“When I wake up in the middle of the night and see dark skies, I know that there will be light in the morning.”
There is always a story for every story (two in this case). I wanted to write about what is going on in the mortgage business, but needed another catchy story to go with it. Today, I received two calls from lenders describing their new Jumbo loans and I started to think about how to inform borrowers about them.
Meanwhile, as I mentioned in the last couple of newsletters, I still cannot access my photo images on my computer. Therefore, I am limited to what I can write about, since photos are an important part of my stories. The solution was in my pocket. Browsing through the camera roll on my iPhone, I found some photos of jumbo jets that I took during my last trip to Phoenix and, I thought they were a perfect parallel to the Jumbo loans that I wanted to write about this week. When we travel, I often photograph from the plane and have quite a few interesting shots that I have framed and am planning to exhibit one day.
Regarding mortgages, you might know that interest rates have recently gone up, and consequently slowed down refinance activities. We do have borrowers who buy new properties, as well as a few whom I can help to get loans without stating their income. Some banks have started lending these types of loans again, but one needs to know how to present their personal information to qualify.
Regarding Jumbo loans, there was an article in the Wall Street Journal pointing out that those loans might be better priced than conforming loans. The Federal Government who owns Fannie Mae and Freddie Mac does not know what to do with them, and the only reason why the interest rates stayed low was because the Federal Reserve was buying mortgage bonds. When the stock market started doing better, the Fed sent a message that the bond buying might slow down, and mortgage rates consequently jumped up.
Most banks made a killing from the low rate mortgages. At the same time, higher rates will increase their profit margin, and they will not need to fund so many loans. This will result in mortgage-industry related layoffs. For banks, mortgages are just one of the profitable products in good times and losses in the bad times.
For us, mortgages are our lifeline. This is all that we do and we are very good at it. During the tough years from 2008 until the summer of 2010, we barely survived. (You can read more about that in my book, “The Mortgage Game: The 5 C’s and How to Connect Them”. )
I think that interest rates will come down again soon. We need to be ready. I strongly encourage you not to wait. Prepare the paperwork now. When it happens, no one will have time to deal with the volume. Besides, even today I can get you 3.25% fixed for 7 years. Who needs it for 30? Most people change it down the road, anyway. Many borrowers in our area have Jumbo loans (over $625,000), which have relatively low interest rates as well.
P.S.
Some time ago, I wrote about TICs (Tenancy in Common). According to a recent article in the San Francisco Chronicle, the San Francisco board of Supervisors introduced a significant change in the way TICs will be created in the future. All of these changes will affect getting loans for the purchase and condo conversions. You might know someone who might need my assistance. Lately I’ve helped quite a few borrowers with those loans.
Do not keep me as a secret.
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Best Wishes,
