San Diego Loan Tips

Mortgage rates fell for the second straight week since their initial 2021 spike on Jan 14. Lower rates have followed on the heels of economic weakness seen in lags in personal income, GDP growth and the labor market in recent weeks, according to the Commerce Department. 30-year Fixed-rate Mortgages The average rate for the benchmark 30-year fixed fell 4 basis points to 2.73%, according to Freddie Mac’s Primary Mortgage Market Survey. This time last year, the 30-year fixed was... 3.51%. Borrowers with a 30-year fixed-rate mortgage of $300,000 with today’s interest rate of 2.73% will pay $1,221.55 per month in principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. The total interest paid over the life of the loan will be $139,757.20. That same mortgage taken out a year ago would cost an additional $45,814.13 in interest over the life of the loan. 15-year Fixed-rate Mortgages The average interest rate on the 15-year fixed mortgage slipped 1 basis point to 2.2%. This time last year, the 15-year fixed-rate mortgage was at 3%. Borrowers with a 15-year fixed-rate mortgage of $300,000 with today’s interest rate of 2.2% will pay $1,958.28 per month in principal and interest (taxes and fees not included). The total interest paid over the life of the loan will be $52,490.01. What Low Rates Mean for Borrowers Mortgage rates are at record lows, so this could be an opportune time for many folks who want to save money on a new home loan or refinance their existing mortgage. Borrowers who want to get the lowest rate should make sure they have a credit score of at least 760. Lenders reserve their ultra-low rates for those with a strong credit profile, as this is a major indicator that borrowers are at low risk for late payments or default. In fact, borrowers with lower credit scores can be charged one percentage point or more higher than borrowers with very good or excellent scores. Before you apply for a mortgage, check your credit score. Many banks and credit cards allow you to do this for free. One way you can improve your score relatively quickly is to pay down debt. You also can request credit for paying monthly bills on time, such as your internet or utility bills. Source: Forbes

The best plan is to fully disclose your intentions with your lender before you do anything financial in nature.

Mortgage rates in the U.S. climbed to the highest level in two months. The average for a 30-year, fixed loan reached 2.79%, up from 2.65% last week and the highest since Nov. 12, Freddie Mac said in a statement Thursday. Mortgage rates are the highest they've been in two months... The increase follows a jump in yields for the benchmark 10-year Treasury, which climbed above 1% last week for the first time since March. As Treasury yields have risen, it is putting pressure on mortgage rates to move up, Sam Khater, chief economist at Freddie Mac, said in the statement. Mortgage rates have been below 3% since July, but higher borrowing costs could threaten a housing rally that’s been a bright spot in the pandemic-battered economy. With inventory of homes to buy scarce, the strong demand for larger properties in the suburbs has driven up prices. As rates tick up, a lack of affordable properties may slow home sales. But that won’t be an issue until borrowing costs rise above 3%, according to Tendayi Kapfidze, chief economist at LendingTree. The increase reported Thursday has minimal effect on housing demand, he said. Keith Gumbinger, vice president at mortgage-information company HSH.com, agreed that housing demand won’t take much of a hit from the latest rise in rates. He said the jump to 2.79% from a record-low 2.65% last week would translate to less than $15 a month more on a $200,000 loan. The question now is if rates will continue to climb. As vaccines roll out there’s optimism about an economic recovery if social-distancing guidelines ease. That could keep rates from dipping to new record lows. It’s worth keeping in mind that the worst economic conditions bring the lowest mortgage rates, Gumbinger said. Mortgage rates are more likely to be a little firmer over time, or at least have fewer reasons to continually revisit record-low levels.

Central banks are set to spend 2021 maintaining their ultra-easy monetary policies even with the global economy expected to accelerate away from last year’s coronavirus-inflicted recession. In Bloomberg’s quarterly review of monetary policy that covers 90% of the world economy, no major western central bank is expected to hike interest rates this year. The Bloomberg Central Bank Outlook... How major central banks will change interest rates by the end of 2021 Source: Bloomberg Economics forecasts, survey of economists for Switzerland, Czech Republic, Poland China, India, Russia and Mexico are among those predicted to cut their benchmarks even further. Only Argentina and Nigeria are forecast to raise rates. The assumption is central bankers will want to guarantee the recovery is safe before they even start to consider tightening policy. Continued uncertainty over the path of the virus along with elevated unemployment and weak inflation are the main reasons for waiting. And even if inflation makes a comeback this year, central banks will likely try to look through it.

Mortgage rates hit another record low at 2.67% The average U.S. mortgage rate for a 30-year fixed loan fell four basis point this week to 2.67%, breaking the previous 50-year survey low set Dec. 3. Call me if your mortgage is above 3%. It will be worth it to refinance!

Given San Diego’s lack of affordable housing and inventory shortfall, hundreds of San Diegans have turned to constructing so-called Granny Flats on their existing property. State and local jurisdictions have loosened rules and permitting requirements to make it cheaper and easier to build what is formally known as Accessory Dwelling Units (ADU). Over the next year, NBC 7 will follow the Krone family as they build a Granny Flat in the backyard of their Rancho Peñasquitos home....Continue reading

The average mortgage rate fell to 2.98% this week, breaking the 3% threshold for the first time, as investors concerned about a resurgence of the COVID-19 pandemic fled to the safety of the bond markets and the Federal Reserve continued to scoop up securities backed by home loans. The average rate for a 30-year fixed mortgage fell to the lowest in almost five decades of data, down from 3.03% last week, Freddie Mac said in a statement Thursday. The average 15-year rate fell to... 2.48%, the lowest in a data series going back almost 30 years, according to the mortgage financier. Mortgage rates have hit a series of new lows in recent weeks as investors poured money into U.S.-dollar-denominated bonds mainly Treasuries and mortgage-backed securities. Money managers are reacting to a stream of bad news about the coronavirus pandemic, with some of the nation’s biggest states setting records for new infections this week. The Federal Reserve has continued to support the mortgage markets by purchasing about $4.5 billion a day of securities containing home loans packaged by Fannie Mae, Freddie Mac and Ginnie Mae. The Fed has been buying mortgage-backed securities even more than Treasuries, said Chris Low, chief economist of FTN Financial in New York. The Fed purchases are one of the main reasons for the record lows we’re seeing in mortgage rates. Record lows in mortgage rates will incentivize more households to refinance, putting more money in their pockets to support consumer spending, Low said. When you consider all the components of the economy exports are not growing, business investments are not growing that means households are going to carry the economy for the next couple of years in the form of consumption and retail, Low said. In addition, the low rates will boost home sales, which will motivate builders to kick into higher gear, which supports a component of GDP called residential fixed investment, he said. Low mortgage rates boost housing demand which means stronger residential investment, and already we are seeing that, he said.

Workers will have to reverify income and employment during a time when many borrowers are no longer working. Others must handle a deluge of calls from panicked ...customers asking for forbearance on their current loans. The resource constraints are phenomenal it’s going to be a lot more difficult than just moving bodies around, said Ted Tozer, a senior fellow at the Milken Institute and former president of Ginnie Mae. It’s not only crazy as far as staffing, but what makes this very difficult is that lenders have to go back and revalidate every loan they have in their pipeline. The question also is how much of this they can do remotely and whether there is any slack to move to servicing. The same crisis that fed the refinance wave could ultimately kill it, Tozer warned. If one in five people have income disruption, then they can’t refinance, he said. But that's not the problem right now. Refinancings currently make up 75% of all mortgage applications and have been strong since the second quarter of 2019. The Mortgage Bankers Association’s Refinance Index fell 8% for the week ended March 13 as economic volatility increased but was still up 402% from the same period a year ago. The difficulty of verifying borrower incomes has forced lenders to ask for waivers from Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Administration, to allow for verbal verifications of employment. Nonbank lenders also are seeking appraisal waivers and assurances that gap insurance meets lien requirements if there are delays in recording titles and mortgage notes. It is unclear if they will get such waivers. Another key problem is that lenders rely on underwriters, notaries, title and escrow companies, and county recorder offices that have closed temporarily. Many independent mortgage bankers are having a hard time selling nonagency loans that normally would be purchased by big-bank aggregators. "Lending is in a bottleneck," said Larry Goldstone, president and CEO of Aventur Partners, a Santa Fe, N.M., nonbank lender specializing in jumbo loans. "Most of our correspondent buyers and wholesale buyers are discouraging new loans. They are bloated with loans in process and cannot take on any more." Mike Fratantoni, the MBA's chief economist, said lenders were maxing out on overtime and tapping [other personnel] to handle the increase in volume before the pandemic hit. Now, banks are turning outward and trying to hire new employees to fill the gap. But that is not so easy in an environment where people work remotely. Most lenders had business continuity plans in place, so they knew how to move in this direction, but some of the challenges around this [situation] are unique, Fratantoni said. We’re hearing from lenders that they are adjusting and getting workforces out remotely and technology is working but there are steps in the process that are still physical, like the actual mortgage note. If it’s a paper note, someone still has to show up at the office and collect those and send it on to the next step in the process. Large regions of the country could shut down, with residents asked to shelter in place as has happened in San Francisco and six neighboring counties. Lenders have asked counties to give exemptions to continue processing loans even as nonbank lenders grow increasingly concerned about liquidity and the potential for severe disruptions in financial markets. Big banks are being whipsawed by the operational challenges of originating loans and redirecting staff in a time of social distancing. Bank of America said closing times for all loans will be delayed. BofA also is adding another 30 days of interest rate protection for rate locks, for a total of 90 days. Martin Griffith, president of Bank on Buffalo, a division of $3.8 billion-asset CNB Bank in Clearfield, Pa., said refinancing requests have more than doubled in the past two weeks. Home purchase volume is up but is expected to drop as more people self-quarantine. A particular problem is getting verbal verifications of income when so many businesses are closed and there is no one to verify a borrower's employment. A lot of these refinances are never going to close because the lender will find out the borrower doesn’t have any income or employment, said Tozer. Lenders are going to be using people up to do processing and re-verifying income and once they start working through their pipeline, I don’t know if there is going to be any slack capacity to shift to servicing." Lenders also are keenly aware from the mortgage crisis that they remain on the hook for repurchase risk for loans sold to Fannie and Freddie. Flaws in the underwriting process led to massive repurchase demands during the last mortgage crisis by the government-sponsored enterprises, which forced banks and lenders to repurchase loans because of claims of misrepresentation and fraud. Lenders and servicers are waiting for guidance from regulators on how to proceed. County recorders closed "All the things that people really don't understand about mortgages, the back-end work that we do, is hard to do with everybody working from home," Dallas said. Getting signatures with notaries present and recording titles are among the hurdles keeping loans from closing, said Nanci Weissgold, a partner at the law firm Alston & Bird who represents mortgage lenders and servicers. "How do you get documents notarized when only 23 states have effective remote notarization laws?" Weissgold said. "Documents getting notarized is one issue, but the bigger issue is funding the loan and recording it in local jurisdictions." Both California and New York have measures pending for remote notorization but neither state has yet passed a law, she said. Settlement service provider Equity National Title sent out a memo to its clients on March 16, warning that there were a number of county and city recording offices closing in response to COVID-19, some with little-to-no warning. Underwriters generally will not close a loan, nor would the loan be insured, in any municipality where loans cannot be recorded. "What this means is we will verify before closing whether an office is open, closed to the public, or shut down, and its ability to accept recording documents, Jim O'Donnell, Equity National president, said in the memo to lenders. Appraisals also are an issue though Fannie and Freddie often provide property inspection waivers and appraisals are only required on loans of $400,000 or more. "We are in a crisis, so there is going to have to be some accommodation and temporary waivers to help people get through the crisis otherwise lenders cannot continue to do business," said Weissgold.

Central bank lowers federal-funds rate range to 1% to 1.25%

A local’s guide to San Diegowhere to eat, see, drink, shop, and more: https://trib.al/dgyOT7q