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3 BIG Things You Need to Know This Week – February 26th, 2021

Hi it’s Bruce Woodburn. Welcome to The Three Big Things You Need to know. This is a forum where I help educate my clients and my real estate agents as to what’s going on in the real estate market. What’s happening with interest rates? Maybe you’re considering buying or refinancing a home. Maybe you’re a real estate agent or a builder representative and you just want to know more about what is currently happening in today’s climate.

  1. So you should be able to see my screen today. I’m doing a screenshot because there’s some crazy stuff going on in our industry, and I want to just give you an indication. If you look over here on the left side of my screen, you will see that mortgage rates are trending higher, and when I mean higher, they’re trending higher. So, be aware that if you have not locked in on a refinance, you are going to pay a higher rate of interest. If you have not locked in on a purchase transaction, you are going to pay a higher rate of interest. They’re rising pretty quickly right now. I can tell you, sometimes doesn’t make a lot of sense because usually, if the stock market’s doing really good, the bond market’s doing poorly. Today I’m looking at it and the stock market’s doing poorly, and bonds are doing poorly. It generally doesn’t go in that direction. Think of it this way. When the stock market’s doing well, then, institutional money is investing in stocks and making a lot of money. You guys have made a lot of money in the stock market in the last year or so. Now, when it’s not doing well, institutional money moves the money from stocks into bonds. Why bonds? They don’t pay a lot of money, but they’re a safe haven. So that increases the bond yield, which then gives you better interest rates. So when the stock market’s doing poorly, usually you see interest rates getting better. Everything is out the door now, all right. I don’t know what’s going on with this. This is a crazy world, but I can tell you this much, Interest rates are trending higher. So let’s just look at a graph here on the trend of the bond market. So this was back on January the 27th and the bond yield was about 103.59 Call it 103.5. Okay, so that was when interest rates were very attractive. You guys, if you locked in on January 27th, you probably did pretty good even before then. In October, it was really attractive as well. But let’s just see the trend. What’s happening here where you see all this red. We’ve only had a few decent days in the market since January 27th. You see these green symbols and the red ones? The red ones are really negative. Now, look, this is today. So the bond market is now at about 99.97 Okay, what does that mean to you? Well, when it was at 103.38 that means for that same interest rate, would cost you 3.38 points. That’s the market. 3.38 points. If you wanted that same rate now, lenders can’t even charge you 3.38 points. It’s not legal. They’re not allowed to do it. You have to meet certain requirements, and there’s only so much you can add into a loan. So you couldn’t buy that rate even if you wanted to. So now it’s not getting better. As you can see, the trends are worse. We’re into negative territory right now. And today the bond market opened up negative 91 points. Well, let’s just put this in perspective. So you could put a number to it for every 100 points that bond market drops or goes up, it changes the point by one. So if we dropped 100 basis points, then what was zero points yesterday, is one point today, and on $100,000. That’s $1000. On $200,000, that’s $2000. On $300,000 that’s $3000. Putting that in perspective. Okay, it dropped 91 points in one day. Last week, the whole week was terrible. We had one decent day and it wasn’t even great. It was just kind of flat. Okay, so if you haven’t locked in, lock in! I watch these candlesticks, these are Japanese candlesticks. I’m watching them Intraday, I’m watching mortgage trends. You want a trusted advisor? I’m here to help you. But I’m gonna tell you something. Whatever it was yesterday, it is higher today. It’s not likely going to get better. This is not what I call a floating bias. This is a locking bias. I’m suggesting that you secure your interest rate. Take your losses right now because it’s not going to get better in the next 30 days. All right, that’s the first big thing you need to know.
  2. Second big thing you need to know, let’s switch the pot to a positive note here. Okay? So we already know that there’s a lack of inventory. There’s a month and a half worth of inventory on the market for resale. Builders can’t build fast enough. Thank God we got production builders out there, but they can’t build fast enough. They’re limiting how many houses each subdivision will even sell. Why are they doing that? I’ll tell you why. They’re doing that because the cost of goods are going up so fast, they don’t know what to price their houses. So they’re raising their prices for every 2 to 5 homes they sell by $3000. They don’t know what to sell the house for. I heard, and I don’t know if it’s a rumor, but I believe it that because I do know that lumber prices have gone up 100% in the last six months, they’re expected another 300% increase in lumber prices. What do you think that’s gonna do to houses? I can tell you what it’s gonna do. It will drive your value up if you already own a home. But if you don’t own a home, it’s getting it’s getting more and more expensive. So all you folks out there that decided you wanted to be renters, you will look at this in a year and go, Oh, my God, I didn’t want to buy because they’re going up so fast. Buy, buy, buy, buy, buy, buy. It’s not going to get better. You’re gonna make money. It’s OK. And rates are still great, even if rates were 4.5%, which they’re not that high, but even if they were, that’s not bad. You have to remember, over the last 50 years our average rates have been about 7.5%. So for us to see twos and threes is It’s a gift. Alright, so sorry. I digress. Good news. I am holding a construction perm training class on Excuse me. March the 30th at 10 a.m. Go to WeBringYouHome.com, that’s WeBringYouHome.com and register for the event. I have a limited amount of people that I can put in there like 100 people is all I’ve got. So if you want to know how you can build on your own land or buy a piece of property, build on it and have your own dream home the way you want it, then I’ll show you how to do that. Most banks and mortgage companies don’t do construction perm loans, most don’t. And the ones that do are very picky on what they do, only conventional loans. I have conventional loans 10% down. I have FHA loans 3.5% down. I have VA loans 0% down. I have builders I will connect you with and they will help you build that dream home of yours the way you want it. Not the way the production builder wants it, all right. That’s what we’ll do here. That’s a great thing.
  3. And then the third thing you need to know and it’s not really a big deal, but it It’s kind of big deal for me and anybody in my industry. The industry has changed the format of the mortgage loan application, called a 1003. It’s completely revamped, and there’s a lot of moving parts in it. It’s going to take lenders a little bit of time to navigate through this. I’ve done five training programs on this, and if you don’t hit this button, nothing happens over here and this one comes up and that one does this and you’re looking at it and you’re going, Oh my God, this is going to take me a couple of weeks to probably get through several loans and then really figure out what it is. It’s not a big deal for you, but it could take a lender a little bit of time when they’re taking the loan application just to figure out where to put something.

So those are the three big things you need to know. I’m Bruce Woodburn CrossCountry mortgage. 32 years in this glorious industry. Don’t fret about interest rates. They’re going to go up, they’re going to go up. They couldn’t go down anymore. So don’t be surprised by this, but if you need my help, I’m honored to help you. If you’re in real estate, team up with me we’ll make a great team. I can help a lot of your folks. I could help you. You’ll always get honesty and transparency here, okay. The good, the bad or the ugly. You get it from me, all right. Bruce Woodburn, CrossCountry Mortgage. WeBringYouHome.com is my website. You do know that my radio show for WDBO is also posted on my YouTube channel? I also record my show on WFLA. So it’s not only on the radio, but it’s filmed, and it’s a podcast and put on my YouTube channel. If you are in real estate or you’re builder or you have something to do with the housing industry and you have something of value that I can add to my show, then I might preview on that. You have to contact my office, tell me what kind of value you can add to my show. And there may be an opportunity for us to put you on the air. I do preview real estate agents. I do preview builders. I do preview people that may be in home staging or something. Some other industry that might not even relate to mortgages or real estate, but might be important for you to understand. That’s my show. Bruce Woodburn, CrossCountry Mortgage. Those are the three big things you need to know. Have a great day.

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