June 23, 2022

I hope you are doing well, and I hope you are having a great week. I know this will be a great weekend to work even though it will be hot as next week is 4th of July and you know how everything stops for holidays!

I keep getting the same call from my Real Estate friends on how can we make the prices and payments more affordable? I mentioned Interest-only loans in the past and today is another reminder of what they can do for your clients who want to buy a house now that 31% of them have had price reductions in the past 30 days but still can’t stomach the payment! Although I don’t shop much, I love buying things on sale, but here are a few options for your clients that will bring their payments back to January. For today’s example, we will go with the $1,250,000.00 buyer with 20% down.

We are looking at a 10/6ARM, which is fixed for ten years and then becomes a variable after ten years, and the payment is Interest-only!
0 Point 10/6 ARM interest only – 6.125% – $1,250,000.00 Price – $1,000,000.00 Loan Amount $5104.17 + Taxes $1302.00 + Insurance $175.00 = $6581.17
1 Point 10/6 ARM interest only – 5.750% – $1,250,000.00 Price – $1,000,000.00 Loan Amount $4791.67 + Taxes $1302.00 + Insurance $175.00 = $6268.67
2 Points 10/6 ARM interest only -5.250% – $1,250,000.00 Price – $1,000,000.00 Loan Amount $4375.00 + Taxes $1302.00 + Insurance $175.00 = $5852.00
3 Points 10/6 ARM interest only – 4.750% – $1,250,000.00 Price – $1,000,000.00 Loan Amount $3958.33 + Taxes $1302.00 + Insurance $175.00 = $5435.33
Compare that to what we used to do below and what we can still do with Principal and Interest. Please note that the first two do not exist today!!
3% rate which does not exist today -$1,250,000.00 Price – $1,000,000.00 Loan Amount $4216.04 + Taxes $1302.00 + Insurance $175.00 = $5693.04
4% rate which does not exist today – $1,250,000.00 Price – $1,000,000.00 Loan Amount $4774.15 + Taxes $1302.00 + Insurance $175.00 = $6251.15
5.875% 30 year fixed rate – $1,250,000.00 Price – $1,000,000.00 Loan Amount $5915.38 + Taxes $1302.00 + Insurance $175.00 = $7392.38
0 Point 10/6 ARM Principal and Interest 5.500% – $1,250,000.00 Price – $1,000,000.00 Loan Amount $5677.89 + Taxes $1302.00 + Insurance $175.00 = $7154.89
1 Point 10/6 ARM Principal and Interest 4.875% – $1,250,000.00 Price – $1,000,000.00 Loan Amount $5292.08 + Taxes $1302.00 + Insurance $175.00 = $6769.08
2 Points 10/6 ARM Principal and Interest 4.500% -$1,250,000.00 Price – $1,000,000.00 Loan Amount $5066.85 + Taxes $1302.00 + Insurance $175.00 = $6543.85
I am telling you today that you can get a loan fixed for ten years with a payment lower than what you could get last year. If you get the seller to pay 2-3 points and get an interest-only loan, you could take some extra funds and throw them at the mortgage when you have them to knock out the principal. I agree this is not optimal, but neither is $7.00 gas prices, a war in Ukraine, a water shortage, world hunger, or homelessness, and we can’t do crap about any of those things! So this is what I have! LOL!

Interest rates have been kind this week, and they have dropped quite a bit over the past few days. YAY! We are seeing Conforming rates with no points back to the mids 5’s! Holy CRAP!!! Hold on, 3% is coming! In your dreams, but we are starting to look better!
30-year Government Loans (FHA / VA) are in the low 5’s
Conventional Loans up to $647,200.00 – low to mid 5’s
High Balance Loans $647,201.00-$ 970,800.00 are in the high 5’s and low 6’s
Jumbo loans above $970,801 are in the high 5’s and low 6’s.
5/1, 7/1, 10/1 Arms are in the 4’s for over $647,201. Under that, don’t bother right now!
Bank statement loans – They are available with 10% down again! 7’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 high 6’s.
0 down loans are in the 5’s – 620 credit score min right now! Mid 6’s, for the most part, up to $670,000.00 Price.
0 down Jumbo to $975,000.00 – 680 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 6.49 – 6.99% 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 weekend if you have any questions or if someone interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please 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!