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.
Merely a few months ago, if someone were to say 1.99% regarding a loan, they would undoubtedly be talking about the fees or “discount points” that need to be paid to obtain a mortgage. Indeed, we are now at historically low mortgage rates, and astute homeowners are diligently scrambling to get the best financing terms for their potential refinance. Most perceptive rate-shoppers recognize that the published mortgage rates they see online and in reports actually do include fees, in the form of points. More often than now, if it looks “too good to be true,” it probably is. That said, I am here to announce that the once inconceivable mortgage rate (not fee) of 1.99% is now being offered by Approved Funding for select products and applicants.
Since 1990, the Mortgage Bankers Association (“MBA”) has published a weekly mortgage rate survey that covers over 75 percent of all U.S. retail residential mortgage applications. Per their findings, this week, the average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.05 percent from 3.10 percent, with points increasing to 0.52 from 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Freddie Mac, the largest buyer of mortgages in the U.S., also conducts a weekly mortgage rate survey – and this week, they reported a 2.90% average rate for the 30-year fixed mortgage loans with 0.80% fees/points. This rate is 0.03 basis points higher than the previous week and 0.74% higher than a year ago. The 15-year fixed-rate mortgage was reported at 2.40% with 0.70% in fees/points. Interestingly, the 5-year Adjustable Rate Mortgage (“ARM”) was reported at 2.90% with a 0.2% fee.
Finally, according to Bankrate’s latest survey of the nation’s largest refinance lenders, the benchmark 30-year fixed refinance rate is 3.060% with an APR of 3.190%. The average 15-year fixed refinance rate is 2.620% with an APR of 2.800%. The 5/1 adjustable-rate refinance (ARM) rate is 3.220% with an APR of 4.090%. According to their website, Bankrate has been the authority in personal finance since it was founded in 1976 – with top publications such as The New York Times, Wall Street Journal, CNBC, and others relying on Bankrate data.
Our average mortgage rates are consistently and considerably below the weekly averages of these above organizations at Approved Funding. Why is it that these distinguished and reputable sources publish higher rates than what we can provide? There are many answers to that question, but the primary reason is that every lender and bank work on their own pricing model based on their capacity and margins. Whereas one would think that the larger banks with the most money would offer low rates, they often have higher rates because of their overhead and profit demands.
Local lenders, such as Approved Funding, can be more sensible and economical because their niche is to provide the products and services that big banks offer – better, faster, and cheaper. A few months back, I started seeing reports and getting calls about some online lenders and mortgage wholesalers, promoting a 1.99% mortgage rate. Upon further review and investigation, it was discovered that these loans require at least a 2% fee and carry hefty extension fees if the loans weren’t closed in 21-30 days. Clearly, it was more of a marketing gimmick than a practical offering.
With the market stabilizing as it has, we, however, are actually beginning to offer 1.99% mortgage rates for certain qualified 15-year mortgage products without the excessive fees, and often below the average cost quoted by the sources above. To find out more, visit, www.approvedfunding.com/199
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