This question is an important one to Houston jumbo homeowners who might be considering refinancing their mortgage at today’s record low rates. Given the economy, it is understandable that many people may not want to part with their hard-earned cash to pay for closing costs or they may not have sufficient funds to cover closing costs.  Don’t fret; you do not have to miss out on the refinancing boom due to a lack of funds. There are ways to cover your costs without breaking the bank.

First, we need to make one thing clear: there is no free lunch. You are not going to get a rock bottom rate with no closing costs.  Anyone who promises this is being disingenuous. Many closing costs are “hard costs” of your loan paid to third parties, independent of your mortgage lender. These include title insurance (the rates for which are set the by the state insurance commissioner in Texas), appraisal, recording costs, and in many cases, escrows for taxes and insurance. Your lender is also not going to work for free. Though their fees may not be charged directly to you, I am often reminded of the old Prego spaghetti sauce commercial that features the tag line “it’s in there”.  Well, so is your lender’s fee.

There are two ways to avoid paying some, or all, of your closing costs out of pocket. One way to do this (and still obtain some of the lowest rates available in the marketplace), is to roll these costs into your loan amount. The benefit of this strategy is that you keep your cash in the bank and get a very low rate. The downside is that you will end up paying more interest over the life of the loan because you are increasing your loan balance by the amount of the closing costs. This is still not a bad strategy, particularly if you plan to remain in your home for several years.

Another possibility is for your lender to pay all or a portion of your costs on your behalf. As we discussed earlier, there is a cost to this. You will have to settle for a higher interest rate. The lender will pay your costs and earn their fee when your loan is sold because the buyer of your loan will pay a premium for a premium rate. Nevertheless, if you can reduce your rate with no additional costs, you are saving money on your mortgage no matter how you slice it. I have been able to help countless homeowners using this strategy over the past month.

If you have a Texas mortgage with a rate of 5% or higher and would like to take a look at your refinancing options, please contact us at info@hlstx.com or at (832) 286-1600.  Many people we talk to about refinancing are astounded at the amount of money they will save over the life of their loan.  We can do a free refinance analysis for you and determine your breakeven point if you do refinance. There is also a Texas Mortgage app available for iPhone and iPad users that uses current rates to give you an idea of monthly payments on a refinancing.  Search the App Store on your device for “Houston Mortgage” or click here to download the app from iTunes.

Contact us today, we will be happy to help you save money!

Average rates for the benchmark 30-year fixed mortgage as reported by Freddie Mac stood at 4.09% this week. This represents a decrease of .03% over last week’s average. The average for the 15-year fixed program equaled 3.30%, also a decrease of .03% on the week.

Once again, both of these averages set new lows for 2011.

Bond investors continue watching the developments in the European Union economies. Germany (this week) has pronounced that they would assist Greece with their critical capital needs to add stability to the Euro. The strength of the German economy appears to be the only factor preventing complete disaster for the EU. Despite the lower averages, major lenders have not reacted with lower mortgage rate postings this week.

Home Loan Specialists is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.06%) and 15-year at 3.25% (APR 3.57%). We continue to advise refinancing candidates to take immediate action if their existing rate exceeds 4.875% on 30-year loans as long as their outstanding balance exceeds $100,000. It remains an ideal time to uproot old 30-year loans and replace them with 15- (or even 10-year) fixed rate programs as long as no more than 5 to 7 years has elapsed since their current loan was closed.

By Mike Lesmeister, CRMS, CMPS

In today’s unpredictable economic atmosphere, many investors are struggling with decisions regarding their next move. The stock markets are unstable, yields on bank time deposits and other fixed-income investments are nearing record lows, gold has had a huge run-up that, judging from its historical performance, may not be sustainable, and long-term inflation lurks on the horizon.

In this environment, one option to consider is investing in residential real estate. Contrary to the news that housing values are plummeting and you can’t get a mortgage, many investors have silently made a killing by investing in rental properties. Now, these are not the “flip and get rich quick” schemes you see on cable television, but a long-term strategy of meeting increased rental demand in the Houston area by buying homes at distressed prices and financing them at record low, long-term mortgage rates.

The opportunity here is three-fold; through positive cash flow that can be gained on the difference between rental rates and the debt service on the loan, through the tax advantages real estate offers, and through the long-term appreciation and inflation-hedge real estate represents. Currently, the rent-to-mortgage payment ratio in Houston is just below 1%, meaning that the average rent in Houston should cover mortgage repayment on a 100% financed property.  So, when adjusted for down payment, taxes and insurance, it should not be too difficult to find a property that provides positive monthly cash flow.

Houston remains a strong market for rentals as our relatively strong economy continues to attract workers from other states. This population growth, coupled with the need for housing by immigrants and homeowners displaced due to foreclosure or a previous job loss, creates a significant demand for housing, particularly in areas with good schools. It is not uncommon for newly listed rentals to garner several applications within hours of listing.

Financing rental properties is not as easy as it once was, but for investors with cash available and good credit, it is readily available. Potential landlords should expect a 20-25% down payment, have credit scores over 700, and demonstrate cash reserves equivalent to six months’ worth of housing payments. Interest rates and closing costs are slightly higher than those charged on owner-occupied properties, but not significantly so. At current rates, it would not be unusual for a well-heeled buyer to be able to purchase a $100,000 home with 20% down at an interest rate under 5% over 30 years with closing costs totaling $3,000, excluding prepaid interest, taxes, and insurance. This home in the right area could easily fetch over $1,100 in monthly rent. To search properties that might be suitable for investment, visit www.houstononlinehomefinder.com. To get pre-qualified for a mortgage to purchase investment property or for a rate quote from a BBB-accredited mortgage lender, visit www.HLSTX.com.

Many would argue the timing is right for purchasing investment property in Houston where home prices are very affordable relative to other large metropolitan areas. As the econo

The average for the 15-year fixed program equaled 3.33%, a decrease of .06% on the week.  Both of these averages set new lows for 2011.

Mortgage-backed security prices have continued to increase this week as the equity markets throughout the world remain under selling pressure. The eager anticipation surrounding President Obama’s Thursday address on job creation did not carry forward in a positive way to stock market trading on Friday.

Also, this week’s jobs data statistics continued to illustrate a total lack of employment growth in the US economy. Simply put: The American investor has lost faith in stocks and is unshakeable in his resolve to avoid risk .

Home Loan Specialists is posting par rates for our 30-year fixed (conventional) loans at 3.875% (APR 4.06%) and 15-year at 3.25% (APR 3.57%).

Our advice to refinancing candidates is to request a breakeven analysis if their existing rate exceeds 4.875% for 30-year terms and 4.125% for 15 year terms. A very simple tool for this purpose can be found on our website (http://www.HLSTX.com/) under mortgage calculators.

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This summer we have steadily recommended that buyers and homeowners with an interest in refinancing should take action immediately.  During August rates stayed low as a result of increasing turmoil in the European Union economies.  The perception was that EU bonds are a much less favorable investment than American Treasury bonds. This kept mortgage bond prices high and (therefore) rates depressed.  Although this perception continues to dominate bond trader attitudes, we see its influence diminishing in the face of pending inflationary pressure.

In other words, now is the time to take advantage of these incredibly low rates before the market realizes that all the money our government is printing for wars, stimulus, quantitative easing, and handouts around the world has become unsustainable by the American tax payer without a serious inflationary result.

Historically, mortgage rates have closely followed the stock market movements.  The NASDAQ charts are very well correlated with mortgage bond daily pricing which, in turn, dictates your mortgage rates.  In theory, when stock prices rise inflation is at hand and mortgage rates increase.  Conversely, stock market losses signal lower mortgage rates ahead.

The recent nosedive of US stock prices has continued to confirm this relationship as mortgage rates dropped an average of .25% last week.  This rate decline was seen in all of our most popular loan programs including the 10 and 15-year fixed, jumbo, and government rates.

Qualified borrowers should give serious consideration to signing the contract and locking in immediately.  Now is the time to consider refinancing your current home, buying an investment property, or buying a new home.

Below, we developed a refinance analysis for borrowers who purchased a new home in 2006.   It is stunning how much you can save over the life of your Texas mortgage!

Be sure to call our office at (832) 286-1600 or email Rick@HLSTX.com for your customized analysis!

Original Loan Information from 2006 (5 years ago)

Original Loan Amount: $700,000

Original Interest Rate:     6.25%

Original Loan Duration:   30 Years (360/360)

Refinance Today – 30-year Loan

New Loan Amount: $650,000

New Interest Rate: 4.875%

Old Monthly Payment: $4,310.02

New Monthly Payment: $3,439.85

PROJECTED SAVINGS: $306,848.00

Refinance Today – 15-year Loan

New Loan Amount: $650,000

New Interest Rate: 4.25%

Old Monthly Payment:  $$4,310.02

New Monthly Payment: $4,889.81

PROJECTED SAVINGS: $665,029.00

The borrowers in this example will basically be saving an entire house worth of money if they refinance their already low mortgage to a 15-year loan.  Their monthly payments will go up minimally because of the shorter term; however, their projected savings and equity-building opportunity is significant.

As we mentioned before, now is the time to look into refinancing your home, purchasing a new residence and even beginning your foray into investment properties.

• Close your blinds and curtains to keep out the sun and the heat.
• Close the vents and doors to any rooms that aren’t being used.
• If you do not have air conditioning, keep your activities to the lowest level of your home since heat rises.
• Avoid using the stove or the oven (use the microwave) and put-off on running the dishwasher (don’t use the heat cycle for drying) or washing laundry until after the sun goes down.
• Replace manual thermostats with programmable thermostats and set them at around 78 degrees or higher during summer months.  Raise the temperature of the thermostat when you leave, but do not turn the air conditioning off. Your unit will have to work too hard to get your home’s temperature back down later.
• Keep your air conditioner clean. Outdoor units can get clogged from weed pollen and other materials that are floating around in our outside air.  Use a hose to spray your a/c unit down; making sure all plant debris is washed away from the unit.  Ensure the inside filters are cleaned or changed monthly.
• Use ceiling fans (or install some) to allow you to be comfortable at a higher ambient temperature. The air movement can make you feel several degrees cooler and make it much easier on your a/c and utility bill.
• Always have a pitcher of icy water ready in your refrigerator. Letting the water run from the tap until it turns cold is wasteful and inefficient.

Aside from keeping yourself and your family safe from these brutal temperatures, also be sure to check on your neighbors, friends and relatives you think might be at risk in this kind of weather, and keep your pets inside with you.

Average rates for the benchmark 30-year fixed mortgage as reported by Freddie Mac stood at 4.52% this week. This represents a change of +.01% over last week’s average.

The average for the 15-year fixed amortization equaled 3.66%, also increasing .01% on the week. Both averages are within .02% of 2011 weekly lows.

Mortgage backed security prices have rebounded this week as fixed rate investors worldwide are favoring US Treasuries over Euro back offerings. Economic chaos across Europe appears to be influencing bond traders more than the potential for American debt default looming August 2nd if a political compromise is not reached.

Today, Home Loan Specialists is posting par rates of 4.25% on 30-year fixed conventional and FHA loan programs. 15-year conventional rates are listed at 3.5% with 10 year rates available as low as 3.25%.

The two evils are: the impending US budget crisis which, if the debt ceiling isn’t increased by August 2^nd, will threaten to cause the government to default on credit obligations; and the rapid deterioration of several fragile European economies including Greece, Spain, Italy, and Ireland.

Fixed-income investors are choosing to favor dollar-based securities over those backed by the Euro.  As demand for (US Treasuries et al) has risen, bond prices have increased, thereby pushing rates back down below rolling 12-month averages.

• Jumbo loans (>$417,000) are also at bargain basement levels with 30-year fixed terms in the low 5%s and 15-year at 4.25% to 4.5%.15-year programs are available at 3.5%
• 30-year fixed mortgages (at par) can be locked in the 4.25% to 4.5% range
• 10-year amortizations as low as 3.25%
• Even more attractive are 3 year ARMs in the mid 2s
• Investors can also reap these benefits with rates that are only .5% to .75% higher than the par rates stated above available on primary residences.

Once an agreement on the US budget is reached, all bets will be off.  If the highly contested debate ends with a compromise that leaves any lingering scent of possible inflationary pressure, bond prices will likely fall and rate increases will likely be dramatic and instantaneous.