Pasadena CA Real Estate

By Brian Brady

Had you taken my advice this weekend, and immediately locked your Pasadena mortgage rate, yesterday you would have lost out.  The par rate for a 30-year fixed rate conforming loan was 5.625% yesterday- today that par rate is 5.5%.  My advice would have cost you .125% in rate.  Alas, my mortgage rates report is not about “catching the bottom” as much as it is about “avoiding the top”; it’s about mitigating market risk.  From my explanation on the Zillow Mortgage Blog:

My approach is with an aversion to risk so I’m biased towards locking rather than floating a rate.  What I do try to find is overreactions in the MBS market so that you won’t lock your mortgage rate at the top nor float your mortgage rate when higher rates are imminent.  My customers RARELY catch the “bottom” but they miss out on many “tops” when locking their rate.

I look for irrational exuberance or irrational fear.  If I think markets are being too optimistic, like this week, I advise customers to lock.  The whipsaw reaction to irrational exuberance is irrational fear; a steep rise in mortgage rates.  THAT is what I want to avoid.

Long-term, I feel that the government bailouts of financial institutions will result in a hefty price tag to the taxpayer, which is inflationary in nature.  I look for markets to start reacting to this sooner rather than later.

If you have a definitive closing date for the purchase of your Pasadena home, lock-in your Pasadena mortgage rate today.  If you’re shopping for a new home locking your mortgage rate at contract acceptance is advisable.  If you are one of the fortunate few with equity, good income, and good credit, and want to refinance your home loan, today looks better than next year.

I’d love to discuss your options with you.

PS:  In my last report, a Florida mortgage broker suggested that my risk mitigation strategy is inferior to a “lock and pray “approach:

Bottomline, none of us knows what is going to happen, so the smartest course is to lock with a lender that will renegotiate your rate when we experience one of these rapid drops that occur with little advance notice.

I’ll agree that prescience is a virtue best reserved for the Divine.  My faith in the predictability of mortgage lenders’ actions has been shaken over the last year.  I’ve seen lenders flip programs to make an extra buck and back off approvals.  While this gentleman’s strategy has proved superior to mine, this month, I still rely on my charts and research to execute low rates for my customers.

Originally posted on MIllionaireRealEstateLender.com

by Brian Brady

The MBS market has improved dramatically since the new FHFA seized Fannie Mae and Freddie Mac.  An implicit government backing of mortgage bonds became explicit with that single event.  The rate difference, or spread as we call it, between govʼt bonds and mortgage bonds, has narrowed from abnormally high margins.  This means that mortgage rates dropped as much as .375% since the govʼt takeover.  Alas, I think that party is a bit short-lived.  The exuberance appears to be a bit irrational and the reality of impending bank failures has worried the MBS market again.  Short-term, Iʼm advising clients to lock-in these low rates and be done with it.

For Pasadena home buyers who are in escrow with a 30 day time period until closing, Iʼm advising that they lock as well.  Rates may spike up and come back down ,to these below 6% levels, but I donʼt see a great opportunity for the medium-term to improve upon todayʼs already low rates.

Longer-term, mortgage applicants may find mortgage rates higher than they are today.  The realization that SOMEONE has to pay for this bailout will hit everyone, after the election, and treasury bond yields should rise, pushing the MBS yields, and mortgage rates, higher as well.  Not a rosy picture.

So, lock those loans at application. While the current 30-year fixed rate loan offering, with 1% origination fee, is 5.75%, for a conforming loan (6.02% apr),  the risk of those rates popping up to the 6% level far outweighs the reward of holding out for 5.625%.

Originally posted at www.MillionaireRealEstateLender.com

PS- Please check out Brian’s references on LinkedIn

by Brian Brady

Weird things are happening in the mortgage-backed securities market.  Strong
buying, in the 30 year-fixed rate loans, has dropped rates .25% since my last
report,  The ARM rates, however, have RISEN.  A weird phenomenon, indeed.  I’m
only quoting two loan programs (the others make no sense):

Pasadena Mortgage rates  for August 29, 2008.  Loan amounts up to
$417,000:

5/1 ARM              5.750%

30 Year Fixed      6.125%

All rates offered to the borrower with 1 point cost.  Rate quotes assume
a purchase transaction with a 20% down payment, 720 credit score, and full
income qualification.  Rates are subject to fluctuation.  Custom rate quotes and
rate lock advice are available by calling (858)-777-9751.

Short-term, this is about as good as it gets.  I think we’ll see some higher
rates, in the next 7-10 days, with rates coming back down to this level by the
end of September.  I’m befuddled for the 3 month trend so I’ll stay neutral.

PASADENA MORTGAGE RATE TREND:

Next 7 days:      Higher 

Next 30 days:     Neutral

Next 3 months:    Lower? (I’m
stumped)

Originally
posted on MillionaireRealEstateLender.com

Pasadena Real Estate Mortgage rates for August 1, 2008.  Loan amounts up to $417,000:

3/1 ARM              5.500%

5/1 ARM              5.625%

7/1 ARM              6.125%

10/1 ARM            6.250%

30 Yr Fixed          6.250%

All rates offered to the borrower with 1 point cost.  Rate quotes assume a purchase transaction with a 20% down payment, 720 credit score, and full income qualification.  Rates are subject to fluctuation.  Custom rate quotes and rate lock advice are available by calling  (858)-777-9751 .

PASADENA MORTGAGE RATE TREND:

Next 7 days:       Slightly Lower

Next 30 days:     Slightly Lower

Next 3 months:   Neutral

This mortgage rates report is offered courtesy of Brian Brady.  Contact Brian for more information about a home loan or apply online.