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Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.

The name sounded very familiar when I returned the call last week, but I couldn’t place where from. After talking for a few moments, even the details of the loan scenario sounded familiar. When he said, “but these title costs are even more expensive than what you told me last year … it’s still too much!” – I finally remembered our previous conversation and found my notes. Yes, we had spoken about 14 months ago, when rates were over 1% higher than where they are today and when loan expenses were slightly cheaper. We hung up, and my quick calculation confirmed that had he refinanced a year ago, he would have already more than broken-even by now and would be saving close to $300 each month going forward. The distorted discussion about closing costs got me thinking, do people truly understand how much is too much?!

Governmental Stimulus
This week we also got word of a massive $2 trillion governmental stimulus that the Biden administration unveiled. Money was being earmarked for everyone – individuals, businesses, the unemployed, etc. Janet Yellen, the U.S. Treasury Secretary nominee, and former Federal Reserve Chairperson, addressed a Senate Finance Committee hearing imploring them to consider a much bigger stimulus package than many conservatives are comfortable with. The concern is that more Governmental stimulus will weaken the dollar, generate massive inflation, and cause interest rates to rise. The Dovish Yellin didn’t seem overly concerned. “Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big,” Yellen said. Listening to her plea, I couldn’t help but wonder, how much is too much?!

Real Estate Prices

I was humbled when I got a call from a client who told me that she was referred to me by both the sellers listing agent as well as her own realtor. The seller’s agent would not accept her “significantly higher than listing price offer” unless I was the one doing the mortgage. He was uncomfortable that just any mortgage company could get the job done for this unique home. After discussions with several of my appraisers, I confirmed with both realtors that we could get it done and still get closed in 30 days. They accepted my clients offer, and we closed last week. This week, I had a client who lost out on a bid to buy a home despite offering $40,000 above the asking price. I know the market is hot, but how much is too much?!

Soaring Markets
I had a friend tell me that he bought put options, betting against the skyrocketing S&P 500 Index when it hit its historical 3700. His decision was well supported given the recent accelerated market run and the fact that most were predicting a pullback for stocks. Needless to say, his options are almost worthless as the S&P continues to soar and closed at another historic level breaking 3850. The stock market’s extraordinary climb continues to defy most analyst forecasts. With the Biden administration poised to launch massive spending and stimulus, the markets are likely to continue surging. I must ask, fundamentally speaking, how much is too much?!

Panic vs. Euphoria
Citigroup has a fascinating “Index” that it has been tracking for years. It is called the Market Sentiment Panic/Euphoria Index. The Citi Index, which is a great contrarian indicator, is at an unprecedented level of enthusiasm in the history of this index. After hitting 1.83 last week and 1.28 two weeks ago, it is now at 2.01. To put this number into context, anything above.41 is considered euphoria, so we are now at almost five times that level. This indicator would have led us to believe that the stock market would have been due for a correction weeks ago, but alas, here we are. When it comes to panic and euphoria, how much is too much?!

In case you didn’t get the overall vibe of this article, yes, I do believe many sectors of the economy are presently overvalued. Still, I think housing prices will further rise, even if mortgage rates do inch a bit higher. No one knows what the future will bring, which is why I cannot help but encourage people to act now when it comes to their mortgage financing. Is your present payment too high? Are you concerned your home equity will drop? Do you have a line of credit that is not fixed? Are you carrying any debt whatsoever? When it comes to overpaying on interest, there is no such thing as “how much is too much?” Get the lowest rates that you can now, before things do change – whenever that might be.

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