The truth about mortgage interest rates | Morris Invest

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Go all right welcome everyone to the investing in real estate show i’m clayton morris hope you’re all doing well there’s a lot of talk right now about interest rates and i think it’s really important to have some historical context for what these interest rates mean also how the mainstream media is spinning these interest rates look i worked in the mainstream

Media for a number of years i know how the belly of the beast works in order to foment fear god knows all you need to look around right now is to see that monkey pox is scaring the hell out of everyone so on today’s show i want to talk about mortgage rates what we possibly could expect for the rest of 2022 put this in some significant and historical context here

So we cannot freak out but also it’s important for us to have a better understanding about that so in 2022 mortgage rates are up and they will continue to climb well that sounds like bad news for home buyers and investors if you look at the full picture you’re going to see that rates aren’t necessarily up instead it’s more like they’re returning to a baseline

Number in fact you may even argue these things have been artificially low for so long why have they been so low in fact you’ve had many critics of the federal reserve saying this is ridiculous like these should not be this low this is why we have runaway inflation the printing of money and the amount of capital that’s flowing into these hedge funds and wall street

Institutions the rich get richer right well that’s our topic for today’s show we’re going to dive into the history of mortgage rates a little bit to provide some context so what interest rates look like in 2022 and what this all means for your investment portfolio go going forward now today’s mortgage interest rates are well below the highest annual average rate

Recorded by freddie mac that was 16.63 percent back in 1981 that’s back when my father was a realtor now imagine being a real estate agent in the early 1980s and think about trying to get people to qualify for a mortgage and how much they’re going to have to pay for their mortgage on that property think about that 16 percent and we’re crying right now in 2019

One year before the covid-19 pandemic the average interest rate for a 30-year fixed rate mortgage was 3.94 percent the average mortgage rate for 2021 was 2.96 the lowest average in 30 years okay so it dropped again almost a full point almost the lowest in 30 years so of course the housing market exploded people who and millennials who thought you know maybe i

Didn’t want a house you know like the pandemic hit and i i didn’t think i wanted a house because now the pandemic hit i don’t know that i need this but um okay yeah interest rates are great and well you know what i don’t want to live in this apartment in new york city anymore and now i can have more space and move out to the country and i could do my work remotely

Everything changed right now let’s take a look at some of the mortgage rates over the past few years this is a chart trends over the past few decades so just take a look at where we were the average on the left side of your screen is the average 30-year 30-year fixed rate mortgage okay look at that 19 look at through most of the 1970s increasing and a little bit

Down in my my year of birth 1976 but then up 1979 1980 and then on up and up and up you know people like to think of the reagan years as like boom years and everyone’s doing great really look at that how is that possible with 16 interest rates in 1981. and then look at the year on the look of the years on the right side of your screen 2006 2007 even in the 2000s

Look how high these interest rates were and all the way down to 2021 5.8 percent for an average or 2.96 for an average 30-year fixed rate mortgage so while you might be thinking that rates are up it’s actually important to look at the full picture when you see that chart i think it really puts it into perspective right our tendency is to panic about these sorts

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Of things but it’s really just the name of the game and all of these things are cyclical now i know we’ve talked about this before but it’s worth reiterating the only way that you’ve missed an opportunity is if you didn’t invest over the last two years right and even if that’s the case it’s really not something to beat yourself up over because again interest rate

Isn’t the only factor that should go into weighing an investment now is your return higher than the interest rate if so it’s very likely that you’re making a smart investment again the most important thing i want you to take away is that rates aren’t necessarily up but more so returning to their average more of a baseline and again i will come back to this again

I’ll come back to the chart here 2.96 that’s ridiculously low i mean that’s artificially low and what happened when they were artificially low can anybody who’s watching right now answer me in the chat like what happened in 2021 or 2020 when these interest rates are so stinking low or even 2019 for that matter what happened we have a lack of houses right we have

An absolute dearth of homes we don’t we can’t build them quickly enough we are in a housing crisis as a result of that so much so that even during i mean makes help me understand this that even during the pandemic builders because of the demand were deemed essential right so houses could continue to be built while everyone else was under lockdown builders could

Build why because we needed these homes why because artificially low interest rates kept us in this demand cycle remember that we can’t control interest rates the there are ebbs and flows in the market and this is just one of them now the federal reserve can control interest rates the benchmark rate at which against all things that are based and so yes you move

That needle a little bit and then of course interest rates can follow but these things flow and we have ebbs and flows in the market what you can control though is how you choose to utilize your resources how to build wealth with the bank’s money and to make some smart sustainable investments when you’re looking at the bigger picture now i do understand that this

Is a major point pain point right now for a lot of people so let’s talk about a few things that you can do to make sure that you’re getting the lowest rate possible right now now at our company at morris invest we work with over 100 different lenders so that enables our clients that work with us to be able to shop around in fact we’re able to get you know navigate

That for them by shopping around that’s number one on my list here utilize services like lending tree if you’re not working with us and you’re doing this on your own lending tree or to find the best rates and to narrow down your options you can put in what you’re looking for and you’re going to have banks like competing for your business and then

You’ll know okay well i can actually get a better rate with these guys this smaller local bank over here they’re trying to compete with wells fargo so they’re giving me a better rate great and then you win right that’s their tagline right when when banks compete you win that’s actually kind of that’s actually true in my experience number two don’t forget about

The local banks and the credit unions people forget that you might have had a credit union you might have had a you know access to a credit union from a number of years ago they very often have much lower interest rates and all sorts of perks and things you might not even know about that was the case for me when i joined 20th century fox a number of years ago in

Los angeles i joined the credit union and they had all sorts of like really good benefits and savings accounts and things like that that i didn’t you know i was unaware of at the time i didn’t understand the benefit of it until years later when i was getting a mortgage i was like wait a minute i still have this credit union account it really helped me and don’t

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Forget about these small local banks again small local banks first of all they know the neighborhoods they know the town and so if you have a relationship with a small local bank like we do then you’re more likely to get favorable interest rates and favorable loans because they know you you know and especially if you do business there they know they know the kind

Of foot traffic you bring in they know how you operate and so it’s much more of an opportunity for you to get lower interest rates and get a better loan situation with a small local bank than it is with the bigger boys because you’re just a number to a lot of the bigger banks smaller banks really have to pride themselves on developing those personal relationships

They can be more competitive and they’re often have much lower rates than the big banks and they’re willing to do really creative things you can actually sit down at the desk with a local banker and have a conversation about how you want to construct this particular loan or this project i was able to sit down and have discussions with local bankers to talk about

Construction loans tell them what project i’m working on and how can we put this all together and they were really fantastic and i would much prefer working with those small local banks but sometimes you do have to go through an education process sometimes the smaller local banks aren’t familiar with some of the nuances of maybe some of the new programs that are

Out there and available and and there might even be some education process involved in sort of bringing those people up to speed but that’s how you build a relationship and then of course you can reap the rewards of that long-term relationship number three fine-tuning your credit score sometimes making small changes in your finances can boost your credit score

Allowing you to qualify for a lower rate you can use an online credit score service or you can sit down with a banker to see if you have out any any in inaccuracies it’s hard to say see if you have any inaccuracies on your credit report outstanding debts or anything else can be quickly remedied now friends of the show they are not sponsoring this episode but i

Love these guys our friends over at score master if you go to invest they they have a program where they say look they have a thing called the three week rule so if you sign up for score master they can add up to 61 points to your credit score uh and even if you just take their profile to understand what like where you could actually add points

To your credit score it’s i think it’s totally free just go over to invest check them out we’ve had so many of our listeners and and watchers of our show tell us that they’ve had great success with score master so and i’ve had personal people here on my staff that work with us have had things removed from their credit report thanks to score master

And fix their credit so i can attest to this personally again invest they can tweak your credit report by allowing you to add all sorts of additional plus points to your credit score and even just waiting that three weeks that they talk about three week rule allowing you to fix certain things on your credit report before you apply for that loan could

Save you like tens of thousands of dollars on your loan so it might not necessarily be a way to you know lower the interest rate but it’s a way to lower your payment because now you’re not having to deal with a bunk credit score that’s actually driving your payment up so all of these things are are very very powerful number four is to utilize the benefits of a full

Service team now you don’t need me to tell you that if you’re interested in buying new construction rental properties that’s what our team does at so you can come over to our website go to art financing team again we have over 100 different lenders that we work with and because of this we can actually help you find competitive rates

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And terms on conventional financing and the added bonus here working with us is that our financing team holds your hand through the whole process helping you have a seamless experience in this process to open you know to to be able to figure out what your credit score is to help you identify the best financing get the best rates get the best terms uh identifying

The property that will partner you up with so that you own that property as a cash flowing rental property asset in your portfolio so to learn more about that come over to our website which is just m-o-r-r-i-s and click on the book a call button and then you can jump on the phone with us and we will it a little calendar will pop up and

You can pick the best time that suits your calendar and we’ll get on the phone and go through your financial freedom number and learn about your overall financial goals so that’s how we deal with these interest rates again i think for historical context here again i want to put this chart back up on the screen i mean look at this we are really entering a baseline

Period right now you know and so if even if we’re in that five or six percent or seven percent for a length of time in many ways this is a very healthy cycle to be in right this is a healthy cycle it allows well it allows builders to frankly get caught up in building properties it slows down the quick sales of properties where there’s a lot of speculation happening

A lot of people just throw in properties up on the market quickly boom boom boom boom they’re buying it selling it buying it selling it a lot of what we saw in 2008 you have people getting mortgages that probably shouldn’t get mortgages and now by having interest rates be a little higher and more of a baseline number it kind of settles things down a little bit

And it calms the nerves so to speak and it kind of removes some of these bubble markets and some of the bubble tendencies that we see in some of the financing that’s taking place again you still have the mortgage-backed securities you still have wall street bundling up bad debt that they’ve taken on so we’re still sitting on this like tinder box right now but at

Least with having these higher interest rates it allows us to enter maybe a calmer period where things can slow down a little bit and i know realtors don’t want to hear that i know maybe economists don’t like to hear that but at the end of the day um through periods of great growth i mean just look at the 90s for instance let me just pull up the 1990s again so

We think about like era right and we think about the clinton era which is the 90s right 1992 bill clinton comes to office 1992. right and look at that up through 2000 right we had one of the best growth periods in american history during those clinton years um and of course we had bust in 2000 but that eight year period look at the interest rates

During that time look at that so we had one of the best growth periods in american history during that time with unemployment etc and so that shows you that i mean just look at those numbers for mortgage rates during the 1990s seven percent eight percent right really a baseline there was plenty of building going on there was plenty of investing happening during

That period just a few more points on those on those interest rates um and uh things can calm down a little bit so i’d love to hear your thoughts on this drop me a comment below were you investing during the 90s do you think that we are entering into a dangerous period or is this more of a calm period let me know in the comments below

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The truth about mortgage interest rates | Morris Invest By Morris InvestliveBroadcastDetails{isLiveNowfalsestartTimestamp2022-05-24T155059+0000endTimestamp2022-05-24T164716+0000}