What is the SOFR or Secured Overnight Financing Rate?
The SOFR is the Secured Overnight Financing Rate and is the rate large financial institutions pay each other for overnight loans. The simple explanation is that it is a key benchmark interest rate used by most lenders. Mortgage lenders use this benchmark as an index when pricing conventional and jumbo adjustable rate mortgage products. The […]
What is the LIBOR or London Inter Bank Offered Rate?
The LIBOR or London Interbank Offered Rate is a benchmark interest rate which major global banks lend to one another in the international interbank market for short-term loans. It is administered by the Intercontinental Exchange which would use estimates from these major world banks to calculate the rate. It was based on five different currencies […]
What’s the difference between a deed of trust and a mortgage?
The simplest thing to remember when comparing a deed of trust to a mortgage is that a deed of trust involves three parties, the lender, borrower and a neutral third party that holds the rights to the real estate in question and a mortgage only involves two parties, the lender and the borrower. Both are […]
What is an LLC?
An LLC or limited liability company is a type of corporate structure that is created in order to protect it’s owner or owners from personally being sued for the company’s liabilities and debts. These owners are also known as members. This type of entity is regulated on the state level and does not pay taxes […]
What is the CMT and how is it used with mortgages?
To understand what the CMT or Constant Maturity Treasury is we first need to understand what Treasury securities are. Treasury securities fall into three main categories: Bills, Notes and Bonds. T-Bills or Treasury bills are short term obligations under one year. T-notes carry a maturity from two to ten years. T-Bonds range from ten to […]
What is a hard money loan?
Traditional banks do not make hard money loans. Hard money lenders are typically private individuals and companies and the approval process is significantly faster and more streamlined than conforming loans. These loans can be approved in as little as a few days versus a month or more for traditional programs. The interest rates tend to […]
What are the top mortgage mistakes to avoid?
When it comes to obtaining a mortgage, there are some things you definitely do not want to do. The Top mortgage mistakes to avoid include most importantly 1. not keeping tabs on your credit report. 2. searching for homes before getting fully underwritten pre-approved by a lender 3. not shopping around for a mortgage from […]
What are asset and reserve requirements?
When applying for a mortgage, in most cases you will need to document your assets. This is done by providing scanned copies of your bank statements or by allowing your lender access to view your banking balances and recent activity online by providing your login credentials through a secure encrypted portal. The reason for this […]
What is the Fed Funds Rate?
The federal funds rate is the rate banks charge each other to borrow or lend excess reserves overnight. The rate reached a staggering high of 20% in 1980 to combat doube digit inflation and a low of 0% in 2008 and again in March 2020 as a consequence of the coronavirus pandemic. Similar to the […]
What is hyperinflation?
Hyperinflation is an economic term used when a country’s inflation rate is very high, is accelerating and is out of control. This type of inflation exceeds 50% per month. This is mainly brought on by a rapid increase in the supply of paper money and a corresponding increase in the cost of goods. A recent […]