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All Encompassing Mortgage and Real Estate Thread


UTPhil2006

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Posted (edited)

I think that’s some of it, but people aren’t as simple as that. And definitely don’t make the smart money decision all the time. There are always other factors that trump money. Family, quality of life, schools, etc. 

For example, I have a borrower that has to sell a 3% and move into a 6%. They can afford it. They’re not jazzed about it, but they’d rather pay more than live in their current city 

 

 

Edited by Neonmoon
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1 hour ago, Neonmoon said:

For example, I have a borrower that has to sell a 3% and move into a 6%. They can’t afford it. They’re not jazzed about it, but they’d rather pay more than live in their current city 

That seems like a problem. 

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2 hours ago, Neonmoon said:

I think that’s some of it, but people aren’t as simple as that. And definitely don’t make the smart money decision all the time. There are always other factors that trump money. Family, quality of life, schools, etc. 

For example, I have a borrower that has to sell a 3% and move into a 6%. They can’t afford it. They’re not jazzed about it, but they’d rather pay more than live in their current city 

 

 

We sold a 2.8 and are buying a 5.  But we downsized by over 50 percent to move.  Convincing my wife wasn’t that hard because of the location but yeah the value proposition of a million dollar mortgage at 5 percent is scary.  Essentially the buyers are betting on being able to refinance in a few years, which I think isn’t a safe bet at all.

 

I wonder what my buyer in Westlake Hills is thinking right about now… 

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3 minutes ago, Hefeweizen said:

We sold a 2.8 and are buying a 5.  But we downsized by over 50 percent to move.  Convincing my wife wasn’t that hard because of the location but yeah the value proposition of a million dollar mortgage at 5 percent is scary.  Essentially the buyers are betting on being able to refinance in a few years, which I think isn’t a safe bet at all.

 

I wonder what my buyer in Westlake Hills is thinking right about now… 

Hopefully to refi with me in 8 months 

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35 minutes ago, Hefeweizen said:

We sold a 2.8 and are buying a 5.  But we downsized by over 50 percent to move.  Convincing my wife wasn’t that hard because of the location but yeah the value proposition of a million dollar mortgage at 5 percent is scary.  Essentially the buyers are betting on being able to refinance in a few years, which I think isn’t a safe bet at all.

 

I wonder what my buyer in Westlake Hills is thinking right about now… 

It's definitely a quandary.  They say to marry the house and date the rate right?  If I knew for sure I could get back in under 3, I'll buy "the dip."  Idk if we ever get there.  But I'd love to cash in my equity and put it all on black in Reno.  

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9 hours ago, Texas Jeff said:

I think we are in for the weirdest housing bubble of my life.  Rates were low, housing shot up, lots of people with unrealized gains that they thought would be tax-free income with a chance for more.  The more house you bought, the more you could make.  Now rates are up and those same people could never afford to now buy they house they just bought.  Demand will sink and prices will fall.  Maybe not a crash, but enough to wipe out some equity for a while.

People will be stuck in their current homes.  They may make enough to pay the 2.5% mortgage on their million dollar home but not enough to sell it at a 100k loss and move into a 700K home with a 6% mortgage.  Those folks are going to sit tight.

We may get into a situation where there still are not a lot of homes on the market because not many can afford to move.

I would guess there could be a 10% pricing dip but would be shocked if it's more than that, but Idk shit about fuck.

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On 6/21/2022 at 6:43 AM, Neonmoon said:

A realtor just asked me, the lender, to reach out to the sellers agent and ask for a sellers concession addendum

(I don't think the clients are getting their money's worth)

 

That makes me fucking ragey. 

On 6/21/2022 at 6:52 AM, Wulaw Horn said:

So, I just saved some deal for a realtor with a non QM program. His lender gave him an approval, he got under contract and then they denied him. Then, he went to another lender that she had recommended and she turned him down (her normal lender). Finally, she asked one of her friends who was good and had a bunch of products, got

recommended to me and I’m getting it done with a 12 month Business bank statement program. 
 

Am I his best friend for doing a loan that multiple people have denied?  No, he’s bitching about cost and time. We are going to close in 30 days (he was conditionally approved Wednesday night after I got the loan application at 6:48 on Monday night, and his lock is 6.375 on Thursday morning- paying 1.25% in discount points. He’s bitching and morning, pissed and “threatening to find another loan officer because of these outrageous costs and fees”. For context the national average on A paper premium deal right. Is is 6.12 I believe. And the typical spread on a non QM deal is at least a point and a half. 

What do you think- should I fire him as a client?  

Such a tough call. 

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On 6/21/2022 at 8:07 PM, Shaggy3.0 said:

That’s thanks, in part, to new lending regulations that resulted from that meltdown.

Because we all know shady lenders would never find loopholes to skirt those regulations (surly lenders not included obviously).  You don't find out how shitty those regulations are until shit hits the fan.

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On 6/22/2022 at 8:34 AM, Wulaw Horn said:

It doesn’t have to be 5% or 5.5% on that $1,000,000 house if you are a really well qualified buyer. We can still put those guys in right around 4% on an arm. That’s not an insignificant as far as savings go. 

It's max $15k over what, 30 years or so?  $500 per year is fuck all for someone getting into a $1MM house.

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13 minutes ago, Fudge Nuggets said:

It's max $15k over what, 30 years or so?  $500 per year is fuck all for someone getting into a $1MM house.

you'll need to show your math on this one.  Its more like 500 a month, or more.

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14 minutes ago, Fudge Nuggets said:

It's max $15k over what, 30 years or so?  $500 per year is fuck all for someone getting into a $1MM house.

The difference between 4% interest and 5% interest on a million dollar house?

Call that an 800K loan.  At 5.00 your P&I is $4294.00 per month

At 4.0% your P&I is $3819.   That's $5,0000 a year man.  That's not nothing. 

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2 minutes ago, gurt said:

you'll need to show your math on this one.  Its more like 500 a month, or more.

Yessir.  That's the math I just ran and showed. It's an odd flex.  If the 1% savings in interest rate wouldn't matter then that would also mean that rates going up didn't matter a lot, which is the entire point of what we are talking about.  Sometimes everyone forgets to carry the 1 😉

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3 minutes ago, Wulaw Horn said:

The difference between 4% interest and 5% interest on a million dollar house?

Call that an 800K loan.  At 5.00 your P&I is $4294.00 per month

At 4.0% your P&I is $3819.   That's $5,0000 a year man.  That's not nothing. 

And 175k in compound interest over the life of the loan.

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Posted (edited)
1 minute ago, Wulaw Horn said:

I mean, it's actually $5700 a year, but we already established the man likes round numbers and wouldn't get out of bed for $500.00 a year, so I just chopped that off the end of the thing.

Take a closer look at the number you typed.  Which is why the second lol. 

Edited by Pato del Muerto
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2 minutes ago, Pato del Muerto said:

Take a closer look at the number you typed.  Which is why the second lol. 

I looked again and I didn't get it.  

I gave him monthly on the 5% b/c you pay your payments monthly

Then I gave him monthly on the 4%- again, b/c you pay your payments monthly

then I told him that was $5,000 a year (exactly 5700) b/c he was talking about yearly savings so I translated that.  

What did I screw up?

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Just now, Pato del Muerto said:

@Wulaw Horn 5,0000 has 4 zeroes. It’s not a real unit of money. Just have an extra zero typo, that’s all. 

That's awesome.  Got the comma in the right place and then just added a nonsensical zero.  Like I said- sometimes everyone can forget to carry the 1!

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Speaking of loans I close on next Friday, 22 days from the offer being written.  That’s pretty impressive by any metric except all cash.  
 

I got to say even though my lender isn’t Phil or Thad, I’m pretty happy.  
 

The kick in the balls was when we found out some of the new appliances are over six months out.  
 

Now to be back to debt slavery for a few more years.  It was liberating being free from all debt for a month and a half!

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My quasi Monday update- remember what this is- this is the average of where all deals closed at on Friday according to my loan sifter.  This is real time- so it's typically in a rising interest rate market (like this one) higher than the published national average (in a lowering environment it will often be lower b/c there's a lag between daily market meanderings and the quoted government statistics.  

My success story for Friday- we locked a cash out refinance at 4.375% with no points on a 15- that was fixed. The national average as you can see is almost a full half point higher.
Success story #2- we are locking an FHA at 4.875% on a 30 year fixed this morning- the national average is currently higher.  This is kind of interesting right now- I've ran some payments with like 5% down and FHA payments are coming in lower even for people with good credit.  That doesn't necessarily mean I'd recommend an FHA deal on a $400k house for someone with a 720 credit score, for example but the payment (PIMI) breaks down as follows:

FHA- $2269

Conventional- 2485.  That's a 216.00 per month savings (Hopefully I got the decimal correct here- right Duck?)

Now- that comes with a $6650.00 PMI fee that's rolled in, meaning that it takes 31 months for the savings to pay back the extra PMI rolled in- but if you think your framework is 5 years and then sell- and you don't want to refinance, the FHA deal actually might make sense.  

2 main drawbacks of an FHA:

1) Your mortgage insurance never goes away when you get to 80% loan to value.  When you get there as a conventional it will automatically drop- on an FHA the only way to get rid of it is to turn it into not an FHA (i.e. refinance it)

2) you roll a 1.75% up front PMI fee into the loan.  So- in the above example you buy the $400,000, put 5% down (20K) and your loan amount is 386,600 instead of 380,000.00  That will be money that's still there when you go to sell the place, of course.  

But, for a big enough monthly savings those two drawbacks might be worth it to some people.

Anyway- with no further ado- here is the charts:

 

30-YR. CONFORMING

5.849% +0.025

30-YR. JUMBO

5.445% +0.098

30-YR. FHA

5.643% +0.020

30-YR. VA

5.408% +0.014

30-YR. USDA

5.622% +0.024

15-YR. CONFORMING

4.858% -0.039
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2 minutes ago, Neonmoon said:

The question as always, what will the next CPI report show on July 13th?

High inflation- I already have the answer to that. If you need to know how high I can't tell you exactly, but it's not going to be great man.  My shot in the dark- 8.2% year over year.  Slightly down from last month as the gas prices have mostly stopped going up (he said- maybe hopefully).

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Any particular reason you went with FHA?  That could potentially be a long term very bad idea if rates hold or even go up and stay up long term.  With conventional down to 2-3% down on certain programs, and fairly low credit score requirements, I avoid FHA unless absolutely completely necessary.

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1 minute ago, UTPhil2006 said:

Any particular reason you went with FHA?  That could potentially be a long term very bad idea if rates hold or even go up and stay up long term.  With conventional down to 2-3% down on certain programs, and fairly low credit score requirements, I avoid FHA unless absolutely completely necessary.

Yeah- she is 2 years and 1 day out of BK.  

I typically do avoid FHA as well- it's usually a last resort- which was why I was surprised at how big the difference in payment was in favor of the FHA, especially for it being a pretty decent credit score borrower.  

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2 minutes ago, Wulaw Horn said:

Yeah- she is 2 years and 1 day out of BK.  

I typically do avoid FHA as well- it's usually a last resort- which was why I was surprised at how big the difference in payment was in favor of the FHA, especially for it being a pretty decent credit score borrower.  

Gotcha.  Hopefully rates go down or get close to where she's getting now so she can get into CONV in the next year or so.

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6 minutes ago, UTPhil2006 said:

Gotcha.  Hopefully rates go down or get close to where she's getting now so she can get into CONV in the next year or so.

Going to take a lot of improving for a 708 credit score person to get a rate down to 4.875 on a conventional, and it's going to take a lot of appreciation to get her out of PMI with 5% down. I think she's probably in this loan for 3 years if I had to guess.  That's not a bad loan for right out of BK.

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11 minutes ago, Wulaw Horn said:

Going to take a lot of improving for a 708 credit score person to get a rate down to 4.875 on a conventional, and it's going to take a lot of appreciation to get her out of PMI with 5% down. I think she's probably in this loan for 3 years if I had to guess.  That's not a bad loan for right out of BK.

Yeah for sure.  I'm still mad at the mortgage person (don't recognize his name from the GFE she sent me) that in October of last year did an FHA streamline on her 60% LTV, 720 CR deal instead of taking her from 3.25 FHA to 2.xx Conventional.  By time she got to me in April we were already close to 5.  So shes still stuck with MI for the life of the loan because of that jackass til it get's to a reasonable conventional number, which could not come for quite some time.  Just a total bonehead move by that guy.

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10 minutes ago, closetohumping said:

You know what sucks is I think PMI used to just roll off without a refi.  Someone can confirm that I'm sure.  

 

Anecdotal for now but housing seems to have slowed down out here in SoCal.

It's gone back and forth on FHA's a bunch of different times in the 20 years I've been in the business.  To be clear- PMI still does roll off in a conventional without a refinance.

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12 minutes ago, UTPhil2006 said:

Yeah for sure.  I'm still mad at the mortgage person (don't recognize his name from the GFE she sent me) that in October of last year did an FHA streamline on her 60% LTV, 720 CR deal instead of taking her from 3.25 FHA to 2.xx Conventional.  By time she got to me in April we were already close to 5.  So shes still stuck with MI for the life of the loan because of that jackass til it get's to a reasonable conventional number, which could not come for quite some time.  Just a total bonehead move by that guy.

Probably will never come, if we are being honest. That's such a low blow/awful.  

FHA is awesome if it's the only avenue (which is most of the people on an fha).  

FHA is fine if rates are at a topping point/very high

FHA when rates are at historic lows and you can qualify for a conventional means the mortgage broker should be stripped down naked and flayed within an inch of their life. 

Only thing I can think of- maybe she didn't have income at the time so it had to be a streamline?  But most likely you are right and just terrible LO. 

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1 hour ago, Wulaw Horn said:

High inflation- I already have the answer to that. If you need to know how high I can't tell you exactly, but it's not going to be great man.  My shot in the dark- 8.2% year over year.  Slightly down from last month as the gas prices have mostly stopped going up (he said- maybe hopefully).

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2 hours ago, Wulaw Horn said:

Probably will never come, if we are being honest. That's such a low blow/awful.  

FHA is awesome if it's the only avenue (which is most of the people on an fha).  

FHA is fine if rates are at a topping point/very high

FHA when rates are at historic lows and you can qualify for a conventional means the mortgage broker should be stripped down naked and flayed within an inch of their life. 

Only thing I can think of- maybe she didn't have income at the time so it had to be a streamline?  But most likely you are right and just terrible LO. 

But would a broker push for an fha if a conventional is available?  Why would they?

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33 minutes ago, Wulaw Horn said:

Fha typically pay better. 

 

14 minutes ago, Pato del Muerto said:

And a streamline refi (fha to fha) is a quicker, easier process. So more money for less work, at the expense of the borrower’s best interest. 

This saddens thou.  

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4 hours ago, Wulaw Horn said:

It's gone back and forth on FHA's a bunch of different times in the 20 years I've been in the business.  To be clear- PMI still does roll off in a conventional without a refinance.

For FHA’s?  I’m getting my PMI removed in August on my conventional 30 year, I have to pay for an appraisal since we’re not under 80 on the original contracted price but with the market doubling it didn’t really matter.

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1 minute ago, TKthunder2 said:

For FHA’s?  I’m getting my PMI removed in August on my conventional 30 year, I have to pay for an appraisal since we’re not under 80 on the original contracted price but with the market doubling it didn’t really matter.

He said it does 

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So this is interesting- on a deal I'm looking at right now

680 credit score. 20% down.

FHA PIMI total payment- $1694.  

Conventional PI (no MI) total payment- $1703.  

The PMI will go away on the FHA- what- within 10 years (FHA PMI goes away eventually when you originally put 20% down- it's an odd quirk that we don't talk about b/c it almost never happens that an FHA loan puts that much money down).  

I think we might go FHA.  It's $9.00 cheaper today, the Conventional will never get cheaper, but someday, if they live there long enough, the MI will eventually come off on the FHA and make it even greater savings.  They are doing a non-occupant co-borrower so that's probably going to be easier on the FHA side.  Who knows. 

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FHA PMI cancels after 11 years if you put down 10% or more.

How much are the savings over the life of the loan? i would also factor in the geographic area. If homes appreciate fast in the area, conventional can knock off that PMI way faster 
 

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