American Pacific Mortgage

American Pacific Mortgage

Wednesday, November 16, 2022

The Holidays are Upon Us!

 As we look forward to celebrating Thanksgiving this year with family, we want to wish you all a wonderful holiday next week.  We have so much to be thankful for, including our clients and their referrals.  You are appreciated!

This year we were able to generate a $10,000 donation to “You Run This Town”, a non-profit focused on at-risk youth.  They held their first annual golf tournament, and we were able to participate.  Steve and I golfed with another couple, and Katie acted as the event coordinator and MC for the day.


In the past the typical home buying season was springtime through summer.  Now, there is no actual buying season, as volume does not tend to slow down as much during the holidays.  We are working with active buyers as I write this, who are benefitting from the recent home price reductions.  The days of multiple offers on a property are gone, so buyers have much more power than earlier in the year. 


While rates have continued to rise, they seem to have leveled off somewhat in the last couple of weeks.  We are hopeful that the Fed will slow down rate bumps in an effort to tame inflation. And the concept of refinancing as soon as rates drop in the future is becoming a common theme with many of my clients who are buying or refinancing right now.

Permanent rate buydowns and 2-1 rate buydowns are becoming commonplace.  A permanent buydown can be paid for by either the seller or the buyer, and with say two points (2% of loan amount) this will reduce the interest rate permanently by around 1.75%.

A 2-1 buydown works like this:  In the first year, the rate is reduced by 2%;  in the 2nd year, by 1%;  and in the 3rd year goes up to the original market rate.   The buyer still must qualify at the higher original rate, but they receive the benefit of lower payments for the first two years.  This type of buydown must be paid by the seller and cannot be paid by buyer.  The hope is that when rates drop (AND THEY WILL!) the loan can be refinanced. Any funds leftover for the buydown at the time of refinance will be credited to the loan balance, reducing the payoff.  The cost for the 2-1 buydown is essentially the same as it is for the permanent buydown. But only the seller can pay for it.

Debt Service Coverage programs are also popular for use with rental properties.  These loans are not underwritten with an eye to the borrower’s income but focus on the income from the rental property in order to qualify for a loan.  Much simpler and easier.  Rates are higher for rental property, however.


Steve and I recently returned from a sailing trip down the coast from Dana Point to San Jose del Cabo.  We accompanied friends on their sailboat, which will eventually end up in Ft. Lauderdale.  It was quite an adventure, filled with catching tuna, flying spinnakers, anchoring in bays on the way south, and some card games at night while at anchor.  Night watches did get exciting a couple of times!  We will rejoin our friends soon in Loreto to sail to Mazatl├ín before flying home.   A little scuba diving may be involved…

Please reach out to us with any questions, and travel safely over the holiday!