Page 10 - November 2020 Issue.indd

DOLLARS AND SENSE by Tolbert Rowe

Interest rates are at historic lows… again!
“Interest rates are at historic lows.” I For those with government loans, like and the risk of default is assessed to
think in the 40 years I have been involved FHA, VA or USDA, 30-year rates have be minimal, a PIW is issued, and no
in real estate or real estate finance I have gotten as low as 2.25%. Even those who appraisal of the property is needed. Th is

probably said this a dozen times. And closed on their loan one year ago are happens almost exclusively in refi nance
each time I felt like rates would never seeing an opportunity to potentially transactions where all the borrower is

go lower. Heck, I remember saying that save hundreds of dollars a month. doing is paying off an existing mortgage,
I didn’t think we would see single digit Again, lenders pipelines of business are not getting any additional cash.
interest rates in the early 80’s. swelling, and the process of refi nancing

There is a definite sense of fi nality in
is taking longer as lenders prioritize
Here we are in a presidential election refinancing to today’s interest rates.
purchase transactions. For those who
year with unemployment nearing 10%, Finality being that this will be the last

are refinancing to a conventional loan
800,000 to 1 million people becoming mortgage you will get. The odds of
there is an added benefit that many can

unemployed every month, in an refinancing a 2.5-2.75% mortgage to
take advantage of.
economy struggling to recover from get an even lower rate are slim to none.
a pandemic that is rapidly marching Until our economy was turned on its
And for those looking to purchase a
closer to killing a quarter of a million heels because of coronavirus Property
home? Well, let us just say that buying
people. Here we are again saying that Inspection Waivers (PIW’s) were
a home in today’s market is like the
long term “interest rates are at historic granted in very few loan scenarios.
wild, wild west. Inventory has been at
lows.” But this time the lows we have hit A PIW is granted when the national
such a low level for so long that homes
have blown through prior historic lows. data base of properties held by Fannie
that are aggressively priced are seeing
Mae and Freddie Mac supports a
Not too long ago we were excited to see multiple off ers.
loan to value determination under a
interest rates below 4%. Many people
certain threshold, usually 75%. If the Things have gotten so bad that several

jumped on 3.75% money thinking that
credit and income profile supports buyers that I had issued pre-approvals
this was the lowest level we would ever
an exceptionally low probability of for were making an off er on the same
see rates hit. With rates below 4% for
default by the borrowers the need for house, listed at $199,000. Th e highest
sure this was the last mortgage you
an appraisal of the property is waived, offer I was involved in was $215,000,
would ever get. Rates will never get
saving approximately $500 in upfront $16,000 over asking price, and they were
lower.
costs. not successful. The seller reviewed 12

Now these same people are refi nancing In today’s automated underwriting offers that were presented to them at the

to not only sub 3% rates, they are environment, a loan is underwritten as same time. 12 off ers!
taking further advantage of low rates soon as income and credit information
by shortening the term of their loans are input. If the stars align, when Selling in today’s red-hot market

by refinancing to going with a shorter- submitted for automated underwriting requires some prep work, the most
term loan. important task being consulting with a
realtor, someone with their finger on the

pulse of the market. The key to getting

the most for your home is to prepare it
“Your Mortgage Consultant Since 1985”
appropriately, price it aggressively and be
Purchase or Refinance prepared to negotiate buyers’ conditions.

The advice and recommendations of a
Realtor could mean thousands more
in your pocket in return for a minimal
investment.
For first time buyers the challenge is a

115 E Dover St. Ste 3 - Easton, MD little more daunting and can be a lot
tolbert@baycapitalmortgage.com C. Tolbert Rowe, more frustrating. First and foremost,
www.baycapitalmortgage.com NMLS Vice President/Lending you must have a solid pre-approval
182844
from a lender who is well versed in
410-819-3005 / cell 410-310-3520 the requirements of loan programs
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