6/15/2023

I want to take you back 18 months when interest rates were in the low 3’s. Yes, that was only 18 months ago, but it seems like a lifetime. If interest rates remained in the 3’s, we would have never seen the summer pullback last year when rates went to 7+%! We would have never seen prices drop by 10% between May and November and then the recovery when rates went down again back to where we are now, a slightly higher price than 18 months ago. So, where would prices be today if rates stayed at 3% for the past 18 months? We all agree that the 10% pullback would not have happened last summer. It is safe to say that we would have had another 10% annual increase in price. Eighteen months is a 15% increase without the 10% decrease, and we would be 25% higher than last year or 20% higher than now!

So if prices are higher by 20%, an $800,000.00 would be $960,000.00 today! What does that do to payments?

$800,000.00 with 5% down would have a payment with taxes, and $250.00 of Insurance at today’s rates would be $5859.51

At $960,000 with 5% down with a 3.5% interest rate with $250.00 for Insurance, would have a payment of $5611.29

Your interest write-off at $800,000 is $14,650 more, so you will pay about $3600.00 less in taxes which is $300.00 per month. This makes buying now with higher rates better than if rates stayed in the 3’s!

You can always refinance today’s property to a lower rate - 800K @ 5% rate = $5321.00 / 4.5% rate

$5092.48 / 4% rate $4870.02

We agree that interest rates will come down from here, and today is another indication.

We can also agree that prices will continue to rise with the tight market, and buying today rather than tomorrow is better. Holding off is making it worse, and you need a team to help your clients understand this!

Economic data was mixed today, with the headliner being higher unemployment! This is good news for interest rates but not for the overall economy. Rates have improved today, but they are still hanging in the area we have been all month. Let’s hope for a breakout because rates in the fives sound much better than those in the sixes!

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• Government Loans (FHA / VA) are in the high 5’s.
• Conventional Loans up to $726,200.00 are in the 6’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the 6’s
• Jumbo loans above $1,089,300 are in the 6’s
• 5/1, 7/1, 10/1 Arms are in the high 6’s.
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• No income qualifier – 20% down with reserves! In the 8’s and 9’s!
• 0 down loans are in the mid to high 6’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.99% with limited fees – But they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until 2024!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am around all weekend if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!