Talk about mistakes. The recent uptick in mortgage applications will not translate into home sales. It’s not a quick time.
Before I explain, indulge me as I share a few facts.
Commercial mortgage applications rose nearly 25% on Thursday, January 19 from the previous week, according to the Mortgage Bankers Association’s weekly survey.
It doesn’t matter that Freddie Mac mortgage rates keep falling; are still high. Mortgage rates this week fell to 6.15%, a four-month low, but well above last year’s 3.56%. The average 30-year mortgage payment is $1,139 higher than last year’s mortgage payment.
Sales – whether closing or going under contract – keep the tank going. Over the past six months, I’ve had a lot of pre-foreclosures, many first-time home buyers tell me they expect them to sit on the sidelines until they get dusty. Specifically, that dust includes deflated home prices, the possibility of inflation and job losses as the economy continues to weaken. In case you missed it: Microsoft announced that it is cutting 10,000 people from its payroll.
More facts: Domestic sales fell 45% in November while Los Angeles and Orange County home sales fell 44%, according to CoreLogic.
“The number of listings going under contract continues to decline month over month,” said Patrick Veling, CEO and president of Real Data Strategies in Brea.
December 2022 numbers are down 42.6% in Orange County with only 961 transactions (compared to November 2022) that are under contract, according to Veling. San Bernardino County saw contracting activity drop 48.2% to just 986 homes. Riverside County saw contracts drop 43.6% to just 1,501, and Los Angeles County dropped 46.9% or 2,302.
Mortgage lenders are pushing hard-working and sure-footed buyers to buy homes, leading to an increase in mortgage applications. it’s 25% this week. There is no doubt that the lack of business in 2022 made the days of the Great Recession look like a walk in the park. As a result, the industry is throwing a lot of dirt on the wall, hoping that some will stick.
What I’m seeing and hearing is the obvious and easy talk of consumers. Here’s today’s look at consumer credit. The main idea is to mis-qualify home buyers and then scare and switch those borrowers to lower mortgage programs. Affordable means a higher mortgage, higher down payment and higher closing costs or all of the above.
Sales, which many dismissed as a result of the pandemic and low prices and potential home-hunters, have suddenly became a potter.
These home buyers are satisfied and provided with unconditional guarantees. Many people who have developed a strong desire for a paycheck or two are offering historically low-interest rates along with theirs and default payments. the houses. On the other hand, the first home buyers have got their expectations. Yes, home ownership is a healthy and happy dream come true for those who can close on escrow. But these days, it’s like going to the altar on your wedding day only to celebrate.
My advice for homebuyers on the hunt: Don’t be delusional about your eligibility and what a reasonable home payment is. Any good mortgage broker will be happy to send you back a pre-approval and internal documents. It’s like a math teacher asking you to go over the test answers and do real math.
That said, you have a better chance of getting what you want in this low-cost, low-inventory real estate. Buyers have a better chance of getting what they want than trying for their third choice at a bargain price.
So, how do you protect yourself from predatory mortgage brokers?
First, be true to yourself. Do you have reason to believe you are eligible to buy? Do you know deep down that you have problems that are keeping you up at night like bad credit, too much debt and not enough money for a down payment?
Or maybe you don’t really know if you can qualify or not.
If you often get the same story from three mortgage originators about your purchasing power, you’re on the right track. Yes, it takes work on your part to buy. If you’re qualified, you’ll usually end up with a better mortgage deal because you’ve armed yourself with valuable, up-to-date information.
Remember, mortgage originators do not have the authority to provide a buyer’s credit. There is still a barrier between consumers and lenders. Or a special pre-approval letter with a similar digital form like Fannie Mae or Freddie Mac can be issued for conventional mortgages, Federal Housing Authority or Veterans Affairs mortgage.
Most mortgages that fall into the category of government mortgages are mortgages known as non-QM or non-qualified mortgages. They are easy to qualify but more challenging to afford.
For mortgages that fall outside of the computer generated boxes, you will need a pre-approval letter signed by the lender. .
Check the license of the mortgage loan originator and mortgage lender at NMLS or mortgage.nationwidelicensingsystem.org. You are looking for both valid and current licenses. Also, check out the California Department of Real Estate site dre.ca.gov and the California Department of Financial Protection and Innovation dfpi.ca.gov.
Freddie Mac news
The 30-year fixed-rate average 6.15%, 18 basis points lower than last week. The 15-year yield averaged 5.28%, 24 basis points lower than last week.
The Mortgage Brokers Association reported a 27.9% increase in mortgage applications from last week.
bottom line: Assuming a borrower gets a typical 30-year loan on a $726,200 loan, last year’s payment is $1,139 less than this week’s payment of $4,424.
What I see: Locally, people with good credit can get fixed mortgages with one rate: A 30-year FHA at 5.125%, a 15-year conventional at 4.625%, the 30-year standard to 5.5%, the 15-year standard. high balance at 4.875% ($726,201 to $1,089,300), the 30-year high standard balance at 5.877% and the jumbo 30-year fixed at 5.625%.
Note: The 30-year FHA conforming loan is limited to loans of $644,000 in the Inland Empire and $726,200 in LA and Orange counties.
Weekly eye loan program: The 30-year jumbo fixed rate at 5.375% and 2 points.
Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or jlazerson@mortgagegrader.com.