Financing - Bawldguy Talking
Written By — Chad Emerson
Happy Friday all, the good news is the economy is showing some signs of improvement, albeit, nothing to get overly excited about. The bad news is, the economy is showing some signs of improvement. Basically good news for the economy is typically bad news for rates, but it is what it is. Mortgage Backeds are currently down 9 and the DOW and NAZ are churning away at plus 166 and 47 respectively. What happened you say? Reports came in today, better than expected for retail sales in the U.S. Overall sales last month rose by a better than anticipated 1.1%, largely due to strong car sales. Taking out autos, sales pace was up .6%, which was almost double than what the “experts” had guessed. 10 of the 13 most important components of this data, showed increases last month.
Since we all know consumer spending makes up almost 70% of all economic acitivity in the U.S., and the data released today suggests domestic growth is showing signs of life, you are going to see investors purchase stocks in favor of the bonds, and the MBS and that is never a good recipe for lower mortgage rates.
So are rates going to go through the roof now? No because there are still two very important components, the ‘wild card’ if you will, unemployment and the European Debt Crisis. With both of these unresolved, this will help to counter the positive data for the economy. Not enough to counteract completely, but enough to keep the interest rate rise, subtle.
On to the rates!
SFR with 20% down can be leveraged at 5.125%
2-4 Unit properties with 25% down can be leveraged at 4.875%
That’s it for me, everyone have a safe and fun weekend, rest up, and Get er Done!
BawldGuy Here: Need to speak with Chad? Call him at (210) 557-6320. Tell him I sent ya.
Happy Friday Investors!
OK, we are having a pretty good day as far as mortgage rates are concerned, as mortgage backeds (the driver of mortgage interest rates) are posting a +10 reading. They have been as high as +19 earlier this morning, but seem to be holding just fine. There’s been a lot of activity at the Wall this week and today is no exception. Now some thought that the recent climb in rates was a sign of the American Economy waking up from it’s slumber. But today it hit the snooze button. Turns out that all of that selling going on in the bond market, and the purchasing of stocks, was not a reflection of investors having confidence in the economy, it was merely a market correction.
Okay, unfortunately for my literary skills, that may be the only Shakespeare line I can quote….no sense going more into my illiteracy with the great written works of all times. But, this is a question that can come up for people with self-directed plans when, typically, purchasing real estate from their IRA or 401K.
You see, what most people fail to realize with their SD plans is that in the eyes of the IRS, it is an entity to itself. If established correctly, you can make investment choices for your plan, but you can only serve in this capacity. You cannot personally benefit from your relationship to the plan, NOR can your plan benefit from its relationship to you. This impermissible “relationship” (if it were to occur) is called “self-dealing” and your plan is not allowed to enter into this type of transaction. If it does occur, it triggers a Prohibited Transaction within the plan and now your plan is potentially subject to penalties and taxes.
Happy Friday from Texas Y’all!
Well, all the talk over in my part of the country is how ecstatic we all are to finally see a little bit of rain, We have seen about an inch all summer in San Antonio, for those not in the know. As for rates, unfortunately, they aren’t falling like rain, rather they are starting to rise just a bit. Trading activity has been relatively flat as most investors are prepping themselves for next week’s Federal Open Market Committee, that starts Tuesday and ends Wednesday. There is a lot of chatter about whether Big Ben will or will not enact a new stimulus program, no longer titled QE (Quantitative Easing), but now it will be dubbed “Operation Twist”. Many don’t think he will, but if he does, here is how it works.
Allow me to show you how I’ve earned free drinks, lunches, and dinners using info from countless cash flow analyses. We’ve all heard of ‘bar bets’ right? You know the ones. The guy says he can do something you ‘know’ is impossible, then he does it as easily as he you let him set the hook in your lip. Sometimes the bet is about something he’ll promise to prove to you. Something you know in your heart of hearts can’t be proven in a million lifetimes. Then he does it — and to your astonished and chagrined amazement.
Here’s one you can use — drinks are on me.
Before we start, I’ll tell ya in advance, that I’m not gonna give you the answers till someone comes up with the answers, or till tomorrow, whichever comes first. OK? Let’s start.
You’re buyin’ a small income property which you plan to pay off as quickly as you can. You’ll be using a combination of your own money and the monthly cash flow to add to each payment. Your loan is for $200,000. You have the choice of payin’ an origination fee of $2,000 and paying 4.5% interest — OR — no origination and 5% interest. Both loans would be 30 year fixed, fully amortized. You’ll be adding $3,000 to each payment till the loan is gone, regardless of interest rate.
NOTE: I’ve widened the gap between the rates you’d pay with/without the origination fee in order to more clearly prove my point about executing any investment analysis to the bitter end.
Which interest rate would allow the loan to be paid off sooner? If you and I have already talked about this, please, zip it, OK?
Happy Friday Investors! (Yeah, I know, it’s really Monday.) The sun is shining, the Dow is struggling and the bond market is having a good day. That said, on to the stats. I know I’m starting to sound like a broken record, but once again, job growth was unchanged for the month of August, unemployment is still too high at 9.1%. On top of these dismal numbers, the average workweek was negative and hourly earnings fell .1%, that doesn’t say much for manufacturing and the demand for our goods. As I write this, the Dow is trying to gain it’s footing, still down 178 after being down over 200 earlier this morning, with the NAZ off about 44. On the opposite end of the spectrum, Mortgage Backed Securities (the real driver of rates), are at +5, down from the open of +10 earlier. The day is young, but it looks like the bond market is winning today which is helping to keep rates in check.
Happy Friday to all my investors out there…er sort of.
OK, so yesterday was a great day for mortgage rates, but today was a different story. The market just closed and mortgage-backed securities lost 31/32 today and some of our gains on rates for the week were erased today. This was pretty much what we call a market correction. I figured there would be a buying spree as the old adage goes, “buy low”, and that’s just what investors did, opting for stocks over the more conservative bonds and mortgage-backed securities.
Today’s feature was the non-farms. The labor department said that jobs grew by 117,000 which was more than forecasters called for July. May and June were also revised and they had miscounted about 56,000 for those two month, so that helped boost the numbers for the previous months as well.
Unemployment dipped from 9.2 to 9.1, but before everyone gets excited, it is probably more of a case of 190,000 so discouraged with searching for a job that they just gave up on the job search all together, which could give an ‘artificial’ boost to the labor numbers and unemployment rate. As a country, we did hit a milestone that we haven’t hit since the Great Depression — we have been above 8% unemployment for 30 straight months. We got some work to do people before things get better economically. The good news is this will help to keep rates in check for some time, so take advantage while you can.
Onto today’s rates: You can leverage 20% on a single family residence or 25% on a 2-4 unit for around 5.125%.
Everybody have a safe and restful weekend and we’ll roll into Monday ready to Go Get Em’!
Happy Friday to all, I just wanted to drop a few factoids before heading out for the weekend. It was a great day for Mortgage-backed securities, the driver of mortgage interest rates. Final numbers came in at plus 24/32. A good day is usually plus 6, so today was exceptional.
Why such a good day with the ‘black cloud’ debt ceiling issue still unresolved?
The information in this article was current at 06 Dec 2011