fhfa delays the .5 point hit and should i buy down my rate
DDA Mortgage • August 31, 2020
a .5 point hit on refinances would have cost an extra .25 percent in rate on refinances
is it worth paying points to buy down the rates when we could possibly go to negative rates
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Program Overview Borrower Contribution: You pay 1% of the purchase price as the down payment. Lender provides a 2% grant, bringing your total to 3% down, which is the typical minimum for conventional loans. For example, on a $250,000 home: You pay $2,500 (1%) Lender adds $5,000 (2%) You start owning 3% equity from day one Eligibility Requirements To qualify for ONE+, you must meet all of the following: Income: At or below 80% of your area's median income (AMI) National Mortgage Professional Credit Score: Minimum FICO® score of 620 Property Type: Must be a single-unit primary residence (no second homes or investments) Loan Limit: Loan amount must be $350,000 or l Total Down Payment: With their 2% grant included, your total down payment cannot exceed 5% Mortgage Insurance (PMI) Despite the grant taking you to 3% equity, the program does require mortgage insurance (PMI). National Mortgage Professional The Mortgage Report tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
A 40-year interest-only fixed for 10 years mortgage is a specialized loan product with the following structure: 🔹 Loan Term: 40 Years Total length of the mortgage is 40 years. 🔹 Interest-Only Period: First 10 Years For the first 10 years, the borrower only pays interest on the loan. No principal is paid down during this time (unless the borrower chooses to). Monthly payments are lower because they do not include principal repayment. 🔹 Fixed Interest Rate: First 10 Years The interest rate is fixed during the 10-year interest-only period. This provides payment stability during that time. 🔹 After 10 Years: Principal + Interest After the initial 10 years: The borrower starts making fully amortizing payments (principal + interest). These payments are higher, because: The principal is repaid over the remaining 30 years, not 40. And the interest rate may adjust, depending on loan terms (some convert to an adjustable rate, others stay fixed). ✅ Pros Lower payments early on—can help with cash flow. May be useful if the borrower plans to sell or refinance within 10 years. Good for investors or short-term homeownership plans. ⚠️ Cons No equity is built unless home appreciates or borrower pays extra. Big payment increase after 10 years. Can be risky if income doesn't rise, or if home value declines. 🧠 Example Let’s say: Loan amount: $300,000 Interest rate: 6% fixed for 10 years First 10 years: Only pay interest = $1,500/month After 10 years: Principal + interest on remaining $300,000 over 30 years = ~$1,798/month (assuming same rate) tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
When the 10-year Treasury yield goes down, it generally signals lower interest rates and increased demand for safe-haven assets like U.S. government bonds. Here’s what typically happens across different areas of the economy and markets: 🔻 Why the 10-Year Treasury Yield Drops Increased demand for bonds: Investors buy Treasuries during uncertain times (e.g., recession fears, geopolitical risk), which drives prices up and yields down. Expectations of lower inflation or interest rates: If the Federal Reserve is expected to cut rates or inflation is cooling, yields tend to fall. Weak economic outlook: Slowing growth or a poor jobs report can trigger a yield decline. 📉 Impacts of a Lower 10-Year Treasury Yield 🏦 1. Mortgage Rates and Loans Mortgage rates (especially 30-year fixed) tend to follow the 10-year Treasury. As yields fall, mortgage rates usually decline, making home loans cheaper. This can stimulate the housing market and refinancing activity. 📈 2. Stock Market Lower yields often boost stock prices, especially growth stocks (like tech), because: Borrowing costs are lower. Future earnings are worth more when discounted at a lower rate. Defensive and interest-sensitive sectors (like utilities and real estate) also benefit. 💰 3. Consumer and Business Borrowing Lower Treasury yields can lead to lower interest rates across the board, including for: Auto loans Credit cards Business loans This can boost consumer spending and business investment. 💵 4. U.S. Dollar Falling yields can make U.S. assets less attractive to foreign investors. This can weaken the dollar, which may help U.S. exporters by making goods cheaper abroad. 🪙 5. Inflation Expectations If the yield is falling due to low inflation expectations, it may indicate deflationary pressure. However, if it's just due to safe-haven buying, it might not reflect inflation at all. ⚠️ Potential Risks A sharp drop in the 10-year yield can signal a recession or loss of confidence in the economy. A flattening or inverted yield curve (when short-term rates are higher than long-term) can be a recession warning. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
