Another informative Roundtable. Here is a Roundup of some of the topics we covered. If you’d like to see all of the topics covered, you can watch it on our YouTube channel by clicking: https://youtube.com/live/ZqoOMvMzOaQ
1. Market Update – Freddie Mac shows the 30-year fixed mortgage at 6.26%, which is the lowest it has been in about a year. The Fed reduced the Fed Funds rate by a ¼% last week. So, does this mean mortgage rates will be coming down, too? The 10-year Treasury Note is a leading indicator for mortgage rates. Since the Fed reduced the Fed Funds rate, the rate on the T-Note has inched upwards. The Fed reduced the Fed Funds rate in part due to rising unemployment numbers. They balanced these numbers with the inflation numbers, and determined the risk of higher unemployment outweighed rising inflation. However, since Liberation day, inflation increased. The Consumer Price Index (CPI) increased 0.60% and the Personal Consumption Expenditures Price Index (PCE) increased 0.40%. As inflation increases, the value of fixed-income investments, such as mortgage-backed securities, decreases, causing mortgage rates to increase. We’ll be watching to see how this plays out.
2. Mega-Jumbo loans – we can provide residential financing up to $30 million! If you are looking for high end financing, give us a call
3. Refinance – we went over considerations for determining whether to refinance. Many people are looking to simply reduce their monthly payment. There is a lender offering a 2/1 buydown for a rate and term refinance to further lower the monthly payment.
A general rule of thumb is to reduce your interest rate by 1%, but it could make sense to refinance if it is less than 1%. You would want to calculate the breakeven point of the savings. This is determined by calculating the monthly savings as compared to the closing costs to determine how long it would take to breakeven. Another consideration is a comparison of the amount of interest left to be paid on the current loan to the amount of interest to be paid on the new refinanced loan.
4. Blended rate – The blended rate is the effective rate of the first and second mortgages. For example, if your first mortgage balance is $500,000 at a 3% interest rate, and the second mortgage is $300,000 at an 8% interest rate, the blended rate is 4.875%. You would want to consider the blended rate when determining whether to get a home equity line of credit or whether to refinance the low rate on your first mortgage.
5. Reverse Second Mortgage – this can help borrowers over the age of 55 who have a low rate first mortgage, but want to tap into the equity in their home without refinancing their mortgage. You would continue to making payments on the first mortgage, but you would not have to make out-of-pocket payments on the second mortgage, rather, the equity in the home makes the payment as the principal balance increases over time. This product can help those borrowers who are on fixed incomes with tight cash flows and want to access the equity in their home for repairs or other items.
6. Trigger Leads – the Trigger Leads bill was passed and signed into law. This law prohibits vendors from calling you after your credit is pulled. It is scheduled to go into effect in March 2026. In the meantime, if you do not want to be solicited when your credit is pulled, go to www.optoutprescreen.com, and opt out of solicitations.
7. Recast – some loan servicers offer recasting. If you make a principal payment to your loan, the lender may recast, or re-amortize, the loan over the remaining term of the loan to lower the monthly payment. There is usually a processing fee. If they do not offer a recast, you can still make a principal payment, but the monthly payment remains the same. The term of the loan, however, shortens. For instance, when you pay a few extra hundred dollars on your mortgage each month, the remaining term on the mortgage shortens.
Subscribe to our YouTube page to stay informed and follow us on social media.
Looking forward to seeing you at next month’s Roundtable!