Mortgage Discussion for the Panhandle area

As I sit in the office on a rainy day updating the interest rates for the week, I noticed how good rates are still. It seems like we have had low rates for a while now and we may be on borrowed time. Well "borrowed" is the pun of the day due to the amount of money our government has "borrowed" or at least printed for the spending lately. Let us take a second and analyze the cause and effect on interest rates.

Very simply, government spending more than it takes in creates a debt that must be paid with interest. This alone causes the dollar bill to be worth less and less as inflation (devalue of that dollar) moves with the amount our nation owes.

A couple of things happen when inflation is left unchecked and the dollar slides in value. First, goods and services cost more. Prices go up as the dollars paying for the goods and services are worth less. Secondly interest rates go up as the interest being paid is in dollars as well. The rates are one of the few "tools" the federal government has to combat inflation. As more dollars are spent the economy picks up steam. The government tries to slow down the progression of the economy by raising rates.

So what is going to happen in 2009 and 2010? That is a good question. Inflation will be on a major rise as these new government dollars hit the streets. Yet the economy is still in a downward motion as referenced by the GDP last week. That leaves us to ask when will rates go up?

Soon, is the only answer. I do not believe we will see 6% rates this summer as we need all the buying possible to spur the comeback of the economy. Though inflation has started to creep in the government is trying a new approach. The Federal Reserve is using these borrowed funds to buy the governments own Treasury Funds. Treasury funds were designed for citizens to give the government our money now and get an IOU with interest to come at a later date. If the government is borrowing money then lending it to it's own Treasury that seems crazy but in fact exactly what is happening this week and has happened two other times under the new administration. This is our governments way of artificially lowering interest rates. It works but at what price? I believe you will see this periodically until the economy stabilizes.

All that to say, inflation and high rates are coming but not for a while. What are the only two vehicles that hold true value and make money during a rapid inflation time? Gold and real estate are the answers historically but there has been a run up in gold prices as those smarter than I have already bought gold inflating the price. Real estate is depressed at this time and right for investment long term. Real estate historically will be answer to what we are about to face in light of the current spending.

With rates down and prices down I encourage everyone to look up some history on inflation and what provided the best investment cash. Then call your local, trusted realtor to find that perfect real estate investment for your family. I will set here by the phone if you have mortgage questions.

Simply put WOW! A lot of changes yet again but not all changes are for the worse. People are still buying homes and mortgages are still being closed. We are still pushing forward with the "govy" loans being FHA, VA and the USDA (Rural Development). The county is still giving SHIP money and first time home buyers are looking to buy. The new tax credit of $8,000.00 is not hurting either. If you have not researched the new tax credit may I suggest going to www.realtor.org and reading what NAR has on the subject. I think they did a great job breaking it down so everyone can understand why it is important for them to buy a home this year. The information is under the stimulus bill information.

Rates are moving higher as the government need borrowing power to pay for the spending bill. This is a call to all first time home buyers to get off the fence and make a decision. Our economy needs housing moving and and the tax credit and still low rates should help.

We at America's Mortgage Experts are still closing the weird and difficult "Govy" loans as our experience of over 20 year per person here is showing in the realtor community. We simply close what confuses other mortgage lenders. Our lending area has grown to include most of the eastern states as well. So if you have a customer who needs lending in another state please give us a call as we have grown rapidly in 2008 where other lenders have imploded.

Guess that is enough of a quick update please call if we can help you close that next deal.

Interest rates have moved up a little but still at historic low marks. The interest rates have been acting like our Northwest Florida weather lately. Cold to freezing one day to hot the very next day. The economy has forced rates to these low margins but what can we expect? Considering the latest data out the unemployment rate keeps climbing and prices on goods and services continue to fall. That means the need for low rates will continue and we have no inflationary pressure to push rates higher. Good news for rates and people who need to refinance or buy a new home.

The market is starting to show signs of some recovery. Home sales have inched upward with the lower rates. Will it hold for a while? That is the million dollar question.

On this historic inauguration day, I remember the words of FDR's inauguration speech. Roosevelt's inauguration speech was the shortest in history lasting about 15 minutes. That was the speech where FDR said "The only thing to fear is fear itself". It is that fear that keeps our current economy from moving forward. I wish our new President all the best and hope the excitement surrounding our nation is contagious and sparks a new growth for the economy and the housing market.

Currently we are still closing 100% loans with low 5% rates and FHA loans are going crazy. Our commitment to all customers is our experience. We simply close the loans we start. If you are having any trouble closing loans in this market call our expert team to make your loans close easier.

Today my blog is simple. Mortgage rates below 5% for a historic low. Buy a home, refinance, get cash out. It does not matter we do not know how long the window will be open. If Bush gets an auto bail out plan approved rates will go back to 6% +.

We are open and taking calls today locking in rates.

Interest rates are again low and should start some new activity in the area. Some loans can be quoted below 6% with 30 year fixed rates so make your buyers aware this is a good time to look and get that new home.

We may be missing some good opportunities today with all the bank owned homes. How many of you have closed a FHA 203K loan? Do you know what that is? I hope so but for those who may not please get familiar with the product. The loan is a remodel loan that will allow a customer to close a mortgage on a property in disrepair and take money and fix up or remodel the home. There are two types of these loans FHA and our company offers. The full 203K and the streamline.

Under the streamline a customer buys or refinances a home with minor repairs that total a maximum of $35,000.00 and uses 2 or less contractors to complete the work. The loan is simple and still only requires a 3% investment at purchase. With all the homes on the market with repairs needed we need to close more of these deals.

The standard 203K loan is everything over the streamline. There is no maximum except the FHA loan limits and multiple contractors can be used to complete the renovations. Again only a 3% investment is required for a purchase and standard FHA credit underwriting guidelines apply.

Most banks and mortgage companies are still afraid to offer this product in our current environment but I am happy to say America's Mortgage Experts is again showing the way to close these great loans and put people into houses. Please call the office if you would like to know more about the product or would like me to visit your office and give you a complete overview of the program.

We are always here to help you close loans.

The markets have truly been on a wild ride this week as the news you have seen is digested. Mortgage rates are currently at or about 5.5%. This moves every day but still people do not seem to understand how low rates are and feel the need to wait longer. Let us take a second and look at this.

As you know our United States of America took control of Fannie Mae and Freddie Mac. This sent a calming throughout Wall Street and other investor platforms. Investors have been buying mortgage backed securities and driving rates down. The government has been silent lately about the takeover so that is good news. This part of the ride was the steep fall of the roller coaster in the beginning.

Now we have Lehmen Brothers, Morgan Stanley, Countrywide, Washington Mutual and AIG issues in the financial markets. These are weighing heavily on the mortgage market as these companies are heavily tied to foolish mortgage practices and bad management. Now we are left with a market in turmoil about what to expect next. The coaster goes up the next hill.

With all this news you would think we will never close another mortgage or sell another house. That is all hype and one sided media coverage. The Media needs ratings and they get that by sympathy as well as blaming banks and mortgage companies for all troubles. When has the media ever run a story about an irresponsible homeowner in foreclosure because he made bad decisions and bought a house he could not afford? NEVER it is always the lenders fault.

 Houses sell and mortgage rates are again at historic lows. Money IS flowing freely into the housing market and we still get young couples with some credit issues approved everyday. It is easy to throw up your hands in defeat but things just are not that bad.

The Federal Reserve today felt there was no need to lower rates again. This is great news as our U.S. Dollar will regain strength and gas prices will fall again. By not moving the rates the Federal Reserve sent a message to us in the public that the markets are soft but under control. Some will perish but others will get stronger.

The simple fact is rates are down and again now is the time to buy a new home or refinance your present home. Find a good realtor and make some offers.

You you are aware our United States Government has decided to take over the two mortgage giants Fannie Mae and Freddie Mac. What does that mean for you? Here are my thoughts on the subject as of today.

Short term I do not think you will see or notice and difference in how loans are approved or closed. Rates should remain stable or get a little better. You will not see huge drops in rates or any looser underwriting guidelines. You will not see higher rates or guidelines tighten either. Just more of the same for now.

On a longer term it will be a guess. I am requesting the papers the Federal Reserve used to form the take over and see if they have any clues to the future. Remember with all things government there is the "why" that they tell you and always the "why" they do not. I need to do a good bit of research before I try and answer this question.

Stay tuned as I will try my best to break down this issue in my blog this week with facts.

This week brings us all a lot of news and good news at that. First let us speak of politics. On second thought let's NOT. We did get some other good news though. The economy seems to be moving along with the Gross Domestic Product released yesterday at 3.3%. This was a better reading than the 2.6% forecast and almost two times the previous months estimate of 1.9%. This reading alone proves we are not in a recession and that the economy is picking up a little steam and moving forward. Good news for us all.

The second release was from the Department of Housing and Urban Development. In this release HUD put a moratorium on the risk based pricing for FHA loans. Though this may all seem like Greek to you this is good news as FHA loans will be cheaper for those with lower credit scores come the October 1, 2008 start date. As I have stated before my company is one of the few mortgage lenders willing to close FHA loans with LESS THAN 580 CREDIT SCORES left around. These loans though closable under the current system FHA has is rather expensive. (about .25% higher in rate than a 620 credit score borrower) With the new pricing come October 1, 2008 these loans will be in line with all FHA loans no matter what the credit score. GOOD NEWS.

I also wanted to invite everyone out to the 16th annual Baptist Health Care Family Expo on Saturday September 6th. This will be a great time and very fun for the children. It is Free to the public and loads of fun. Please come visit our booth (#30) while there. I have attached a link to a flyer explaining the fun and activities. 

Family Expo 08'.pdf

Please call with any questions or if you would like to discuss a loan.

Without speaking in the negative we can all admit our nation has an abundance of foreclosures and properties that need some repairs. It is often difficult to get these seemingly good homes financed due to the repairs. Again agents and mortgage professionals alike forget that FHA has an answer to moving these properties on the market. A product called the FHA 203K Streamline is a FHA loan where up to $35,000.00 can be put into escrow for the repairs at closing. This is a huge advantage to the homeowner as they often buy the house below market value and still have the funds for the refurbishment. We use the after completion value on the appraisal and the rest of the loan looks and feels just like a standard FHA loan. This means only 3% required for down payment and the normal loose credit standards FHA allows. The Streamline has eligible repairs such as roofs, HVAC, plumbing, electrical, appliances, decks, windows, doors and septic as well as others. The 203K streamline does also limit repairs not allowing major remodeling, new room additions, landscaping, or work requiring longer than 6 months to complete. If you have any questions about what is allowed please feel free to call my office.

I believe this product added to your sales plan may open more doors to closed sales and happy clients. Any client we close in today's market with standing equity will be very happy to watch that equity grow in the near future.

Now to move on to some not so good news. As many of you are aware the President signed the housing bill in an effort to stabilize the housing market. Much of the bill in my opinion is media spin and false mirrors. Yes there are some good aspects to the bill but there are some worries as well. The first area of concern is the elimination of Down Payment Assistance programs such as Ameridream and Nehemiah from financing. This assistance is scheduled to go away October 1, 2008. This would mean to buy a house a customer would need cold hard cash. That can be a problem in a struggling economy. There is a hope though and I ask you to decide. House Bill 6694 has been introduced and that bill would keep Down Payment Assistance alive but only with the support of the American People. I ask you to think of any client you have helped get into a home and remember if they used any type of this assistance. FHA purchases use this type of assistance for about 40% of first time home owners so the numbers are huge. Please make your own decision and if in support please call or write your elected officials. You may also visit http://capwiz.com/nehemia/issues/?style=D to get more information and learn more than I can write here.

As always please call me with any specific questions and remember we also finance homes. We can close your FHA or Rural Development loans and have no minimum credit score requirements.

Joe

I hope you enjoyed your July 4th holiday. With all out petty issues America is the best place on earth to live and I am so thankful to enjoy my freedom in such a beautiful country.

On to financing and what is happening lately. More and more banks and lenders are moving to minimum credit scores for FHA financing. We at America's Mortgage Experts have not issued minimum scores. We truly believe the FHA program was set up to help people become homeowners. If you have a deal falling a part because the customer does not meet some minimum credit score set up by a lending institution please give us a call. Our goal is to help you close every deal possible.

FHA will also be changing its requirements for mortgage insurance on July 14th. The new provisions will be on a risk based pricing scale so if you have a customer with a lower score please get them in this week. If you need details on the changes please do not hesitate to call.

Jumbo pricing is relaxing month by month. I can now offer rates below 6 % on a five year interest only loan for 1.5 million or less. The loan is not a 30 year fixed but in this mortgage environment the rate is as strong as a garlic milkshake. Great rates on jumbo loans have seemed impossible for sometime now and I wanted to write in this blog good deals are still out there. Call me if I may explain the programs or give you a quote. There are no surprises just great deals to be closed.

Thats all for today. Have a safe July!!!