Brad: Well hello everyone, everyone, we are back again with Mike Anderson with Reliance Mortgage and Mike’s Mortgage Minute. Okay so there has been a lot of talk in the news about this group Federal Reserve. They are going to meet June 15th, they are going to raise rates, it is doing this with mortgage rates or is it? Why don’t you give us your thoughts on if somebody is looking to try to figure out if they need to go ahead and lock in a rate or thinking about doing a mortgage or a refinance, is that going to influence the market or is it just a tossup and you just sometimes got to go with the flow?
Mike: Well I say two things about trying to predict the rates, the people that know, don’t know and the people that don’t know, they don’t know they don’t know. I can tell you I have been tracking the mortgage rates for 25 years and the Federal Reserve has sort of indicated that they are going to raise rates 25 basic points which translates maybe to a quarter base portion rates. But rates are so historically low right now that I wouldn’t screw around with gambling. I mean there is no reason for it. Now with your 30 year notes, you currently a little under (0:57) depending on credit score. Loans today, because you can’t, I will tell you giving somebody an interest rate on the phone is like asking you how much a car costs.
Mike: You know, you got to know what kind of car it is.
Brad: So consumers should be careful out there if someone is telling them, “Oh I can get you locked in…”
Mike: Oh there are so many hooks on the radio, 30 year rates under (1:18), there are no 30 year rates under (1:19), they should want to pay 10 point to get the rate down. And all they are is banks switching, in my opinion. And what they do, they will advertise the rate, let’s say and the rate may be around, if you put 60% down, the credit score is 780, and you know, you got low ratios, oh well you are at 740 so your rate is going to be this, if you put 40% down it is going to be this, there is just no way in hell….
Brad: You mean, you really don’t know until you go through the process right.
Mike: If I get a credit report on somebody, people call all the time and go my credit scores is 740 and reality is there are 4 different kind of credit reports, and we run a credit report which could be 680 which can change the pricing quite a bit on any loan, whether it be government, jumbo, super jumbo. And a lot of the superjumbo loans, they won’t do a loan for less than 7-20 credit scare, 740, whoever the cut off we send off to has. All I am going to say is, if you are looking for a mortgage loan and you are wondering what you can do, you know just call us on the phone, even if you go to a competitor, we will tell you how a loan should be structured and trust me, that is what we have been doing for 25 years now, I think we are the best at it than anybody I ever been. I tell you, I get probably 15-20 referrals a month from banks, this call and if it can be done, Mike can do it.
Brad: And that is what you wanted.
Brad: So consumers beware is basically, you know be careful about it…
Mike: Here is my own personal opinion about rates, I don’t think that rates are going to go up dramatically for the next 4-5 years and I will tell you the reason why. The government not just in the United States but all over the world are broke. They have no money, in fact, interest rates in Japan are 0, in Germany they are 0, and there is so much debt all over the world that government can’t afford to do rates. For example, if the feds raise the rate 25 basis points, it cost the United States government, what I have read, is $500 million/day in interest. And so I don’t think the government is going to….
Brad: Doesn’t make much sense does it?
Mike: No, not at rate they are going, I mean we are going to debt at $2.5 billion/day as it is, they don’t want to add another $500 million. The other thing is the economy has really not recovered that much, I mean it is better than it was but it is still not recovered in my opinion to where they are going to raise rates tremendously. But to get to your point, if I were buying a house, there is two reasons I would buy one now. Number one, shortage of inventory. Number two, they are going up 10-12% in the metropolis anyway and number three, rates are a historic low, so why don’t you screw around. So if you screw around for a, until you get enough 5% to pay down, you know it makes no sense to me, so if you are going to buy something I would go and buy it now because prices are increasing, rates can go up, it is just a great time to buy if you can find a property.