backed Securities market did close today with some nice gains and more importantly a consistent gain throughout the day.  This should have been reflected in some decent improvements for Colorado Home Mortgage rates.  I checked out several investors today and they are still a little conservative in their rate sheets so we have not seen all the Colorado Home Mortgage price improvements that I would have expected, which certainly means that FLOATING through the weekend should be a safe bet. 

 

The Last thing I will say is be careful not to allow yourself to be to heavily influenced by what you hear.  Look at the simple data and make your decisions on what you think the market is doing.  I am also easily influenced by what other people are saying.  I do not come up with all of this on my own, I read a lot to get this information out and the sources I read the information from will always push their personal opinions.  Heck my personal opinion comes out in every message I write.  I have had a strong stance that our economy appears to be in a recession and I have stuck to this for some time, but over the last three weeks we have had a few reports come out that seem to tell a different story.  Of course every expert on the planet has to have something to say about it and when you hear it enough you begin to believe it.  I bought into this as well, however today’s data came in pretty bad and unfortunately we will not know how close to a recession we are in until we are almost out of it.  Colorado Home Mortgage rates go up and down based on investor impulse and opinions on where the economy is heading and what the economy has to day today.  When they feel things are getting better for the economy, Colorado Home Mortgage rates suffer.  Likewise, when we fall on bad Economic times Colorado Home Mortgage rates drop.  Right now our economy is in a state where Colorado Home Mortgage rates should be at an all time low, but the simple fact is we have way too much data to sort through, which allows everyone to have an opinion.  Stick to the basic, and call me with your Colorado Home Mortgage questions.

 

Daniel

 

 

Colorado Home Mortgage blogs can sometime be dry and long so I will summarize by blog in the first paragraph and if you want more detailed information then I will encourage you to read on for more information.  Colorado Home Mortgage rates have hit the LOCKING window we have been waiting for.  Today we can get the 5.75% without any points which means LOCKING is the way to go.  I have several Clients that will have a chance to get LOCKED in today.  We have several influences in the Market that can have negative effects on Colorado Home Mortgage rates.  You can gamble, but the risk reward will not be worth it.  Jobless claims did come in better then expected and The Bank of England did not raise rates.  Nothing out of the ordinary, but Colorado Home Mortgage rates appear to be doing what we want.

Jobless Claims came in today lower then expected.  The initial jobless claims were expected to be 375K but actual data indicated that it was only 365K.  Normally this would have caused Colorado Home Mortgage rates to go up, but so far the market is holding strong.  In fact we are seeing slight improvements, which means we may want to look at locking your Colorado Home Mortgage rate soon.  I will be watching the market very closely this morning and may be calling you for a LOCK recommendation. 

The Bank of England held their short term interest rates right where they were.  It appears that the board in Europe has taken a strong approach locally to fight inflation.  Our Federal Reserve System seems to be more aggressive in their actions.  This will make foreign bond investments more profitable the U.S. investments, which may cause investors to start buying internationally versus here at home.  Regardless the news was not unexpected and has kept its influence out of the market so far.  I have reported several times in the past about the pricing gap between the 10 year treasury and the 30 year 5.5% fixed bond.  These two financial instruments tend to trade in similar circles and move up and down at the same rate.  Over the last few months there appears to be a larger then normal gap between these two securities.  In short, Treasury’s are trading higher then its partner the Mortgage Backed Security.  Colorado Home Mortgage rates should be slightly better assuming that these two financial instruments trade where they are supposed to.  This may explain some of the improvements we are seeing lately.  I will be looking at several banks today and making some assessments on the loans that will be closing soon.  Those Colorado Home Mortgages closing in the next couple of weeks should probably be LOCKED today.  We can get the 5.75% and LOCKING is my recommendation. 

If you are a risk taker then we may have a few more days where rates can improve.  It may even drop us to the 5.5% range, but I will not be recommending client to wait to long.  Here is why I have issues with waiting and why LOCKING your Colorado Home Mortgage rate is so attractive.  Investors have been overly cautious in their projections and though the economic reports are still bad they are all coming in better then projected.  Better then projected economic data causes problems for the Mortgage Backed Securities market.  Colorado Home Mortgage rates will go up as bond prices drop.  Investors are getting their confidence back in the Stock Market and this will cause unwanted pressure in the Bond market.  Another big issue is oil.  I have talked about this over and over so I will make it short.  Oil causes inflationary issues, which again is bad for Colorado Home Mortgage rates.  I don’t see any other solution to slow down inflation except for drastic decreases in the price of oil.  I don’t believe that will happen anytime soon.  All the negative influence in the bond market seem to be there and when we have a small window of opportunity to LOCK a good rate then LOCKING will be my recommendation.  I set the bar at 5.75% and we will have several people locked in today at that rate.  Call me with your Colorado Home Mortgage questions and check out www.coloradohomemortgageloan.net/news for in-depth economic data information.  Thank you for reading.

 

 

The lack of Economic news continues to have investors looking to the stock market for signs.  Colorado Home Mortgage rates started off stable this morning as retailers continued to report week by week decrease in sales, causing investors to have some concerns about the risk in stocks.  The day appeared to be heading in the right direction and Mortgage Backed Securities began to trade a bit higher then yesterday.  This was short lived, as the headlines reported that Disney had higher then expected 1Q profits.  The news forced money out of the bond market and into the stock market. This may be the reason for the late day rally in the Stock Market.  Colorado Home Mortgage Rates did jump a bit late this afternoon, and we may see Colorado Home Mortgage rates continue to rise tomorrow morning.  Having just watched Lilo & Stitch with my 2 year old I can understand the success Disney has reported and unlike any of the oil companies, I actually feel good about where they are going.  Colorado Home Mortgage rates will however, continue to be impacted by headlines throughout the week.  We have a couple of reports coming out tomorrow which can change the momentum and hopefully push Colorado Home Mortgage rates back down.  We will watch these reports tomorrow and give you an updated on where the market is heading.  I do have some concerns building up lately.  Everything I am seeing in the market shows that we have some tough times ahead as it relates to Colorado Home Mortgage rates.   We will continue to set our locking point to 5.75%.  I have several people holding out and unless the momentum changes, we may want to go ahead and start locking in your Colorado Home Mortgage rate. 

There are several things that I am concerned with, the biggest issue I have relates to how investors currently view the economy.  I believe investors have been hit so hard for poor projections that they have become ultra conservative.  The conservative approach has caused investors to project data at extremely low levels.  In theory investors use this information and act accordingly as they buy and sell investments.  Typically, investors will buy Mortgage Backed Securities during tough times and stocks during good times.  When investors project poor economic data in the near future, activity in the bond market will increase.  This will cause Colorado Home Mortgage rates to improve.  The problem I am having recently is that I just don’t believe that investors are responding to the market according to the projections shown. This is causing the Mortgage Backed Securities market to be under inflated.   Now when the actual data comes out investors have been reacted accordingly, causing the market to fluctuate up and down depending on what the economic data shows.  The only proof I can give that will show the market is under inflated is the relationship between the 10 year Treasury bond and the 5.5% coupon bond.  The 10 year treasury and the 30 year 5.5% coupon bond has shown signs which indicates a larger then expected pricing gap.  The gap used to be much greater, but over the last couple of weeks has dissipated a bit.  Though the gap is smaller we still have some room to move. Colorado Home Mortgage rates will see the benefits of the gap reduction over time, but it will take some time.  This will all come down to investor confidence in the Mortgage Backed Securities market.  Right now investors are not showing the confidence needed to reduce Colorado Home Mortgage rates down where we would like to see them.  It is hard to project when investor confidence will return, but all the negative press about Colorado Home Mortgage companies going out of business or needing help certainly does not build the momentum we need.  Countrywide and Fannie Mae are good examples of why investor confidence is so low.

The next issue I see is the continued inflationary risk in oil.  It is obvious that when shipping cost increases the increase in cost is passed down to consumers.  The increased pricing causes inflationary pressure, which adds more bad news for Colorado Home Mortgage rates.  We will see this issue in the market for some time to come.  Another problem facing Colorado Home Mortgage rates is corporate profitability.  The corporate profitability reports have shown some real surprises in 1Q 2008.  Several companies projected to report poor profitability actually reported that profitability was up.  Adding fuel to the fire was the number of Mortgage companies that have indicated that their default rates will continue, causing sever profitability issues in the future.  Countrywide continues to be the Headline leader in bad mortgage performance, but out just today, Fannie Mae has reported similar issues in their holdings.  This has investors concerned about a possible bail out needed from the Federal Reserve.  This will certainly add to an already unstable Mortgage Backed Securities market and will have investors continuing their conservative approach in the market. 

My recommendation is to LOCK if and when you can get the recommended Colorado Home Mortgage rate of 5.75%.  Its looking like 5.875% will be around for some time.  Luckily we did hit a pricing ceiling at 5.875% so the rate will hold strong, but any major news can have rates going to 6.0%.  I will be watching the Colorado Home Mortgage market very closely over the next few days.  We may have to suck it up and simply lock while we are under the 6.0% range.  Call me and I will be happy to answer your Colorado Home Mortgage questions.  I had a crazy busy day to day that had me in and out of the office, so I apologize for not getting the Colorado Home Mortgage information out to you sooner.  In retrospect rates did not move much if any since yesterday and seem to be lingering around the 5.875% range.  I will post earlier tomorrow.

As I have stated before I will summarize the blog info in the last paragraph so here it is in the simplest of terms.  Colorado Home Mortgage rates today are at 5.875%.  These rates will be impacted by any Headline news because economic data this week is light.  The Headlines had Disney showing stronger then expected profits which caused Colorado Home Mortgage rates to go up a bit.  The Colorado Home Mortgage rate did not go up enough to hit 6.0%.  We expect the Market to start off poorly tomorrow riding out the news seen today.  We have a couple of reports that may help rates but will not know until these reports are released.  Right now if you can get 5.75% at all I would LOCK.  If you are a gambler we do have a long way to go in order to get below 5.75%.  Today 5.75% will have an additional cost to it, I am hoping that the cost goes away by the end of the week at which time I will have a strong Colorado Home Mortgage LOCK recommendation in place.  Call me with your Colorado Home Mortgage questions.  Thank you for reading and please remember to visit www.coloradohomemortgageloan.net/news for more information.

Daniel