May everyone have a pleasant Spring week.
Mortgage Rates: Time is Now
– Don’t Miss Out –
Good News: Direct actions by our Federal Reserve and Board, are further helping our markets. They have assured a low-rate guidance for interest rates, for whatever time needed. With this, they will have a light hand on the amount of mortgages they purchase. This to help hold rates stable and more steady, reducing speculation. Good on them !!
With more data about immune prevention and alleviating suffering associated with CoVid-19, markets are calming. Yet it is not time to relax – not us or our government. My focus will be to continually assess our current situation and our real estate market.
But, not all of this weeks news is good…
Warning: Forbearance: A real issue of concern:
The Concern: 1) Estimated 7 % of mortgagees have requested forbearance. Of these, a number of borrowers, verified by the lender as employed, quickly seek forebeafance. Worst, many are cash out. Such a break in trust, can hurt this good and helpful program.
Ripple Effect: Lenders cannot sell a loan in forbearance. And because they are not in the business of holding loans, the act of forbearance risks plugging the credit lines needed to fund tomorrow’s loans. Outcome: This financial window-of-opportunity will close.
Result: An outcome we don’t need: A serious tightening of liquidity that risks many specialty loan programs, such as cash-out for investment properties and 75 % loan-to-value on rental units. For loan over 510,000, we are seeing a rate 4 % +, with an add-on fee of 3 points.
Serious Question: Who is advising clients to take out a new loan and then, with out conscious or sense of good will, file for forbearance ?? Have they been instructed on how this may seriously hurt their future lending prospects – locking them out of the market for many years. Have they been forewarned as to the consequences of changing the “paid-as-agreed” box to read forbearance / modification? There are no short-cuts, only dangers. Be safe – call us.
For my clients, we understand the need to keep food on the table. At the same time, we review other financial options and choices, before seeking Forbearance. Our goal is to prevent people actually working, who can afford to pay their mortgage, from harming this needed program.
On-going Loan Servicing:
A concern: Current head of the FHFA – overseeing both Fannie and Freddie – is not in alignment with understood market operations. Please note: When a mortgages goes into forbearance, the Loan Servicer – the company you write your check to – must continue to make the monthly payment – regardless if you make or miss a payment. And if missed, they have the extra capital needed to make payment. Caution: However, in extreme market where too many loans fail at the same time, this system can be overwhelmed and freeze up.
The Good News:
As we steady our ship, we actively and daily fund:
Owner-occupied loans in the low 3’s,
VA and FHA loans starting with a 2!
Wow. Don’t miss out. Call us.
SBA: Two helpful programs.
1) The $10 K grant that comes directly from SBA – the SBA -EIDL program. We currently have many people who have received money from this program. Call us to learn more.
2) The PPP program – 2nd funding – is active and ready. How long will it last ? To help expand the numbers for Small Business, there are activists tracking who is getting the money. Good News: Many larger business are returning money, not intended for them. Amen. I know a number of small businesses now able to keep their doors opened and people employed.
Please Call Us
Not all banking institutions are helping. And for those of us in the brokerage community, few if any have received compensation for helping clients. Regardless, we are still here to help. For small businesses and sole-proprietors, you can receive 2 1/2 months of salary, as a loan. And more – there are forgiveness provisions whereby such loan can be considered paid. Call us.
We are here for you, to make sure you know how best to move forward.
All my commentaries are posted on my website: Check the tab ‘Letters From My Heart’.
WHAT CAN YOU DO?
Potential Strategies: Preparation is key here.
Refinance Strategies:
A) Debt consolidation to reduce overall payments, put cash in the bank, and build a safety net. Home improvements can increase home value and marketability. For some, it maybe 3 + months before the lending program you need, is available.
B) No Cash out / Lower rate loan. Start the planning now, let underwriting,
appraisal, et all, do their thing, while you watch / wait / lock your loan when interest rates hit a low point. Good News: Appraisals are good for 4 months, with a simple update. So too, all the paperwork with a quick update. Start today.
Purchases:
A) Fear creates opportunity – storms can create deals. Those prepared and ready are in the driver’s seat. And if you, like me, are long-term Bull for California real estate, now is the time to act. Why? Because the fundamentals of supply and demand draw new Buyers. This is one of the best places to live – high tech, high paid professionals and excellent weather, plus close to mountains, rivers, and an ocean.
B) Low down payments options make great sense with rates this low. Keeps you in control of your cash, especially during a slow down. Even better, when the market kicks back in gear and values double from here, you will smile at your low rate, while enjoying your extra cash for other investments.
CAVEAT:
Being a SBA lender, along with our Commercial and Residential work, our phone is ringing. I will return any missed call as quickly as I can. Sadly I have no crystal ball, nor does anyone else. Instead, ours is to make some sense of the market, the day you call. But predicting tomorrow is impossible. So finding safe and secure lending is critical and what we do best.
Key to success: Being diligent in gathering up all your information. This has become a time-sensitive market and your extra effort will help assure the success, we both desire. Like you, we are doing whatever is needed, to get it done. Being prepared, we can be the team that wins.
We Believe in You and You Matter to Us
Thank you for trusting me with yourself, your friends and family. Referrals are appreciated.
We are working hard in these stressful time, and are doing our best to keep things moving smoothly. Sadly, I am only human, with human and life limitation. But my motivation for you to succeed, has not diminished. :-)
Call me. Your success is my priority.