I am a little off topic as we primarily speak about mortgage options here at the HB Mortgage Oracle but this is exciting news for those in the business. Orangetee Realty will be opening their first Orange County office in the City of Costa Mesa in the Metro Point Business Center. Orangetree is set to begin operations in August of 2014. Orangetree Realty has a proven track record of getting their listings sold for listing price or better. For additional information on Orangetree Realty you can visit them at http://www.facebook.com/pages/Orange-Tree-Realty or http://www.otreehomes.com.
The Real Estate market continues to improve with homes values increasing roughly 8% on average in most of the coastal areas. This increased value as allow many people to refinance their homes and obtain much lower mortgage rates. With that said I have noticed an increase of questions addressing their mortgage rate on a loan they are about to get and recently closed loans. Nearly 50% of the inquires, that I have address, have mortgage rates that are much higher than the wholesale mortgage at the time the loan was structured. So what does that mean?
Lenders all make money on every loan that they do, we all know that. The question is how much money you are paying for your loan. Yes the A.R.P. can show you the amount that you are paying for your loan but this figure is often manipulated. You should be able to get a rate quote from any lender without them running your credit report providing you know what your fico score is. Also your rate will be subject to your personal information once reviewed. Once you have a few rate quotes then you will have an idea if you are dealing with a reasonable priced mortgage company.
The larger mortgage companies are the Banks themselves. Do not fool yourself, Banks today function much like a Broker. If your Bank Loan Officer says that they have DU approval on your file, most will not tell you, then they plan to sell the note once created. They will service the loan once created but servicing and owning a note are two different things. For those that do not know, service is much like a property manager when you rent a place to live. You deal with the property manager and not the owner. A servicer and a property manager are similar in terms of function to their client, client as in property owner or note owner. You can also look closely as your paperwork and loan docs and see if there is anything that states the Lender can sale your loan after you sign your loan docs. This is that same thing a Mortgage Broker will do.
This is why I always say to get a mortgage quote from a Bank, Direct Lender and a Mortgage Broker as the cost will vary widely. Look closely at your note rate, loan fees to close and your monthly payment. Keep in mind that Brokers are required to show how much they will make on a loan. Direct Lenders and Banks are not required to show how much they will make on a loan. This is because Lenders both depository and non depository that fund loans using their own funds do not have to show their fees, imagine that! Personally I find it shocking that a Bank, the place most people trust, does not have to show their fees but it is what it is.
The Feds have made many changes to the Mortgage Industry over the past four years but clearly, as indicated above, the industry favors the larger mortgage operations. Today roughly 70% of the small mortgage brokerage companies have closed down just as many of the Banks over the past 10 years. When looking for mortgage companies, look for a local mortgage company in your area, check them out with the Better Business Bureau and request a mortgage rate quote. Mortgage rate quotes should always be free of charge. Frankly all consumers obtaining a new loan should never pay any upfront fees.
MN Capital of Huntington Beach offer free online rate quotes.
MN Capital –
How many people really understand what “Tapering” is? When you hear finance person speak of the proposed Fed. Tapering they are speaking of the Federal Reserve and their effect on the financial markets. So how does this affect real estate? Simply put is affects the available low cost money to fund a mortgage. So in order to get a mortgage funded your new mortgage is structured with a higher interest rate to bring in Private Money. This “Private Money” is Wall Street money and frankly, in most cases, our 401K money.
In recent weeks It has been common to see the Mortgage Bond Market moving 60 bases points in a single day. Bases points are a percentage of a single percent. This does not sound like much but when you multiple bases points by your mortgage amount you can see how this adds up quickly. With the large market swings and an unlocked mortgage rate you could see, in a single day, your month payment increase substantially. So simply put higher rates equate to lower approved mortgages or reduced buying power.
When speaking with Michael Gillett of MN Capital I was informed that home buyers buying power is being reduced due to the increasing mortgage rates. Gillett went on to say, with the flood of cash buyers in the real estate market it is difficult to purchase a property today with conventional financing and even worse with FHA financing. With conventional financing an appraisal is required and the loan simply takes time to complete. The cleaner the buyer the faster the loan will be approved. With FHA the property must have everything working at 100%. So simple little things such as a stove, water heater, HVAC unit, that the buyer plans to replace anyway, most be working 100% when the loan funds. So you can see how this could be a huge issue when applied to everything on a property. So an all cash buyer has a huge advantage as they take a property “as is.”
Sandy Cordery of Orangetree Realty indicates that the real estate market is very busy with most properties selling within two weeks once posted on the MLS. Cordery went on to say, the bulk of these deals are all cash buyers. With real estate selling so quickly property values are going up fast and appraisers are having a difficult time appraising a property at a selling price due to all of the historical short sell properties. Short sell properties did allow people to purchase properties under value but they also depressed the values in the same area. Cordery did said that not all areas are seeing equal increases in values in terms of percentage with some areas seeing as much as 30% increase in value over the past six months.
We have a free market system which is still the best way to operate. It will not always benefit everyone but it will benefit most. The more Banks, Mortgage Bankers and Brokers the better rates and terms will be available to the consumer. Do not blindly think that your Bank, Mortgage Banker or Broker will give you the best deal. Shop your rate with at least two of the three. You have to make the monthly payment so get the best deal you can.
You can reach the two interviewed at;
Michael Gillett – email@example.com MN Capital Website – www.mn-capital.com
Sandy Cordery– firstname.lastname@example.org Orangetree Realty Website – www.otreehomes.com