[Gustan Cho]

Current Mortgage Rates (August 5, 2024)

• 30-Year Fixed-Rate Mortgage: 6.63%.
• 15-Year Fixed-Rate Mortgage: 6.16%.
• 7/1 ARM: 6.55%.
• 10/1 ARM: 6.76%.

Recently, mortgage rates have been on a downward trend due to positive inflation news and a cooling labor market, which has increased the chances of the Federal Reserve cutting rates later this year​​.

Dow Jones Industrial Average Drop

The Dow Jones Industrial Average down by 1,000 points is mainly because of fears about economic data indicating a slowing economy and potential stagflation. These worries are compounded by weak corporate earnings reports and geopolitical tensions that have spooked investors.

30-Year U.S. Treasuries Decline

• The yield on 30-year U.S. Treasuries has decreased.
• The drop in 30-year treasuries makes a flight to safety by investors worried about economic instability.
• When Treasury yields fall, it often leads to lower mortgage rates.
• With lower treasuries, mortgage rates drop because these rates are closely tied to long-term bond yields.
• Lower Treasury yields can make mortgage-backed securities more attractive to investors.
• Lower Treasury makes mortgage-backed securities attractive to investors and reduces consumer mortgage rates​​.

Gold and Silver Prices

Several factors have led gold and silver prices to drop:

Interest Rate Expectations: Anticipated cuts in interest rates by the Federal Reserve could decrease the prices of gold and silver since they do not pay any interest. Fed rate cuts and low interest rates make Gold and Silver less appealing than other assets earning interest.

Market Manipulation: Reports claim banks have been heavily short-selling silver, suppressing its price even when gold prices rise​​. Silver prices should be substantially higher than what they are today. However, banks are screwed because of such a high short position on silver. If silver prices take off, as they want to do, many banks will go bankrupt because they need to cover the short silver position.

Federal Reserve’s Position

• Currently, the Federal Reserve is in a holding pattern after skipping rate hikes in its recent meetings.
• The Fed closely monitors inflation and labor market data to determine when it should cut rates.
• If conditions allow, future cuts may begin around September, further affecting mortgages, among other economic activities​.

Refinancing Considerations

Given the decreasing trend in mortgage interest, it might be worth refinancing now. Suppose you can save significantly every month or over time. In that case, you should look into streamlined refinance processes available for FHA/VA loans. These processes require minimal documents without needing new appraisals, thus making things easier for homeowners​​.

Mortgage Rates in 2024

Different experts forecast different mortgage rates next year. Here’s what some say:

• Freddie Mac expects the average 30-year fixed-rate mortgage rate to be around 6.73% on August 1, 2024, with minor fluctuations during the year​.

Fannie Mae – predicts that the third quarter of 2024 will have predicted pricing around 6.80%.

National Association of Realtors – projects NAR expects third-quarter averages near 6.90%.

Mortgage Bankers Association forecasts an estimated value of close to 6.80% during the fourth quarter of 2024.

How U.S. Treasuries Affect Interest Rates For Mortgages

• Investors seeking safe long-term investments tend towards U.S. treasuries.
• Particularly ten-year treasury notes.
• Whose relationship with mortgage interest lies here?

Correlation: When yields fall on treasury bonds, borrowing costs, including those related to mortgages, generally also reduce.

Risk Premium:

• Treasury yields are also included in mortgage rates.
• For instance, if Treasuries yield at 3%, mortgage rates may hover around 5%.
• This covers the extra risk lenders take on with home loans.

How the Dow Jones Industrial Average Affects Mortgage Rates

• On its own, the Dow Jones Industrial Average (DJIA) does not directly impact mortgage rates.
• However, it mirrors wider economic conditions, which can affect these rates.

Economic Confidence: When the DJIA rises, it indicates strong economic performance, leading to higher inflation and interest rates since the Federal Reserve may increase them to curb overheating.

Economic Downturns: A declining DJIA could signal impending recession hence lower interest as the Fed attempts to stimulate borrowing and investment.

What Causes Mortgage Rates To Go Up

Several factors can push up mortgage rates:

Inflation: When inflation expectations rise, lenders demand higher interest to compensate for reduced purchasing power over time.

Federal Reserve Policy: Typically, when mortgages rise following rate increases by the FED in an effort against inflation.

Government Borrowing: Heightened government debt issuance leads to upward Treasury yields, thus affecting home loan prices accordingly.

What Makes Mortgage Rates Drop

Conversely, mortgage rates can go down due to:

Economic Slowdowns, Downturns, and Recessions typically result in lower interest rates as the Fed cuts its base rate to revive growth.

Low Inflation: Lowering Inflation Real returns on loans rise, leading to decreased lending costs during periods of stagnant or falling price levels.

Increased Demand For Safe Investments: In times of heightened risk aversion among investors toward equities, etc., people tend to flock towards safer assets like U.S. Treasuries. This causes their yields to fall, which subsequently lowers mortgage costs.

Federal Reserve Policy: If the central bank reduces its key short-term interest rate, mortgages usually decline because banks borrow more cheaply, allowing them to offer cheaper loans.

Forecast For U.S. Treasuries

U.S. Treasury yields are expected to change depending on how well or poorly the economy is doing overall. If inflation cools off and slows as expected in 2024, treasury prices might fall further. Still, other factors, such as worldwide political events, will always affect this sort of thing, such as ongoing economic data releases, etcetera!

What Is Pushing Down Mortgage Rates?

Factors That Have Recently Contributed Towards Decreasing Home Loan Costs Include:

1. Cooling Inflation Decreasing price levels.
2. This means less pressure on the Federal Reserve System to maintain high benchmark overnight funding costs.

Economic Uncertainty:

Worries about slowdowns and recessions make risk-averse investors prefer safe assets like U.S. government bonds, pushing down their yield.

The Fed’s signals of possible future cuts due to changing circumstances have also made mortgages less expensive lately!

Mortgage Rate Predictions Over Five Years Period

• Long-range predictions regarding housing finance charge movements should always be clear.
• This is because many economic issues determine them. Here’s some general guidance, though.

Between 2024 and 2025: Expect a gradual decrease if stable prices and moderate GDP expansion occur afterward.

From 2026 Until Nine Years Later: Stabilization or a slight uptick is likely after vigorous post-recession recovery with renewed pressures from fast-rising wages/incomes, etc.

[Gustan Cho]

The FHA Amendatory Clause and the VA Amendatory Clause are provisions created to safeguard borrowers during real estate transactions, but they differ significantly. Let’s examine each clause closely and point out what makes it different.

FHA Amendatory Clause:

The goal is to protect buyers from being forced to buy a property if it does not appraise for the sales price.

Scope: Mandatory for all loans insured by the Federal Housing Administration (FHA).

Key provision: The buyer can cancel the contract without penalties if the property does not appraise at least equal to its purchase price.

Timing: Must be signed before or when signing the sales contract.

Exceptions: These are unnecessary when there aren’t any contingencies from the buyer, who will still complete this purchase regardless of appraisal value.

VA Amendatory Clause:

Purpose: This policy protects VA buyers from paying more than what is considered reasonable by a VA appraisal on a given piece of property.

Applicability: Required in all loans guaranteed by Veterans Affairs (VA).

Key provision: This stipulates that no penalty shall be incurred and earnest money forfeited against failure to close on behalf of the buyer where the contract price exceeds reasonable value as established by VA.

Timing:

• This should form part of the purchase agreement.
• Additional protection offered includes an ‘Escape’ clause.
• This allows buyers to back out should they fail to obtain their VA loan.

Differences between FHA and VA amendatory clauses

Appraisal focus:

FHA – Based on actual appraisal value.

VA – Based on “reasonable value” determined by VA.

Scope of Protection:

FHA – Primarily deals with appraised value only

VA – Includes protection against loan denial or overcharging

The language used in contracts:

• FHA can be separate documents.
• VA Usually becomes part of purchase agreements.

What Buyers can do:

• Under FHA, buyers can cancel if the appraisal is low.
• Meanwhile, under the VA, buyers are protected from exceeding payment above reasonable values determined by the VA.

Specificity regarding loan types:

• Specific for FHA loans, FHA-specific protections while VA-specific protections apply specifically.
• Both aim to protect borrowers regarding the purchase price.
• Still, the VA amendatory clause provides wider protection specific to the VA loan program.
• Meanwhile, the FHA amendatory clause focuses more on valuation within that context.

When handling these types of loans, it is important for those involved, such as sellers, real estate professionals, and buyers alike, to understand these clauses because they can potentially influence transaction processes and affect the parties’ rights.

[Gustan Cho]

Yes, Lending Network, Inc. has TPO agreements with wholesale financial institutions financing mobile home parks throughout the nation.

Mobile Home Parks’ Financing Overview

Although financing a mobile home park can be complicated, there are various options to help you obtain the funds you need. This article takes a detailed look at how to obtain finance, eligibility requirements, and the types of financing available.

Eligibility Requirements And Guidelines

Creditworthiness:

Credit Score: Lenders like borrowers with high credit scores, typically above 680.

Credit History: A clean credit history with no recent bankruptcy or foreclosures is perfect.

Experience:

Management Experience: Lenders would prefer borrowers who have managed mobile home parks or similar properties.

Track Record: Your eligibility may be enhanced by a track record of success in real estate investments.

Property Condition:

Occupancy Rate: Favorable occupancy rates are typically higher (often above 80%).

Infrastructure: Maintained infrastructure such as utilities, roads, and common areas is essential.

Financial Stability:

Down Payment: Most lenders require down payments ranging between 20-30% of the cost price.

Debt-to-income Ratio: A low debt-to-income ratio is preferable since it shows they can take on more debts.

Location and Market:

Location: Properties located in popular regions with strong market demand are more likely to get financed than those situated elsewhere.

Market Analysis: Reading through an exhaustive market analysis showing the profitability and viability of MHP has its advantages.

Types Of Financing Options

Traditional Bank Loans:

Term Loans: Loans with a fixed term length and payment schedule attached.

Requirements: Strong credit, substantial down payment, and detailed financial documentation required.

Commercial Mortgage–Backed Securities (CMBS) Loans: Overview: These loans are combined into securities and then sold to investors.

Pros: They enjoy longer tenures(up to 30 years)and fixed interest rates, especially compared to other loans.

Cons: Strict Underwriting standards coupled with prepayment penalties.

Small Business Administration (SBA) Loans:

SBA 7(a) Loans: Best to buy or refinance an MHP;

SBA 504 Loans: For purchasing large fixed assets like MHPs.

Pros: Lower down payment requirements as well as longer repayment terms.

Cons: it is a lengthy approval process and requires stringent eligibility criteria.

Private Lenders:

Overview: Non-bank lenders offer more flexible terms.

Pros: Easier approval process and more flexible terms.

Cons: Higher interest rates and shorter loan terms.

Seller Financing:

Overview: The seller finances the purchase directly.

Pros: Flexibility in the terms of purchase and possible smaller down payments.

Cons: This may require a larger balloon payment at the end of the term.

Bridge Loans:

Overview: Short-term loans are used until permanent financing is secured.

Pros: Quick funding and flexible terms.

Cons: Higher interest rates and fees.

Steps to Secure Financing

Prepare Documentation:

Financial statements, tax returns, personal financial statements, a business plan with market analysis for your MHP, and property details such as occupancy rates, rent rolls, and condition reports.

Getting a loan for a trailer park involves knowing the criteria, producing extensive records, and selecting an appropriate credit. Getting the financing option that suits you best is possible through traditional bank loans, SBA loans, private lenders, seller financing, or bridge loans. Working with professionals like mortgage brokers or financial advisers can also help navigate complex MHP financing.

[Gustan Cho]

Thank you, Ali. Hope everything is well. What a year. Thank you for answering this post of Juan. I will introduce you to Juan and his wife Lisa Johnson for credit consulting but right now, he needs to get his credit to 620 from 525. Juan and his brother Hector need to purchase a house which needs to close on September 1st. Juan only has $2,000 this month to pay credit cards and another $2,500 next month. Should Juan pay the little credit cards with high balances first?

[Gustan Cho]

@Bill Burg Burger King 🤴 🍔 🍔 🍔 🍔 🍔 🍔 🍔 🍔 🍔 🍔 🍔 told me that it was a 30 hour plane ride, and the Whopper King with No Meat said he only spent seven dollars a day. Maybe the Burger 🍔 meant 7 PESOS. I think he got sick there which is typical of the HAMBURGER 🍔 because he always gets sick. I want to find out how his trip to the Philippines 🇵🇭 was and the people he met. Ask Ann and Anna. Billy King 🤴 talks alot so he probably told them everything. I know he was homesick and wanted to get out of there. I think he bought plane tickets 🎟 for a whole family of Filipinos and Filipinas including their in-laws, cousins, step-siblings, neighbors, and they all got caught by TSA, IMMIGRATION PATROL, and the HAMBURGER POLICE

[Gustan Cho]

Please save the WHY NEXA WITH CEO MIKE KORTAS Zoom link. CEO Mike Kortas is live every Thursday at 1:00 PM CDT to discuss the benefits of starting your career at NEXA MORTGAGE.

https://www.zoom.us/j/4802285442#success

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Join our Cloud HD Video Meeting

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[Gustan Cho]

Wow. Thank you for clarifying this. Let me ask you, Anngelli. I know hands down you are very talented. I can tell from your writings and editing articles. I know that you will be very successful in whatever you do. You and April have been a Godsend and the way I see things and am a firm believer is you do not work for money. If you work for money, you will not enjoy work, life, and won’t have self-gratification. God gave all of us one life. During that life, we have a chance to accomplish success. Everyone’s definition of success is different. A postal worker working twenty years as a mail carrier and getting a pension of $2,000 per month for the rest of his life may consider that he achieved success. More power to him. Others like me, I had everything and then some at the age of 40 years old and did not do with my life. I had all the money in the world, 35 lamborghini’s and ferrari’s, 20,000 square foot mansion, 12 homes, 3,000 housing units, and could eat anything I want, travel wherever I wanted to go, and felt I was dead. Then shit hit the fan and the 2008 financial crisis happened where I lost all my assets and $100 million dollars. I did not lose it due to mismanagement but rather was a victim of corporate greed from the big banks. Long story short, I had to restart my life again. At 44 years old, what can I do. I had a hangover type attitude and feeling with real estate. So that is when I became a loan officer. Whatever you do, do it to the best of your ability. Do not work for money. Have money work for you. You work hard, give it all your might, and accomplish or come close to accomplishing your goal, you will be rewarded with money. Money is your REPORT CARD. There’s more I want to cover but I can see the future for you guys. You ladies will succeed and prevail. I am a goal getter and my goal is to give all loyal hard working VAs U.S. dollar and not treat them any different than where they live. I told my goal to Marga from day one. Money does not give you wealth. Money comes and goes. Its the people who you trust, love, and can depend on and of course you need to give the same back is what WEALTH is. So, my question is, what is your goal? What if you worked very hard where you achieved your goal at work and got a great report card. What would you do? Will that change your life? Would you want to go back to school, become a doctor, open up a business, have more kids, get more dogs?

[Gustan Cho]

Here is a blog written by Chad Bush about the California Housing Market Forecast for 2025. @chadbush

https://gustancho.com/california-housing-market-forecast/

gustancho.com

California Housing Market Forecast For 2025

California Housing Market Forecast for 2025 is expected to be strong despite many Californians fleeing the state due to incompetent leadership

[Gustan Cho]

You nailed it. I love Koreatown in Los Angeles. California is so racially and ethnically diverse and really miss it. There’s a reason why people pay a premium living in Orange County on a million dollar home versus in Inbredville, Arkansas in a $90,000 double wide with chicken shacks and goats as pets. Lol. Love it. Your reasoning behind it is spot on and it is the responses I get. I will tell you, you Californians need normal people to run the state and get this clown Gavin Newscum out of office. The son of a bitch wants little children to have confidentiality from their parents knowing if they want a sex change. The child can tell their teacher and principal and the school staff cannot let the parents know. Fuck Him and have him get castrated. WTF is he thinking. A total creep. God created man and woman and nothing in between. People who are confused on weather to cut off the peep do not need equal rights. They need mental illness and psychological help. They need to tune up their chromosomes and hormone tune up. I don’t want to start this because I get upset. When I was growing up and in school, none of this shit was public. The buck stops with people being gay (homo, lesbian). Not transgender or dragon queen.