Danny Salas

Archive for October 13th, 2009

Chico, CA Interest Rates Market Report – Economic Influences – October 13, 2009

Interest Rates Benefiting At The Expense Of Stocks

The Moment of Truth

Johnson & Johnson reported earnings, less than anticipated.  Stocks are reacting negatively towards this information, and it’s what I’ve been talking about for months.  Even though companies were reported better than expected earnings through the second quarter, they were cutting jobs, energy costs were lower, and closing down whole locations to simply stay alive.  Well, that’s not truly economic growth.  And I expected the third quarter earnings reports to show this.  It’s happening now.

Stocks Suffering…Rates Benefiting

Generally, when stocks suffer, Mortgage-Backed Securities benefit, as money pours out of stocks and into bonds.  So, their yields, and therefore interest rates, move down.  We’re still not at the lowest levels, that we may not ever see again, but we’re close.  So, again, educate yourself, and your clients, regarding locking in, when it’s time to buy (NOW), and who to work with on their loan (ME).

UK’s Central Bank Extending Their Purchase Program

That’s right!  The United Kingdom has a purchase program for assets to help stave off inflation (temporarily) and keep interest rates down, because they’re dealing with an economic nightmare, too.  $25 Billion Pounds has been approved.  Are things worse off overseas than we’re reading in the press?  Seems like England and the rest of the United Kingdom are experiencing similar the same situation as the United States.  Keeping the overnight rate low, Government Asset Purchase Program, and pushing the value of each countries currency low.

Locking Advice

Last Thursday and Friday were the days to lock.  If you’re starting a new escrow, I’d hold out and see how these 3rd Quarter Earnings Reports continue to pan out.  We have a little support above the 25-Day Moving Average, so we should sit back, relax, but keep that itchy trigger finger on the lock button.

Related Must Reads

Late August Info, “To Put It Simply, Stocks Are Overbought
2008 Article about World Wide Inflation
Hello, Is This Thing On?

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VA…The BEST Loan In The Industry! “Generally” Speaking

The General Loan...VA

VA:  The “General” Loan

Where else can you obtain 100% financing without mortgage insurance…with ONE loan?  Well, USDA, loans, but…OTHER THAN THAT?  NOWHERE!  That’s right…VA Loans enable a veteran to obtain 100% financing, have the seller pay most bank fees, and also have the seller credit 4% of the sales price toward other closing costs and prepaid items like taxes and homeowner’s insurance.   In most cases, the VA buyer can move into the home with almost nothing down.  AND NOT HAVE A PAYMENT FOR UP TO ALMOST TWO MONTHS!  You just cannot do any better than VA Loans…they’re the best.  So, in a previous article, I may have mentioned that FHA is King; VA must be “The General Loan.”  I like that…”VA…The General Loan.”  Coin that!

Getting In With No Money

Let’s give an example…VA allows a veteran to put nothing down…0%!  So, automatically, we’re at 100% financing.  Then, over and above that, they allow a seller to credit up to 4% of the sales price, towards a buyer’s closing costs and impound account.  Even more desirable, the veteran is NOT allowed to pay many fees that most borrowers do have to pay.

The Critical Offer

When writing an offer, make sure you understand that the buyer is NOT allowed to pay certain fees.  Really, the only fees a veteran may pay is an origination fee, reasonable discount fees (to buy the rate down), credit report, flood certificate, appraisal, and title fees.  Any other “bank fees,” must be paid for by the seller.  So, if your lender has a tax service fee, a processing fee, an administration fee, an underwriting fee, or any other “bank fee,” prepare to have the seller pay for these fees.

Title And Escrow Fees Can Be Sticky

Also, keep in mind that there are VA guidelines regarding title and escrow:  Escrow must be paid for, by the seller.  Also, depending on how the contract is written, you may be able to have the seller pay all title fees, as well.  What I mean by that is VA’s guidelines state that title is to be paid according to “what is typical for the area.”  So, in Butte County, we generally structure the buyer and seller paying 50% of the CLTA Title Policy.  We generally structure that the buyer will pay the ALTA Title Insurance Policy.  However, if you write the contract to state that seller is to pay CLTA and ALTA Title insurance policies, than you free up more of the 4% seller credit funds that can go toward the buyer’s impound account and other costs.  Most VA underwriters don’t happen to live in the actual county that the contract is being written.  Therefore, what is typical for the area, is generally passed along as to what is written in the contract.

VA Rank

So, VA is a four-star loan.  The General Loan.  Feel free to call me when writing a VA contract.  We can go over the particulars, together.

Related Must Reads

Read About FHA

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