i have moved up to hosting my Blog with a Domain www.YourMortgagePlannersBlog.com please update your feeds
http://feeds.feedburner.com/ yourmortgageplannersblog/lQtb
thanks
Thursday, September 18, 2008
Monday, September 15, 2008
Mortgage Interest Rates Drop as Markets Crumble
The old adage of flight to safety was more than apparent in today’s market.
The inverse relationship between stocks and mortgage backed bonds played true today. After a massive sell off in all major indexes, Mortgage Backed Bonds closed at a 6 month hi.
With newfound liquidity in the mortgage bond market, thanks to last week’s bailout of Fannie and Freddie, Mortgage rates are experiencing lows not seen since the brief dip in early January and are testing three year lows.
Fed Rate Forecast Cut 8/16/2008
Fed Fall 2008 Rate Cut
The Federal Open Market Committee (FOMC) is scheduled to meet again this week and it's predicted that rates will be cut again. It's commonly thought that a cut in interest rates by the FOMC brings with it a decline in home mortgage rates.
This is not always true.
If you are considering obtaining a new loan, the time to pick up the phone is now.
Historically, the time to make an application to capture the best rate may be before an FOMC meeting, not after. While it's true that mortgage rates may improve immediately following a rate cut, they can just as quickly get worse.
Don't lose out by playing the waiting game.
Why do home loan rates often rise following rate cuts by the FOMC? The reason is that Fed rate cuts can be seen as inflationary and bond traders hate inflation. It is the bond market that sets long-term interest rates.
After two recent FOMC meetings, interest rates rose significantly after a rate cut. First when rates were cut in September of 2007 and then again following the inter-session emergency meeting in January 2008. In each case the price of bonds deteriorated quickly and in the span of two days, interest rates increased up to .75% off of their low points.
If you would like to know how you could benefit from refinancing or are in the process of buying a new home, make sure you have your application in process. This way, you can capture the best interest rate when it is available. If you wait, you may cost yourself the best chance to have the lowest rate.
Contact me today for a FREE evaluation of your home loan. Not calling me could cost you hundreds of dollars each month.
The Federal Open Market Committee (FOMC) is scheduled to meet again this week and it's predicted that rates will be cut again. It's commonly thought that a cut in interest rates by the FOMC brings with it a decline in home mortgage rates.
This is not always true.
If you are considering obtaining a new loan, the time to pick up the phone is now.
Historically, the time to make an application to capture the best rate may be before an FOMC meeting, not after. While it's true that mortgage rates may improve immediately following a rate cut, they can just as quickly get worse.
Don't lose out by playing the waiting game.
Why do home loan rates often rise following rate cuts by the FOMC? The reason is that Fed rate cuts can be seen as inflationary and bond traders hate inflation. It is the bond market that sets long-term interest rates.
After two recent FOMC meetings, interest rates rose significantly after a rate cut. First when rates were cut in September of 2007 and then again following the inter-session emergency meeting in January 2008. In each case the price of bonds deteriorated quickly and in the span of two days, interest rates increased up to .75% off of their low points.
If you would like to know how you could benefit from refinancing or are in the process of buying a new home, make sure you have your application in process. This way, you can capture the best interest rate when it is available. If you wait, you may cost yourself the best chance to have the lowest rate.
Contact me today for a FREE evaluation of your home loan. Not calling me could cost you hundreds of dollars each month.
Friday, September 12, 2008
Bush isn’t to Blame for the Current Mortgage Market Mess
I consistently hear uninformed and misinformed individuals take the easy way out when speaking about the current mortgage and real estate fiasco, by blaming the mortgage mess on Bush and his presidency. I have drafted a quick primer on what happen and how we ended up in this lovely mess that will so fondly be remembered as the “Credit Crunch/Crisis”.
Subprime mortgages have now been credited for bankrupting well over 110 lenders (and still counting) and seriously damaging operations at many major mortgage firms. They've reportedly wiped out multiple hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.
This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 2 years ago.
How did this happen? The Greenspan real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.
These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.
In the fall of 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures have followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now enduring.
Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.
What does this mean to you and your mortgage?
Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.
Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.
ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.
Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.
Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now – while it seems harsh and could get much worse – is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.
--William Doom Will@MyEquityPro.com Certified Mortgage Planner
Subprime mortgages have now been credited for bankrupting well over 110 lenders (and still counting) and seriously damaging operations at many major mortgage firms. They've reportedly wiped out multiple hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.
This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 2 years ago.
How did this happen? The Greenspan real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.
These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.
In the fall of 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures have followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now enduring.
Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.
What does this mean to you and your mortgage?
Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.
Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.
ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.
Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.
Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now – while it seems harsh and could get much worse – is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.
--William Doom Will@MyEquityPro.com Certified Mortgage Planner
Thursday, September 11, 2008
Off the Money on this one Carmen Wong Ulrich
WOW Misnomer of the Day?
The non accredited Financial Guru of CNBC ubber popular personal finance show “On The Money” Carmen Wong Ulrich (CWU) explained in a recent Web Extra: Mortgage Insurance: You Don’t Want It “If you’re a homeowner and you’re paying PMI – or private mortgage insurance – you should know that you probably don’t want it and definitely don’t need it."
Watch the video for more.
-Sorry young Padawan, you are Way off base, you must have missed the memo or fallen asleep in Mortgage PMI 101.
I don’t know what CWU means by a little equity if she is referring to 20% then yes CWU is correct.
Any Conforming loan above 80% LTV will require you to pay PMI. If a borrower is taking an FHA loan they will be required to pay MI even if the LTV is <80% (Note: Years will be determined when the loan balance equals 78%, provided the borrower has paid the annual MIP for at least 5 years (scheduled or actual)).
MI is determined on a risk based method for Fannie and Freddie, FHA has a flat .50% which is soon to change to risk based credit grade. Risk based is calculated by a borrower’s credit and LTV.
As a mortgage planner I don’t know of one lender left that is currently offering LPMI (Lender Paid MI), if you are lucky to find one you pay for it your in interest rate.
There is no way around MI if you have a high LTV Mortgage. A borrower is required to have MI if they would like the Mortgage.
This is why there are accreditations and certifications, to insure erroneous information is not released to the masses.
I am watching you Carmen Wrong on this one Ulrich
The non accredited Financial Guru of CNBC ubber popular personal finance show “On The Money” Carmen Wong Ulrich (CWU) explained in a recent Web Extra: Mortgage Insurance: You Don’t Want It “If you’re a homeowner and you’re paying PMI – or private mortgage insurance – you should know that you probably don’t want it and definitely don’t need it."
Watch the video for more.
-Sorry young Padawan, you are Way off base, you must have missed the memo or fallen asleep in Mortgage PMI 101.
I don’t know what CWU means by a little equity if she is referring to 20% then yes CWU is correct.
Any Conforming loan above 80% LTV will require you to pay PMI. If a borrower is taking an FHA loan they will be required to pay MI even if the LTV is <80% (Note: Years will be determined when the loan balance equals 78%, provided the borrower has paid the annual MIP for at least 5 years (scheduled or actual)).
MI is determined on a risk based method for Fannie and Freddie, FHA has a flat .50% which is soon to change to risk based credit grade. Risk based is calculated by a borrower’s credit and LTV.
As a mortgage planner I don’t know of one lender left that is currently offering LPMI (Lender Paid MI), if you are lucky to find one you pay for it your in interest rate.
There is no way around MI if you have a high LTV Mortgage. A borrower is required to have MI if they would like the Mortgage.
This is why there are accreditations and certifications, to insure erroneous information is not released to the masses.
I am watching you Carmen Wrong on this one Ulrich
Subscribe to:
Posts (Atom)
