VENEZUELA, OIL PRICES… AND MORTGAGE RATES? YES, I’M GOING THERE!

We have all heard about the deal the U.S. put together with Venezuela last week, and I was hoping that meant cheaper oil, cheaper gas, and lower interest rates THIS WEEK! Unfortunately, it doesn’t work quite that fast. LOL!

What it could mean is something pretty positive for the future. Venezuela has some of the largest oil reserves in the world. While it will take time to really ramp production back up, we could start seeing additional oil coming to market over the next 6 to 12 months, with production potentially increasing substantially over the next 2 to 5 years.

Why should we care about that in real estate? Because oil affects almost everything. Lower oil prices can mean lower gas prices, lower transportation and shipping costs, and lower costs to manufacture and deliver goods. All of that can help put downward pressure on inflation, and lower inflation is one of the biggest things we need to get lower mortgage rates eventually.

Am I saying Venezuela is going to make mortgage rates drop magically? Of course not! A lot of things affect rates. But is this another piece of the puzzle that could help over the next couple of years? I think it is.

So, how do we use this with buyers today?

One of the biggest things we hear is, “I don’t want to buy because rates are too high.” Fair enough. If we believe inflation continues to improve and rates could be lower in 6, 12, or 18 months, the answer isn’t to sit on the sidelines. Maybe we structure the loan around it.

A 1/0 buydown gives the buyer a payment based on a rate 1% lower for the first year. A 2/1 buydown gives them a payment based on a rate 2% lower the first year and 1% lower the second year before going to the actual note rate in year three. The seller or another permitted party generally funds the difference up front.

And if rates come down faster than expected? Great. We refinance!

With our Free Refi for Life program, if the borrower qualifies and it makes financial sense, we can refinance them without the normal lender costs. Better yet, if there is unused money left in the temporary buydown account, it is generally credited back through the payoff or applied toward the loan balance, depending on the program and servicing rules.

Win Win!!!

I actually like this strategy right now because buyers still have something they may lose if rates fall: CHOICES. More inventory, fewer bidding wars in many areas, sellers willing to negotiate, and opportunities for seller credits and buydowns.

When rates eventually come down, more buyers will come back. Competition can increase, seller concessions can disappear, and home prices could start moving higher again.

The better conversation isn’t “Let’s wait until rates are lower.”

Maybe it is, “Let’s buy while you have choices, use a temporary buydown to lower the payment today, and refinance when the opportunity comes.”

Nobody can guarantee where oil, inflation, or mortgage rates will be. But I like the direction of this one. More oil production can help lower energy costs. Lower energy costs can help inflation. Lower inflation can help rates.

And if you’re a real estate agent who can explain that to your buyers, you’re going to sound a lot smarter than the average agent.

Of course, if you’re reading my blog, you probably already are. LOL!

Interest Rates
We are rolling now! Two solid days in a row! Well, after five horrific days, we need a few more to catch back up, but I like the momentum.  

Loan Programs Snapshot

• Government loans (FHA/VA/USDA): in the low 6s –
• Conventional (≤ $832,750): mid 6s
• High-balance: mid to high 6s
• Jumbo: Mid 6s
• Bridge Loans 7.75-7.99

Additional options:

• Bank statement loans (10% down+)
• P&L loans (20% down, no bank statements)
• 0% down options (620+ score)
• DSCR loans (15% down)
• Buydowns Available (3/2/1, 2/1, 1/0)
• Private Money loans – Hard Money  
• Construction Loans
• 203K loans
• Commercial Loans
• Fix and Flip Loans  

Rates subject to change without notice.

Condo Update

Good news:
Nothing this week!     

Bad news:
No news this week!  

We love your Non-Warrantable Condo loans!!
Need help checking a condo? Call me, and we can look it up in real time.

Also:
Full California “naughty list” available here:

https://mikemeena.com/non-warrantable-condos/

If you or your clients, friends, or family need guidance, I'm here.

📞 661-291-2222 (Direct)

📞 661-714-6258 (Cell)

📞 661-260-2970 ext. 2222 (Office)

📧 Mike@AugustaFinancial.com

Sincerely,