One reader asked me: " When does it make sense to "overpay" for a property?"
ANSWER: When the future carrying cost of that property acquisition is likely to rise dramatically.
READ: Waiting for lower San Diego real estate prices could be costly
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Mortgage rates improved, this first week of July, from a horrible June. If you followed the drama last month, fears of defaults and inflation ticked off a rise in mortgage rates of up to 6.0%. As brutal as June, 2009 was, July is giving us back most of what we lost last month. Still, I'm locking loans at application (listen to my two-minute report) because I've changed my bias to locking rather than floating.
The July exuberance may be unfounded:
Thirty-year bond yields rose from near the lowest in seven weeks before the $11 billion sale of the securities. Stocks gained. Yesterday’s $19 billion sale of 10-year notes drew the most bids on record from investors seeking refuge from an economy whose recovery may take longer than expected.
The bond market may have gotten ahead of itself. Mortgage rates look REALLY attractive at 5%; I think this is about as good as it gets for the summer.
Mortgage Rates for July 9, 2009:
Conv 5.0% (no points)
FHA 5.0% (.5 points)
VA 5.0% (.75 point)
All loan quotes assume a 740 credit score, full income documentation with acceptable debt-to-income ratios, and required down payments (20% for conventional, 3.5% for FHA, and zero-down for VA). We will charge a 1% origination fee plus a $695 processing fee.
Apply online now. It's really simple and should take about 20 minutes.
Maybe not today, maybe not tomorrow but mortgage rates are headed higher before Labor Day. The Fed is pulling the plug on its emergency, market-meddling:
An end to the Fed's emergency measures poses a "cliff-effect" risk for the bond market, according to Morgan Stanley.
The effect "increases the risk for a policy misstep and produces greater uncertainty," Morgan Stanley analysts wrote in their midyear outlook published on Wednesday.
They forecast benchmark 10-year Treasury note yields could push toward 4.25 percent by the end of the year, almost 0.70 percentage point above current levels. Short-term yields on the other hand will likely stay steady.
Think of the relationship between Treasury bonds and mortgage-backed securities like a dog, leashed by his master. Sometimes, the the master lets the dog run and then...
SNAP!
The master tugs on the leash and the dog comes running towards him. The Fed's emergency mortgage-backed securities program was a tug on the leash, in an effort to bring mortgage rates down towards Treasury bonds. The Fed's letting the leash out. Expect interest rates to rise and mortgage rates to rise even faster. Let's lock all loans at application.
"Who the heck has time to do all of this?" is a question that may have entered your mind these past ten days. Certainly, a social media marketing campaign neither:
produces immediate results, or
is easy to implement.
An effective social media campaign develops over years, not weeks. All of the ideas I showed you are free or extremely low-cost (less than $50/month) but they do require a time investment on your part. To develop a web presence like I or Greg Swann have is kind of like eating an elephant; you have to do it one bite at a time. Here are some tips to help you get started:
