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UTPhil2006

By UTPhil2006
in Business and Markets

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mchookem
mchookem

alrighty...i haven't wanted to jinx anything so i've been pretty quiet... but we just closed on our new home in Denver this morning so i can now officially say YEAH! 😃 in a nutshell - we sold

Esque
Esque

Thank you for this - gave me a good laugh.  But also a good reminder of how the general public does not understand what is going on in real estate and thus why so many get caught offsides when the tid

Neonmoon
Neonmoon

Realtor: You should list your house at 500K Client: But three houses down the street sold for 700K Realtor: Yeah, but those are overvalued due to pandemic Fed policy and institutional invest

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HRSchenker

HRSchenker 2224

Posted
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Can someone explain what this means?

Quote

FANTASTIC Location! CALLING ALL INVESTORS! RARE Opportunity to remodel or build in a highly desirable redeveloping area near Uptown! New construction on both sides of the property and across the street - all new construction surrounding the home! Located near downtown, freeways, restaurants, shopping, entertainment, etc. Property is being sold AS-IS for lot value! Home needs a complete rehab! Owner willing to carry 1st for qualified buyers - 20% down - market interest - 5 year balloon.

 

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Gil Bang

Gil Bang 25689

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The underlined part means that the seller will carry the loan...meaning you won't need a bank.  He will do so at the "market rate"; the prevailing interest rate that other buyers in this particular market can expect to pay.  You will need to put 20% down in cash.  The loan will come due in 5 years; the expectation being that you will refinance before that time. 

You will need to dump a ton of cash into this deal, over and above the 20% down payment, because it's a shitbox and cannot otherwise get financed. 

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Wulaw Horn

Wulaw Horn 18919

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Big inflation report today. My guys have been saying all year to circle May 10 on your calendar- that’s when things will really start to get better. And now the last 2 weeks they’ve been apologizing for being wrong- saying it won’t be a good report because of reporting changes (general fuckery is about) opec and shelter measurements absurdly lagging  they still say better days are ahead/ just not today. 
They are pretty good at what they do and they say we are getting relief for sure in the back half of this year. 
We shall see in 29 minutes I guess. 

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Wulaw Horn

Wulaw Horn 18919

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4.9. Beat expectations of 5. 11 months of decline in a row.  Market flipped from down 10 MBS to up 6 in the last 5 minutes. Hopefully it runs strong and we get back the 100 basis points we lost in the last week or so. 

Up 22 now. Last 3 minutes. And we are off. 

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Wulaw Horn

Wulaw Horn 18919

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Peaked at up 34 so far. Now at up 22. Facing quadruple resistance. 
the 100 basis points improvement I wasn’t expecting today but rather over the course of a week or two. That would get us back to the high water mark of 2023 I believe that we saw for about a minute in February. And then a bit a couple weeks ago. 
very bullish report today. Said summer will be good. 

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Esque

Esque 135

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How are you mortgage brokers competing against the homebuilders in submarkets where homebuilders are active?  Looks like they're buying down rates anywhere from 1.50% - 2.00% plus other incentives.  So if market today is circa 6.50% they can get down to let's say 4.50% - 4.75%.  How in the world does the buyers down the street compete with that if they want to sell?  Or they could potentially be screwed for years until the builder is done and out of their community?  Or take a huge equity cut to get the sales price down enough to compensate for rate differential?  Seems like a fubar situation.

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Gatorubet

Gatorubet 29791

Posted
Posted (edited)
19 minutes ago, Esque said:

How are you mortgage brokers competing against the homebuilders in submarkets where homebuilders are active?  Looks like they're buying down rates anywhere from 1.50% - 2.00% plus other incentives.  So if market today is circa 6.50% they can get down to let's say 4.50% - 4.75%. 

True old person story.  In the early 80s my best friend bought his house at 15%.  When I moved to Louisiana, the 30 year fixed rate was 13 and something percent.  The small starter home I bought was advertised with the low interest rate of 9 1/2.  When I went to closing, the builder showed up with a check equal to 10% just to get the thing closed.  I told him if he gave me a couple grand I’d walk away.  The builder told me that he needed the money so bad that he would’ve paid more. 

26F8F436-E3B5-4AB1-B1C8-40F6B2CB955A.thumb.jpeg.cb6b8fee3b00a673d09c17c6786fd606.jpeg

Edited by Gatorubet
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Wulaw Horn

Wulaw Horn 18919

Posted
Posted
9 hours ago, Esque said:

How are you mortgage brokers competing against the homebuilders in submarkets where homebuilders are active?  Looks like they're buying down rates anywhere from 1.50% - 2.00% plus other incentives.  So if market today is circa 6.50% they can get down to let's say 4.50% - 4.75%.  How in the world does the buyers down the street compete with that if they want to sell?  Or they could potentially be screwed for years until the builder is done and out of their community?  Or take a huge equity cut to get the sales price down enough to compensate for rate differential?  Seems like a fubar situation.

We are not. 
we never have. 
builders have often paid out lots of incentives to use their lender so this is nothing new. It’s unusual for us to ever get a builder loan. 
now, we can also do rate buy downs (they are temporary) but those have to come from the seller and the seller isn’t ever willing to do them for us (typically). 
just part of the fun of being a mortgage guy in 2023. 

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Neonmoon

Neonmoon 38126

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Posted

Yeah, if you have a client that submits an offer on a DR Horton type home. You lose the client. They will offer 2% below market and 10K in closing costs or something obscene. They will get the money back somewhere else in the deal. Their business model requires them to get the loan too. Rocket, Redfin, and others are trending that direction too, except not building homes, but Realtor Commission + Mortgage + Insurance. They can offer huge discounts. We have a huge independent firm using this model in our market. It is not awesome. 

Not going to lie, I might have an opportunity in this arena, and I’m a little intrigued 

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UTPhil2006

UTPhil2006 3773

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We are currently doing a builder loan, and did at least a few builder Shaggy guys last year and I think at least one already this year. It’s not hard to beat them, you just gotta figure where they’re building in that money, they ain’t giving it away free. 

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Wulaw Horn

Wulaw Horn 18919

Posted
Posted
21 minutes ago, UTPhil2006 said:

We are currently doing a builder loan, and did at least a few builder Shaggy guys last year and I think at least one already this year. It’s not hard to beat them, you just gotta figure where they’re building in that money, they ain’t giving it away free. 

Yeah/ it all depends on if they are willing to still gone incentives if they don’t use builder lender. We’ve seen a lot of 10k type stuff on giveaways. There’s not that much built in to most mortgage deals but we are always way lower on rates. 

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mchookem

mchookem 15575

Posted
Posted

i know you guys are having a tough go in the current market, i hate reading it and it almost makes me feel guilty getting out a year ago at what appears in hindsight to have been impeccable timing. almost 😊

anyway, just thought i'd see if anybody had buyers looking for a smaller place in Austin? my sister's 2/2 condo up near Oak Knoll is on the market... it's been a few weeks and she just dropped the price a little. just occurred to me to see if anybody has someone who might be interested...or hell, y'all are plugged in, you might have already had a look 😁

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Esque

Esque 135

Posted
Posted
On 5/22/2023 at 5:37 AM, 52-80 said:

jaysus people, the us treasury is not defaulting on its debt.  its just a game of political brinksmanship. 

 

Yeah, really don't get what all the panic is about.  We've known we're going down this road for over a year now.  Nothing about this is surprising nor will it surprise me when they reach a deal at the 11th hour and kick the can down the road AGAIN instead of addressing fundamental financial issues we have.

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Wulaw Horn

Wulaw Horn 18919

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Posted
37 minutes ago, Esque said:

Yeah, really don't get what all the panic is about.  We've known we're going down this road for over a year now.  Nothing about this is surprising nor will it surprise me when they reach a deal at the 11th hour and kick the can down the road AGAIN instead of addressing fundamental financial issues we have.

This is the way to bet for sure. 

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El Tri

El Tri 398

Posted
Posted (edited)
On 5/19/2023 at 10:06 PM, mchookem said:

well here's the listing...

https://www.zillow.com/homedetails/11970-Jollyville-Rd-APT-204-Austin-TX-78759/70353083_zpid/?utm_campaign=androidappmessage&utm_medium=referral&utm_source=txtshare

and what the hell, here's a pic of her pussy...

 

 

 

 

 

 

 

 

 

 

 

 

39140.jpeg.4632da55c4ccaa2c1611b92ab27bf7da.jpeg

😄

anyone interested in that condo will need to go in there and replace the old tile, the old carpet, and all the tile countertops. it's way overpriced

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mchookem

mchookem 15575

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when she listed it was pretty much in line with the comps in the same complex... but maybe the market (especially in Austin??) has taken a more drastic downturn the past couple of months, yeah?

she didn't do anything with the flooring for the exact reason you said - she figured someone would want to pick that out themselves.

anyway... she's going to look at renting it out for a year or so if no bites, she's not desperate yet 🙂

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Esque

Esque 135

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Posted

Curious -

What's the general rate spread between say a sub-prime (<620), near-prime (620 = 660), prime (660-720) and super-prime (720+) borrower?  If the national average 7.00% is for the prime borrower, does it stack up something like this?

  • Sub-Prime: 8.00%+
  • Near-Prime: 7.40%
  • Prime: 7.00%
  • Super Prime: 6.40% - 6.60%

How high are rates for some of these first time buyers using FHA with 580 credit, which I think is minimum credit score required with 3.5% down for FHA?

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Wulaw Horn

Wulaw Horn 18919

Posted
Posted
17 minutes ago, Esque said:

Curious -

What's the general rate spread between say a sub-prime (<620), near-prime (620 = 660), prime (660-720) and super-prime (720+) borrower?  If the national average 7.00% is for the prime borrower, does it stack up something like this?

  • Sub-Prime: 8.00%+
  • Near-Prime: 7.40%
  • Prime: 7.00%
  • Super Prime: 6.40% - 6.60%

How high are rates for some of these first time buyers using FHA with 580 credit, which I think is minimum credit score required with 3.5% down for FHA?

Rates don’t get a ton higher- usually- they end up paying more in points up front. 
so- I might have a 740 guy at 6.5 with no points, a 700 guy at 7.0 with no points, and a 640 guy st 7.25 paying 2 points. 
there’s no spot on the price sheet likely for the 640 guy that goes up to 8- it’s going to top out at 7.25 or something and the worse it gets the more likely they are to add up front discount points as opposed to making the rate higher. 
but, the reality is your borrower under 700 is almost assuredly going to just go to FHA so there’s no real comparison there. 
also- amount of downpayment will determine in some cases how much credit score will affect rate. 
A 640 and a 740 credit score are going to be really close on interest rate if they put down 40%

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Neonmoon

Neonmoon 38126

Posted
Posted (edited)
56 minutes ago, Esque said:

Curious -

What's the general rate spread between say a sub-prime (<620), near-prime (620 = 660), prime (660-720) and super-prime (720+) borrower?  If the national average 7.00% is for the prime borrower, does it stack up something like this?

  • Sub-Prime: 8.00%+
  • Near-Prime: 7.40%
  • Prime: 7.00%
  • Super Prime: 6.40% - 6.60%

How high are rates for some of these first time buyers using FHA with 580 credit, which I think is minimum credit score required with 3.5% down for FHA?

580-619 = FHA = 7.25% with 0.5 points 

620-660 = First Time Homebuyer  = 6.875%

620-660 = 7.875% (edit: just saw the HPML warning next to this rate. You have to pay 2 points and get 6.875%)

 

 

Edited by Neonmoon
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Esque

Esque 135

Posted
Posted
14 hours ago, Neonmoon said:

580-619 = FHA = 7.25% with 0.5 points 

620-660 = First Time Homebuyer  = 6.875%

620-660 = 7.875% (edit: just saw the HPML warning next to this rate. You have to pay 2 points and get 6.875%)

 

 

Interesting.  Is pulling the lever on fees versus points due to HPML risks?  So staying within that spread to APOR by adjusting fees as well?  Is there a limit to these fees to remain a QM?  So basically playing with two main levels - points and rate?

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Wulaw Horn

Wulaw Horn 18919

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10 minutes ago, Esque said:

Interesting.  Is pulling the lever on fees versus points due to HPML risks?  So staying within that spread to APOR by adjusting fees as well?  Is there a limit to these fees to remain a QM?  So basically playing with two main levels - points and rate?

Yes.  Also, the desire to not go too high on interest rates probably evidences knowledge that rates will go back down- and the higher the rate the quicker a transaction will get refinanced and the less servicing value it will have.  As such, many many companies are compressing their yields (meaning less spreads between interest rates in pay to broker or customer in the transaction).  This is another thing that's causing angst and disruption in the mortgage industry.  Compression can be better for consumers at high credit levels but loading up fees and forcing poor credit score borrowers to pay lots of points isn't helping them.

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bluto

bluto 4819

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Posted

Between office market turmoil and multi family speculative purchases on floating rates the last 18 months, commercial RE is about to get lit the f up. Shit tons of apartments underwritten with debt service that has ballooned 4x since purchase along with outrageous insurance premium bumps, and rental rates plateaued due to general inflationary pressures/job losses on renters. 

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Wulaw Horn

Wulaw Horn 18919

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4 minutes ago, bluto said:

Between office market turmoil and multi family speculative purchases on floating rates the last 18 months, commercial RE is about to get lit the f up. Shit tons of apartments underwritten with debt service that has ballooned 4x since purchase along with outrageous insurance premium bumps, and rental rates plateaued due to general inflationary pressures/job losses on renters. 

I just told my friends that in a text that this was going in dry on the commercial guys.
First response back "Good, I'm in the market for a gently used patagonia fleece vest- this should soften that market up"

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