Category Archives: Mortgage Rates

Buy your next home using Guilds Mortgage Sandwich. It’s Delicious!

Posted on by
Reply

For most of us, a sandwich was the first meal we learned to make for ourselves. As a result, roughly 50% of Americans consume a sandwich every day. I mean, come on, it’s one of the most simple yet versatile and loved foods on the planet, with countless variations to satisfy every palate.

And yet, for all its popularity, the sandwich is not infallible. Sometimes even the most basic ingredients can go awry—not to mention your more labor-intensive gourmet sammies, like Croque-Monsieur or the classic Sloppy Joe. Unfortunately, it takes just one poorly designed sandwich to realize how bad it can go wrong.

Similarly, over 50% of California’s own a home – so the majority of us have experienced the process of getting a mortgage and understand the essential “ingredients” to a successful close, but for many, it’s the opposite feeling of having your favorite go-to sandwich – it’s a complete drag! So how do you maximize taste, keep everything between the bread, manage any sogginess, and create the best balanced and delicious mortgage sandwich?

3 Items You Need for That Perfect Mortgage Sandwich

1 – Digital Lending for Speed and Efficiency

Getting a mortgage can be very document-intensive, with stacks of papers to collect and sign. And many lenders still work this way, asking for all of your supporting documents upfront, then picking what they need to complete your approval. So, years ago, Guild decided to flip the script and go to a more progressive platform to provide state-of-the-art technology to streamline the application process and minimize the number of documents to gather without sacrificing the human touch. You get all this technology with the guidance of an actual human being.

For example, Guild can verify a borrower’s assets without asking for a bank statement using AccountChek®. Instead of asking for a copy of a paystub or W2, we authenticate the borrower’s employment status digitally, using The Work Number®. Thus, speeding up the process significantly by requiring fewer documents, helping to remove much of the hassle and frustration compared to your more traditional mortgage experience.

2 – THE SECRET SAUCE is Customer Service

Guild Mortgage is known for its customer satisfaction, as evidenced by our #1 Ranking in Customer Satisfaction with Primary Mortgage Origination by J.D. Power*. At Guild, we want our customers to truly get that we are partners in their pursuit of a home. For more than 60 years, we’ve grown through referrals by focusing on doing what’s right. As a result, you can expect from Guild:

  • A FOCUS ON YOU – We look for a loan that fits your life. By thoroughly understanding your needs, circumstances, and life goals, we tailor each loan correctly for you.
  • HEART – We do what’s right for our customers, partners, employees, and community.
  • EXPERTISE – We have a proven track record of closing on time. We mind the details, so you don’t have to.
  • COMMITMENT – Wherever you call home, we are there in your community to strengthen and sustain the places people call home.

Guild prides itself on its core value, the promise of home without high-pressure sales tactics. Our goal is to learn more about you, assess your goals, review your financials, then make personalized loan recommendations to give you the necessary tools to make a sound decision either way.  

3 – The Benefits of Keeping your Money Local

I love when I can shop at my local grocery store, send my daughter to summer camp, or go to the movies, knowing my dollars support the people in my neighborhood. The same can be said for every client that comes to me for a mortgage. My team and I are local, familiar with the area, and knowledgeable about the community. We frequent the same businesses like you, and by keeping your dollars within our community, our friends and neighbors can meet their needs and prosper. By focusing on this local availability of wealth, we can create even more opportunities for those around us. 

I know some things are just easier online, as I am not immune to the power of pushing the “Buy Now” link when shopping on Amazon. But, whenever possible, I love the act of handing someone in my neighborhood my money, knowing it’s rewarding the people and businesses that serve our community.

Dan Tharp has been a Mortgage Lender in Sacramento for almost 20 years and would love to help you with your next mortgage.

The above information is for educational purposes only. All information, loan programs, and interest rates are subject to change without notice. All loans are subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction. *Ranked #1 in Customer Satisfaction with Primary Mortgage Origination. For J.D. Power 2021 award information, visit jdpower.com/awards

Are Higher Mortgage Rates a Good Thing?

Posted on by
Reply

Have you dipped your toes into lava lately? I joke about this with my clients who are currently shopping for a new home, especially if they started their search within the last few months – The day before Christmas, the average 30-year fixed mortgage rate was 3.05%. Then, a few weeks ago (Easter), that rate spiked to 5%. And now rates are creeping even higher. So much for taking that family vacation this year! This jump in mortgage rates is forcing many buyers to take a more critical look at their current budget and, in some cases, lower their expectations of what they can genuinely afford or get out of the buying process altogether.

Are higher mortgage rates a good thing? 

Mortgage rates are the highest they’ve been in 13 years, and home affordability is the lowest in 15 years. Is that a good thing? The lead analyst at HousingWire, one of Real Estates leading resources, says yes, it’s a good thing. He says spiking mortgage rates could take some steam out of the red hot market and give inventory a chance to rise. If that happens, it could slow down the rate of home price appreciation and reduce the possibility of an overheated housing market ending in a big crash or bust. He agrees that higher mortgage rates are the best thing because we are in a “savagely unhealthy housing market” and need to get off these shallow inventory levels. Too many people are chasing too few homes, and we desperately need a breather. Redfin said that more sellers are cutting home prices as housing demand softens, partly because of this sharp increase in mortgage rates. And it could be a few months before the actual effect of higher mortgage rates is genuinely noticeable. 

Will Home Values Go Down in 2022?

Should you wait to buy that new home until prices drop? Again, the experts say no, and I agree based on the metrics. One school of thought is that home prices have been artificially inflated the previous few years due to historically low rates and the pandemic. But not one single major real estate firm thinks prices will drop this year. Thankfully, we are starting to see a slowdown compared to last year’s unsustainable run. In 2021, according to the S&P CoreLogic Case-Shiller home price index, home prices skyrocketed to nearly 19%. To put this in perspective, the average appreciation rate in Sacramento over the prior 25 years (not including 2020 and 2021) was just over 8% per year. And this includes the Great Recession 2007 – 2009.

HERE IS A WONDERFUL TOOL provided by The Federal Housing Finance Agency to track appreciation in the US from 1991 to the present.

Rising prices have primarily been due to supply-demand imbalance, and I don’t see this going away anytime soon. Even with rates on the rise, we should see some fall off, but not significantly. According to The National Association of Realtors, the inventory of unsold homes was only 950,000 as of the end of March. According to NerdWallet Home Buyer Report, published this January, nearly 26 million Americans plan to purchase a home in the next 12 months. Given that between 5 and 6 million homes sold in each of the past five years, this doesn’t bold well for buyers. Again, we have too many buyers chasing too few properties.

These higher mortgage rates should take some much-needed steam out of the market, and experts agree that high demand and low inventory are here for the foreseeable future. Hopefully, this clarifies if you are like so many buyers trying to decide if they should buy now or wait. But, of course, whether you purchase a home in 2022 is a very personal decision and depends on your financial situation and the market where you live.

The above information is for educational purposes only. Guild Mortgage Company offers home financing only. All loans are subject to underwriter approval. Terms, conditions, and eligibility requirements apply.

Home values are up. Can you still afford to buy?

Posted on by
Reply

Home prices in California are going up and will probably continue to do so. Does that mean they are less affordable?

The news can be misleading and confusing as it recently touted the significant move higher in the median home price, currently up 15% nationally versus last year. And 14.3% in Sacramento County, says the Sacramento Association of Realtors. 15% sounds awfully high. But the median home price does not measure appreciation. Instead, it marks the middle price point of recent home sales. 

With a substantial lack of inventory for lower-priced homes, more transactions occur for higher-priced homes, which pushes the median home price higher.

The actual Sacramento home price appreciation rate was about 1.25% for the last quarter, or 5% annualized. And it is forecasted to increase by a similar margin next year. So have you been priced out of the market?

The short answer is no, or at least not yet. California’s affordability factor has improved year over year because mortgage rates are down by almost a full percent, and incomes have gone up (Avg. weekly net pay is up 5.7% year over year nationally). Also, remember, only a portion of your income goes towards paying your mortgage. A 5% rise in income can offset a much more significant percentage rise in housing expense.

Let’s assume your monthly earnings did not improve from last year. Consider a buyer’s max purchase price of a new home, based on his/her income and debt was $450,000 last year. Maybe this buyer decided to wait because they were nervous about the market. Now, that home is worth about $472,500.

As a mortgage professional, if I were to use the same income and debt structure I used last year, this buyer would now afford a home for $490,000. This tells us that homes are actually more affordable, even though they have appreciated.

Granted, I am using very simple math here, and this does not get into down payment or cash required to purchase this home but is purely to show you the media doesn’t’ always get it right. Take the time to work through these numbers with a mortgage professional you trust, and don’t give up your dream of homeownership!

Why Don’t I Have the Best Rate?

Posted on by
Reply

Without fail, the number one question I get from first-time callers looking to refinance or purchase a new home is “what’s your rate?” I used to stumble a bit when asked this question because there is so much involved in getting an accurate interest rate and one that I can’t answer in a 30-second conversation. I wish it were that easy.

After years of experience, now I don’t hesitate to answer – I respond with, “What rate do you want? “This tactic usually serves to disarm them a bit and allow me to detail the components that go into an interest rate. 

If you are not getting the rate you heard on the radio or the interest rate you read in the Real Estate Section of the newspaper, it’s typically not because of some elaborate bait-and-switch scheme. In all probability, your rate is different because of Loan-Level Pricing Adjustments. Loan-level Pricing Adjustments are not discretionary fees, nor are they a profit source for me or my bank. These are federally mandated fees per Fannie Mae and Freddie Mac to compensate for loans with greater risk.

They work just like auto insurance. With greater risk come higher premiums. It’s an add-on to the base rates set by Wall Street. Here are just a few triggers that will increase your rate or fees:

  • Having a second mortgage or line of credit that you would like to subordinate. (Keep in 2nd lien position)
  • Doing a “cash-out” refinance with less than 40% equity in your home.
  • Having a credit score of 740 will save you almost a full percent in rate relative to a 640 score.
  • Investment property can add up to a full percent or more compared to the primary residence.
  • If you like Macaroni and Cheese, it will cost you. Not really, just making sure you are paying attention.

You can research your scenario at Fannie’s site.

Why Getting the Lowest Rate Might Be a Bad Idea!

I know it feels good to tell your friends that you have a lower rate than them, but you might just be spending more money over time to get that rate because you are paying points (aka extra fees to buy the rate down). And since many first-time homebuyers sell within 6 to 8 years, having that low rate was just for show. I know this might sound counterintuitive, but you may be paying more because of that lower rate.

The one constant in life is that life is continually changing. Folks can’t envision what will happen in years to come because life just happens, and maybe down the road, they need to a cash-out refinance to pay for required maintenance or repairs, or to help with their kids education, a wedding, or help with a new car, the list goes on and on. 

The important thing is to work with a lender who will take a little bit of extra time to crunch some numbers and help you decide whether a buydown or lender credit is better for your long term and short term goals.

New Tax on Mortgage Refinances

Posted on by
Reply

I’ve got some good news, and I’ve got some bad news. Here’s the bad news first.

Last week, the Federal Housing Finance Agency (FHFA) announced a surprise fee on all new refinance transactions sold to Fannie Mae and Freddie Mac, making up approximately two-thirds of all loans. The cost was assessed regardless of the bank or mortgage company you choose to work with and will increase the interest rate that you had been expecting and had been available.  

This sudden move came as a surprise both in the imposition of the fee and in making the fee effective almost immediately. Historically, they allowed 60-90 days before the new pricing went into effect, to enable lenders reasonable time to close their rate lock pipelines.

Why are they introducing a new fee?

Two reasons. First, both Fannie and Freddie are concerned about the uncertainty surrounding future mortgage defaults and the increased costs they incur. Secondly, they are worried about how quickly their current mortgages are prepaying due to the unprecedented wave of refinances. When a loan refinances, the prior loan comes out of the security, which creates losses to the investor who owns that mortgage, so by raising the cost to refinance will slow down how past loans are paying off.

Although Fannie nor Freddie outwardly stated this, many in the industry think that a third reason drove this announcement. The “refinance tax” will allow both enterprises to build up a capital base for their future release from conservatorship and back to becoming private entities – This is pure capitalism ladies and gentleman. 

 What is the impact to borrowers?

  1. Across the country, lenders are adding these new refinance fees into rate sheets effective immediately for all conventional conforming refinances.
  2. These fees are on top of all other fees already charged by Fannie and Freddie.

What happens next?

The mortgage industry is united in its disappointment with the announcements, specifically with the break from all past precedent of providing a reasonable advance notice of the effective date. The probability of FHFA, Fannie Mae or Freddie Mac revising their announcements with a different effective date is probably low.  

Now for some good news… 

Interest Rates are still at extraordinarily low levels, and refinancing may be a smart financial move, which can save you money every month or reduce the number of years remaining on your mortgage. You may also be able to consolidate your debts to save even more money.