Supply-and-demand thinking no longer applies

July 24, 2012

Recovery hinges on home prices Commentary: Supply-and-demand thinking no longer applies By Lou Barnes Inman News® Share This It is high summer, a scorcher, even mad dogs looking for shade. It's supposed to be a nothing-happening time. However, the anxious suspense in markets is as high and hot as the sun. Everyone knows that the U.S. economy has lost momentum. Federal Reserve Chair Ben Bernanke on Tuesday twice in one page used "decelerated," followed by "... the generally disappointing tone of recently incoming data." Everyone expects that the Fed will do something, but nobody knows what or when, possibly not the chairman. Bernanke vaguely mentioned use of the Fed's balance sheet -- "QE3" the shorthand for a third round of "quantitative easing" -- but no one outside the Fed can tell if action is held up by internal politics (resistance by the regional-Fed hardheads), or by doubts of QE effectiveness, or by desire to keep powder dry for something more troublesome than a slow patch. The primary purpose of QE has been to knock down long-term rates, but markets have already done that, the 10-year T-note to 1.46 percent, and mortgages to 3.5 percent (if someone answers the phone). The secondary purpose has been to encourage risk-taking by investors and lubricate lending, but credit is choked by regulation and post-Bubble over-reaction. Bernanke: "…Prospective homebuyers cannot obtain mortgages due to tight lending standards." In the Fed's most-recent meeting minutes, the only group agreement in 12 pages was the plaintive wish for new ideas to help the economy. The Fed should hold something in reserve to meet two contingencies: a failure to defer the fiscal cliff now five months away, and/or a euro collapse. The fiscal cliff is actually nearer by. We are only three months from election. President Obama has been unable to make a deal with the current Congress; whether he is re-elected or the lamest of ducks, Congress will remain the same until January. Europe is like watching the Liar on "Saturday Night Live." Day after day after day after day, leadership says everything is fine, going according to plan. Right. This week Finland's short-term sovereigns went to negative yield, and Spain's 10s rose to 7.2 percent. Marker: For the moment French debt is still receiving flight-to-quality cash, its five-year down to 0.86 percent. When markets realize that French banks, budget, economy and trade deficit are in sum no better shape than Italy, and French yields begin to rise ... On to something understandable: U.S. housing. For once, the National Association of REALTORS® has properly explained the drop in June sales of existing homes, down 5.4 percent from May, up 4.5 percent from June 2011. The primary reason: a scarcity of the cheapest distressed inventory, the darling of cash-paying investors. Listed inventory is down 24 percent versus last year. Does this pattern mean anything? For the economy, or housing in general? No. Not yet. Listed inventory is merely apparent supply. The shadow supply lies offshore like ocean swells not yet formed into waves. The most deeply distressed inventory, not yet seized in foreclosure, let alone listed, seems to be down from 4.5 million homes to 4 million but replenished by constant inflow of new delinquency in shaky-economy feedback. Some especially favored local markets -- like mine in Boulder, like Saudi Dakota, and San Francisco and any of the other IT paradises -- are doing remarkably well. The rest of the country ... how can the inventory/sales ratio fall so far and prices not rise? Because we still have at least 15 percent of homes underwater, most owners still making payments; many new sales merely recognizing the pre-existing loss, hardly encouraging to sellers or buyers. Supply-and-demand thinking by finance types when the "bubble" blew was wrong then, and still is. Prices crashed far below "clearing prices" and resulted in more sellers and fewer buyers; now it will take quite a while to work off immense but latent inventory. Media also focus on sales of new homes. Although rising a little, they are not particularly useful, except to the stock prices of builders. The gross domestic product (GDP) contribution of new construction even in good times is low single digit. For a better economy we need home prices to rise. That will repair household balance sheets, and every percentage point of home price gains will mean fewer homes underwater. And for that, as ever since 2007, we need credit. Supply vs. sales today is a statistical curiosity. Watch prices. Prices, prices, prices. Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com. Contact Lou Barnes: Email Letter to the Editor Copyright 2012 Lou Barnes

Improve Your Credit Score Before Searching for a Home

From RISMEDIA via Lowes -
Improve Your Credit Score Before Searching for a Home
By Paige Tepping

RISMEDIA, September 8, 2010--Many prospective homeowners find out the hard way the importance of a good credit score when they apply for a home mortgage, especially after the subprime loan crisis. If you are considering buying a home in the near future, it is a good idea to give your credit score a check-up and then take positive steps to improve your credit score if you find problems. Ideally, it is best to begin working on improving your credit score at least six months before you plan to start shopping for a home.

According to the experts at Buy-and-Sell-House-Fast.com, the following tips will help you improve your credit and should be taken before you begin your home search.

The first critical step in taking care of your credit is to check your credit report. Unfortunately, many people fail to take this all important first step. Instead, they wait until they have applied for a mortgage loan to find out from the lender that there are problems with their credit scores.

By checking your credit score before you apply for a mortgage loan, you gain the opportunity to find out if there are problems which you can correct and discrepancies that need to be removed. When you check your credit report, make sure you check all three of the national credit reporting agencies: Experian, Trans-Union and EquiFax.

Review your credit report carefully for items that may be erroneous. If you believe that an item on your credit report is reported in error, you have the right to contest it. To do so, you will need to contact the credit reporting agency and explain why you believe the item is inaccurate. Supporting documentation such as receipts and cancelled checks can help your claim. Alternatively, you can engage a credit report repair services firm to fix your credit report.

If there are derogatory items on your credit report that are accurate but which could cause problems in your loan application, you cannot have them removed; however, you can take positive steps to counteract them. In the event that you have missed payments in the past, take steps now to get your bills current. Even if it means tapping into money that you might be planning to use for a down payment, it is essential that you get your accounts current and keep them that way. Begin by immediately making your payments on time. There is nothing which can lower your credit score more quickly than late payments. Ideally, make an attempt to begin sending in your payments a few days ahead of time to make sure they arrive on time and you do not have any more late payments on your record. If necessary, begin taking advantage of electronic payments in order to make sure your payments are made on time. Over time, this can make significant difference.

Keep in mind that eradicating all of your credit balances is really not the solution. In fact, credit can be your friend when you are looking to make a big purchase such as a home. The key is to make sure your credit is positive, not negative. Toward that end, avoid actually closing out your accounts. Instead, make an effort to pay down your balances and keep them paid down well below the minimum or completely paid off, but do not close the account. When your lender runs your credit to make a decision on your mortgage application, he or she will want to see that you have had a long credit management history.

After reviewing your credit history, if you see that most, if not all of your credit cards are maxed out or nearly maxed out, it is time to sit down and plan an aggressive strategy for paying some of them down. One of the critical factors that often determine your ability to be approved for a mortgage loan is your debt to income ratio. In addition, high credit card balances can drag down your credit score. Therefore, it is important to look at paying off some of your balances.

It is generally better to begin with your highest-rate balances first. Many consumers are tempted to move around balances when they receive an offer from another bank that is good; however, before you do this, remember that the worst thing you can do when you are trying to make a major purchase is to open new accounts.

By following these guidelines, you can improve your credit score and improve your chances of being approved for your home mortgage loan.

Lowe's Customer Care(CON8) 1065 Curtis Bridge Rd. Wilkesboro, NC 28698.

© 2010 by Lowe's®. All rights reserved.

Your Credit Score

From Realty Times of December 14, 2009

2010 and Rebuilding or Protecting Your Credit Score by M. Anthony Carr

If the latest numbers on credit card delinquency is any indicator, U.S. consumers are starting to get a handle on their credit card debt. In the 3rd quarter of this year, according to data from TransUnion, a credit reporting agency, the delinquency rate dropped to 1.1 percent.

The Associated press reports: “The decline is significant because of its timing. Delinquency rates usually rise in the third quarter from the prior period as people spend on summer vacations and back-to-school shopping,” said Clifton O'Neal, a TransUnion spokesman.” How you handle your debt affects your credit score and rating, which is what affects your ability to get a loan to purchase a home. The good thing about credit scores is that they are merely a snapshot of your credit at a given time. Missed payments, high credit vs. limits, too much credit, et. al., can all be corrected and cleaned up and your credit score return to a new high level.

Tim McLaughlin, senior vice president of Weichert Financial Services, answers the question – what dings on your credit affect your score and why it seems all the good loans (low rates, low/zero point, and even product availability), seem to favor those with good credit.

The Fair Isaac Corporation maintains the most popularly used score (referred to as the FICO score) and it ranges from 300 to 850. They also have a great resource on how to understand the score: What I like about McLaughlin’s information from his Market Monitor newsletter is that he provides the number of points your score will drop or increase with these items in place or cleaned up.

“There are five major ‘dings’ that impact your DCS (Decision Credit Score, or FICO score) the most, some obvious, some not so obvious: Maxed out credit cards: Doesn’t seem like a big deal in the grand scheme of things, right? Oh, it is: a maxed out credit card can reduce your DCS anywhere from 10 to 45 points, according to Fair Isaacs, a hefty price to pay for accumulating debt.

30 Day late mortgage payment: In addition to the late fees, this occurrence adversely impacts your DCS by 60 to 110 points … a whopping impact for being late on your mortgage.

Debt settlement: Also known as debt arbitration or debt negotiation, it is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. The downside, a 45 to 125 point drop in your DCS.

Foreclosure: Unfortunately, an occurrence we are seeing far too often as of late. In addition to the event, it will reduce your DCS 85 to 160 points.

Bankruptcy: The event that would have the single biggest negative impact on your DCS, reducing your score 130 to 240 points; an almost irreparable event.”

FICO has its own web site dealing with the scoring prices and it’s a good starting place for those trying to repair their credit rating.

Here are the three credit reporting agencies that use the FICO score:

Equifax (www.equifax.com)

TransUnion (www.TransUnion.com)

Experian (www.Experian.com)

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Copyright © 2009 Realty Times. All Rights Reserved.

Mortgage Rate Dip Impacts Housing

September 29, 2009 from Realty Times

Real Estate Outlook: Mortgage Rate Dip Impacts Housing by Kenneth R. Harney


You may have seen the headlines last week about the Federal Reserve continuing its policy of keeping interest rates low to stimulate the economy. But you might have missed a major byproduct of that move that's certain to have a direct impact on home real estate: Thirty-year fixed mortgage rates slipped below the five percent mark for the first time in nearly half a year, dipping to 4.9 percent.

Fifteen year fixed rates are just 4.4 percent.

Now, there's nothing more stimulating for home buyers than mortgage money at rates that are about as low as they go. And sure enough, applications for new mortgages jumped by nearly 6 percent last week, according to the Mortgage Bankers Association.

Applications to buy homes using FHA financing soared to the highest share in the history of the Mortgage Bankers' index - which goes back to 1990.

Meanwhile, existing home sale closings took a breather from the rapid increases of the past several months, according to the National Association of Realtors. Sales in August declined by 2.7 percent, but remained 3.4 percent higher than they were in August of 2008, said Lawrence Yun, chief economist for the Realtors.

He attributed the slightly lower rate of closed sales in part to clogs in the system -- more contracts being written, but longer wait times to go to closing, leading to a higher rate of fallouts.

In other key developments:

The index of leading economic indicators, which is produced by the Conference Board and forecasts economic activity three to six months down the road, was up again last month -- by six tenths of a percent.

That was the fifth straight month of higher readings for the index, and would have been higher had unemployment not held it back, according to analysts.

Home prices continued their slow gains, according to the Federal Housing Finance Agency. Its home price index, which is based on Fannie Mae and Freddie Mac transactions, found prices up by three tenths of a point nationwide in the latest survey month.

That coincides with most private price indexes, which have found that we're past bottom and headed back up in most parts of the country.

Finally, the private mortgage insurance industry, which virtually eliminated low-downpayment financing opportunities in many markets during the past year by declaring them "declining" or "distressed," has begun reversing course.

Genworth Mortgage Insurance Company last week removed 63 of its 68 previous designations of "declining markets." That should open up non-FHA cash-out refinancings and low-downpayment home purchase mortgages to thousands of people who'd been squeezed out under the old rules.

Copyright © 2009 Realty Times. All Rights Reserved.

NEWS OF NOTE

Items gathered from several places:

The median home price in the Phoenix area reportedly rose for the first time in 2 years. The median price was over $120,000. No doubt the 1st Time Homebuyer program has something to do with that. The inventory of homes in the $100,000 price range in nearly non-exsistant in even Maricopa and Johnson ranch, and even the next range step up to $150,000 is small at best. Most remaining in that market are short-sales which have less appeal to most buyers today.

There were over 8,000 sales in the Phoenix market in August, offset somewhat by 12,000 new listings. The Foreclosure Pipeline is approaching 50,000, but one hopes a large percentage of those will be resolved by loan modifications. You may have read about the judge that brought a Senior VP from a major bank to Phoenix for 2 days of grilling on why modifications are only in the 2 to 3% range? Workload seems to have been the answer - when new loans stopped, people were laid off. How about we hire some back?

Related issue, credit cards.

Some rules that just kicked in the Credit Card industry mean that:

-Card issuers must mail credit card bills at least 21 days before their due dates. That's up from 14 days. Issuers were"banking" on the fact that consumers would make a payment late and incur a $35 late fee.

-Card issuers must give you the option to avoid future interest rate increases and pay off any outstanding balance under your current rate. If you take this option, you won't be able to make additional charges on that card, and you must pay off the balance within five years the bank can cancel the card and make you pay it off under your old terms, but with a higher minimum payment, according to Consumers Union. "Your new payment could be double your old minimum payment, or higher, if needed, to pay off the card in five years."

-Card issuers must give you at least 45 days' notice before making major changes in terms, such as changing your interest rate or the fees they charge. That's up from 15 days. Other card changes that require at least 45 days' notice include an increase in your minimum payment and switching your fixed rate to a variable rate.

After seeing their housing and personal wealth hammered by the recession, U.S. consumers are saving more and paring down their debts, a trend that the new law could reinforce.

For the three months that ended June 30, U.S. households on average carried a credit card balance of $7,987, down from a high of $8,529 in the third quarter of last year, according to Moody's Economy.com.

For Information on getting a new credit card if you're current terms are undesirable visit Bankrate.com

Oh, by the way, the Feds announced today that savings in the U.S. rose by 3%. Why is my head spinning?

Hang in there!

FICO SCORES

There are recent reports that FHA has raised it's FICO score requirement from 540 to 580. It is even suggested it could go to 600 or more.

If you are in that region of FICO scores, it is suggested you act soon while you have the opportunity and before the bar is raised too high for you to qualify.

Lower Mortgage Rates

From Realty Times of February 13, 2009

Lower Mortgage Rates Translate into Large Volume of Refinancing

McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.16 percent with an average 0.7 point for the week ending February 12, 2009, down from last week when it averaged 5.25 percent. Last year at this time, the 30-year FRM averaged 5.72 percent.

The 15-year FRM this week averaged 4.81 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. A year ago at this time, the 15-year FRM averaged 5.25 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.23 percent this week, with an average 0.6 point, down from last week when it averaged 5.26 percent. A year ago, the 5-year ARM averaged 5.19 percent.

One-year Treasury-indexed ARMs averaged 4.94 percent this week with an average 0.5 point, up from last week when it averaged 4.92 percent. At this time last year, the 1-year ARM averaged 5.00 percent.

"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage."

"The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008. As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association."


Copyright © 2009 Realty Times. All Rights Reserved.

Assistance for Distressed Homeowners

The Federal Housing Administration (FHA) can provide some assistance to homeowners behind on their mortgages.

You can reach a US Department of Housing and Urban Development(HUD)counselor, at no cost or charge to you, for advice and guidance. FHA offers several programs to those eligible including, in some cases, a refinance loan.

In addition, for new loans FHA has relaxed some requirements on bad or leas than perfect credit folks. They also accept a lower down payment of 3.5%, less than conventional mortgages.

Ask your current lender about the "FHA Secure" program.

If you or anyone you know are in a distressed situation and could use some advice and guidance, call a HUD Counselor at 1-800-569-4287. Again, no cost to you and the sooner you act, the better the chance for help.



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Top Five Myths About Loan Modification

From Realty Times of January 26, 2009

Top Five Myths About Loan Modification by Ralph Roberts

DETROIT--(BUSINESS WIRE)-- Ralph R. Roberts, consumer advocate and spokesperson for Federal Loan Modification Law Center, today released a list dispelling the top five myths about loan modification. Intended to better educate homeowners facing the prospect of losing their home in foreclosure, the following list demystifies the most common misconceptions surrounding the loan modification process.

MYTH #1: My bank wants me out of my house. My bank wants my home. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions). In today's market, there's a good chance they'll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.

MYTH #2: My credit score is bad so I won't qualify. Unlike the option of refinancing out of trouble, which requires you to apply for a new loan, loan modification simply adjusts the terms and perhaps reduces the balance of a loan you already have. Your credit score is much less of a factor in determining whether you qualify for a loan modification. In addition, a successful loan modification can actually improve your credit score over time, especially if it prevents you from ending up in foreclosure or bankruptcy.

MYTH #3 I am not late on my mortgage payments so I won't qualify. I have to miss a payment to be eligible. Early on, this was true. In fact, some early eligibility requirements stated that you had to be 61 days delinquent in order to qualify. In other words, you would have had to have missed two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders. Many lenders are now working out loan modifications with borrowers who are up to date on their payments. It's difficult to determine whether you qualify until you actually discuss your situation with the lender or with an attorney who is knowledgeable and experienced in loan modifications.

MYTH #4: I would be better off walking away or declaring bankruptcy than modifying my loan. Walking away from the home and filing for bankruptcy are certainly two options, but they are rarely the best options when you are facing foreclosure. If you simply walk away, the lender is unlikely to pursue legal action against you, but in some jurisdictions, the lender can pursue a deficiency judgment against you to collect the difference between what the lender receives for your home at auction and what you currently owe on the balance of the mortgage. Filing for bankruptcy may be better than just walking away, but it can leave a blemish on your credit history that makes it difficult to borrow money in the future. A successful loan modification is almost always a more prudent choice.

MYTH #5: It's too late. I have already received a foreclosure notice. As long as you still reside in the home – that is, you didn't voluntarily abandon it, and the home hasn't been sold at a foreclosure auction – you may still have time to work out a loan modification with your lender. The sooner you take action, the more options you have available and the more time you have to pursue the best option, but you can still negotiate late into the process. By contacting the lender or, better yet, having your attorney contact the lender on your behalf, you demonstrate a good faith effort to work out a solution and can often buy yourself extra time to negotiate a loan modification.

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Copyright © 2009 Realty Times. All Rights Reserved.

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Few Borrowers Can Revise Mortgage Loans

We do not wish to only present the good news - you will get the other side of the story here as well!

Not everyone agrees that the bailout is working. One woman's story as it appears in RISMEDIA, January 23, 2009:

A different view of the bailout!

It appears our new president has a major challenge ahead of him in this area!


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Federal bailout is working, Zions banker says

The first clear feedback on the TARP progream:

This article from the AZ Republic Newspaper of Jan. 18 indicates that "the effort appears to have bolstered the stability of the banks and has helped to get credit flowing again."

Federal bailout is working

It is significant to note that the writer does feel the government will be repaid the funds provided by this program. That doesn't seem to get mentioned very often!

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More on Lower Interest Rates

Realty Times of January 16, 2009

Slow Economy and Government Actions Lead to 11 Weeks of Lower 30-Year Fixed Rates

McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.96 percent with an average 0.7 point for the week ending January 15, 2009, down from last week when it averaged 5.01 percent. Last year at this time, the 30-year FRM averaged 5.69 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year FRM this week averaged 4.65 percent with an average 0.7 point, up from last week when it averaged 4.62 percent. A year ago at this time, the 15-year FRM averaged 5.21 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.25 percent this week, with an average 0.6 point, down from last week when it averaged 5.49 percent. A year ago, the 5-year ARM averaged 5.40 percent. The 5-year ARM has not been lower since the week ending September 8, 2005, when it averaged 5.24 percent.

One-year Treasury-indexed ARMs averaged 4.89 percent this week with an average 0.5 point, down from last week when it averaged 4.95 percent. At this time last year, the 1-year ARM averaged 5.26 percent.

"Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions," said Frank Nothaft, Freddie Mac vice president and chief economist. "So far, both the U.S. Treasury Department and the Federal Reserve have added over $100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages. The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008 announcement, to further shore up mortgage lending and keep rates low.

"In December, the unemployment rate rose to 7.2 percent, the highest since January 1993, and the economy lost 2.6 million jobs over 2008, the largest annual drop since 1945. That brought down yields on Treasury securities and mortgage rates followed."

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Copyright © 2009 Realty Times. All Rights Reserved.

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Low-Interest-Rates

Realty Times for January 15, 2009

Quick! Take That Low-Interest-Rate Holiday by Broderick Perkins


One holiday Blue Light Special appears to be working.

Interest rates are as low as they been since Freddie Mac started tracking them, refinancing applications are soaring and home buys are on the move.

Freddie Mac on Christmas Eve, bless them, said the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent for the week ending Dec. 24, 2008. That's the lowest the rate has been since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year rate averaged 4.91 percent.

Five year hybrid adjustable rate mortgages (ARMs) were higher at 5.49 percent, but 1-year ARMs were below 5 percent at 4.95 percent nationwide and even lower 4.75 in the Northeast and Southwest.

Talk about visions of sugar plums.

With home prices in a trough, with all the money you've been saving on reduced holiday spending and gasoline conservation, with all those motivated sellers out there twisting in the frigid wind?

It's a good time to consider refinancing your mortgage and it's a good time to be thinking "Buy A Home -- Now!"

Forget settling down for a long winter's nap.

It's obviously time to put on your refinance thinking cap or your buy-a-home lid, not that go-to-sleep winter topper.

Either way, you won't be alone. Jack Frost can't hold a candle to housing consumers who feel the heat.

On Dec. 24, the Mortgage Bankers Association's composite index of mortgage applications to buy a home or refinance a mortgage -- bless it also -- rose to 1,245.4, the highest since 2003, from 841.4 a week earlier. The group's refinancing gauge rose 63 percent and purchases gained 11 percent.

Low rates have you looking to refinance?

The average rates are so low, refinancing can benefit even those who purchased a home a year or two ago, even if they had a small equity stake in their home and used an ARM to buy.

The key, say the experts, is to examine your options.


Visit your existing lender first, especially if your lender doesn't sell loans and has a vested financial interest in keeping its portfolio intact. It will prefer to refinance you at the going rate rather than cut a loan modification and lose money.
Also shop around at other banks, credit unions (especially credit unions) and other lenders that also retain loans.


Trading an ARM for a fixed rate that's slightly higher also isn't a bad deal if that ARM rate will eventually explode with an upward adjustment.

A 40-year mortgage also can help offset the cost of trading an ARM for a fixed rate, due to the longer term's relatively smaller payments.

If you have both equity in your home and pristine credit, bargain hard. You have the most options.

Quickly pull your credit report from the only federally-sanctioned free service, AnnualCreditReport.com and check it twice for accuracy.

Don't overlook trading one ARM for another, especially if the new ARM is a hybrid that provides enough breathing room, say five or seven years or more before the first adjustment.

A U.S. Housing and Urban Development-approved counselor, experienced mortgage broker or mortgage adviser can help you quickly sort through options from lenders, bailout programs and other sources to get you a refinanced mortgage -- fixed or adjustable -- that is most viable.

Examine all potential options by comparing all loan costs of each refinance from a variety of sources -- in-house lenders, secondary market lenders and brokers.
Low rates making you think about buying?

Budget. Know all sources of every penny and where every penny goes. You can't know where you can cut costs until you know in detail what those costs are.

Save. Pinch Pennies. Save More. Being miserly isn't lame. It's a prerequisite to homeownership. If you don't have a savings account worth three to six months of your net income, you are already a financial disaster waiting to happen should there be an emergency. In addition to money for the down payment, lenders today will expect you to have some cash left over for insurance, taxes, maintenance and other costs that come with homeownership.

Don't just get your credit report, read the darn thing. Your credit report is a report card on your credit use -- the good, the bad, the ugly -- and, too often, the incorrect. Which is why you want to see it. If there are errors, follow the instructions to correct them.

Get professional help. Can't determine what your credit report is trying to tell you? Not sure how to calculate what you'll need to save for a down payment? Don't know how to set up a budget? Most consumers don't. It's okay to ask for help. It's smart to ask for help. You don't know everything about buying a home, even if you are moving up, but especially if you are a first-timer. Save the pride for after the purchase.

Whether it's a financial planner, financial counselor, real estate agent, mortgage broker, loan officer, or real estate market nerd, ask family, friends, co-workers and others you trust for references to find those who can help you. Get help in setting goals, sifting through mortgage programs, understanding the title and escrow process, finding a home and keeping a home -- all well before you are actually in the market for a home.

Learn about market and economic conditions that could impact your decision. Learn about home prices, mortgage rates, home buying costs and other issues surrounding what's likely to be your most complicated purchase ever.

Attend workshops, seminars and classes.

Browse for housing information from online content providers, including MyMoney.gov, the Better Business Bureau (search "Tips for Troubled Homeowners") and Deadline Newsroom's home buyers search results.


Pick up a few books, or save some bucks in the library reading "Buying Your First Home" (Nolo, $24.99); "The National Association of Realtors Guide To Home Buying" (Wiley, $19.95) and "Let's Get Real About Money" (Financial Times, $19.99), among others.

Above all -- refinancing or buying -- move fast. The mortgage market is as volatile as it's ever been. Rates could quickly reverse course and head back into Scrooge territory.

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Copyright © 2009 Realty Times. All Rights Reserved.

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Another New Low in Mortgage Rates

Realty Times - January 9, 2009

Long-Term Rates for Tenth Consecutive Week Setting Yet Another New Low

McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.01 percent with an average 0.6 point for the week ending January 8, 2009, down from last week when it averaged 5.10 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year FRM this week averaged 4.62 percent with an average 0.7 point, down from last week when it averaged 4.83 percent. A year ago at this time, the 15-year FRM averaged 5.43 percent. The 15-year FRM has not been lower since June 13, 2003, when it averaged 4.60 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.49 percent this week, with an average 0.7 point, down from last week when it averaged 5.57 percent. A year ago, the 5-year ARM averaged 5.63 percent.

One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.5 point, up from last week when it averaged 4.85 percent. At this time last year, the 1-year ARM averaged 5.37 percent.

"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac vice president and chief economist. "On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008."

"Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week."
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Copyright © 2009 Realty Times. All Rights Reserved.

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Lowest Home Loan Rates Ever!

I have received a mailing from a local mortgage representative that states that " ....home loan rates dropped to the lowest levels that have ever been seen....".

If you would like to receive a copy of the entire mailing, please send me an email address to which I may send it. The article is too long to be reproduced here and I do not wish to violate any coyright laws by quoting pieces of the article.

Go get one of those loans!

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Best Interest Rates in 50 Years,

By Mary Trupo mtrupo@realtors.org for NAR

Fed Action Creates Best Interest Rates in 50 Years,
Realtors® Report WASHINGTON, December 17, 2008

The National Association of Realtors® applauds the actions of the Federal Reserve Board in lowering interest rates for home buyers and homeowners who need to refinance. This will significantly impact housing sales, home valuations, and the nation’s overall economy.

The Federal Reserve is purchasing large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets.

“NAR has been aggressively calling for mortgage rate reductions, and the Fed’s action to slash interest rates, coupled with the actions by the Federal Housing Finance Agency and the Department of the Treasury, has driven down interest rates to make the dream of homeownership once again attainable for thousands of Americans,” said NAR President Charles McMillan.

Mortgage rates, which had averaged 6.3 percent in the third quarter, have recently fallen into the 4 percent range in some parts of the country. “That is the lowest rate in nearly 50 years and will bring buyers back to the market,” McMillan said. “We are pleased that the government heard our message and responded to our call for action.”

NAR has estimated that a one percentage point decrease in mortgage rates will increase home sales by more than 500,000 homes. “To boost the economy, it is critical to stem the rising tide of foreclosures and boost home buyer confidence in the housing market.” McMillan said. “Lower interest rates coupled with increased foreclosure mitigation are the key ingredients to stabilizing the housing market and preserving communities and homeownership.”

NAR continues to call on the federal government to maintain the higher loan limits passed in the economic stimulus bill earlier this year and to expand the $7,500 tax credit for first-time home buyers to all buyers and to eliminate the credit repayment requirement. “Together, all of these actions will stimulate and stabilize the housing market and begin an overall economic recovery,” McMillan said.

© Copyright NATIONAL ASSOCIATION of REALTORS® | Headquarters: 430 North Michigan Avenue, Chicago, IL 60611

DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500

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FHA Still Going Strong

From Realty Times of October 20, 2008

Washington Report: FHA Still Going Strong by Kenneth R. Harney

The country's top housing official has an urgent message for potential home buyers: You may have heard that the credit markets were "frozen," but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA's volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.

In an exclusive one-on-one interview with Realty Times, Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie -- who account for a combined 90 percent plus share of the entire U.S. mortgage market -- "have kept liquidity alive" for home buyers -- and have virtually unlimited funds for new mortgages.

"There is no credit crisis" for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston.

Business loans and various other types of credit may have been more difficult to obtain in recent weeks, Preston told Realty Times, but thanks to the government's backing of the three biggest sources of mortgages, buyers and refinancers of houses have had no unusual problems.

Preston and HUD are playing key roles in the $700 billion financial system bailout plan now getting underway. Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort. HUD's main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.

The agency's new "Hope for Homeowners" program, which started October 1, allows it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancings into fixed-rate FHA mortgages.

In the interview, Preston emphasized the importance of a new, $3.9 billion program that has received virtually no attention in the press, but which could have huge positive impacts on neighborhoods and communities struggling with large numbers of foreclosures.

Congress authorized HUD to provide funds and other assistance to local governments to buy, fix up, resell or rent out foreclosed houses that are dragging down local property values.

Known as the Neighborhood Stabilization program, it offers not only roles for local governments to fight housing blight, but also provides opportunities for alert realty agents, rehab contractors, builders and investors to be involved -- profitably -- in the turnaround efforts.

If you're interested, talk to your city or county housing and community development officials for details. Though HUD will be providing the funds, local officials will be calling the shots.



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Helping Homeowners Keep Their Home

If you or a family member, a co-worker, a friend, or a neighbor behind on payments, make sure you or they read the following:

*Don't ignore the letters from your lender
*Contact your lender immediately
*Contact a HUD-approved Housing Counseling Agency
*Toll FREE (800) 569-4287
*TTY (800) 877-8339

And most important, visit the following website:

Helping Homeowners Keep Their Home

FHA has relaxed many former requirements to get the home lending process in a healing process. It is there for you to use!

Watch the Midyear Housing Market Update Video from the National Association of Realtors

The National Association of Realtors® (NAR) has concluded its mid-year legislative meetings.

One of the highlights of the meeting was a presentation by the NAR Chief Economist.

2008 NAR President-Elect Charles McMillan and Chief Economist Lawrence Yun provided Midyear Legislative Meetings and Trade Expo attendees with news on the housing market and when we can expect a recovery.

Click here to watch the video.

A positive message can brighten the future for all of us.

The video is Copyright NATIONAL ASSOCIATION OF REALTORS®
Headquarters: 430 North Michigan Avenue, Chicago, IL. 60611-4087
DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020
1-800-874-6500

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Fannie Mae Removes High Downpayment Provisions

From NewsGeni.us an article from CNNMoney.com:


Fannie Mae Removes High Downpayment Provisions

This will improve the sale of mortgages by many lenders, thus loosening up the money available to lend on new mortgages.

In parallel, Congress is still kicking around a credit relief program to stimulate the lending process with the aim of resolving the Housing Crisis sooner. Bush is prepared to veto since it's the taxpayers that will pay the price ultimately.

Here is a chance to read the process and progress of such a bill through our congress:


House Bill H.R.3221

Why should I worry, the Government will fix it - if I live long enough.

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