CPC Holiday Newsletter 2014

Wishing You & Your Family a Happy Holiday Season!


Dear Friends and Clients,

For the 29th time, I’d like to extend the warmest of Holiday wishes to all of you that we’ve had the opportunity to work with over the years. Since 1986, we’ve arranged the funding of nearly $2 billion. Thank you all for your support and your referrals. We would not be here today without you.

As you may know, 2014 was a year of transition here at CPC Mortgage. We elected not to renew our lease in Arcadia. As technology has evolved, we felt we didn’t need the space and the overhead that went with it. Our business, like so many others, is able to function in a more efficient way without the large “brick and mortar” office space. On September 1, we moved our office to Pasadena at 180 S. Euclid Avenue, just below the Paseo shopping mall. We have streamlined the operation and are all now more technologically savvy than before. Fred and I continue to work from the office but are far more mobile than in the past. Thanks to the “cloud,” we can work from the office, our homes or while on vacation. Shelly continues to process our loans but mainly from her home office. The bottom line is we are “leaner and meaner.” We have now signed on with multiple lenders that offer many more funding options than in the past.

For example, beside standard Fannie Mae and Freddie Mac conforming loans, we offer Reverse Mortgages, FHA and a very competitive array of jumbo products, both fixed and adjustable. While Fannie and Freddie have tightened their guidelines, we now have sources for interest only, stated income and can even make loans to borrowers with recent short sales on their record.

What’s ahead in 2015? For the past several years, many experts have projected higher rates as a result of anticipated inflation, largely due to the Fed stimulus programs. Now, however, the Fed appears poised to keep rates down for the time being to help further stimulate the jobs market and overall economy. Another factor is that the global economy is slowing, with recessions in Japan and parts of Europe. The U.S. economy is stabilizing and many investors around the world are seeking the “safe haven” of our treasury securities. This helps drive rates lower. In fact, it’s possible we could see fixed rates fall below 4% again in the near future. Let’s keep our fingers crossed.

There are a number of financing opportunities for potential buyers and existing homeowners. If you’re looking to purchase, fixed rates are near all-time lows. And in many cases a hybrid ARM (5, 7 or 10 Year) can be a great alternative to a fixed rate. Recently, we were offering a 10/1 ARM up to $1.5 million at 3.5%.

For borrowers with ARMS that are at or near their first adjustment, now may be a great time to re-write that loan for a fixed rate or another 5 or 7 year ARM. There’s another very important consideration for those with home equity lines of credit (HELOCs) that are approaching 10 years old. Many borrowers don’t realize that after 10 years, the low interest only payment option goes away. Starting in year 11, the payment becomes fully amortized over the final 15 years of the loan. If your HELOC balance is $150,000 or more, you could see your payment rise as much as $1,000 per month or more. Now would be a perfect time to combine your first loan with your HELOC and avoid the huge payment shock. Give me a call if you have a HELOC that is 8-10 years old and we’ll analyze your options.

Probably the biggest difference now versus the past several years is the easing of the “jumbo” market. Jumbo rates have become competitive and underwriting guidelines have loosened. Easier jumbo money along with a wider range of products should translate to an overall easing in real estate financing.

I’d like to take a second to mention my former partner, John Patterson. John is doing great in retirement. We talk frequently and get together from time to time. For those that dealt with “JP” over the years, please feel welcome to give me a call. I’ve had the pleasure of working with a number of John’s clients since his retirement and look forward to being of service to many more.

In closing, I’d like to stress that we’re here for the indefinite future and we need your loans and referrals. We even have a new website for your convenience. On behalf of Fred Olson and Shelly Dunn here at CPC Mortgage, I’d like to wish everyone a very Merry Christmas and the happiest of Holiday Seasons. Here’s to a very successful New Year for us all. I look forward to hearing from you in 2015!!




Ed Cree


Market Update – Q4 2014

Overall, we have seen interest rates tick down a bit in the last couple months. The Fed, while completing their quantitative easing, has indicated that they see no reason to start raising short term rates. The global economy is struggling and many investors are buying our treasury securities which drives our bond prices higher and yields down. We all know that rates will go up at some point, but right now it appears that we are in for a decent run of low rates. We may even see fixed rates drop below 4%. Let’s keep our fingers crossed.

Now is the perfect time to buy a house or refinance a loan you already have. As we’ve discussed this may be a perfect time to combine your 1st loan with your HELOC to lock down a good fixed rate or hybrid ARM. If you have an ARM that is nearing it’s first adjustment, this might be a great time to re-write that loan into another 5/1 or 7/1 ARM or a 30 year fixed rate.

Mortgage rates won’t stay down forever. Take advantage now.

Watch Out For That Equity Line

Many borrowers don’t realize that when they take out a home equity line of credit (HELOC), they are entitled to make interest only payments for just the first 10 years of the loan. At that point, the borrower cannot take any more draws and must begin paying back the balance over 15 years with fully amortizing payments. On a HELOC of $200,000, this can amount to an increase of $1,000 or more per month.

Many took out HELOCs 8-10 years ago so the clock is ticking on the low, interest only payments.  Now might be an ideal time to combine your first loan with the HELOC and lock in a low fixed rate or 5 or 7 year ARM. This way you’ll tied down a rate for a fixed period of time and avoid the payment shock when your HELOC recasts. Give us a call and we’ll do the numbers.

Consider a HYBRID

A hybrid ARM is a loan that is fixed for a certain period of time, say, 5, 7 or 10 years. The rate is lower than a fixed rate but there is more stability than an ARM that adjusts every year. In other words it’s a cross between an ARM and a fixed rate. The borrower enjoys a fixed rate for the initial period of 5, 7 or 10 years. Often times, borrowers don’t anticipate staying in a property more than 5-7 years. So, why not take advantage of the monthly savings that are guaranteed for the initial period. There is no reason to pay the “insurance” of a 30 year fixed rate when it is reasonably certain you won’t have that loan for more than 6 or 7 years.

The difference in rate may be as much as 1% or more for a 5/1 ARM. The longer the initial term the higher the rate. But in all cases, hybrid ARMs come with lower rates than fixed rates. Give us a call and we’ll discuss your options.