Mortgage Insight with Mike Shaw

Mortgage Rate Market

Did you know all banks and lenders get mortgage rates from same place? Yes it’s called the Bond Market.  And this may blow your mind: Rates don't change, it's the cost of each rate that changes based on the bond market. Essentially mortgages are grouped together into a mortgage bond so they can be sold and traded, otherwise banks and lenders would run out of their own money to lend quickly. Each mortgage bond has an interest rate ranging from roughly 2.5 up to 8%. This is the range of rates you can always get! 

So it's the price of each "mortgage rate bond" that changes based on free market trading and the current economic conditions. That price is then passed on to you and it is always changing. Think of it like this. If you could invest in a 30 yr mortgage bond would you rather get a higher rate of return like 4.5% or lower like 3.25%? 4.5% of course! But 8 years ago when the economy had tanked 3.25% was a great deal! Investors want a decent fixed rate they can count on compared to riskier stock investments. Today 4.375% is an average good rate but they pay extra for a higher 4.75% rate. That extra money is passed on to you and is what helps pay for your closing costs on a No Cost Loan. Rates like 3.75% are too low for investors so they won't pay much for a low return like that. You the borrower have the option to make up the difference, which is why 3.75% costs a few extra points now!

You can still get 3.25% but it's just too darn expensive to talk about. The going rate is now in the low 4's and rates higher than average are where you end up with the No Closing Cost loan and rates lower than about 4.375 you pay extra. We use professional software to analyze all of the rates, costs, and loan programs to see which ones provide you the best financial benefit! 

Can't you get a better deal at your bank or credit union? Since the rates come from the bond market, everyone has to add on their overhead and profit. Mortgage Brokers like The Mortgage Advisors LLC just have lower overheard and mark up the cost much less on average!

We can find the True Break Even Point ™ on your purchase or refinance to make sure you are making a wise mortgage investment! Let us know if we can help!

The Mortgage Advisors | Empowering YOU with Educated Mortgage Decisions!

Michael Shaw   Sr. Mortgage Advisor, Owner  Phone/Text: 303.979.1822

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Posted by Michael Shaw on March 17th, 2018 3:25 PM

Want to remodel to that open floor plan...hold your horses!!

Published Date 3/8/2018

These days open floor plans sell and are a popular remodeling project. They make it look so easy, those cool people on TV. Nothing seems to be sweeter to reality show hosts than “demo day” — the day when homeowners can take out all their frustrations tearing apart their fixer-upper to make way for the new and the shiny. Old, smelly carpets are pulled up, outdated kitchen cabinets are ripped down, and walls are removed to create the open concept they have always wanted in a home.

Easy Peazy right? Well, what about everything that doesn't fit into that 60 minutes of entertainment. Don't expect to take out your frustrations on those pesky walls and imitate what you see on these shows because there is so much they hide when those walls come down.

Let's talk about hidden electrical and plumbing and heating ducts. Make sure your contractor does a good assessment of what types of utilities are hidden in that wall and what the expense could be to move them OR if it is even possible. Beyond that what about if your roof falls in?

There are two types of walls: load bearing and non-load bearing. Load bearing walls support the weight of elements above: roof, attic, second floor, joists, etc. ALL exterior walls are load-bearing and some of the interior walls are too! Non load-bearing walls may be physically attached to the ceiling but exist only to separate rooms and make closets etc.

Back in the day, older homes were divided into many small rooms , it was the style! But also milled lumber was not available to span great distances to create larger spaces. In other words, laminated veneer beams didn't exist! The good news is that with modern building materials you can build a header or add a beam to support wider open floor plans and windows!

Even though green-building and smart energy-saving tactics are never quote as efficient as heating and cooling individual rooms rather than the whole house at once, we won’t go there for now, because there is little chance that the open concept will go away anytime soon. We all want to see our friends, family, and that 120 inch flat screen in the family room from our kitchens while we prepare dinner, drinks, and refreshments!!

Make sure you live in the house for a few months and get a feel for it before making major changes, such as moving or removing walls. If you are set on tearing down that wall  Here are some guidelines:

Check for utilities, outlets, heating ducts. Check in the basement, attic or crawl space.

All exterior walls are load-bearing. There is no exception to this.

If a wall parallels the joists above it, it is likely not carrying a load. Load bearing walls are built perpendicular to the joists above it.

Not a DIY'er? We recommend hiring an expert and paying their hourly or fixed fee (contractors looking to get the job may credit their fee if they get the remodeling job; structural engineers can be costly but offer some of the most detailed advice).

So it isn’t a matter of ordering up a dumpster for your driveway and throwing a bunch of drywall into it. Just like Forrest Gump, tearing down a wall is like a box of chocolates. You never know what you’ll get until you bite into it. Which is why — if you are a DIYer — it’s wise to go into this project with your eyes wide open, anticipating the worst while hoping for the best.

Construction remodel loans are available for purchases and refinances and use the future value of your home after improvements to accommodate larger projects!!

Let me know if you have any questions!!

Michael D Shaw
The Mortgage Advisors LLC

Posted by Michael Shaw on March 8th, 2018 5:27 PM