catalpa wrote:
- quote -

RESPONSE: I know; sorry, I was just using the "T-Bill" to denote
anything issued by the Treasury.

- quote -

RESPONSE: Mortgage backed securites are issued by Freddie Mac, Ginnie
Mae and Fannie Mae; MBS are traded daily and offered by most full
service brokers (Pimco and Vanguard sell them).

http://www.sec.gov/answers/mortgagesecurities.htm
http://www.investinginbonds.com/lear...=5&subcatid=23
http://www.investopedia.com/universi...stments/11.asp
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RESPONSE: Before the development of the secondary mortgage market,
there was a easier answer. Changes in mortgage rates lagged changes in
corporate bond yields by anywhere from 2 to 8 months. Today, however,
the mortgage market is so thoroughly integrated into the broader
capital market that there are no leading indicators of mortgage rates.
Mortgage rates and bond yields change together. MBSs trade actively in
the market and are considered close substitutes for bonds. Any change
in bond yields, therefore, is transmitted instantly to the MBS market.
Mortgage loan originators, in turn, base their rates primarily on
yields in the MBS market. Originators usually post their rates at
about 11am EST, after they see the opening yields on MBSs that morning.

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

There are two types of PPP (pre-pay penalties); a soft PP and a hard
PP.

A soft PP allows for the sale of a property (without the need to pay
the PP); PPP is due if you refi before X months (normally 3-6 months
but can last for as long as 3 years).

A hard PP doesn't allow for either a refi or the sale of the property
without paying a penalty.

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com


asdf wrote:
- quote -

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1138979482.394136.294150[at]g49g2000cwa.googlegroups.com...
- quote -

All wrong. 10 year Treasury is a note, 30 year Treasury is a bond. Mortgage
futures were delisted from the CBOT on 17 January 2002.

Corporate bonds, junk bonds, MBS, CMO, ABS and almost all domestic fixed
income securities trade off a variable spread to their Treasury note/bond
maturity/WAL benchmark. The spread will vary widely over time due to overall
market conditions and market sector demand/supply . Read a book like the
"The Handbook of Fixed Income Securities" by Frank J. Fabozzi for complete
information.

What does 3-6 month prepayment clause mean ? Is this when you have to
give notice of refinancing ?

Also is this the same thing as making extra payments above the monthly
payment to reduce principle owed ?

Despite the popular opinion (shared by you and some other posters), the
movement of the 30 year fixed rate has little to do with the activities
of either the 10 or 30 yr T-Bill.

Mortgage interest rates move daily because mortgage backed securites
are traded everyday on the Chicago Board of Trade.

Mortgage backed securites move in accordance to other economic factors
such as; stock market, unemployment claims, producer and consumer price
indexes (inflation gauges) to name a few.

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

asdf wrote:
- quote -

You can refinance at anytime with anyone but be cautious of one thing;
the prepayment penalty. Most loans come with a 3-6 month prepayment
clause that indicate that you (the lender) would occur additional costs
if you didn't keep the loan to the minimum term. One caveat though is
you are not alone. The broker that provided you with the loan will
most likely have to concede all or most of his/her commission!

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

asdf wrote:
- quote -

I agree with both previous posts.. Probably rate of 30 yr mortgage is
more correlated with 10 year treasury than 30 year treasury yield. The
spread includes many factors as mentioned. I guess it is hard to say
what component is do to the "free option" of refinancing. I know
sometimes you have to pay to refinance and sometimes not - this
probably has to be taken into consideration as well.

"asdf" <qjohnny2000[at]yahoo.com> wrote in message
news:1138804844.464257.190160[at]g43g2000cwa.googlegroups.com...
- quote -

Couple of problems with that one. Common sense tells us
that:

The "spread" has to include *profit* for the folks loaning the
money. There's a lot of factors in trying to determine the
"spread" that will attempt to do both (a) maximize profitibility
and (b) stay competetive with the other folks loaning money.

As far as the home being collateral? Yes, but there carrying
costs while in posession of that collateral (e.g. the bank paying
the taxes, or insuring the place while they own it and are trying
to resell -- as well as appraisals, repairing damages etc.) that
have to be built into the profit equation, in the event of a
foreclosure. Even worse, today there are a surprising amount
of "upside down" loans -- e.g. the homowner owes 110% of
the value of the home.

I'm not too sure it's based on the 30 year bond either -- but
I wouldn't know where to check.

"asdf" <qjohnny2000[at]yahoo.com> wrote in message
news:1138804844.464257.190160[at]g43g2000cwa.googlegroups.com...
- quote -

Point of information: The yield on a new 30 year mortgage is based on the 10
year Treasury Note because the weighted average life (WAL) is 12 years.

when you get a 30yr fixed mortgage do have option refinance any time
with another broker. what are the costs of doing this ?

does the difference in spread between the 30 year treasury bond and a
30 year mortgage mainly come from this option to refiance or does it
come from credit risk ( i don't see much risk though in credit as home
is suppose to be collateral of the loan ).

cheers.