Estimated Interest Rate Seem to Good to Be True? It Just Might Be.

I encourage people to avoid focusing on a lender’s estimate of the interest rate their note will bear. This is because the quoted rate means essentially nothing whatsoever until after it has been locked. Until then, some lenders can (and will) quote people just about anything to get them under their spell.

I also believe it is important for borrowers to work with a lender that is local, available and licensed, in addition to having the time and patience to walk the customer through every step of the process.

In our case, we like to under-promise and over-perform. In the final analysis, if all another lender has to offer is a small break on fees, and the promise of a lower rate, borrowers can only hope that lender will deliver at closing, and all too often it doesn’t happen.

We want as much business as we can get, but we can’t and won’t go about getting it like other lenders do. We have to go about it the right way.

Buy or Re-fi!

Bonds have taken a beating over the past week or so, and this could mean that interest rates may head upward in the near future. So, what can you do before interest rates increase? Well, here are some options:

1. Buy stocks based on all the optimistic predictions currently being advanced by the very same guys (government & Wall Street) who brought you the sub-prime fiasco and credit crisis,
2. Stay the course and do nothing, or
3. Invest in a new (or, your existing) home via a purchase or re-fi.
   

Think about it… With the stock market in shambles, and one-year CDs yielding about 2.50%, it’d make a lot more sense to take advantage of low mortgage interest rates and either:

• Buy a home (the most expensive item you’ll ever purchase), or
• Refinance and significantly lower your monthly payment.
  

Consider the potential for a home’s appreciation in value, and, unlike rent, the deductibility of the tax and the interest portion of your mortgage payment. And right now, first-time homebuyers may be eligible for up to an $8,000 tax credit. Wow!

In addition, there currently are a number of government stimulus and other programs available to assist even those with perfect credit and payment histories—and regardless of income! However, as you go forward, you’ll need to bear one thing in mind: The rules associated with these new forms of "stimulus" are complex!

To achieve your goals, you’ll need help from capable specialists--and our professionals are available seven (7) days a week to assist you. Just call 214-559-0277, and let us lend a hand!

EchoPoint Mortgage Company / CSW Home Loan
Phone: 214.559.0277
Email: info@cswhomeloan.com
Website: www.cswhomeloan.com
Blog: http://echopointmortgage.blogspot.com/

EchoPoint Mortgage Company dba CSW Home Loan is not an accounting or law firm, and neither it nor any of its officers, directors or employees provide tax or legal advice. Before making decisions that might have tax or legal consequences, you should consult your tax or legal advisor.

As Low as They Go? Maybe So...

Despite well-understood economic forces exerting an upward push, some people think mortgage interest rates will decline further. When confronted with this view, however, I disagree. In fact, I’m reminded of a remark once made by Bertrand Russell. He observed, "The fact that an opinion has been widely held doesn't mean it's not utterly absurd."

I don’t think interest rates can get much lower than the range they’ve been in recently. As for my logic, here’s why…

Our government has two powerful options when it comes to servicing the $11 Trillion in debt it’s run up over the years. It can (1) print money and (2) tax the public. Given such infallible resources, Uncle Sam has very little (if any) concern about the rate of interest it must pay for what it borrows. Stated differently, our government currently has no choice but to (and can) pay whatever price necessary to rent money from the marketplace, and the cost of doing so has become—quite literally—irrelevant.

In addition, to attract capital, Uncle Sam must offer a higher rate of return on its bonds than that provided by mortgage-backed securities (the primary means by which money is raised for use in making home loans). Therefore, when the government ratchets-up the rate it pays on its bonds (e.g., to a point higher than that offered by mortgage-backed securities), the inevitable result will be that mortgage-backed securities respond by offering a return even higher than that. Ultimately, this competition will cause interest rates on Treasuries and mortgage-backed securities to spiral upward as each form of investment tries to make itself more attractive to the marketplace than the other.

All this being so, the question everyone asks me nowadays is: “Should I [buy/refinance] now, or wait?” I used to reply, somewhat wryly, that I could definitely narrow things down to one or the other… However, at this point in time, I’m telling folks they shouldn’t get too fancy, and here’s why…

Let’s say a borrower has a $300,000 mortgage balance bearing 6.00% interest over 30 years. Currently, the principal and interest portion of his monthly payment is $1,798.65, and he has the opportunity to refinance at 5.00%. Let’s also assume the borrower is hoping rates will drop to 4.75%, and he doesn’t intend to refinance until they get there. At 5.00%, his monthly payment would be reduced by about $188.00 to $1,610.46, and, at 4.75%, it would be reduced some $45.00 more to $1,564.94. See what I mean? By waiting to try and save an extra $45.00/month, the borrower risks rates moving in the other direction…

In the final analysis, if you’ll permit me, “Pigs get fat and hogs get slaughtered.” Sure, it’d be neat if everyone could time the market perfectly, but I don’t see much chance of this becoming the norm. Therefore, to resort to another cliché, I’ve begun to suggest that people remember “a bird in the hand…”

EchoPoint Mortgage Company / CSW Home Loan
Phone: 214.559.0277
Email: info@cswhomeloan.com
Website: www.cswhomeloan.com
Blog: http://echopointmortgage.blogspot.com/

EchoPoint Mortgage Company dba CSW Home Loan is not an accounting or law firm, and neither it nor any of its officers, directors or employees provide tax or legal advice. Before making decisions that might have tax or legal consequences, you should consult your tax or legal advisor.

Making Home Affordable Refinance Program & other Market Forces

Given recent government initiatives, the information below stands to benefit almost everyone. If you are or want to be a homeowner or real estate agent, or you know someone who is either, you could save quite a lot of money by reading this note carefully, and those you know could as well. Here's the important news:

• Our government's brand-new Making Home Affordable refinance program (which is designed to benefit people with good payment histories) begins late next week,
• We already have a fast, easy and hassle-free FHA refinance program available (with no minimum credit score, income/bank account verification or, in most cases, appraisal),
• Interest rates are near a 45-year low,
• The Housing Affordability Index is at an all time high, and
• A tax credit of up to $8,000 is available for eligible first-time home buyers!

To be eligible for the new Making Home Affordable refinance program:

1. An individual must the owner of a one- to four-unit home,
2. Fannie Mae or Freddie Mac must own or guarantee the loan (we can determine this),
3. The borrower must not have been more than 30-days late in making mortgage payments over the last 12 months, and
4. The amount owed on the first mortgage must be the same or less than the current value of the house. That's it! Hard to believe, huh--especially, for a change, since this program is designed to help all those hard-working individuals who've made their payments on time (when other alternatives might have been easier).

Indeed, now probably is probably the very best time in the last 45 years to buy or refinance a home, and this is true with regard to both new loans and refinances, and both conventional and various government programs alike. Because of how our economy got to where it is now, however, these "stimulus" initiatives will involve complex rules only EchoPoint/CSW and other top-echelon lenders will be capable of implementing for eligible borrowers.

EchoPoint Mortgage Company / CSW Home Loan
Phone: 214.559.0277
Email: info@cswhomeloan.com
Website: www.cswhomeloan.com
Blog: http://echopointmortgage.blogspot.com/

How Mortgage Lenders Make Money (and Borrowers Pay for It)

Some borrowers still believe "no fee" loans really do exist. However, I'm afraid I have to report the reality is that they don't--and, it's a shame some lenders lead people to believe otherwise.

If a lender doesn't charge something akin to an origination fee, you can bet it will do something to make up for it. In the real world, for example, some will increase the interest rate, or charge unnecessary "discount points" and/or assorted "junk fees." Others will outright lie, and collect a "prepayment penalty" instead of calling the charge what it actually is. And others still (meaning, the real bad actors) will try to get away with all the above-and many borrowers let them do it, all the while thinking they're getting the deal of the century.

The truth is that there are nine (9) types of expense a borrower might encounter when it comes time to close a home loan:

• Lender compensation (such as "Origination" and "Broker's" fees, which are the traditional methods by which lenders are compensated for their efforts),
• Administrative Fees (to recoup the direct costs associated with extending credit),
• Discount Points (the price paid to "buy down"/reduce the interest rate to a lower level),
• Prepayment Penalties (for paying a loan off before the due date),
• Third-party expenses (to cover the actual cost of appraisals, title insurance, etc.),
• Illegitimate prepayment penalties (those with no basis in fact--meaning, mere disguised forms of lender revenue),
• Illegitimate "Discount Points" (sometimes included although not required to lower the interest rate--meaning, mere disguised forms of lender revenue),
• Marked-up third party expenses (otherwise legitimate expenses that are marked-up by the lender to result in additional lender revenue) , and
• So-called "junk" fees (mere disguised forms of lender revenue that go by names such as "Application Fee, "Commitment Fee" and "Setup Fee").

As I've said before, I think this is one of the dumbest things on the planet. Consequently, therefore, we've chosen to do things differently. As irrational as it may seem to our competition, we've chosen to be totally up-front about our loan-related charges and compensation.

Except when the borrower insists due to special circumstances, our pricing model calls for us to be compensated by way of only two (2) of the nine (9) items referenced above: (1) a compensatory charge (item 1 above) and (2) an Administrative Fee (item 2 above). In addition, we usually do our best to earn a Yield Spread Premium ("YSP"), which is the profit a lender can make when it sells a loan into the secondary market. However, when the loan is for an amount greater than our benchmark, we rebate any and all residual YSP to our customer.

Our method accomplishes a number of things:

• Greater transparency when it comes to pricing, expenses and what customers pay and we earn for our services,
• Speed to closing, since no time is wasted negotiating the lender's compensation, and
• Unparalleled customer service resulting from a focus on what's best for the borrower.

In the final analysis, there's no such thing as "free" anything. The simple fact of the matter is that the borrower will always wind up compensating the lender via a combination of some or all the above nine (9) elements--or, if not, the borrowwer can bet on paying a higher rate of interest.

In the final analysis, we think there's a category of customer who's smart enough to understand and appreciate candor, responsibility, personal service, knowledge and professionalism, all of which they can count on from us--but, not always from our competition. If you're one of them, give us a call.

EchoPoint Mortgage Company / CSW Home Loan
Phone: 214.559.0277
Email: info@cswhomeloan.com
Website: www.cswhomeloan.com
Blog: http://echopointmortgage.blogspot.com/

I Never Thought I’d be Saying This...

I never thought I’d be saying this today (meaning, in early March of 2009), but things just keep getting better! In particular, now is an even better time to refinance or buy a house than even as recently as last week—and this is true no matter what kind of loan you have! Here’s why:

• Interest rates are near a 45-year low,
• The Housing Affordability Index is near an all-time high,
• Eligible first-time home buyers can receive a tax credit in an amount up to $8,000,
• Loan limits have just been increased, and, most recently,
• The brand-new Making Home Affordable (MHA) plan came into existence just last week!

As you’ll note, the newest item shown above is the MHA. Under its Home Affordable Refinance provisions, borrowers meeting certain additional criteria can now refinance, if:

• Their loan is owned or securitized by Fannie Mae or Freddie Mac,
• They occupy the house at issue,
• Their payment history is solid,
• Their first mortgage does not exceed 105% of the current market value of the property, and
• They have sufficient income to support the new mortgage debt.

Stunning! As I’ve said before, whether you agree with the concepts underlying the “Stimulus” process, or not, this kind of thing is an outright gift to present and future homeowners. At least from the individual’s perspective, no one should pass them up if they’re in the market to buy a home, refinance or avoid foreclosure.

But remember, these stimulus initiatives will involve complex rules only the top echelon of the mortgage industry will be capable of understanding. Therefore, be sure you let the professionals at CSW Home Loan assist in going about things the right way.

If you’d like to learn more, just call or email us, and, if refinancing is the subject you’re interested in, simply have a recent mortgage statement handy so we can gather the information needed to assist and determine your eligibility. Hope this helps!

EchoPoint Mortgage Company / CSW Home Loan
Phone: 214.559.0277
Email: info@cswhomeloan.com
Website: www.cswhomeloan.com
Blog: http://echopointmortgage.blogspot.com/ Fannie Mae Refi Plus™ Desktop Underwriter® (DU®) Home Affordable Modification Program

Slumdog Millionaire: What should have been the final question...

Paul B. Farrell isn’t always right, but he sure knows how to provoke some worthwhile discussion. In his most recent column for Marketwatch.com, Mr. Farrell suggests the final question of the game show depicted in this year’s Oscar-winner, Slumdog Millionaire, should have been:

“Will America's recovery package of stimulus handouts, bank bailouts and home foreclosure relief plans work?

I don’t know if it’ll be the stimulus plan that does the job, but the U.S. economy will right itself. In the mean time, here’s what present and future homeowners have working for them—and it’s a lot:

(1) Even with recent upticks, interest rates are still near a 45-year low, (2) the correction in housing prices has made homes affordable again for many, and (3) we now have a stimulus plan that includes: (a) An $8,000 Homebuyer Tax Credit for first-time home buyers, (b) Increased FHA, Fannie Mae and Freddie Mac loan limits, (c) Access to Low-Cost Refinancing for Responsible Homeowners, (d) A $75 Billion Homeowner Stability Initiative, and (d) Support of Low Mortgage Rates.

BUT, these things won’t last forever…

Whether you agree with the concepts underlying the “Stimulus” process, or not, recent legislation and related executive orders have resulted in some outright gifts to present and future homeowners. Arguably, at least from the individual’s perspective, no one should pass them up if they’re in the market for a home, a method by which to refinance one, or a means through which to avoid foreclosure.

Warren Buffett is reputed to have said his strategy is to “be fearful when others are greedy and to be greedy only when others are fearful." Given where things are in the current economic cycle, it might be worthwhile to think about how his view might apply at this point in time—especially in the context of deciding whether to invest in a home, or save through refinancing.

Remember, stimulus initiatives will involve complex rules only the top echelon of the mortgage industry will be capable of understanding. Therefore, if you or someone you know decides to pursue the purchase or refinancing of a home, or might benefit from assistance in avoiding foreclosure, let the professionals at CSW Home Loan assist in going about things the right way.

EchoPoint Mortgage Company / CSW Home Loan

Phone: 214.559.0277

Email: info@cswhomeloan.com

Website: www.cswhomeloan.com

Blog: http://echopointmortgage.blogspot.com/

The Good, the Bad and the Exceptionally Favorable

Originally Distributed 1-01-2009

When it comes to buying, selling and owning homes, things are changing rapidly. In addition, one particular item has become even more apparent these last 45 days… Many people still don’t fully accept, appreciate or understand just how problematic our current economic circumstances are. Moreover, they don’t really know what to do about it. This being so, I thought some more information might be of assistance…

First, the BAD news…

• The current recession is DEEP and will continue to get worse—much worse than the average American might presently surmise,
• This recession probably will not be over even by the end of 2010,
• Real estate values will continue to decline in certain parts of the country,
• Foreclosures will continue to increase, and
• Interest rates will be volatile.

And here’s what this means to those who want to buy or refinance a home:

• Fewer lenders now exist, and
• Loan underwriting standards have become far more strict.

Now, the GOOD news:

• The Housing Affordability Index is at an all time high, and
• Interest rates are at or near a historic low..

These two exceptionally favorable circumstances:

• Provide a means for existing homeowners to significantly reduce their monthly and annual expenses, and
• Can help facilitate the continuing accumlation of wealth through home ownership.

In short, these two things couldn’t have come along at a better time, and, with assistance from CSW Home Loan, many people can and should still take advantage of them. Hope this helps.

EchoPoint Mortgage Company/CSW Home Loan
Dallas, TX
info@cswhomeloan.com
www.cswhomeloan.com
A service of EchoPoint Mortgage Company

Should I Refinance?

Despite recent upticks, today’s interest rates (in the range of 5.50% for a 30-year conventional loan) are still pushing a level virtually unseen in the last 45 years. So, where are they headed now? Well, we don’t know for sure. However, market consensus indicates they should remain relatively stable for a period of time. Even so, they do tend to bounce around (up and down) during the course of just about every 48 period…

So, what should someone who wants to buy or refinance do? Let us answer this way…

Let’s say a borrower has a $200,000 mortgage balance bearing 6.50% interest over 30 years. Currently, the principal and interest portion of his monthly payment is $1,264.14, and he has the opportunity to refinance at 5.50%. Let’s also assume the borrower is hoping rates will drop to 5.25%, and he doesn’t intend to refinance until they get there. At 5.50% (his “bird-in-the-hand”), his monthly payment would be reduced by about $130.00 to $1,135.58, and, at 5.25%, it would be reduced some $31.00 more to $1,104.41.

See what I mean? By waiting to try to save an extra $31.00 per month, the borrower risks rates moving in the other direction… Hope this helps.

EchoPoint Mortgage Company/CSW Home Loan
Dallas, TX
info@cswhomeloan.com
www.cswhomeloan.com
A service of EchoPoint Mortgage Company