Colorado Home Mortgage Loan

My Colorado Home Mortgage Rate is about to adjust.  What does that mean and what should I do?

The full impact of a Colorado Home Mortgage that has an adjustable rate tied to it really depends on the type of Colorado Home Mortgage you have.  The most popular adjustable rate programs used over the last six years were the subprime loans.  These Colorado Home Mortgage Programs were designed to get high risk borrowers into homes at a rate normally just low enough to qualify.  The adjustable rate period for these loans ranged from 2 years to 3 years.  They are known in the mortgage business as two/twenty-sevens or three/Thirty-eights.  They were designed to adjust every 6 months until the rate hit the market cap rate, which is around 11%.  Pretty scary for anyone that currently has these Colorado Home Mortgage Programs.  These loans are designed so that you have to refinance after the 2 or 3 year grace periods.  If you do not refinance your Colorado Home Mortgage, you can expect your rate to jump up 2% every 6 months until it hits that Market Cap rate.  So if you had a 5% rate on this loan it would jump up to 7%, 9%, 11% respectively over time. 

The 2^nd type of Adjustable Rate Mortgages offered in the market has far less risk tied to it, and as a result, the adjustment periods are a bit friendlier.  FHA and Conventional A-Paper Colorado Home Mortgage programs have an Adjustable Rate Mortgage Option.  These Rates typically adjust only once per year and will not exceed 1% per year during that time.  This option will give most Colorado Home Mortgage clients the ability to refinance when it makes sense to them.  For example, we have several clients that got into an ARM Colorado Home Mortgage program at 3.875%.  This is a great rate and they have it locked for 5 years.  In year 6 that Colorado Home Mortgage will be set to adjust.  The adjustment can only go up 1%, therefore making the highest rate available for that year set at 4.875%.  That rate is still better then the 30 year rate currently being offered.  Year number 7 the rate could go to 5.875%, assuming worst case scenario. Again that rate is right in line with what is being offered on 30 year fixed rates.  

Much of the publicity circling around adjustable rate mortgages comes from media outlets.  These media outlets will only report the most negative aspects of the business.  A tornado hits a small town what do you see, 3 trailers hanging from a tree.  You know what I am talking about and the point I am trying to make is that you need to understand what type of Colorado Home Mortgage you are getting yourself into.  There are benefits from an Adjustable Rate Mortgage when it is done right.  Those clients that have been in their house for 5 years at 3.875% will attest to the benefits that they had.  There are so many right reasons to do an Adjustable Rate Mortgage, however the biggest wrong reason is for qualification purposes.  Many of the subprime lenders now out of business qualified these Colorado Home Mortgage programs with the lower teaser rates in order to get people approved.  What they did not do is analyze the impacts created by the adjustment for these buyers.  These borrowers were put in a position where they could no longer afford their payments at the higher interest rate levels.  This has caused many Americans to fall into Foreclosure status.

So now that we have talked about what the Adjustable Rate Mortgage is, we will focus on what you should do.

Option 1:  Refinance Your Home

Utilizing a premier Colorado Home Mortgage broker, you can get access to all programs that are available to you, not just the programs offered by that bank.  The most popular refinance for those borrowers that took out a subprime loan is a FHA Colorado Home Mortgage.  The FHA option allows for a little more risk then the conventional A-Paper loan option.  The Higher risk also allows for a higher loan to value ratio.  This is big as most Colorado Home Mortgage programs face home value issues.  You do not need much appreciation on your home to qualify.  In fact you only need 3% if you have not refinanced before, and 5% if you have.  If the rate creates payment obstacles for you and new 5 year adjustable rate mortgage might be the solution.  FHA Colorado Home Mortgage ARM products are far less volatile then subprime ARM products.  The reason that I recommend the 5 year option as a qualifying option is that it will allow you an additional 5 years to get your current situation back on track.  This is the most feasible option available for people who are not happy with the adjustment that is about to take place on their Colorado Home Mortgage program.

Option 2:  Let your Rate adjust and continue paying.

I stated above that some adjustments are not bad.  Colorado Home Mortgage programs that only adjust once a year at a rate of 1% a year may still offer a lower rate then what the market currently offers.  In these circumstances it is best to wait and refinance only when the market hits a low point.  Colorado Home Mortgage programs should be designed to meet both your current and future needs.  Refinancing should only take place when it makes sense for your long term objectives.  Many people looking to refinance their current Colorado Home Mortgage Program do so because it saves them $200 a month today.  Then they sell their home a year later.  The cost of the refinance will set you back much more then the savings you get over the next year.  Your net proceeds from the sell of that house will be far lower then the savings your received from the refinance.  So refinancing your Colorado Home Mortgage should only take place when it makes sense to do so.  Talking to your Colorado Home Mortgage broker and asking for amortization schedules will help you make that decision.

Option 3:  Sell your Home

Not the most popular option, but if you find yourself in a situation where you can no longer afford your payments selling your home will be the best option.  Hopefully you have some equity to make the sell of the home complete.  However if you are upside down on your home like many of us are, you can also go into a short sale situation.  You should contact a professional Real Estate agent to answer your short sale questions.  Colorado Home Mortgage loans have been adjusting for many people in a way that makes it impossible for them to continue making payments.  Circumstance arise that may have contributed to these obstacles, but putting your home up for sale and eliminating the threat of continued Colorado Home Mortgage rate hikes may help you save money over the long term.  

I hope that you found the information helpful, if you are looking for current Colorado Home Mortgage market updates you can check out my market blog at www.coloradomortgagebanking.com/news

I am here to help you and I would be pleased to earn your business.  If you are someone you know needs my assistance please don’t hesitate to call me directly.  My goal is to be your Colorado Home Mortgage provider for life.

Daniel   

Colorado Online Mortgage rates experienced a lot of activity in the last couple of days.  We have a variety of economic reports to talk, but in short most of the data released came in positive for Colorado Online Mortgage rates.  The movement seen in the Mortgage Backed Securities markets however has not been enough to send Colorado Online Mortgage rates to far down.  We have seen about a 1/8^th decrease in Colorado Online Mortgage rates and we are hoping that going into next week we see Colorado Online Mortgage rates continue to drop.  Listed below are the Economic reports reported in the last couple of days all of which will have some impact on Colorado Online Mortgage rates:

Yesterday 6/26/2008

Corporate Profits continue to be the hot headline topic.  So far Corporate Profits are down and with recent troubles being reported by GM and Ford its hard to believe that Corporate Profits will come back this year.  The negative press related to Corporate Profits will increase the likelihood that investors will buy Mortgage Backed Securities.  This demand should decrease pressure on interest rates and should move Colorado Online Mortgage rates down.  

Jobless Claims continue to jump over expectations sending another weakening influence in our economy.  Jobless claims are monitored as a signal of strength in our economic system.  We are trending above 3.1 Million Claims which is at a new high for this decade.  Investors again tend to lean towards MBS in order to ride out the poor economic storm.  Colorado Online Mortgage rates tend to do better when this report comes in worse then expected.

Existing Home Sales did come in a bit better then expected.  We were anticipating 4.96 Million homes sold and in fact we had 4.99 Million.  This report would have normally had negative impacts on Colorado Online Mortgage rates, but the difference was not enough to send any real shock waves to investors.  As a Colorado Online Mortgage Provider I will attribute the higher then expected numbers to an increased activity seen in the summer months.  We also have many new home owners recognizing the potential to buy now and this would increase home sale activity.  The report though negative did not move Colorado Online Mortgage rates in one direction or the other.

Gross Domestic Product Came in as expected showing about a 1% increase.  GDP is the biggest monitor for recessionary pressures.  Negative GDP numbers are defined as Recessionary periods.  Two GDP reports in a row showing negative output indicates that we are in a recession.  Colorado Online Mortgage rates did not react to the information.  Most of the expectations in GDP have already been priced into the Colorado Online Mortgage markets and would have only impacted them if the news came in different then what was expected. 

06/27/2008  Economic Data

The Personal Consumption Expenditures (PCE) report is a component of the monthly Personal Income report. It is a measure of price changes in consumer goods and services. The PCE is the Fed’s favorite inflation indicator and markets tend to be extremely sensitive to unexpected changes to the reported numbers. As inflation and expectations of future inflation rates change, the markets adjust Colorado Online Mortgage interest rates to reflect those changes.   The fact that the actual Core PCE come in lower then expected indicated that inflationary pressures were weaker then anticipated by the market.  This will create buying demand in the market and will help lower Colorado Online Mortgage rates.

Consumer Sentiment, like Consumer Confidence measure how people feel our economic situation is.  A strong report typically indicates stronger then expected expenditures by consumers.  A weak report indicates consumer’s propensity to save.  When people are not spending, economic stimulus does not take place.  Poor economic stimulus activities will increases the demand for bonds and as a result lower the price for Colorado Online Mortgage rates.  Our current Consumer Sentiment reading is at its lowest level in 20 years and appears to be motivating people to save.  This will help Colorado Online Mortgage rates over time.

In conclusion, most of the economic data seems to positive for Colorado Online Mortgage rates.  We are hoping to see Colorado Online Mortgage rates continue their downward momentum.  We will need to stay tuned to all the economic data influencing our markets over the next week or so.  We should drop a bit over the next few days. 

Please call me with your Colorado Online Mortgage questions.

Colorado Mortgage rates have improved for the 2^nd straight day, giving us hope that Colorado Mortgage rates may start looking competitive sooner then later.  Most of the Colorado Mortgage rate improvements can be contributed to growing concern for the economy and a decreased emphasis in inflation.  It only took two days and 4 separate speeches by the Federal Reserve to increase Colorado Mortgage rates by almost 1%, it may take weeks to recover from the increases.  So far most of the data being released seems to favor Colorado Mortgage rate improvement.  We saw this happen yesterday with the release of the Producer Price Index.  Producer Price Index came in as expected and all the hype related to inflation concerns seem to dissipate with the report. 

Today we have no scheduled Economic Reports to help the Market.  Investors will be looking at Headlines to determine their buying motivation in the Colorado Mortgage Securities market.  We has some very unexpected news hit the securities (stock) market today as Fed Ex reported earnings far worse then expected.  The stock market appears to be down over 100 points and may hit the 11K mark by the end of this week.  Colorado Mortgage Rates always do well when news in the security markets appears to be bad.  Morgan Stanly also reported very negative profit news and their stock is currently trading about 10% lower then yesterday.  So in a day of very little economic data it appears that the headlines have increased to momentum to buy bonds.  This new demand will increase the price of bonds and lower Colorado Mortgage Rates.  Take a look at www.coloradomortgagebanking.com/news if you get some time to compare other market moving indicators, but regardless of which site you tune into it is clear that you will not lose by FLOATING until tomorrow. 

Stay tuned for tomorrows leading indicator report, Jobless Claims, and Philadelphia Fed Index to get a step up on whether locking will be necessary.  Everything I am seeing in the market seems to indicate that the economic data due to be released should come in as expected and no real surprises are in store.  If that is true then Colorado Mortgage Rates will continue its downward trend.  We learned something over the last week or so and that is the Federal Reserve is not as predictable as they have been in the past.  I still have a lot of faith in Mr. Bernanke but he still has a lot of critics out there thinking that he may be in over his head.  Colorado Mortgage Rates appear to be impacting new loan applications which have hit its lowest mark since 2006.  When you are shopping for a Colorado Mortgage it is critical that you work with someone who understands the market.  We will give you the Colorado Mortgage that makes sense for you.  Call me with your Colorado Mortgage questions and have a great day.

Daniel

Colorado Online Mortgage rates improved today as investors began to realize that the mortgage backed securities market was a little undervalued.  Investors went on a selling frenzy yesterday on fears that inflation could be higher then what was currently being reported.  Obviously inflation is bad for Colorado Online Mortgage rates.  I tend to reserve this site to talk about the various economic reports impacting Colorado Online Mortgage rates.  I also try to explain how the data was interpreted by the market and what that means to future Mortgage Backed Securities Pricing.  The price of bonds has an inverse relationship to Colorado Online Mortgage rates.  When bonds are up Colorado Online Mortgage rates are down. 

Most movements created in the market revolve around volume activity in the market.  Volume in the market is dictated by Economic activity, which is reported by economic data and/or current headlines.  In the absence of economic data, current headlines take the center stage for what investors look at to help them determine their buying and selling strategies in the market.  When buying volume is up Colorado Online Mortgage rates will decline.  If selling volume is up Colorado Online Mortgage rates will climb.  Our only economic data report for today came in the form of Existing home sales.  The Existing Home Sales Index reports the number of existing homes sold, expressed on an annual basis. The sales of existing homes accounts for 84% of all houses sold and the total volume indicates housing demand. The report is a strong predictor of future national mortgage origination volume and for near term spending for housing-related items. The Existing Home Sales expectation for today was around 4.85 million and the actual data came in around 4.89 million.  This data appeared to be better then expected and typically causes Colorado Online Mortgage rates to jump a bit.  However the data is still so poor that investors could not help but be concerned about the volume in Home sales.  This concerned outweighed the better then expected numbers and caused investors to seek safer investments.  When investors seek safe investments bonds become a nice portfolio to have. We also had inventory numbers released for homes currently on the market.  This report showed that we had more homes on the market then ever before.  Our inventory levels came in at a new 22 year high and not since 1985 have home inventories been so bad. 

Colorado Online Mortgage rates will be impacted by a verity of economic reports due out.  Durable orders; consumer confidence; and new home sales will all be market movers next week.  The biggest report for the week will come in Durable Orders which reports on Wednesday.  Durable Goods Orders reports the number of new orders placed with domestic manufacturers for immediate and future delivery. Durable goods are items considered to be useful for at least three years (such as vehicles, large appliances and computers.) It is important for Colorado Online Mortgage rates because durable goods provides insight into demand as well as business investment. Companies willing to spend more on equipment and other capital are possibly experiencing sustainable growth and could be planning on greater production capacity. The Durable Goods Orders report is a leading indicator for the manufacturing sector and has a big effect on the Colorado Online Mortgage markets despite its volatility and large revisions. The non-defense category closely reflects the GDP category, Producer Durable Equipment, and is looked at more closely than the overall headline number.

We believe that we will continue to see light reporting through Tuesday of next week and therefore should see Colorado Online Mortgage rates continue to regain this weeks lost ground.  Colorado Online Mortgage rates will be focused on Headlines until then and because most of the 1Q reporting has already found its way into the market no surprises appear to be on the horizon.  If you can get 5.75% the LOCK otherwise continue to FLOAT until early next week.  Call me with your Colorado Online Mortgage questions and take a look at www.coloradomortgagebanking.com/news.

Colorado Mortgage rates saw slight improvements on today’s economic reporting.  We had two reports both reporting on the same subject material, inflationary pressure.  PPI and Core PPI were both released today.  These reports create movements in the Mortgage Backed securities Market and both impact Colorado Mortgage rates.  The Producer Price index for last month showed a 2.0% positive growth increase in pricing.  The expectation was 4%, signaling a lower then expected inflationary number.  This was very good news for Mortgage Backed Securities and allowed Colorado Mortgage rates to see some improvements on the day.  However, with the good news came some bad news, when the Volatile Energy and Food components were taken out of the data, Producers Pricing Index came in at 4% whish was 2% higher then expected.  All in all a very mixed day as it relates to the economic data released on inflation. 

Producer Price Index measures the change in prices, paid by producers, for a fixed basket of capital and consumer goods. It also measures the change in prices received by the manufacturing, mining, agriculture and electric utility industries. The “core” PPI excludes the volatile food and energy sectors and gives a clearer picture of the underlying inflation trend.  Economists pay the most attention to the PPIs for finished goods, intermediate goods and crude goods. The PPIs measure inflation of prices on the producers’ end and often that inflation gets passed onto the consumer and CPI. Inflationary pressures seen in PPI can help predict future pressures on consumer products’ prices. As a general rule, higher inflation is negative for bond markets.  Inflation creates a devaluation of current bonds which causes bond price to decrease and Colorado Mortgage rates to increase.

The mixed economic data, though important, was not the market mover for today.  The Market mover came as a result of poor stock performance.  The stock market lost some ground today and most experts believe that the stock market is still a little over valued.  This over valued belief creates some concerns for investors, which pushes portfolio strategies to focus on bonds.  We will continue to have a LOCKING recommendation for Colorado Mortgage rates at least until tomorrow afternoon.  Rates are looking good and if you can get below 5.75% then jump all over it.  For .5% cost today, I can actually get your 5.5% which means that we may have a new locking floor established by the end of the week.  We will need to watch rates, but anytime you can get a Colorado Mortgage rate at 5.75% or better you will ultimately be on the winning side of your rate lock.  If you have Colorado Mortgage Rate questions please feel free to call me.  In the mean time have a great evening.  Don’t forget to look at my other article at www.coloradomortgagebanking.com/news

Daniel