Mortgage Rate Strategies of 2019
Sunny: How will you afford that second or third investment property? Well, today you're going to hear about mortgage rates strategy for 2019. Stay tuned.
Sunny: It's an Austin Real Estate Insider, where we tackle all the issues that buyers and sellers and Austin are encountering. Hi, my name's Sunny Tracey and today we're going to talk about mortgage rates in Austin. As always, be sure to like this video if you're watching on Facebook, if you found this helpful comment home below and to subscribe to future broadcasts. If you're watching this on youtube, make sure you like and subscribe as well. And as always, if you have topics or questions at them in the comments slow today. I am joined by John McCarthy. He's our sales manager here in Spyglass Realty and I'm also joined by Max Leaman of the Leaman team and we're going to be talking about mortgage rates of 2019. Interest rates of course, how they changed from 2018 and we're going in 2019.
Sunny: The interest rate for you as a home buyer or seller and how to find the best mortgage rates. So Max is the number one volume producing lender in Austin and also in Texas. He's kind of our go to litter here at it's room to you. We worked with them a lot. His processing team is amazing. So let us know if you ever need anything for Max, but he helped farmers to your house and in through the U has been doing it since 2001. The first thing we want to ask you about just to kind of tackle current events issue, is the government shut down and has that had any effect on mortgage processing?
Max: Thanks for having me here. Yeah, the shutdown, you know, there was some, there was a lot of nervous nellies if you will. In the beginning you couldn't get flood insurance. We couldn't get our IRS transcripts for tax returns and that was. People thought that was going to be a big issue that the IRS is open for. Transcripts were able to buy flood insurance again. So there's really nothing that's holding us back. USTA loans, you're not able to close those right now, but that's really the only thing. So for all of us, it's really just business as usual.
John: Yeah. So, you know, we hear things in the media and you know, interest rates are rising and affordability. We hear those things and the Feds raise interest rates increase in the first half, decrease in the second half. I mean every year there's projections and you know, they, I think interest rates may have ended lower last year than what was projected. Is that true? And then this year, what do you expect to happen this year?
Max: Yes. So really about the beginning of December Sam leads and into that unit we've seen it. That's the kind of the same trend for the most part with all the volatility in the stock market and all the uncertainty with trade wars and everything else. We've seen a really positive results. The rates. So last year we were thinking rates to be five and a half, maybe higher. This year we're seeing a lot of revised forecasts. I'm Fannie Mae's thinking they'll end up around four, eight, seven, five, five, Freddie saying maybe five and an eight. Five. And the core for, you know, right now it's a day where we're about four and a half a quite a bit. You know, there was, there were days last year where we were. So it's really, I think since the beginning of the year, we all feel we're going to end up at five and a half, so it's still a really good time to get in.
John: So, so what does that mean. Like if, if they raise rates a quarter point for someone that's looking at a house that's around 300,000 or even a house around 600,000, if they raise half a point or a quarter point, how's that going to affect someone's mortgage payment?
Max: Well, so number one, it's important to know that when the Fed raises the rate that doesn't have a direct impact on mortgage rates. So when the Fed comes through and race raises rates, a quarter of a point, mortgage rates are going up, reporter of most of the time, a bond pricing, which is what mortgage rates are derived ride from, um, have already kind of factored in what the Fed's going to do. So as long as, uh, as long as the Fed kind of falls in line with what expectations are, you really don't see much of an impact on mortgage rates. If the Fed came through and we thought that, you know at this meeting, they're not going to raise rates. And then all of a sudden they raised rates a quarter of a point that's not really good. But these last couple of rounds raised the way, but it was expected that they would. So that was the only kind of priced into the market. For example, on a $600,000 loan, um, you know, at a four and three quarters, right Your principal and interest payment is 25 or three, it says before 32. So you're looking a about 70 bucks or so, a court appointed to be on a board. Yeah. And that's what a $480,000 a loan amount on a, um, you know, if you're buying a house that's for $50 at 20 percent, a 20 percent down, three 64 and a four and three quarters, you're at 1877 and at four and a half you're at 18, 24. So it's about 50, 55 bucks there.
John: That's not too scary. But there's other things factored in there.
Max: Yeah. And those are just principal and interest payments. Taxes and insurance are always going to be in addition to that you know, tax rate and Austin's about insurance. A good rule of thumb on that is if you use a like point four, five percent of the sales price, that's a good kind of waffled estimate for your. And we'll bring you on insurance so, you know, they do think that rates are going to go up some this year. Um, so definitely better to get in sooner than later. But you know, it, if you're waiting till the summer at the end of the year and the quarter grades of appointments, not by the end of the world.
John: Yeah, well that sounds like real good news for our spring season. We're about to get into sounds like interest rates aren't really gonna price anybody out of the market in the next few months. So should play right in line with, you know, all of the, the peak of the market that we're going to see in the next six months.
Max: We're now today. I think so, uh, you know, we've definitely seen an uptake of loan applications since the beginning of the year and just in talking with other lenders and real estate agents, that kind of seems to be the trend for everybody. We could maybe see more activities here
John: Well let's see what Max, that's, that's really the biggest thing to questions we had. I'm sure there might be some other things on your side, either nationally or locally, uh, is, is there anything else that, that you think is real important for our viewers to hear?
Max: Don't let the market, don't let them market scare you. Don't be afraid of a quarter or a half a point, a changing rate, um, you know, it's just, and, and it's important to really look at your overall payment. A lot of times I think people can get hung up on an eight double point here or there and when you're looking at 20, 25 bucks, 30 bucks, it's just not that much money. So I try to keep stuff like that in perspective when you're shopping rates. One of the big thing, especially because you see all sorts, all sorts of stuff on the Internet, it's not just about the interest rate, but it's about rate and feeds. What is this interest rate Right, you might see a four percent rate at some point for a 30 year fixed, but there there's going to be a cost associated with that. So it's, it's important. It's important that buyers are working with a loan officer that's going to help them figure out what's their break even point. Is it, is it smart to by the way down and pay these extra fees or is it not So it's not just about getting the lowest rate.
John: Yeah. Okay. That's interesting. That's great to hear. Kind of like layman's terms and eighth of a point or a quarter point. I actually have a client right now who you guys are working with on a new home built and we can't lock them in on their rate because we're like 90 days from closing. We had the conversation yesterday. She was kind of scared about where her payment might, why and, or following 30 days when we actually lock in the rate, but even if it adjust for a quarter of a point for her, it's no big deal. Which the hesitation to go ahead and contract on buying a new home. So again, now, now's the time. Yeah, absolutely. Great. Okay. Any other questions for Max and Leaman team?
Sunny: I don't think so.
John: Now, do we have any questions that came in on our, on our board Just a lot of love from our supporters over there. I guess we'll wrap it up right. So, don't forget if you liked this video and you're watching facebook if you found this helpful to you, be sure to comment home in the comments below and subscribe to see our future broadcasts and catching this on youtube. That's great. Like us and subscribe to our Youtube Channel.
Sunny: And also, do you have any topics or questions that you'd like to cover Comment in here and we'll get that on our run of show for one of our future shows. You bring them lined up for the rest of the street and inspiration, so make sure you stay to the end.
Max: Great. Yeah, so put those questions in there. We can try to answer those on some of our, our next shows. Great. All right Max. Well thanks for your time today, man. Thanks for having me guys. I appreciate it.