Interest Rates California | Q&A with RPM Mortgage expert | EP 3

Interest Rates California | Q&A with RPM Mortgage expert | EP 3

we are all in limo right now and many of
you guys are wondering what's going on with the economy what's gonna happen to
the housing market what's going on what does the feds 0% interest rate mean our
rates going up our rates going down what does this mean for my home sale what
does this mean for my home loan what is this me for my refinance what
does it mean for my home search these are all questions that you guys are
wanting to know these are all great questions and in this video my colleague
evany Hicks and I as well as our little mascot Mason are going to be
interviewing Brandon Carroll with our p.m. mortgage he is an expert in the
mortgage industry and he's going to answer all these tough questions for you
so let's get to it okay hi everyone this is Rachel and ebony here today from
Keller Williams where real estate agents with Keller in the bay area and today we
have Brandon Carroll with artheon mortgage who is an expert in the
mortgage industry we work with him a lot in the bay area and he's going to be
answering some important questions that you guys have had for us so Thank You
Brandon for taking your time to chat with us today
thank you for having me this is fun it's nice speaking to real people for once
instead of the mirror so yeah I'm excited
let's do this awesome so we have a couple questions I'll have evany go
ahead and get started on the first one the number one question we've been
getting is what is the whole thing about bringing it down to 1% yeah so that was
a that's kind of like what kick-started this whole situation that were under
because basically everyone when they hear the Fed lower they were interested
naturally and rightfully so assume that it applied to mortgage rates right so
the feds reduced their interest rate twice twice this year mortgage rates on
their own since January first we're already low to begin with I mean we were
talking like the threes and they were already low it's just no one really knew
about I didn't except for my best clients I was reaching out to right and
so when the Fed reduced their interest rate
all of a sudden there were these headlines left and right and everyone
was like mortgage rates are dropped and any lender probably had their phone
blowing up like 30 calls the next day right and the same conversation was the
feds interest rate does not directly impact mortgage rates there are two
separate entities so when the Fed lowers their interest rate they lower it
because the economy is somewhat suffering right stock market was tanking
bond market was doing awful in that sense and when they lower their interest
rate that's the large entities large banks they borrowed from the federal
government and so more or less it's a steroid to the US government in that
sense mortgage rates are more so fueled by the employment rate and more so the
bond market in that sense so with them already being low and then the Fed
basically announcing that they lowered their interest rate it was kind of a
misguided way where all the eyes of Americans went straight to mortgage
rates that were already low but because of that there became such an influx into
the actual banks taking on refinances but it was almost an overcapacity for
what they could take at the time and I can dive into a lot of reasons why
recently a few weeks ago mortgage rates actually shot up a great deal over a 48
hour span but basically it was a sense where there were so many deals coming
through it would be like if you built homes right and you've is the analogy is
you built homes your Builder you did three homes a month and that was great
right and then one morning you wake up there's a thousand people knocking on
your door office saying I want home this month right your relations bring on the
money sounds good right okay you can't hide there enough people to do that you
can't facilitate that it's not a realistic situation and so everyone was
just flooding in from an operational standpoint they could not take it on
right the other big item with why mortgage rate shot up very recently too
is the thing called an EPO or an early payoff so whenever a mortgage bank
facilitates a loan and they close on it a borrower happens to either refinance
herself within 180 days after they close in that refinance the banks get nothing
right so if you put yourself in the shoes of an investor right i refinanced
you we closed mortgage rates are incredibly low they're looking like they
could go even lower what's to say a client that you've just closed on their
refinance refinances in two weeks right and then these mortgage banks pay one to
three percent of the loan amount just to facilitate creating on their end the
refinance so it would be implosive for investors
to be able to do that so it was just too much all at once and it all was sparked
basically by the feds that are in their interest rate and then all of a sudden
Americans thinking that was directly applicable to mortgage rates which they
were already low but it was all eyes on it and everyone making that assumption
in the analogy I used to as the whole trunk situation when everyone went on
Facebook and they saw headlines left and right that Trump was impeached and
everyone was like high-five and and then like you slowly realize like it was just
a houseboat right he was impeached he was voted impeach but it was not in
Peach federal the Federal Reserve lower their interest rate mortgage rates were
already low but they weren't directly correlated it's just everyone couldn't
stop talking about it okay so you kind of answered the next question for us
that we had do you think that rates are continued going to continue to go up so
you kind of has it a little bit but do you want to touch on it a bit more yeah
I think there's there's two very big parts to look at everything right now
everything is unbelievably volatile we get updates on an hourly basis right now
of repricing situations right now for interest rates and there's a lot of
different factors that are playing apart before the whole pandemic episode it was
exactly what I went over where the Fed lower their interest rate people thought
mortgage rates they were low huge capacity the biggest capacitor that's
ever been documented of incoming deals to mortgage banks in America
post pandemic it's a very unique kind of world that we're listening right now not
just naturally because at home right now in this sense that the Federal Reserve
not because their interest rate right now are trying to help mortgage rates
what they're doing is they're buying up or they did buy two hundred fifty
billion dollars in mortgage backed securities mortgage-backed securities
basically fuel mortgage rates and necessarily like what we're looking at
with the bond market so when there's more value with mortgage-backed
securities and the bond markets doing well naturally that means that mortgage
rates go down and so to help stimulate that to help bring mortgage rates down
the Fed yeah that's about two hundred fifty billion dollars worth of
mortgage-backed securities because in their eyes what they're wanting to do is
you know stimulate the economy and bring it back down so that's how they did it
but in the same sense on the other side of and it keeps going the Fed on one
side and then mortgage investors on the other on the other side of it with
mortgage investors it's a very unique time to be lending right now right and
it's a very sad time to be lending specifically with what's happening with
unemployment right now so with that said all indications are going that mortgage
rates are naturally gonna go downwards but investors are pushing back right
because their pipeline is still so full from these refinances that came in in
February right that that they're still trying from an operational standpoint to
clean out that pipeline instead of dropping mortgage rates back to where it
was again and then we're back where we were in that sense and then there was
that whole fear of the EPO thing where if they drop those right who say that
people are just gonna keep refinancing and these mortgage banks are gonna be
spending thousands and thousands and thousands of dollars on nothing and then
it you know it absolutely goes to nothing and then the added layer on top
of this is when you think about a mortgage investor providing a loan they
have to sell that loan on the secondary market right now no one really wants to
by risky loan meaning it's hard to put it in a sense but a lot of investors are
holding off with facilitating the more non 20% down 800 credits for like rpm
one of the great things that we have our jumbo non-qm loans are a little outside
of the box like 2.5 million purchase 5% down no mortgage insurance
like that's a non-qm love also very risky somewhat if you're buying that
right and if you're trying to buy that right now in this environment you really
can't service that type of a loan because everyone's very fearful what's
going on so there's a lot of pullback and as investors go as far as how are
they gonna sell this loan on the secondary market and these riskier loans
are having a tough time matching the pricing of bringing down interest rates
so that's why there's pushback to so push back because of epo pushback
because they're worried about how they're gonna sell these loans with no
one really wanted to find everyone's just kind of in a holding pattern right
now specifically with the riskier ones and and in the in the long run too they
have to clear out this pipeline that came in just a month ago and it's a
pipeline that came in of the most mortgage-backed securities in the sense
that everyone also was told to go home – from an operational standpoint right so
you have one month them more Richmond seeing the most deals they can possibly
facilitate from an operational standpoint and then the next month will
pack your bag because your mouth and hopf it's you still got it likely now
this pipeline and then the Fed is going get that's what we're gonna buy 250
billion dollars in mortgage-backed securities so we can you know stimulate
and lower interest rates and everyone is just like this right it's it's it's just
it's a bit crazy right now but the answer your question
my long-winded tangent answer is out there because there's a lot I could go
on forever yeah no I know it is a lot and and we're on a very unique situation
we have a little mascot here obviously he loves hearing about mortgage-backed
securities yes they are gonna go up we just can't obviously predict anything
because it is a very uncertain time right now I very much think that they
are gonna be low and they're gonna be lower than they've ever been for
probably the upcoming next two years the reason being is this situation with this
whole pandemic and everyone being quarantined it's gonna pass right but
the effect that it's had on Americans in employment that's not that's not gonna
be recouped easily right like I've been calling up with past clients the amount
of people I'm hearing or are either laid off receiving no income that type of a
situation that's gonna be a wave that's gonna last a bit right and I think
mortgage rates are gonna reflect that is such as being low and low for a good
amount of time because I think that's gonna be the biggest indicator here
after we get out I think of the storm that is us right now
in this you know endemic convene at home is going to be the effect on the US
economy is what's happening to employment I mean because no one could
prepare for this right and it's one of those things were naturally I think
that's gonna follow suit but right now it's just right I would say right now
like – as of today mortgage rates are somewhat in the middle three weeks ago –
shot up to the high fours like low fives cost it was 48 hours just craziness
now we're someone a middle ground like low fours high threes in that situation
but moving forward from here as far as interest rates go it's not gonna be what
it was where we were sitting at like 3% for a month and a half right I what I
believe is gonna happen when I'm relaying to clients at least refinance
clients and applicable to purchases someone is that it'll probably be a bit
of an up-and-down but not really a holding pattern that's why we're
stressing clients to like get Docs in now just
okay okay that kind of leads into our next question so what advice have you
been giving – you know people are looking to buy or sell or is it still a
good time now or should they hold off yeah with and I'm bringing up refinances
and your real estate agents and I'm lenders we should be talking about
purchase with purchases and sales – that's also the very unique factor in
this sense where I think anyone would naturally say and same with you is you
know knowledgeable professionals on the real estate side is that pretty much
everyone's in a bit of a sixteen and then I need a holding pattern it feels
like right where it's like let's just kind of get through this in the sense
there are also people buying and selling right now because at the end of the day
people are gonna have to buy and sell I clear days ago who went into contract
who got a deal any other time right kind of seller credit and I mean they love
their home did they have to look at it virtually yes are the circumstances very
different yes but they wanted to buy the sellers had to sell they got a great
deal and in that sense the biggest thing where people asked should we buy or sell
right now or should we hold off this is gonna pass in 60 and 90 days when it
does so is gonna pass everyone holding back meaning that I believe that there
is gonna be a whole lot of inventory and a whole lot of buyers right and you
think on the selling side of things it's not an ideal circumstance but if you're
wanting to get the most out of it and depending on how many homes come on the
market right when everyone kind of eases out of this type of a situation there's
less competition on both sides because there's less people out there I just
think that now if you're looking to buy or sell being prepared for that right
circumstance where the puzzle pieces fit together
right and everyone's a little bit transparent with one another with it's
almost like a you know it's almost I think being transparent in the sense
that we're in a pandemic it's not your normal market type of the situation you
know what you want we know what we want let's make the transaction work is gonna
be very different then when we come out of this and it's the summertime when
kids are you know getting out of school which is obviously as we know very you
know our market is very seasonal in that sense when you have a whole lot of
listings out there and you have a whole lot of buyers and it turns to a multiple
offer situation for buyers and they're competing versus right now with these
circumstances keeping an eye out for those potential options where you're not
gonna have anyone really competing right right okay yeah that was really good
information I I like to ask this question because I I know it comes up
and I'm sure people need to be educated on it so this is kind of a more of just
educational question sorry Mason basically can you explain how lower
rates affect the price of homes and what this means for buyers and sellers right
now yes so naturally when rates drop it usually follows suit as a bit of a
stimulus to the market right because it means that people can afford more right
so there's more buyers out there and naturally it usually pushes home prices
upwards type of that situation and and it just it stimulates more interest
among buyers because it's it becomes very cheap to borrow money for something
that's a natural necessity that has just shown to canid equity I mean even out of
the recession in 2008 that was a circumstance that the likelihood of
something like that happening again in the sense that you could literally walk
into a bank and say I make 50k a month you'd be like great here's your
pre-approval letter go buy a two million dollar home and I'm sure you probably
know that right people lie when they want to yeah we really wanted that home really
think you make like 50k a month when it's really 10k right and that's what
happened people defaulted there wasn't due
diligence upfront that's why we asked you for you know arm and a leg in a
firstborn and you know I tell people you're gonna hate me but we're gonna get
through this together for the amount of documentation that we
require but that's that's because of what we saw before so I think the
recession is a bit of an outlier because there was just you know one governing
ability to pay back the loans that people getting in this sense we're still
highly documenting everything as I mentioned do point where it's an arm and
a leg situation it's just we have an unprecedented situation with this
pandemic that no one's seen before but I don't think it's gonna have an
impact necessarily on the housing market for value that was comparable at all the
2008 but where that's gonna be I don't know but there's everyone is still very
active and at the end of the day I always like to say I can go up and down
but the trend is always upwards right you're gonna see Evan flows but it's
always still upwards we're definitely in a unique situation right now sure very
much yeah very much but buyers are gonna buy and sell em in a Cell yes right I
know it sounds so simplistic and even want to hear myself I'm like you sound
like but in the same it almost becomes I've always kind of learned that like
talk overshadows actual fact right in the sense that you often hear so many
people talking about what-ifs and what could be and where is it gonna
go I mean have some kind sword still worried about a recession coming in I've
been speaking with them for five years now and you think about the amount of
time they are still wasting on rent just out of fear of something that's not real
I mean yeah it could be it couldn't be right but it shouldn't impede what
you're doing presently based off non real factual knowledge that it's gonna
occur that okay I know as realtors you know our
business isten no strategize how we do things now yes we we are still working
my team and I we're all working remotely luckily with rpm I mean we've gone
through the previous recession made on the other side we're private mortgage
bank so it's circumstance where all we do is mortgages it's our lifeblood and
then we take that very seriously we're on close communication about everything
and we are still working from a pre-approval standpoint they're still
being turned out very quickly I usually say pre-approvals are usually two or
three business days the only thing that holds that up is any verification forms
that we may need and right now we usually have to get those super a role
or HR departments and they are obviously just like all of us a little bit but
they're arms tied behind you know their backs yes we're still working but we're
all a little bit more transparent with one another and as well as both of you
you know Rachel met me if we were in a transaction together in you were listing
agents and I was on the other side with buyers it would it would be one that
senses where we might be a little late on timelines a day or two but we can all
be on the saintly I was using an analogy with the listing agent the other day
just trying to get this across where it's like prior this whole pandemic
situation it was like mortgage banks for driving a Lamborghini in the fast lane
going 100 and right now all of a sudden from an operational standpoint you're
saying all right you're gonna have to drive a Dodge Dart beforehand right but
we're pushing it as hard as we can and we're gonna get to the destination and
if it's about the end goal which is home ownership or selling your home we'll get
there and we'll get it done and we're all moving as fast as we can but
rightfully so very abruptly everyone was told get out so you know we're still operating in
business too but we're exactly like what you know yeah it's just saying the
expectations right the the best the easiest transactions come with the
closest amount of communication and everyone being on the same page that
expectations are on the same level playing field and that's what I'm trying
to get across with everyone involved with my buyers with the you know buyer's
agent with the listing agents on all transactions the end goal is a smooth
process and getting our buyers in their home or selling or selling their home
and that's that's what we set out to do sell but probably the qualifying
environment it's also very unique right now there hasn't really been a lot
shared about that right now because we were just told on Monday type of
situation we're just kind of unraveling but Fannie Mae and Freddie Mac who back
all conventional financing rightfully so people are thinking okay I mean not
working kid what does that mean for qualifying right and so Fannie Mae and Freddie Mac
basically came out and said very much along those lines that in order for
during if you're buying a home during this pandemic during this quarantine and
we can't document be a paystubs that you are actually receiving income through
this they can't lend right they can't they can't lend and finance you know
you're purchasing a home without the certainty of knowing when this is a
certainty of knowing when you're gonna start receiving income and and be able
to move forward so that's also one thing that's kind of been a curveball in the
situation where with anyone right now who's thinking about offering what may
be pre-approved a few months ago or we haven't connected lately the first
question is are you receiving income at this time like right now through this
pandemic are you receiving income or is everything been halted because that's
that's kind of the new world that we're limited and it's the new guidelines that
they said and that circumstance so a big thing too and it goes back to
refinance is that specific to this pandemic is everything with gavin newsom
right and these headlines of this 90-day relief situation for your not paying
your mortgage I'm very fearful I'm very fearful in the sense that going back to
people reading headlines and assuming it means something right rather than what
it means is that this relief program you have to be improved from it for it you
have to reach out to your servicer and you have to make sure that it's
allowable and I think a lot of people are gonna read these gavin newsom
headlines and seen this 90-day relief and just assume that they don't have to
make their mortgage payments and everything's gonna be fine
right and then next thing you know they miss two mortgage payments hugely
impacts their credit scoring and when these rates drop as you know crystal
ball hopefully expect them to in the near future they might not even be able
to qualify for a refinance because they missed back to back to back mortgage
payments right and they didn't even know about it because it assumed that there
was relief going on so that's very much you know type of the point I want to get
across because that said that that's a circumstance we don't want for anyone
okay well I think we can always just reach out to you with questions and
people if we want to get them pre-qualified you know to potentially
purchase but I think that that's it for us on our questions there was a lot of
information the process the point I always like to make too is that you know
it's non-binding no cost it's a little bit of documentation and an application
and and some of us have a little bit more time now which is nice to be able
to get started for underwriting purposes documents are valid for 90 days but you
know with the clients I work with we just want to make sure that if time has
elapsed we're able to just verbally make sure that everything is in line that
everything looks okay so it's not about restarting the process I think a lot of
people think there's a ticking yeah time bomb or if they start they have to do it
in this time it's not necessarily the same so I
would say being prepared upfront and getting pre-approved is hugely
beneficial and that also goes back to the other side of it when we're talking
about fine and spelling in this market currently as well on the flip side of it
with sellers too you're probably gonna buy right and
unless you're buying all cash you're probably gonna need to get pre-approved
as well for your financing and another thing that's kind of nice about this
market with there not being as much out there right is that if you're a seller
and you're thinking about being a move-up buyer from that right you're
trying to buy a larger home and it might be a contingent situation when it's a
very hot market I mean I hate to say but people look at contingent offers and
they go mmm you know you're right you kind of like I mean it's true because
there's more you know moving parts involved but who's to say right now if
you're thinking of moving up right and selling your home make sure you're
pre-approved right opportunity comes up where no one's jumping at it because no
one's able to walk there tell people but but in that sense you could potentially
get these somewhat contingent offers some times offers in a hot environment
that wouldn't even be you know taking into consideration is something that
could definitely be worked out as long as you know you're really talented
real estate professionals like both of you and you have people in communication
on both making transactions work it could be I'm really financially
beneficial take advantage of that right which is why we always are trying to
educate people so they know how to make the best decisions and that's why we
have people like you on to help us so thank you Brandon I really appreciate it Jason for being so good all right
Brandon thank you so much for helping us today a lot of really great information
for our clients we really appreciate it we're gonna have all of his information
below so you can ask any other questions meet with him get pre-approved go over
any kind of questions that you may or may not have
and really appreciate it Brandon have a great day thanks for answering other
questions there's a pleasure Thank You Rachel thank you have any alright bye
alright so there you have it a ton of information thanks so much Brandon there
are still so many transitions and changes to come and we promise to keep
up to date on all that stuff so if you have questions reach out and we'll get a
mansard for you as they come in Brandon's info is down in the box below
so do feel free to email him or email me and we can get everything that we can't
answer for you answered as soon as those changes come in we're on it
make sure to subscribe below click that bell to get notified every time I have a
new video coming out there's gonna be lots more coming up about the East Bay
and all the changes to come and definitely check out our kW app so you
can start searching for your dream home today link for that is down below that's
it for this video if you thought this video is a helpful and make a comment
down below and if you'd like to share this with someone if you think that
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the market feel free to share that with them and in the meantime thanks so much
for watching and I look forward to seeing you in our next video thanks bye you

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