Your Questions About Mortgage Rates News

Richard asks…

so what is the news getting at about fannie and freddie?

is themedia trying to tell us that the mortgage rates are going down ? or sky rocketing , ? bad news seems

admin answers:

How would the mortgage rates go down? They are poised to ‘sky rocket’ no matter what happens.

First both firms are technically insolvent, that is if they were following GAAP rules which they don’t. But that is only a detail. Forget about what regulators are saying about how Fannie and Freddie are well capitalized, they don’t have any other option but say that. The 2 firms are nowhere close to being well capitalized. Each of them is holding a capital of about 1% of the value of their mortgage holdings (that is a 99% leverage) and it means that if the price of these mortgage go down by a mere 1%, the whole capital is gone and they will soon become insolvent (which they already are because prices decreased more than 1%). They will get to the point where they will need bailout when they will become illiquid (nobody knows if they are already there or not or when they will be) or when their lenders (note holders) refuse to lend anymore or that their borrowing price sky rocket, or if none of these is enough, that the continuous slide in house prices impair their capital and make them lose even more money than they did last quarter.

I said that mortgage rates will go up no matter whether the government bails them out or not. The combined gross debt of both companies is about $5 trillions. We are not talking Bear Sterns here, not even the S&L crisis. If the Treasury takes that debt over it will DOUBLE the amount of government annual fiscal deficit. You imagine what would be the impact on bond yields. They will shoot to the moon. Then imagine what will happen to anything based on bond yields. They will shoot for Mars.

If the Government don’t assume their debt, than there will be a major crisis (or many). There will be a crisis in the mortgage market, prices will collapse, mortgage rates go up, many banks that are holding this crap will be in even more trouble. Lehman specifically will be automitically toast. And Chinese and Japenese (one of the biggest holders of GSE’s debt notes) will not be very happy to know that they were lending to insolvent companies …

Just pray there will be a miracle and that somehow these two twins will not lose their dignity (become somehow solvent), after they lost their virginity this week. Otherwise we are in big trouble.

Ken asks…

Mortgage Interest Rates?

I live in NC and about 30 days away from closing on my first house. My mortgage lender still hasn’t locked me in to an interest rate yet and I am getting a little worried about this whole debt ceiling thing. I heard on the news that if it isn’t raised by Aug 1st, interest rates could “skyrocket”. I asked my lender and she told me that if we are locked in before Aug 1st, it won’t affect us if the debt ceiling isn’t raised which is good news to me. She still hasn’t locked me in though. Maybe she is waiting for the best rate. I don’t know but I told her to go ahead and lock me in. My question(s) is this. Is there a website I can go to that will show me the current rates and how much will it affect my monthly mortgage based on each 1/4 point increase?

admin answers:

Ordinarily the borrower is the one to tell the bank when to lock the rate and how long the lock will be in effect. So, I suspect if you don’t lock it yourself the rate will be market rate at closing. However, once you lock it it’s locked. If the rates drop further your stuck with the locked rate unless you pay a significant penalty or cancel your mortgage application and start over.

Jenny asks…

Was the purpose of the govt. bailout to make mortgage rates go UP?? Cuz that’s what’s happening…?

I’ve heard multiple people talk about how fixing the financial crisis depends upon stabilizing the housing market. This bailout would appear to be doing the exact opposite. Your thoughts??

http://news.yahoo.com/s/time/20081017/us_time/thebankbailoutssideeffectrisingmortgagecosts
I thought the point of the $750 billion was to keep this from happening…

admin answers:

Check the paperwork for your mortgage. If you have an adjustable rate mortgage, then the rate will go up after a specific length of time.

You have a fixed rate mortgage, then any increases in your payment is caused by an increase in your real estate taxes or your property insurance which is being paid by the bank every year.

If you have any questions, you can always call the lending institution which is currently servicing your mortgage. They will explain it to you.

In any case, your payment amount will not be affected at all by the recent bailout legislation.

Mandy asks…

Will mortgage rates go down enought to refi a Jumbo loan to a conforming loan?

I keep seeing that the fed is cutting the interest rates, however the 30yr fixed rate seems to keep going up. I was hoping to refi my jumbo loan @ 6.125% down to a conforming loan with a better rate. Am I going to be able to find a rate low enough to justify a refi? I was excited about the change in limits on conforming loans, now it seems that the good news has gone out the window for me.
The loan I am in now is a good one, 30yr fixed, however it is at the jumbo rate. I want to take advantage of the gov’t raising the limits on conforming loans this year.

admin answers:

Be careful not to get suckered into another bad loan because there are lots of them out there. Some lurk on the Internet, some advertise on mailers, some might even send you emails. BE CAREFUL.

Charles asks…

What’s the latest news on Chris Dodd’s mortgage?

Did he or did he not receive a rate more favorable than what the market rates were, and has he given his HUD statement?

admin answers:

Now that the Democrats are in power, do you thing the press is going to come down on the useless Senator? He knows nothing about special treatment. That goes along with the territory. As a senator, he is about as useless as teats on a boar.

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