Ed's Blog

Interest rates are even better than excellent. They’re so good that I’ve run out of ways and words to describe them.

Over the last 2-3 months, we have been giving out the lowest rate quotes I can ever remember.

It’s like those ads where they say, “Our prices are so low, we’re not even allowed to quote them.” Ditto for rates today. They’re so low I don’t even know if it’s legal to quote them! (I kid…call me or email me to get your quote.)

Let me give you a few examples of what’s possible.

Some of our clients who purchased or refinanced just 6 months ago, when we all thought rates couldn’t get any better, are refinancing today and saving as much as ½% or more on their rate at no cost to them. That my not sound like much, but here are a few of examples of how ½% can impact your cash flow. Savings on a $406,000 loan will be $126 per month. Savings on $625,000 loan will be $187 per month. Savings on $1,380,000 loan will be $415 per month. Sweet!

A couple of clients are switching from 30 year loans to 15 year loans and lowering their rate by 1.0% or more and only having their payments go up by about 33%. But well worth it when you consider that they’ll save nearly $181,000 in interest costs in one case on a $365,000 loan, and a whopping $349,000 in the other case on a $590,000 loan. Mind boggling.

So, if you (or someone you know) have been thinking that it may be a good time to stop procrastinating and refinance already, you’re probably right. Contact me and we’ll run the numbers for you!

I'm tempted to say it is the best of times and the worst of times. But you know what, we're far from the worst of times now. Thankfully...!

In the best of times category, rates a screamin' good, and prices for buyers are absolutely excellent.

In many cases now, we're seeing the cost of buying to be lower than the cost of renting. This is a historical anomaly for the Bay Area. More and more people are recognizing this and taking action.

And refinancing is still creating great opportunities. Clients are lowering their rate anywhere from 1/2% to 1% (even some who have refinanced or purchased in the past year), translating into monthly payments that are often $100 to $300 per month lower and lifetime savings on interest payments in the tens of thousands of dollars. And many are now going from 30 year loans to 15 or 20 year loans and are looking at savings of $100,00 to $200,000 or more. Wow! That's a lot of bread, dude.

In the less than good category, underwriting is still a hassle, and values for refinances are still often challenging. But you know what? We're getting more clients thru the process than at any time in the last 3+ years. And some clients have been making purchases that actually appraise for more than the contract price! Unusual in any market, and a very nice sign for buyers.
 

Do a client, friend or co-worker a favor and refer them to us to get pre-qualified to purchase, or to have us run the numbers on a refinance. We're always available for a no cost, no obligation consultation. Been doing it for years for many happy clients.
 
Hope 2012 is off to a good start for you!

Last blog we talked about saving a lot of money by lowering your interest rate. We talked about lowering the interest you pay by as much as $45,000 on a $415,000 loan and $65,000 on a $625,000 loan.

Still trying to decide and/or get motivated to fill out a loan application? Consider this. If you took the $124 you saved monthly on the $415,000 loan and invested it monthly at 4% over 30 years, you would earn an additional $86,062 on top of the $45,000 mortgage interest saved. Sweet!

And if you invested the $187 a month saved on the $625,000 loan and were able to earn 4% over the 30 years you invested, you would accumulate $125,787! In addition to the $65,000 mortgage interest saved! How cool is that?

Wow! Now we’re talking serious money, big bank, do re mi, you name it.

Motivated yet?

Send me an e-mail at Ed@smithcraine.com or call me at 415-406-2330 and will get the ball rolling for you.

This story was sent to me by a good friend and client with the comment: "Self explanatory." Something Tea Partiers, Occupy Wall Streeters, and just about everybody else can relate to!

Thought you'd get a kick out of it. Neither he nor I can assign attribution to it, but would be glad to give proper credit. So, if any of you out there can send me proper attribution, I will post it!

Here goes- enjoy!

Helga is the proprietor of a bar.
She realizes that virtually all of her customers are unemployed
alcoholics and, as such, can no longer afford to patronize her bar.
To solve this problem, she comes up with a new marketing plan that
allows her customers to drink now, but pay later.
Helga keeps track of the drinks consumed on a ledger (thereby granting
the customers' loans).

Word gets around about Helga's "drink now, pay later" marketing strategy
and, as a result, increasing numbers of customers flood into Helga's
bar.
Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands, Helga
gets no resistance when, at regular intervals, she substantially
increases her prices for wine and beer, the most consumed beverages.

Consequently, Helga's gross sales volume increases massively.

A young and dynamic vice-president at the local Wall Street bank
recognizes that these customer debts constitute valuable future assets
and increases Helga's borrowing limit.

He sees no reason for any undue concern, since he has the debts of the
unemployed alcoholics as collateral!!!
At the bank's corporate headquarters, expert traders figure a way to
make huge commissions, and transform these customer loans into
DRINKBONDS.

These "securities" then are bundled and traded on international
securities markets.

Naive investors don't really understand that the securities being sold
to them as "AA" "Secured Bonds" really are debts of unemployed
alcoholics.
Nevertheless, the bond prices continuously climb!!!, and the securities
soon become the hottest-selling items for some of the nation's leading
brokerage houses.

One day, even though the bond prices still are climbing, a risk manager
at the original local bank decides that the time has come to demand
payment on the debts incurred by the drinkers at Helga's bar. He so
informs Helga.
Helga then demands payment from her alcoholic patrons, but being
unemployed alcoholics they cannot pay back their drinking debts.

Since Helga cannot fulfil her loan obligations she is forced into
bankruptcy. The bar closes and Helga's 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value
destroys the bank's liquidity and prevents it from issuing new loans,
thus freezing credit and economic activity in the community.

The suppliers of Helga's bar had granted her generous payment extensions
and had invested their firms' pension funds in the BOND securities. They
find they are now faced with having to write off her bad debt and with
losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family
business that had endured for three generations, her beer supplier is
taken over by a competitor, who immediately closes the local plant and
lays off 150 workers. Fortunately though, the bank, the brokerage houses
and their respective executives are saved and bailed out by a
multibillion dollar no-strings attached cash infusion from the
government.

The funds required for this bailout are obtained by new taxes levied on
employed, middle-class, non-drinkers who have never been in Helga's bar.

Recently, rates are at the lowest they've been in the last 50 years. Now that's historic!

A number of our clients hit the sweet spot and will be enjoying saving some Big Bank for years to come.

And despite a recent rise in rates due to the fabulous turnaround in the US economy (hah!), you can still save some serious do re mi. (Where did that expression ever come from?!)

I know that a lot of you are not all that excited about going thru the loan application process. It’s a lot like doing your taxes or getting your teeth drilled. Way better things to do! But let me take a stab at putting the extra bit of pain and suffering into perspective by reviewing a couple of very common situations.

Take, for instance, the person with a $415,000 loan at 4.875%. Lower that to 4.375% and you can save over $100 per month, and up to $45,000 over the life of the loan. That is some serious cash.

Or how about the borrower with a $625,000 loan? She could save up to $187 per month and as much as $65,000 over the life of the loan!

Not motivated yet? Read my next blog for even bigger hidden benefits! Or better yet, call me or email me and get started! You might be able to more than double these savings with one simple strategy.

On September 1^st my 23 year old daughter had heart surgery to replace her aortic valve. Despite a couple of curve balls, her surgery and recovery have gone extremely well.

During this time I have been focused on her well being, and have neglected a number of things in life, including this blog!

But now that I’m ramping up my work schedule, the blogging will be ramping up also.

I’d like to thank all of you who have been so helpful and supportive during this challenging time.

Have a few industry updates for you.

Ed takes over as state President for the California Association of Mortgage Professionals-your chance to be an insider!

If you ever wanted to have the ear of a “big cheese” now is your chance. From now until July 1, 2012, I am the president of the California Association of Mortgage Professionals. A big part of our mission this year is to advocate for legislative and bureaucratic policies that help consumers actually get loans. Are you unhappy with your appraisal? Don’t like the current underwriting standards? Wish somebody would listen to you about your housing concerns? Tell me what’s on your mind and I will have our Government Affairs team will pass it along to the powers that be.

R U paying too much? Interest rates remain great!

We still keep getting requests for refis from folks who are paying too much. Are you? Check in with us to find out. This is especially true for jumbo borrowers (those with loans above conforming loan limits). Give us a call and we’ll try to the numbers for you. In the meantime, here’s a quick rule of thumb: If you are paying over 5.25% on a jumbo loan (loans over $729,750 in most of the Bay Area), you’re probably paying too much. If you are paying over 5% on a high balance conforming loan (loans from $417,000-$729,750 in most of the Bay Area), you’re probably paying too much. If you are paying over 4 ½% on a loan of $417,000 or less, you’re probably paying too much.

Insider secrets to getting your loan approved.

Boy oh boy do I have a lot to say about this topic. But number one on my list this year is be prepared to provide explanations and documents for even the most ridiculous requests from lenders. For years I’ve said that mortgage underwriting is the logic free zone. Now more than ever this is true, true, true. For more tips, give us call.

Ed in the news

Every so often I get interviewed for print radio or TV stories. Thought you might be interested in a couple of recent ABC 7 TV stories I was quoted in. Here are the links:

http://abclocal.go.com/kgo/video?id=8298550

http://abclocal.go.com/kgo/story?section=news/business&id=8279260

There's a ton of news in the mortgage market these days but here are three quick items for you.

1) Ed Now State President of CAMP- Effective July 1, I became the new statewide president for the California Association of Mortgage Professionals. One of the things I'm passionate about is helping consumers get a fair shake in the mortgage process. At CAMP, we fight hard to help educate legislators and regulators to understand, and hopefully change, some of the unintended consequences of well-intentioned but poorly crafted reforms.

Let me know what kinds of changes you would like to see.

2) Loan Limit Reduction Coming- So-called “High Balance” loan limits will be dropping from the highs of $729,750 to $625,500 in high-cost counties like San Francisco, Marin, San Mateo, Alameda, Santa Clara, and Contra Costa. The change will be effective September 30. If you are thinking of refinancing or buying a property that has a loan in the $630,000 to $900,000 range, your choices will be affected by this change.

3) Appraisal Changes Coming-Again! Ughh! #8*@%- Yes, it's hard to believe, but there will be even more appraisal changes coming soon. I've been told that the new format "won't be recognizable"! Very reassuring (not!) Given all the appraisal problems we already have. Stand by for more news on this.

Tidbits:

Interest rates continue to be awesome. Especially for jumbo loans, which are nearly as well priced as conforming loans.

Underwriting is still exasperating. I can tell you stories that would make your hair curl. Or straighten it if it's already curly. Nevertheless, we continue to defy odds and get our loans closed!

As always, keep those referrals coming. We appreciate them.

Hope you're having a great summer.

Quick note to let you know that interest rates have been dropping again after a brief spike earlier this year.

How low are they? Well check out this photo!

That's low!

Seems there is a lot of concern about the economy…No kidding! Most everybody I know is concerned about their jobs, their money, their investments, and all things financial.

So here’s one ray of sunshine for you. Mortgage rates have dropped again and now offer great opportunities to save on a refinance or a purchase.

And by the way, that includes some fantastic rates for Jumbo loans- those above either $729,750 in the San Francisco Bay Area and other high cost markets, or above $417,000 in most other areas.

What are you waiting for? Start doing the loan limbo and see how low you can go.

Need a loan that's not plain vanilla? Here are some ideas for you:

1) FHA and VA loans still provide low down payments and low rates. Have great income and little or no money for a down payment? Contact us. We can set you up with one of these great loan programs (must be a qualifying Vet to get VA loans). Or we’ll show you how to qualify with gift money and other creative (and legal!) down payment solutions.

2) Jumbo loan rates and programs are shockingly good! We have some killer rates for loans up to $2 million. The variety of programs and the rates available are almost as good as high balance conforming loans. Down payments can be low as low as 20%. And for loans up to $5 million, there are some awesome five year fixed rate programs.

3) Securities Based Loans. Borrow against securities portfolios for 3, 5, 7, and 10 years at fixed rates starting as low as 2.5% to 4.5%. If you have a nice portfolio of publicly traded stocks, bonds and other marketable securities, you may be able to borrow money quickly (usually within 15 business days) without having to qualify personally and without having to qualify the property. And you don't have to be a US citizen or have a visa, etc. Wow!

And by the way, interest rates on plain old conforming and high balance conforming loans are great! You may want to refinance, or refinance again. Contact us and we’ll run the numbers for you!