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The Mortgage Market crash of March 2020 and what it means to you!

What just happened!?

This has been a pretty awful last several days.  The mortgage markets have crashed... the secondary markets have been shaken.  In some cases, interest rates have gone up over a full percent in a matter of days.  What happened and what does this mean for you? 
 
I want to talk about 3 things.  Lender Capacity, Lender Liquidity and the Danger that remains.  I will also issue a warning and advice based on my personal experience going through some very similar times, i.e. the financial crisis of 2007-08.
 

Capacity

March 2, 2020.  It all started with lenders getting too busy.  Rates dropped so fast, there were estimations that over 90% of all mortgage holders qualified for a refinance.  Lenders went over-capacity in a matter of days and then it was chaos.  Lenders (and their loan officers) could not keep up with all the refinance requests.  They just didn't have the manpower, or capacity, to handle the business.  Then it became a liquidity issue.  Those same lenders realized quickly that they would not be able to fund all these refinance applications, so they had to increase rates or stop taking refinance applications all together.  Extreme measures were put in place immediately.  Then things got worse.
(Caption courtesy MBShighway.com)
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Why you should LOCK in your loan while you still can!

Mortgage Rates plummet, but many lenders increase pricing!

I've been singing this tune for a long time now.  Even though all the market indicators (i.e. the U.S. 10-year treasury) are showing mortgage rates should decline, they aren't and they won't.  Not any more.  It's simple economics... supply and demand.  Simply put, lenders are too busy and most of them are raising rates in a declining interest rate market.  

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The 3 reasons your balance goes up when refinancing!

A frequently asked question

I have helped many clients refinance and there a question that comes up over and over again when looking at the numbers.  It is, "why is my balance going up so much?"

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2 Critical Tips for Homebuyers

25 Years in Mortgage has taught me lots

Having been in the mortgage business for over 25 years has taught me quite a bit.  First, I've learned that long-term exposure to mortgages is not good for hair growth. Secondly, working with your wife sometimes makes date-night more business than pleasure (not too bad I assure you!).  And lastly, every decision in life now must be done on a spreadsheet! 

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Project My Home flaunts new listing strategy for Sellers!

Realtor Influence Matters

Please note that what I am about to suggest requires the involvement of a Realtor.  The following is a unique listing and selling strategy for today's home seller facilitated by one of the largest lenders in the country.

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Let's find your perfect home!

All the media is buzzing about the housing market. They are saying that the timeline for home buyers and sellers are being pushed up. I think the headline was "Could January be the New April for Home Shopping?"  Personally, I agree. The lack of inventory of 2019 is pushing all the home shoppers from 2019 into early 2020. 

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The BIG catch to infinite 100% VA Loan Amounts in 2020!

In June of 2019, President Donald Trump signed a bill into law allowing the VA to guarantee loans that exceed the county loan limits.  Borrowing over the county limit has always been a thing, but there currently exists a formula calculating the maximum you can borrow.  With the new law, this will CHANGE!  

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Culture and Trust

The Elmendorf Chronicles, August 20, 2019

I’m on a plane. I’m sitting next to Jim the restructure guy. That’s all I know about him after trying to start up conversation. I normally keep to myself but thought I overheard the word "securitization" before he hung up on the conference call he was taking on the plane. He briefly told me that he “restructures businesses” and promptly went back to the 300-page paper manifesto he was reading. Paper, sheesh. But it got me thinking… I’m trying right now to restructure. Patch up, rebuild, improve, whatever you want to call it, I AM in restructure! I think all our businesses should be in a constant state of restructure. Constantly improvising, improving, innovating… growing better day by day.

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Why the Fed Cut may not improve mortgage rates

Don't shoot the messenger

One of the most widely misunderstood dynamics of my business is the belief that a Fed rate cut immediately lowers mortgage rates.  Well, I hate to break it to you, but the Fed doesn't touch mortgage rates; however they make monetary policy changes that shake our world and yes... interest rates.  So allow me to support my "click-bait" headline with some comments and fact. 

The main fact is that the Fed doesn't directly touch mortgage rates.  The Fed sets a target for the "fed funds rate" after reviewing mountains of current economic data. The rate that they tweak is the interest rate banks charge each other for overnight loans. Those loans are called fed funds, which lowers the as the Fed lowers interest rates.  This change, albeit small or great, has great impact on the markets.  But the way it moves mortgage rates is quite the conundrum.  I'll explain... 

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Explaining July 4th to your kids

Never taken for granted

The freedoms we have in this country are unmatched in any other country.  I found this really good video which I plan to share with my kids today.  I even got something from the simplicity of explanation.  Although I feel our country has gotten away from many of the values established by our founding fathers, it is still a wonderful God given gift to live here in the United States of America.  I appreciate every day the freedoms we enjoy.  Enjoy the video... and share the simple story with a young one today!

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