Adjustable Rate Mortgages Are An Absolute Steal Right Now. Have You Checked The Rates Lately?

Each week, government-backed Freddie Mac publishes a weekly mortgage rate average compiled from 125 banks across the country. Based on this week's survey results, home buyers in California would be silly to not at least consider the 5-year ARM.

The 5-Year ARM Is A Steal-Of-A-Deal Right Now

As compared to the 30-year fixed, the 5-year ARM is an absolute steal.

Consider this comparison:

•In April 2009, the two products ran neck-and-neck with respect to interest rates
•In April 2010, the two products are split by 0.99 percent chasm

On a $300,000 home loan, that's a difference of $176 per month on a mortgage payment.

Some Folks Are A Perfect Fit For The 5-Year ARM

Now, adjustable-rate mortgages aren't suitable for everyone, but they can be a terrific fit given your individual circumstance. For example, any of the following scenarios might warrant a 5-year ARM instead of a 30-year fixed:

1.You're buying a home and plan to sell it within the next 5 years
2.Your home is currently financed with a 30-year fixed mortgage and you have plans to sell your home within the next 5 years
3.You have an ARM now and want to get a "restart" on your starter rate

Before opting an ARM, speak with your loan officer about how adjustable-rate mortgages work, and what longer-term risks may exist. The savings may be tempting, but there's more to consider than just the payment.

How To Apply For A 5-Year ARM At 3.875 Percent

To inquire about a 5-year ARM, call my office at 510-799-1400 or 800-259-3424 or send me an email. We can review your situation and if the ARM isn't too risky for your goals, we'll move on to an official application and start working toward closing.

Most new mortgages are closing in 3 weeks.

--------------------------------------------------------------------------------

John Payne is an active loan officer. Email John@JohnPayneLending.com or call 510-799-1400 or 800-259-3424.

Defending Your Home From Mortgage Rate Velocity

Life is getting difficult for home buyers and rate shoppers. Since the start of April, mortgage lenders are averaging 2.25 rate sheets per day.

Mortgage Rate Velocity -- the pace of rate sheet change -- is as high as it's been in a year.

What Is A Mortgage Rate Sheet?

A rate sheet is a mortgage bank's "menu". It lists rate-and-points combinations for every loan product available. Some rate sheets are just a page; others go 10 pages or more. Most are now electronic.

Rate sheets show the "right now" pricing on products including:

•30-year, 20-year and 15-year fixed rate mortgages
•Short-term ARMs like 1-year and 3-year products
•Long-term ARMs like 5-year, 7-year and 10-year products
•Jumbo and super jumbo mortgages
•The complete line of FHA and VA mortgages
•Loans for condotels and non-warrantable condos

Rate sheets change with the market and, lately, markets have been wild.

Mortgage Rates Are Changing Every 3 Hours, On Average

In January, mortgage rates changed every 6 hours. Since late-March, however, they've changed every 3 hours.

That's two times as fast. There's no "calling you back in the afternoon" or "thinking about it overnight" in a market like this. Unless you're watching real-time market updates, it's pretty much a guarantee you'll get burned.

Want that rate you were just quoted? You better lock it right this second.

It's Going To Get Even Worse For Rate Shoppers

The pace of change in April is just the beginning. By June, today's Mortgage Rate Velocity will look tame; as a turtle to a hare.

The Fed is officially gone from the mortgage market and its absence has left markets in doubt. The Fed was a stabilizer, if nothing else, and with it gone, there's questions about whether investors will step up to fill the demand void. Especially because stock markets are throwing better returns and debt concerns are easing around the world.

Mortgage bonds fared well in 2009 because the world was on fire. This summer, that won't be the case. Mortgage Rate Velocity will eclipse its all-time highs.

Shield Yourself From Mortgage Rate Velocity

As a loan officer, I track mortgage data in real-time, and summarize it online to to Facebook. I send alerts to my audience before new rate sheets come out so everyone can stay ahead of the market.

You need to be plugged in. If you manage them right, my alerts should save you tens of thousands of dollars over the life of your mortgage. It'd be silly not to pay attention, really.

However, being "alert" is only one part of being ready. You must also have a loan application on file with your lender.

Banks can't give rate locks without full applications.

Applications-by-phone are a 4-minute process. To give one, call my office at 510-799-1400 or send me an email. Then, when it's time for you to lock, you'll be glad you were ready. Markets move quickly and your mortgage is a huge financial instrument. It's not something to gamble with.


--------------------------------------------------------------------------------

John Payne is an active loan officer. Email John@JohnPayneLending.com or call 510-799-1400 or 800.259.3424.

Breaking Open The Fed Minutes For Clues On April's Mortgage Rates

Mortgage markets improved yesterday after the Federal Reserve released its March 16, 2010 meeting minutes. It's good news for California home buyers and rate shoppers -- rates could have just as easily gone the other way.

The Meaning Of The Fed Minutes

The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation's monetary policy. The notes are dense; it takes 3 weeks to compile them for publication.

As compared to its more well-known, post-meeting press release cousin, the Fed Minutes are extremely lengthy. In word counts:

•March 16 press release : 451 words
•March 16 meeting minutes : 6,152 words
If the press release is the executive summary, in other words, the Fed Minutes are the novel.

A Not-So-Hidden Message On Inflation

The extra words matter.The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next. And, in the minutes, Wall Street looks for clues.

This is why the report is important to every rate shopper in the country.

When the Federal Reserve publishes the minutes from its meetings, it leave clues about the groups next policy-making steps. For example, in March's Fed Minutes, it's clear that the Fed's concern about inflation is hugely diminished and that's a major plus for the mortgage bond market.

Inflation causes mortgage rates to rise. The absence of inflation, therefore, helps them to fall. This improves home affordability, among other things.

The Fed Explains Why Home Sales Are Strong

Similarly, the Fed Minutes note that real estate sales may have been worse throughout the winter months if not for low mortgage rates and the sense among Americans that home prices were troughing. We may infer, therefore, that rising rates may suppress home sales later this year.

Markets are always looking for clues from inside the Fed and the last meeting's minute signal that the economy is on its way up. If you're looking for a bargain in the housing market, your window to act may be closing.

Going under contract for home this week or this month? Click here to send me an email and get a competitive rate quote.

--------------------------------------------------------------------------------

John Payne is an active loan officer. Email John@JohnPayneLending.com or call 800.259.3424

With More Homes Going Under Contract, Home Prices Certain To Rise This Spring

As expected, the Pending Home Sales shot higher in February, boosted by the federal home buyer tax credit's April 30 deadline.

Pending Home Sales Spike

Versus the month prior, February's index rose 8 percent but remains well off the highs set last October.

For today's home buyers and seller, the Pending Home Sales Index is an important measurement. This is because a "pending home" is a property that is under contract to sell, but not yet closed.

According to the National Association of Realtors®, 80% of homes under contract close within 60 days, historically. Therefore, a higher Pending Sales figure in February projects that April's Existing Home Sales will be higher, too.

More Pending Home Sales Means Higher Home Prices

If you're a California home buyer today, no doubt you've noticed the extra market activity.

On right-priced homes, multiple offer situations are more common; sales prices are settling closer to listing price; Days on market is falling. These are the signs of a buyer-heavy market. It drives home supplies down and home prices up.

It's a good time to be a seller, in other words. Especially as buyer activity looks poised to peak.

Get Ahead Of The Surge To Get The Best "Deals"

When the home buyer credit faced its last expiration in November 2009, we saw a pattern of buyers rushing to beat the deadline. There's no reason to expect that won't happen again. And as it does, Pending Home Sales should continue to climb. Average home sale prices should rise.

Home buyers may find it smart to go under contract sooner rather than later. Pending Home Sales is a warning shot. Higher home sales figures are ahead.




--------------------------------------------------------------------------------

John Payne is an active loan officer. Email John@JohnPayneLending.com or call 510-799-1400 or 800-259-3424.