January 25, 2022

I hope you are doing well, and I hope you had a wonderful weekend! I know that I had a little bit of breakdown during that Rams game on Sunday, but aside from that, the weekend was awesome!

We have seen some volatility in interest rates lately, and we have some more bad news on its way. Today’s America hates rich people? LOL! Well, we tax them more, and we treat them like they are evil? Did you know that most of your clients are rich because they spend $700,000.00 plus on a house? Yes, even the ones with 5% down! OK, you now sense the sarcasm, but FHFA is hitting our “rich clients” with a wonderful penalty!

We have not seen these on the rate sheets yet, but they will start to hit shortly as most banks are putting their closing deadline on the old rates at March 1, and we are going to hold off until March 5. Yeah, we are givers! Below is what your clients will see in the future on two types of loans. Second Homes and High Balance Loans!

Second Homes: There are no hits to the interest rate when a buyer buys a second home as of today.
On loans closing after March 5, your buyer will pay the following if they buy a second home!
Less than 60% LTV = 1.125 Points (or about .250 in rate) / 60.01%-70% LTV = 1.625 points (or about .375% in rate) / 70.01%-75% LTV = 2.125 Points (or about .50% in rate ) / 75.01%-80% = 3.375 points (or about .875% hit to the rate) / 80.01-90% = 4.125 points (or about 1.125% to the rate)
The good news is that these will line up with non-owner occupied rates, and we don’t get a ton of buyers getting second homes in our marketplace.

High Balance Loans: L.A. County Loan Amounts between $647,201.00 – 970,800.00
Before March 5 – All Loans had a .250% hit from the Conforming Loan limit to $970,800.00. There were some issues if a large majority of the loans were high balance which pushed pricing higher, so we typically saw higher rates than this!
After March 5 close – Less than 60% LTV = .50 Points (or about .125% in rate) / 60.01%-75% LTV = .750 points (or about .250% in rate) / 75.01%-95% LTV = 1.0 Points (or about .25% in rate )
This is not good news, but we have some great Jumbo Lenders that will have lower rates than the High Balance Loans in many instances.

So what do rich people have that ordinary people don’t? Second homes and High Balance Mortgages! More good news is that we have the high balance product because if you go to areas like Riverside or Kern County and buy a $900,000.00 house, you will have to put 10% down, and you would have to qualify for the Jumbo product!
Here in LA, and other counties like Orange, Ventura… you would be able to do 5% down on a high balance loan.
I am just preparing you for when clients start crying!

Interest rates have come off their highs, but not enough to write home about! In the past 50 years, interest rates have been under 3% for twelve months! They have been between 3.00% and 3.5% for sixteen months, and they have spent fifty-five months between 3.5-3.99%. So that leaves five hundred seventeen months over 4%! I hope that puts these rates into perspective for you and your clients!
30-year Government Loans (FHA / VA) are in the low 3’s
Conventional Loans up to $647,200.00 – mid to high 3’s
High Balance Loans $647,201.00-$ 970,800.00 are in the mid to high 3’s and low 4’s.
Jumbo loans above $970,801 are in the high 3’s. We can do low 4’s with as little as 10% down. We can do 1-year findings on these too!
5/1, 7/1, 10/1 Arms are in the high 2’s and low 3’s!
Bank statement loans – They are available with 10% down again! low 4’s to low 5’s depending on down and credit score.
Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the mid 4’s.
0 down loans are in the low 4’s – 620 credit score min right now! Mid 3’s for the most part up to $670,000.00 Price.
0 down Jumbo to 1.2 Mil – 700 credit score – call for a quote
Private Money lenders – hard Money Loans – 35% down!
No Ratio Loans 30% down
Debt Service Coverage loans with as little as 25% down
Bridge Loans – are typically 4.99 – 5.99% with limited fees – But they get you where you need to go!
Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all week, and I hope to hear from you! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!