The Wealthy Are Also Defaulting on Their Mortgages

Real Estate, Newton, MA.


The Wealthy Are Also Defaulting on Their Mortgages

There are many who believe that mortgage delinquencies in their region are concentrated in the middle-to-lower income neighborhoods. Actually, the research shows the number of delinquencies in the higher priced sections are currently exceeding the percentages in less affluent areas.

The most recent Mortgage Monitor issued byLPS reports that the largest increase in both delinquencies and foreclosures, as compared to 2008 levels, are in ‘jumbo’ mortgages. A jumbo mortgage, according to Wikipedia, is:

“a mortgage loan in an amount above conventional conforming loan limits…the limit is $417,000 for most of the US.”

In some parts of the country, that limit can be over $625,000. This type of loan finances the higher priced properties in a marketplace.

According to LPS, the percentage increase in jumbo mortgages is as follows:

  • Delinquencies: increased 281%
  • Foreclosures: increased 589%

Again, these numbers are greater than any other type of loan including Option ARMs and Sub-prime loans.

Strategic Defaults

That doesn’t necessarily mean that the more affluent don’t have the money to meet their mortgage obligations. In some cases, they see their home as a depreciating asset and determine that continuing to put money into it makes little sense. The Washington Post recently reported on this. In the article, they explained:

“The ratings agency Moody’s said that based on its analysis of mortgage-backed bond portfolios, homeowners with jumbos now constitute “greater strategic default risk” than any other type of borrowers, including subprime. That’s because an exceptionally high number of jumbo owners — many in high-cost markets hit by real estate deflation over the past several years — are stuck with persistent negative equity.”

Bottom Line

We often explain that the number of distressed properties in a neighborhood adversely impacts values of other homes in that area. It now appears that even the most affluent areas will be dealing with a supply of discounted properties entering the market as foreclosures.  This would have an extreme impact on the Newton and all west suburban Boston markets.  I have not seen any evidence of this so far, but I will let you know if I do!

The Crew at KCM


How Much Should I Put Down

Realtor, Newton, MA.  homes for sale

Another great article from the KCM Crew—–

Like most questions, the answer is “it depends”. Today, I thought I’d give you some things to consider.

Let’s begin the discussion with loans that don’t require Mortgage Insurance. The suggestion is to borrow as much as you can afford. As an example, borrowing $310,000, as opposed to $300,000, will increase your mortgage payment by about $51 at 4.5%. Recognize that by doing so, you will have $10,000 in the bank. It is my experience that it is easier to find $50 more every month than it is to save $10,000. Even if you had the discipline to set aside the $50 monthly, it would take you 200 months to re-accumulate the $10,000 in principal (longer with lost interest).

Understand too, that the interest paid on the extra money borrowed is tax-deductible. In a 25% tax bracket the $51 additional has a real cost of about $38!


Having the $10,000 liquid has other potential advantages as well:

  1. If rates go up in the future, you could potentially make more interest than you are spending.
  2. If you can avoid using credit cards for furniture, home improvements, etc., you can save a bundle on those non-tax deductible interest rate costs.
  3. In a world where home values have declined, the more you borrow, the less you have at risk. You transfer the risk of the future value of the home to the lender.

Now, many borrowers today will need some sort of Mortgage Insurance, whether it’s a Conventional Loan with less than 20% down or an FHA Mortgage. These borrowers should sit with their loan officer and run the numbers because the cost of the Mortgage Insurance can vary based on loan-to-value and other factors. Examine the costs and the relative benefits.

House Rrices: Where Will They Be in the Spring?

Newton, MA.

Reprinted from The KCM Crew

This post refers to the national real estate market, I believe the market here in Newton, Weston, Wellesley, MA. will remain relatively unchanged thru the spring.  If anything I see a slight dip in the 1st Q of 2012

Many sellers want to wait until the spring before putting their home on the market. This might be for any of several reasons:

  1. They don’t want to be inconvenienced during the holiday season.
  2. They believe that they will see more potential buyers and as a result will get a higher price.
  3. In the northern part of the country, they might not want people walking through the snow and then into their house.
  4. All of the above

In a normal real estate market, this may make sense. However, this market has been anything but normal. This spring will also see some abnormalities. The biggest difference will be the direction prices will take.

In years past, the spring market would favor the seller because increased demand would outpace any increase in supply: the number of houses coming onto the market would not be as great as the number of buyers newly entering the market. In most situations, when demand is greater than supply, prices increase.

The reason this spring will be different is that the supply of homes coming to the market will be dramatically impacted by foreclosure properties being released by the banks. Many believe this increase in inventory will far outweigh buyer demand. In situations where supply is greater than demand, prices decrease.

Will This Actually Happen?

RealtyTrac, in their latest foreclosure report, explained:

“U.S. foreclosure activity has been mired down  since October of last year, when the robo-signing controversy sparked a flurry  of investigations into lender foreclosure procedures and paperwork. While foreclosure activity in  September and the third quarter continued to register well below levels from a  year ago, there is evidence that this temporary downward trend is about to  change direction, with foreclosure activity slowly beginning to ramp back up.

This will impact prices.

What Do Experts Believe the Impact Will Be?

Here are the pricing projections by several major entities:

  • Zillow believes we will not see a bottom in prices until the first quarter of 2012.
  • Standard & Poors thinks prices will drop %5 in the next few months.
  • JP Morgan Chase believes prices will depreciate 6 to 7% over the next six months.
  •  Barclays says prices will fall 7% by the end of the first quarter of 2012.

Bottom Line

You may pay a hefty price for the convenience of not having your property on the market right now.

The Real Estate Ship Appears to be Turning!

Newton, MA.  newtonmasshomesforsale.com

The Ship Appears to be Turning

Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research. To view other research from FIU, visit http://realestate.fiu.edu/D

On October 31, CNN Money reported: “Home prices headed for triple dip”.  Reporting on information provided by Fiserv (a financial analytics company), a 3.6% fall in prices on a national basis is expected by next summer.  This will result in the Case-Shiller Home Price Index falling to 35% below its peak in 2006 and marking a triple dip in U.S. housing markets.[1]

Say it ain’t so!  Is housing set for a third dip in five years?  This depends on factors being in place to lessen the impact from market anxiety brought on by worries over a pending wave of foreclosures and the U.S. debt crisis, which we will start to hear more about shortly.

So, what are these factors and what do they tell us?  These factors are really fundamental drivers that encourage individuals to buy versus rent their personal residences.  They are sometimes referred to as housing affordability measures.  The price to income, mortgage payment to income, and a buy versus rent analysis for various markets provide strong evidence that factors are in place to encourage home ownership or favor renting depending on the resulting measurements.  In ongoing research being performed by Beracha and Johnson, these measures are at record levels in favor of buying.[2]  In fact, the price to income ratios in 23 of the 50 states are at 30-year record lows.  The payment to income ratios are at 30-year record low in all 50 states.  A buy versus rent analysis performed in 23 of the nation’s largest metropolitan areas also indicates that hurdle rates (the rates at which potential buyers are indifferent between buying and renting) in all 23 cities are below 25-year average appreciation rates.  All of these results strongly favor purchasing.

What about per capita income and present day prices (relative to past prices)?  Presently, U.S. per capita income is on the rise again and has regained to the level of 2007 (roughly $40,000 per person), while prices of homes on the other hand rest at 2002 levels according to the Case-Shiller Home Price Index.  What about mortgages rates?  Presently, 30-year fixed rates are at near record low levels.

So, let’s put this all together.  Housing is presently more affordable than at any time in the last 30 years.  While income is only at 2007 levels, home prices are even lower coming in at 2002 levels.  All of these factors set the stage for many individuals to favor purchasing over renting.  Thus, while there are grave concerns over the overall health of the economy, fundamental drivers now appear in place to staunch any further significant plunges in home prices.

The ship appears to be turning.[3]

Real Estate Negotiating Tips

Newton Mass Homes for Sale

1. Go first. Many people hate to be first to toss out a figure because they think they might miss out on an opportunity. (”If I offer $10k and he would have been happy with $5k I’ll spend a lot more than I have to.”) Occasionally that might happen, but it makes more sense to go into a negotiation assuming the other party is smart and has a reasonable sense of the value of whatever they want to buy or sell. Making the first offer lets you set the “anchor” for negotiations to follow. Studies like this one show that when a seller makes the first offer the final price is typically higher than if the buyer made the first offer. Why? The buyer’s first offer will always be low, which sets a lower anchor. In negotiations, anchors matter.

2. Be quiet. When we’re nervous we tend to talk a lot and therefore miss a lot. Let silence be your friend. If you make an offer and the seller says, “No way,” don’t respond immediately. To fill the silence the seller will give reasons why your offer is too low… and in the process may give you information you wouldn’t have received otherwise. Stay relatively quiet, listen, and when you do speak, ask open-ended questions. You can’t meet in the middle (or, hopefully well to your side of the middle) unless you know what the other party really needs. Give them time to tell you.

3. Know what you want. You should always know what you need — and what you’re willing to spend or pay. If you don’t have a clue about the cost of a particular service, don’t expect the other party to educate you; that puts even the most ethical person in an awkward position. At the least have a sense of the market price for the product or service you want to purchase. Then you can adjust your offer based on the quality and quantity you will actually receive.

4. Assume the best case. High expectations typically lead to high outcomes. Ask for what you want, and go into the negotiation assuming you’ll get it. Why not? You can’t receive if you don’t ask. My wife is the eternal negotiation optimist; she always assumes she can make a deal on her terms. And she almost always does — because she confidently asks for what she wants.

5. Avoid setting ranges. Service buyers often ask for estimates in ranges: “I know you don’t have all the information you need, but based on what I’ve told you, what’s a ballpark figure?” Ranges create anchors too. If you don’t have enough information to provide a solid estimate, don’t. And never say, “Well, somewhere between $10k and $20k…” because the buyer will naturally want the final cost to be as close to $10k as possible, even if what you’re asked to provide should cost well over $20k.

6. Only make concessions for a reason. Say a buyer asks you to cut your price, saying, “All I can afford is $500.” Make sure you get something in return. Say, “For $500 I can do X and Y,” and take Z off the table. Every concession should involve a trade-off of some kind; otherwise your price was simply too high to begin with. Use the same logic if you’re buying; the classic home negotiation move is to ask for, say, all the appliances and fixtures when you counter at a higher number. Always ask for something in return, and don’t be afraid to ask for things you don’t really want early on so you have items you’ll be happy to take back off the table later.

7. Never be Harry Truman. Truman kept a sign that said “The buck stops here” on his desk to remind him that his was usually the final decision. In negotiations it’s tempting to say you have the final word and ultimate authority (especially if that’s true.) Don’t. To avoid getting cornered or pressured, always have a reason to step away and get the okay from another person, even if that other person is you.

8. Make time your friend. Never, ever rush. Never see a negotiation as something to wrap up as soon as possible. A negotiation is an investment in time, and most people don’t want to lose their investments, so the more time the other person has in a deal the more they’ll want to close the deal — and the more they will voluntarily give up in order to get you to say yes.

9. Ignore face value. Negotiating is a little like being on Survivor; in the spirit of the “game,” many people feel it’s okay to be less than forthcoming or honest. Don’t assume everything you hear is true. Statements like, “I can’t go a penny lower,” are more likely to be negotiating tactics than truths. Listen, but toss a few grains of salt onto what you hear. Look closely for what lies under the posturing and positioning.

10. Give the other person room. People get defensive or attack when they feel trapped, and neither helps a negotiation move forward. Push too hard and take away every option and the other party may have no choice but to walk away. You don’t want that, because you should…

11. Forget about winning and losing. Negotiating can feel like a game but it’s not. No one should win or lose. The best negotiations leave both parties feeling they received something of value. That’s how you want a negotiation to end up, because a negotiation should…

12. Create a relationship. Take, but don’t take too much. Give. but don’t give too much. Establishing a long-term business relationship should always be your goal.

And when you’ve finalized the deal, say thanks — and mean it.

Boston is 4th Worst City to Rent in the Country

Best And Worst Cities For Renters

Steve Dunwell/Getty Images


Worst Cities, No. 4: Boston, Mass.

Average Monthly Rent: $1,625
Change in Rent year-over-year: 3.6% increase
First Quarter Vacancy Rate: 4.6%
Mortgage Payment v. Rent Payment: $598 cheaper to rent

6 Extreme Personality Types You’ll See At Open Houses

Newton, Mass Homes for Sale

Mood of the Market


Inman News™

From the profane, underhanded real estate agents of “Glengarry Glen Ross” (intensely depicted by an ensemble cast including Jack Lemmon, Al Pacino, Kevin Spacey, Alan Arkin and Alec Baldwin), to the affirmation-chanting agent portrayed by Annette Bening in “American Beauty” and Rodney Dangerfield‘s embezzling mortgage broker in the Richard Pryor film “Moving” — fiction has long seemed engrossed with extreme exaggerations of real estate pro stereotypes.

What these writers don’t seem to recognize is that there are “types” of real estate consumers, too; and nothing brings the most extreme consumer types out of the woodwork than a good old-fashioned open house. Here are a few you might see, if you decide to venture out this weekend:

1. The Voyeur. The Voyeur is the neighbor, from next door or around the corner, who has come by for strictly lookie-loo purposes. Once upon a time, Voyeurs primarily stopped at open houses to check out the neighbor’s decor or landscaping — or to snoop in their drawers. Given the turn the market has taken, though, many Voyeurs hope to keep track of how property values in the area are trending, in part, through their open-house visits — it’s the best way to track what kind of property sells for what kind of price.

2. The Poser. The Poser is the seller who lets the agent in, bids the agent adieu, and then comes back an hour later with a backpack and baseball cap on, posing as a visitor — almost always to the agent’s total and complete horror and surprise. Posers thinks that no one can show their house like they can show their house, so they walk around chatting other, real prospective buyers up, casually commenting on the amazing drapery (“wow — that looks custom!”) or the wide variety of fruit trees in the backyard (“plums, peaches and lemons — it’d be like having your own private orchard — and what a great price”).

3. The Lure. I once went to a public open house (i.e., not a broker’s open house) in a decidedly non-luxe home, where the postage stamp-sized urban backyard had been turned into a scene from the South of France, complete with an entire crew of individuals who qualified as Lures — including waitstaff members busily passing heavy hors d’oeuvres and espresso-pulling baristas. Word on the street is that Thai-massage practitioners and Botox doctors are among the next-gen open house Lures now being used to attract agents who represent prospective buyers into open houses.

4. The Crack Negotiator. The crack negotiator is usually a relatively serious buyer who thinks, bizarrely, that they’re going to go the process 100 percent DIY (do-it-yourself) and that they have the skills to cut a crazy good deal by making an insanely lowball offer — during the actual open house. Not deterred in the least by the facts that the seller is not there, that the listing agent’s junior assistant is actually holding the place open or that they should actually be making this offer via a proposed contract, Crack Negotiators think if they make enough 40 percent-off offers by scrawling a number on a napkin at the kitchen table, someone is bound to take it in this market.

5. The Amateur Inspector. By contrast with the Crack Negotiators, most of whom lose their screwball tactics after a couple of dozen rejections and then move on to successfully purchase a home, the Amateur Inspector is typically a lookie-loo type or real estate hobbyist posing as a serious buyer. Amateur Inspectors think they’ll impress someone with the extent of their knowledge (acquired almost entirely by watching Bob Vila on vintage “This Old House” episodes), and aim to win admirers by mildly stalking true prospective buyers and agent attendees around, pointing out every wall crack, faucet drip and floor slope in the place.

6. The Besotted Buyer. Besotted Buyers saw the listing come online, have driven by 12 or 13 times in advance of the open house, and have bitten their fingernails the whole four days between the time the listing was published and the first open house. They come, they see and they just know — this house is “The One.” But sometimes, in their possessiveness about the property, they begin to act out, coming back to the open house over and over, even trying to nonchalantly discourage other attendees about the property, suggesting it is overpriced and making a big to-do of the few flaws they can find.

The economy has created some extremes in the housing market, and open houses seem to bring out those with extreme personalities who love to look at and shop for real estate. The upside? These folks transform open-house hunting into a spectator sport — not just for home viewing, but for people-watching as well. Have fun!

Making A Realistic Offer to a Resistant Seller

Newton, MA. Homes for Sale:

This article was written by Amy Hoak from Dow Jones, however, the title of the article is How to Make A “Lowball” Offer. I submit that a property that has been languishing on the market for a few months is an overpriced home. In reality you are submitting a market rate offer to an unrealistic seller. I can be reached at 617-921-6860 or margaretszerlip@gmail.com to discuss this very important distinction.

For some home sellers, it was a long summer without a home sale. That means this fall, some buyers — smelling the desperation — may be able to cut a better deal.

Top mistakes when making a low-ball offer on a home: If you’re thinking of making a low bid on a home, avoiding these mistakes will increase your chances of getting an accepted bid. Amy Hoak has details on Lunch Break.

“Sellers who had their homes on the market all summer are anxious to move on, especially before the holidays hit,” says Bill Golden, a real-estate agent with ReMax in Atlanta. The closer it gets to the holidays, the more anxious unsuccessful sellers can become, he says.

Other sellers will choose to let their listings expire and try again next year. They, too, may be willing to make a deal in order to sell their properties, even if they’re no longer actively trying to sell their place, says Patrick Carlisle, chief market analyst for Paragon Real Estate Group in San Francisco.

The key to making an aggressive “lowball” offer on a home is to start by finding properties that have languished on the market for a long time. The softer the market, the more likely the strategy will work, Mr. Carlisle says.

But buyers can get tripped up. Here are six things you need to do when making a lowball offer.

1. Understand the market

Before submitting an offer, your real-estate agent should do a full comparative market analysis of the property to determine what its fair market value is, Mr. Carlisle says.

For instance, it’s still a buyer’s market in the Richmond, Va., area, where Susan Stynes works as a real-estate agent for Long & Foster. Ms. Stynes says she wouldn’t hesitate to encourage a client to make an aggressive offer, after considering the time the property has been on the market and neighborhood comparables.

But in other markets a low offer won’t get you far, says Stephen G. Kliegerman, president of Halstead Property Development Marketing in New York.

2. Pick the right real-estate agent
[sjMW1009]Tim Goldman

Some real-estate agents caution buyers against making an offer that is so low it could offend the seller and halt the negotiation process.

But sometimes agents are too reluctant to make aggressive offers, Mr. Carlisle says. They may be more focused on completing a deal and collecting their commission, rather than making the best deal. Or their negotiation skills might not be up to par.

“If it’s an appealing, well-priced property that has five or six offers on it, well, going in 10% or 20% under asking isn’t going to get you anywhere,” he says. But on a property that has been overlooked by the market and doesn’t have multiple bidders, it often doesn’t hurt to go in low.

3. Back up your price

There’s an art to presenting an offer that’s substantially under the asking price. A low offer could start negotiations off on the wrong foot if you’re not careful, Mr. Golden says. The key is for you or your agent to explain the offer when presented.

“Sellers want to know why you’re coming in so low. Include recent [comparable sales in the area] or issues with the property that validate why your offer is so low,” he says. Don’t be too harsh with your criticism, however — that can also work against you, he adds.

4. Know what you’re willing to pay

Buyers these days have a strong motivation to get the best possible price on a property, especially if they believe that home values will fall even more, says Jay Butler, professor emeritus of real estate at the W. P. Carey School of Business at Arizona State University. Their biggest worry is often that people will say they overpaid, he says.

But sellers have limits, too, most often dictated by the amount of home equity they have, Mr. Butler says.

Before negotiations begin, it’s important for a buyer to decide what his walk-away price is, Mr. Carlisle says. “At some price point, the deal is no longer worth doing, no matter how great the property.”

While a buyer should know how high she is willing to go, don’t put limits in the first offer, Mr. Kliegerman says. You lose integrity if you say it’s your “best and final” offer, but then are willing to come up with a few thousand dollars more in order to buy the property.

5. Make a clean, easy offer

When you make a low bid, you want other elements of the offer to be attractive to the seller. And a deal that can close quickly often will have appeal.

Make sure there are as few contingencies as possible, Mr. Golden says. It’s best if buyers don’t have a home to sell in order to buy the one they’re bidding on, Ms. Stynes says.

Also, have your financials in order from the start. Loan qualification is more difficult these days, so it’s important to have a lender pre-approval letter, Mr. Carlisle says.

6. Be smart about a cash deal

Cash is king, but in the end, a seller often wants the most money for his home — regardless of if the buyer needs a mortgage or not. So don’t think making an all-cash bid will automatically mean an accepted offer.

If the seller is a bank because the property is a foreclosure, the institution may accept a lower offer from a cash buyer, as opposed to someone who needs a mortgage, Mr. Golden says. Banks often don’t want to deal with mortgage-related delays.

Newton Real Estate Market – A Snapshot

Newton, MA. A Real Estate Snapshot

There are currently:

236 Single Family Homes Listed for Sale, average list price is $1.164M with a marketing time of 109 days

60 homes are currently under agreement, average list price is $953K and a marketing time of 98 days

40 homes have sold in the past month averaging $830K and a marketing time of 83 days.

What do these numbers mean?  I feel that these numbers are a clear reflection of seller reality, or lack thereof.   The average list price in a stable market is much closer to the average sale price.  Currently we have a 300K spread between average list and average sold.   It is my opinion that we are still in a declining market.  While I do not think Newton real estate prices will drop precipitously we are probably looking at a 3-5% reduction.  It is worth noting that the high-end market (2.5M+)  appears to be strong in the western suburbs.

Mortgage Rates…..Best Ever!

Newton, MA.

Mortgage Rates: Path Paved

Mortgage rates improved last week amidst an atmosphere of major market uncertainty.

It wasn’t until Friday though, after exceedingly weak economic data, that consumer borrowing costs really rallied. This surprising positive development followed 10 straight sessions of unfriendly directional behavior. All of that negativity was essentially erased on Friday, leaving rates just above their best levels of the year.  CHECK OUT THE CHART

The rally didn’t end there though.  Over the weekend our nation’s political “leadership” finally put aside partisan opinions and came to an agreement on a long-term budget plan. Combine that with another round of unexpectedly weak economic data this morning and we’re looking at new 2011 consumer borrowing cost lows.

CURRENT MARKET*: The BestExecution conventional 30-year fixed mortgage rate has improved to 4.50%. Some lenders are even offering 4.375% but that quote carries with it additional closing costs.  On FHA/VA 30 year fixed BestExecution is 4.375% with some lenders willing to go as low as 4.25% (extra closing costs).  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.25%. It’s important to point out an increased amount of variation in what individual lenders are quoting as their BestExecution rates.  This is a factor of volatility in the secondary mortgage market.  Unfortunately when volatility picks up in the secondary mortgage market, the cost of doing business get more expensive for lenders (hedging costs go up as lock desks peel off coverage at higher MBS prices). Those added costs are usually passed down to consumers.

THE WEEK AHEAD: With drama dying down over the debt ceiling debate and a U.S. default off the table, markets are ready to shift their attention back to economic fundamentals, which have been generally supportive of lower mortgage rates lately.  And while plenty of indicators do have the potential to improve the overall economic outlook,  they’re more than likely going to confirm a dour situation and keep a lid on rising mortgage rates. The most influential data-point of the week comes on Friday morning, with the release of the July Employment Situation Report. CHECK OUT THE FULL ECON CALENDAR

PREVIOUS GUIDANCE:   Floating in this environment is a crapshoot. Both stocks and bonds are maneuvering through major market uncertainties. Investors are focused on news headlines regarding U.S. budget issues, EU debt contagion concerns, economic data, and quarterly earnings. That puts the direction of mortgage rates at the mercy of factors that don’t exactly adhere to schedules or expectations. While we still view underlying economic fundamentals as being supportive of lower mortgage rates in the future, the short-term risks associated with a potential U.S. debt default leave us more inclined to advise locking, especially deals that must be ready to close in the next 10-15 days. This provides protection from rising rates and still gives your lender a chance to negotiate if rates decline.

NEW GUIDANCE: Floating in this environment is still a crapshoot, especially in the short-run,  but barring an unexpected turn of events on Capitol Hill, a path has been paved for our longer-term mortgage rate outlook to come true. That means we see lower mortgage rates in the not so distant future. It may not be a direct path lower though, there will be ups and downs along the way. Be prepared for continued volatility.

CAUTION: MND guidance is speculative in nature. We don’t have a crystal ball, we can’t predict the future, we can only share our outlook. Making the following considerations extra important……………………

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?


*BestExecution is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their “breakeven analysis” on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The BestExecution loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the “perfect borrower” category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. “No point” loan doesn’t mean “no cost” loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don’t forget the fiscal frisking that comes along with the underwriting process.