Mortgage experts? (Full Version)

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Pamsy -> Mortgage experts? (1/12/2008 1:12:09 PM)

Anybody in here a mortgage expert?



peace77 -> RE: Mortgage experts? (1/12/2008 1:18:14 PM)

There are people here who work in real estate.

What is your question?


Peace,
Anne



GroupW -> RE: Mortgage experts? (1/12/2008 4:34:59 PM)

Chances are I can answer it if it's not deep into legal territory. I've been a banker, financial engineer, and trader for about 25 years.



relady -> RE: Mortgage experts? (1/13/2008 9:46:25 PM)

And I'm a Realtor. What's your question?



Pamsy -> RE: Mortgage experts? (1/18/2008 6:07:24 PM)

I don't even remember the question anymore. [sm=aside.gif]



GroupW -> RE: Mortgage experts? (1/18/2008 6:49:25 PM)

No worries. Shout when you remember.



juliondeano -> RE: Mortgage experts? (1/27/2008 6:35:20 PM)

I am a Mortgage Broker (22 years), what is your question?



Pamsy_ -> RE: Mortgage experts? (1/31/2008 3:19:47 PM)

Right now my credit union has a morgage rate at 5.75% and I want to refinance. I heard the feds have reduced the rate another 1/2% recently, but have yet to see it go down at my credit union. Is it supposed to? OR can the credit union leave it there?

Also, I must be blind becasue I cannot find a contact to get my original login name back, it always tells me the login has failed. Where do I find the contact in this site to get it restored?



blessedinnyc -> RE: Mortgage experts? (1/31/2008 5:56:31 PM)

quote:

ORIGINAL: Pamsy_

Right now my credit union has a morgage rate at 5.75% and I want to refinance. I heard the feds have reduced the rate another 1/2% recently, but have yet to see it go down at my credit union. Is it supposed to? OR can the credit union leave it there?

Also, I must be blind becasue I cannot find a contact to get my original login name back, it always tells me the login has failed. Where do I find the contact in this site to get it restored?

Pamsy,

The answer to your question is a little complicated, and has to deal with the inherent optionality of your mortgage. I can go into that if you'd like, but I'm going to try to simplify the answer a bit:

When the fed had lowered interest rates to 1%, mortgage rates were 4%. This was because lenders knew you could refinance if rates went down to 3%, but didn't have to refinance if rates went up to 5%. In other words, they weren't going to make any money if they lent at 1% (plus your credit risk). If the fed lowered rates to 0.5%, you could refinance and make sure they didn't make money, and if the fed raised rates to 2%, they would lose money because they're borrowing at 2% and lending to you at 1%.

As a result, they have to charge extra for this risk to them and benefit to you. This risk goes up the more interest rates move around (you're more likely to refinance if rates drop 2% than if rates drop 1%).

So in other words, a 2% drop in fed rates isn't going to mean a 2% drop in mortgage rates.

Source: I work in fixed income trading at a bank.



Random -> RE: Mortgage experts? (1/31/2008 7:03:43 PM)

While blessedinnyc is correct, I would also add that the spread between the Fed Funds rate and the average rate on a 30 year mortgage is not constant.

The Fed could lower rates, but if people are convinced rates will rise in the future, fixed mortgage rates could increase.

Realize that the Fed Funds rate is an overnight rate, the very definition of short-term, while a mortgage is long-term debt.



blessedinnyc -> RE: Mortgage experts? (1/31/2008 11:06:08 PM)

quote:

ORIGINAL: Random

While blessedinnyc is correct, I would also add that the spread between the Fed Funds rate and the average rate on a 30 year mortgage is not constant.

The Fed could lower rates, but if people are convinced rates will rise in the future, fixed mortgage rates could increase.

Realize that the Fed Funds rate is an overnight rate, the very definition of short-term, while a mortgage is long-term debt.

quote:

While blessedinnyc is correct, I would also add that the spread between the Fed Funds rate and the average rate on a 30 year mortgage is not constant.

The Fed could lower rates, but if people are convinced rates will rise in the future, fixed mortgage rates could increase.

Realize that the Fed Funds rate is an overnight rate, the very definition of short-term, while a mortgage is long-term debt.

_____________________________

"We are what we pretend to be, so we must be careful what we pretend to be." -- Vonnegut


You have a great point here, but the irony is that the most common model of analysis that gets used in the rates world is the parallel shift assumption. For those who don't know, that means that if the 10-year yield drops 50 basis points, we should also expect a 50 basis-point drop in the 30-year rate. Naturally, that's not always the case in real life (30 year rates tend to be a bit more stable even as 30-year bond prices tend to fluctuate more) Measures of modified duration, risk, and lots of other stuff all assume parallel shifts.

I'd imagine that someone smart could make a killing by realizing that everyone in the finance world makes this same assumption and trading against it where appropriate.



APZR -> RE: Mortgage experts? (2/1/2008 12:59:00 AM)

The only thing the rate drops are affecting now are short term rates. Credit cards, HELOCS, autos, etc. Traditional fixed rate mortgages are still in the 5.5-5.75 range. Further rates cuts have done nothing but kill my money market holdings, and made me move to other investments. None of which "help" the economy.
If you are in an ARM, you may not be in a completely desperate situation. Many ARMs are based on LIBOR, and the European markets have taken a tumble too. Sooooo... to really answer you question, you need to find an honest lender who will tell you if it really is worth the cost of refinance.



Pamsy -> RE: Mortgage experts? (2/2/2008 10:58:14 AM)

Well it turns out this February, the mortgage rates DID drop at my credit union, which I was waiting to see. They were at 5.75, now at 5.652. I have been waiting to refinance locally, instaad of dealing long distance which makes me uncomfortable when the mortgage company screws up, or I get bad customer service. I have heard good things about my mortgage company, but I myself have had a number of problems.

Can anyone answer this?

I have already spoke briefly with someone in the 'escrow' area of my mortgage company. She said any descrepencies get readjusted for the next year. Whic quite frankly doesnt make sense for any payments of mine to go up when nothing else went up, not my land taxes, or anything.
At the end of the year I get my check to pay the property tax, which is lesss than what it should be, I end up owing around 70 dollars out of my pocket, which should have been calculated correctly to begin with, right? I ve had this mortgage for 2 years now. ALSO, at the end of last year, they said I was 149 dollars short in my escrow, which I owed them. So I payed it by paying 10.00 extra to my escrow each month. So now sudenly this year, I owe mandatory on my monthly payment even 10.00 more than than that. Does this sound familiar to any of you? Is there one person who is assigned to the same persons escrow for as long as they work there?
Of course maybe it was calculated short to begin with and now since i called, they adjusted it more appropriately.



peace77 -> RE: Mortgage experts? (2/2/2008 11:11:51 AM)

The amount needed monthly in your escrow account can change due to increases in property taxes and insurance premiums.

It is possible that the escrow amount was not calculated properly in the first place.

If your account was short $149, paying an additional $10 per month will only add $120 per year to the account. If you want to add $149 to your account, you needed to pay at least an additional $13 per month, not $10.

Sounds as though your lender wants to make sure that a shortage does not occur again by requiring increased payments.


Peace,
Anne



Pamsy -> RE: Mortgage experts? (2/3/2008 9:03:32 PM)

quote:

If your account was short $149, paying an additional $10 per month will only add $120 per year to the account. If you want to add $149 to your account, you needed to pay at least an additional $13 per month, not $10.


I know, I can add. [;)] They raised it ten, then I raised it another ten because I knew there would be another shortfall at the end of the year. Which is another strange thing. If they knew I was 149 dollars off, they only raised it ten, thus assuming I would be short the amount, PLUS what I may have been short agian the next year, like they want me to screw up so I can be charged extra in late fees or something.



Closie -> RE: Mortgage experts? (2/5/2008 1:27:19 PM)

I just got the notice that my escrow balance is projected to be short. So either I send them a check or the monthly note goes up $30. What I don't get though is even if I send them the amount they asked for, I'll still have an increase of $14. Why is that?



GroupW -> RE: Mortgage experts? (2/5/2008 11:03:53 PM)

I'm guessing the shortfall notice is what it takes just to get the escrow back to flat. Since something caused the shortfall to begin with, the 14 bucks should be what's required to keep it from going negative next year. Most likely your tax value went up this past year, so you owe a slightly higher number.



Closie -> RE: Mortgage experts? (2/6/2008 7:38:03 AM)

Thank you. I talked to a co-worker whose escrow payment went up too. It seems that there was a tax change so we all got socked. I read the statement again and it appears that the check I sent them is for a cushion while the $14 extra is the project amount of the tax for next year.



GroupW -> RE: Mortgage experts? (2/6/2008 9:39:54 AM)

quote:

ORIGINAL: Closie

Thank you. I talked to a co-worker whose escrow payment went up too. It seems that there was a tax change so we all got socked. I read the statement again and it appears that the check I sent them is for a cushion while the $14 extra is the project amount of the tax for next year.


Yup. Me too. I think if the county is willing to buy my house at the level they have it on the tax rolls, I'd be happy to sell it to them!

BT



belikejesus -> RE: Mortgage experts? (2/18/2008 2:52:52 PM)

How may I help you?



ewharff -> RE: Mortgage experts? (8/5/2008 12:14:24 AM)

Hello, I have been living on a credit card for the last year to be able to pay all my bills. The credit card is full now and I can either pay my credit card bills and other bills or my motgage.



ewharff -> RE: Mortgage experts? (8/5/2008 12:17:25 AM)

I need to know what the best thing for me to do at this point. I can not afford my mortgage payment any longer. I have borrowed 30,000 from my mom and dad over the last year to stay affloat and if I borrow again it will always come back to .... I cant afford my payment. Who should I talk to a lawyer, a realator, mortgage company?



Apparition -> RE: Mortgage experts? (8/6/2008 12:14:03 PM)

do you have any equity on the house?
sounds to me like you are living well beyond your means....

if it came down to paying a mortgage or paying a credit card.... i'd pay my mortgage. the credit card can sit there for awhile....

but it also sounds like you need to get out of that house.. you can't afford it.. and the only way you're going to get out of this mess is to get back down into your means.... or file bankruptcy.



relady -> RE: Mortgage experts? (8/7/2008 6:12:42 PM)

Ewharff - The first thing to do is to see if you can sell the house. Do you think you can sell it and get out from under it that way? That would be best. If not, you probably should talk to your mortgage company to see what your options are.



Pamsy -> RE: Mortgage experts? (8/10/2008 6:52:08 PM)

Well i see this thread is still going. At the end of last year, I was over. I added the extra 10 bucks or so each month to cover the next expected shortfall, but i got acheck back instead. Didnt need to. Oh, WHATEVER.



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