Posts Tagged Jumbo mortgage
Here’s an interesting blog post in the Wall Street Journal today about Jumbo loans (loans over $417,000). The general consensus is that rates will come down on Jumbo loans, helping to move homes in the $417,000 plus range. Although credit will be extended to those only with at least 20% down up to $1 million and 30% down up to $2 million and required credit scores will be higher.
The problem I foresee is that most people that can afford homes in that price range are signing the front of people’s paychecks, not the back, and therefore don’t have traditional documentation such as paycheck stubs and W2’s to provide income documentation for the Full Doc loans, which pretty much is all there is these days.
Here is what the author of the blog post has to say:
“The average rate on the 30-year fixed-rate jumbo loan reached 5.76% at the end of April, according to HSH.com, a financial publisher. That’s near the previous record low of 5.55% from 2003. Mortgage bankers say that five-year adjustable-rate mortgages are available at rates nearly a percentage point lower. (Meanwhile, average rates on conforming loans fell to 5.02% last week, from 5.08% one week earlier, according to the Mortgage Bankers Association).
“More lenders are starting to ‘get it’ and are coming to the table with more aggressive pricing,” says Alan Rosenbaum, chief executive of New York City brokerage Guardhill Financial Corp. He says that both prices and product offerings have improved from one year ago.”
Read the full blog post here.
Related articles by Zemanta
- Mortgages: Lenders Loosen Reins on Jumbo Mortgages (nytimes.com)
- How Jumbo’s Improvement Affects Everyone Else (hsh.com)
- A Small Shot of Hope for Jumbo Mortgages (blogs.wsj.com)
The good and the bad of the media
I make my living off the Evening News
Just give me something-something I can use
People love it when you lose,
They love dirty laundry
~ Don Henley from Dirty Laundry
It is the general consensus in any industry except the news media industry that the media isn’t helping the economy any. It’s not like they should be hiding things from the American public, they shouldn’t. What the problem is, is that they are not reporting the whole story. The news media is reporting only the bad. The sensationalist journalism that makes people watch, sells ad space and in general whips the public into a frenzy of panic and despair. Well, and throw-in a cute puppy story every now and then and maybe a funny morning guy at remote locations.
The fact is, as Don Henley so eloquently illustrates in his song “Dirty Laundry”, the new media reports the worst of the worst because that is what makes people scared. And scared people watch more news to see if they still have any reason to be scared.
What’s happened in the financial markets is the way everything has been reported, usually with just a fraction of the truth of the matter, the general public has become scared because they don’t have the whole story. Because of this they’ve frozen their money and are not spending like they did in years past, which is just making the matters worse.
For instance, from today’s headlines:
“Ongoing unemployment claims highest in 25 years.”
The truth: they are the highest in 25 years, but 25 years ago there was way less people in the workforce, so looking at the number of ongoing claims does not paint the true picture. But it’s the picture the media reports because the real numbers are not as interesting and cause people to talk around the water cooler.
If you listen to the media everyone is losing their home. What they aren’t telling you is that about a third of all homes in default right now are what is called non-owner occupied, or investment homes. Many of these were homes purchased by amateur real estate investors that bought too many Carlton Sheets and Robert G. Allen DVD’s from late night infomercials. In fact, nearly half of all sub-prime mortgages in default are on non-owner occupied homes. Sub-prime loans were used by amateur investors because of the more liberal underwriting guidelines and because they could get 100% financing. The “Become a real estate millionaire with no money out of pocket!” gurus pushed this strategy very hard.
I’m not by any means saying the economy isn’t hurting, because it’s hemoraging. However, I am saying that the news media hasn’t helped it at all. In fact, they have made it worse through sensationalist and shoddy reporting of the facts. Of course, they build the news around the lowest common denominator in society and they know that any story that takes longer than 45 seconds to present will lose their viewer’s interest and they’ll change the channel. Lose viewers, lose ad dollars. The amount of time the average American will watch a news story is hardly enough to present the whole story. Thus, people would rather watch The Bachelor than 60 Minutes.
Okay, enough of that. The good news is this. Rates are down again today. Not much lower, but holding steady from yesterday. I recommend floating if you are closing a loan in the next couple of weeks.
For Salt Lake City, UT today’s mortgage rates are as follows:
30-year fixed: 5.500%
15-year fixed: 5.250%
Jumbo 30-year fixed: 5.625%
FHA 30-year fixed: 5.500%