Mortgage Rates Report: July 24, 2007

Lower earnings reports by Google, Dupont, and a warning from Countrywide Financial is causing money to flow from stocks and into bonds.  That is positive for mortgage rates.  The conundrum is that weaker economic news can be potentially beneficial to Long Beach mortgage applicants. 

If you are buying a Long Beach home or refinancing your mortgage, we are advising you to cautiously float your interest rate, pending tomorrow's economic data.  Data we're watching tomorrow include:

Existing Home Sales for June, 2007 ( 5.9 million expected, down from 5.99 million in May)

Crude Oil Inventories

Both are out by 7:30 AM California time so I"ll post if we change our stance to locking.  If nothing's here by 8AM, our position of cautiously floating still stands.

Posted on July 24, 2007 17:22:15 by Brian.Brady

Long Beach mortgage lenders are watching the Fed Thursday

Why do mortgage rates for Long Beach real estate go up and down?    Here are four questions to ask any lender (and the current answers):

What are mortgage rates based on...is it Treasury Bonds or the Federal Reserve Bank?

Neither.  Mortgage rates are based on mortgage-backed securities.  Ultimately, the mortgage markets are less worried about the Fed than they are about their ability to fight inflation.  Inflation is the number one enemy of low mortgage rates.  Subsequently, the Fed can raise rates and mortgage backed securities can gain value because they think the Fed is doing a good job fighting inflation.  So...mortgage rates drop...weird huh?

What is the next economic report that can severly move the market?

Tomorrow morning. Thursday, is a big deal for mortgage rates, especially if you're looking to purchase a Long beach home.  fed Chairman, Ben Bernanke, will be testifying to the Senate Banking Committee.  We'll be listening and analyzing his words more than Gorbachev analyzed Reagan's words during the Cold War.  We want to know if he thinks he has a handle on inflation.

When the Fed "changes rates" does that mess me up?

Sure, if you have a home equity line of credit, your rate will be affected.  The Fed only controls short-term rates.  They've raised them so much , they think they have inflation under control but the higher oil prices are surprising everyone.  It's not the action of the rates, it's the ability to proactively fight inflation that mortgage markets seek.  The Fed has been relatively "hands off" in their policy, lately and that makes the mortgage markets fear that they aren't fighting inflation enough.  If the Fed raised rates, your HELOC would rise, and longer term mortgages may actually drop. 

What's happening in the mortgage market today?

I'm cautious short-term and advising an aggressive locking posture for mortgage rates.  This means that I think you shouldn't gamble with the mortgage rate game.  If you're pre-approved, and have a property, lock the rate.  Floating the rate or playing the interest rate game is risky right now.  Lock your loan and demand written proof from the lender; it takes about 48 hours to get.  We issue a mortgage loan commitment reflecting a locked interest rate.

This could all change tomorrow when Fed Chairman Bernanke speaks.  If it's clear that he has a handle on inflation, I'll change my posture about locking your mortgage rate but for now, lock your loans.

Oh, by the way...if you're talking to a lender and they don't know the answers to these questions...run, don't walk away from them.

Posted on July 18, 2007 19:24:43 by Brian.Brady

Long Beach Real Estate Attractive to European Investors

Euopean investors have a double bonus with an investment in Long Beach real estate as the dollar sinks to an all-time low against the Euro.  I'm going to explain how a weakened US Dollar can benefit a foreign investor should they buy real estate in Long Beach.

Five years ago, $100,000 was equal to 100,000 Euro (the currency in Europe).  Today, that $100,000 is only worth 72,000 Euros.  A foreign investor can withdraw 72,000 Euros and convert it to $100,000 to use for a down payment on a Downtown Long Beach condo.  That  property may have cost as much as $360,000 two years ago but is selling today for $300,000.

Prices fluctuate in cycles.  Let's not forget that there will be close to 50 million Californians by 2020, 12 million more than our current population.  There is a significant, 12 year demographic trend that points to the probablity of higher prices in Long Beach.  Traditionally, real estate has returned 6% annually these past 25 years.  Let's assume it returns just 4% these next five years.  This means that that $300,000 Downtown Long Beach condo will be worth about $360,000.

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Posted on July 10, 2007 18:41:46 by Brian.Brady

Mortgage Independence Day

Happy Mortgage Independence Day!

Have you heard those words?  Do you remember your parents or grandparents having a "mortgage burning party" in the 60's or 70's?  It was the ultimate sign of financial independence to have your home paid off.  Ridding yourself of the bank's debt was an American ideal that sprang from the Depression.  Banks, during the Depression, haphazardly called people's loans when they were in trouble.  That means that the bank got in trouble and sent a letter to the homeowner to pay off the mortgage they held on the owner's property.  The owner had to pay or be foreclosed.

THAT CAN NOT HAPPEN TO YOU.

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Posted on July 03, 2007 07:11:54 by Brian.Brady

Wealth Planning Starts With Your Mortgage

Wealth Planning

If I have had the pleasure of helping you, you've heard me use the phrase, "We're going to play chess while the world plays checkers.".  What that means is that we are going to create and execute a strategic plan for you to use the correct mortgage to accumulate wealth.  We create that plan so that your wealth is created within the property and outside of the property.

READ:  Wealth Planning?  From a Mortgage Salesman?

So here is the five-step process I use before we start talking about rates and terms.  If you've ever bought a home, this is going to be dramatically different then what you've heard from the retail mortgage salesperson that originated your last loan.

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Posted on June 23, 2007 20:14:34 by Brian.Brady