Volitility

In case you haven't noticed, the market has been going crazy lately. From stocks and bonds, to interest rates, to gas prices. . . . .everything going crazy.

If you're in the market to purchase a home, the best thing you can do right now is become friends with your lender. Rates change every day, often times several times in one day. A couple weeks ago the rates went from under 6% to 6.5% all in one day. Last week Friday, the rates changed 4 times throughout the day.

If you're looking to lock in, you need a lender who you trust, who has experience in this crazy market. One who's watching what's going on, one who will CALL you if and when the rates drop so you're not left out to dry.

Today's rates may be lower than yesterday, they may be the same, or they may be higher. Don't chance your mortgage to some DOT COM person. . . . .find a reputable, trustworthy lender.

As always, e-mail me if you need guidance finding someone throughout this process. I'd be happy to share my trusted sources with you.

Bernanke Prepared to Cut Key Rates Again

Daily Real Estate News February 28, 2008

Bernanke Prepared to Cut Key Rates Again

Federal reserve Chair Ben Bernanke told the House Financial Service Committee during an appearance on Wednesday that the Fed is prepared to lower key interest rates again to bolster economic growth.

The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," he said.

Bernanke was asked when he thought the housing market might stabilize. It's possible, he said, that by "later this year it will stop being such a big drag directly" on the economy. But home prices probably will decline into next year, he added.

"It is very difficult to know, and we've been wrong before," Bernanke said.

Source: The Associated Press, Jeannine Aversa (02/27/08)

A Super Bowl Year For Foreclosures

The stadium at the University of Phoenix where the Super Bowl was just played can hold almost 74,000 people. That's a lot of folks, and yet it would take almost 30 of those stadiums to hold all the households that received foreclosure notices during the past year.

The final 2007 figures from RealtyTrac.com show that foreclosure actions increased 79 percent when compared with 2006. Roughly 2.2 million households received default notices, auction sale notices and notices of bank repossessions. Not all of these homes were lost -- about 1.3 million were sold at the courthouse steps but the rest are hardly safe: They belong to distressed homeowners, people likely to sell fairly soon if they can whether prices are up, down or sideways.

These forced sales, when they appear in official records, will become part of the "comps" used to value your home if you sell or refinance. And if the comps are down you can guess how the world will price your house.

Look for more of the same in 2008 and perhaps worse. Just in the toxic loan category, the Federal Deposit Insurance Corporation now estimates that "almost 1.3 million hybrid loans are scheduled to undergo their first reset during 2008. An additional 422,000 subprime hybrid loans are scheduled to reset in 2009, which means these problems will not end anytime soon."

What can you do? Don't panic. Once the current inventory of exploding ARMs is refinanced or terminated there will be less downward pressure on home prices. Until then, buy and refinance with fixed-rate loans at today's low rates and pay down consumer debt. Most importantly, ask nearby brokers about sale trends in your community because national numbers may not reflect local real estate patterns.

2008 Realty Times - by Peter G. Miller

"Fingers Crossed"

Milwaukee Journal Sentinel (01/19/08) Cleaver, Joanne

Full-year results indicate that southeastern Wisconsin escaped the worst of 2007's residential property meltdown. Now, brokers note, pent-up demand is beginning to break logjams that have scuttled many prospective sales. Beth Jaworski, chairwoman of the Greater Milwaukee Association of REALTORS®, notes that January seems to have revived potential buyer interest in at least looking, if not buying. By contrast, she adds, December was so slow that "you wondered if your phone was working." Meanwhile, Milwaukee-based REALTOR® Kathleen Winkelmann says she and her colleagues are working harder than ever to craft incentives--through more generous commissions to buyer's brokers, for example--to grab attention for their home listings. In addition, asking prices are now written on Post-It notes, not labels, to account for fluctuating market conditions locally. Market data compiled by the Metro MLS and released earlier this month determined that average prices were essentially flat last year in Washington and Racine counties and eroded last year in Waukesha and Ozaukee counties. Milwaukee County reported a 4.9 percent increase in average sale price, due both to the rebounding popularity of close-to-downtown neighborhoods and to the influx of higher-end condos into the resale market.

Phenomonal Interest Rates

While everyone is talking about the "mortgage melt-down", the rates have been slowly declining. If you've got decent credit, now is a GREAT time to buy a home.

As of Monday, January 14th, the rates were:

30 Year Fixed - 5.625%
15 Year Fixed - 5.25%

So check your current interest rate. If you're in an arm. . . . .now is a super time to get out and finance into a fixed rate. Don't be a statistic. Don't be unprepared for the rise in your payments. Be smart. . . . .refinance now.

The lending industry is changing

As you may or may not know, the interest rates just dropped below 6%. As of Tuesday, they were at 5.75%, a rate we haven’t seen in about 2 years. With that said, there’s no certainly as to whether that rate will stay, or if we’ll see the fluctuations we’ve seen in the past. But that’s an awesome interest rate if you’re shopping. That means you’re able to afford more home now, with the lower rate.

On top of that, we’ve just been informed that as of January 9th, the structure of the lending industry will be changing. As you may know there have been many “issues” with lenders going out of business, people going into foreclosure because they can’t pay their mortgage, etc. Because of this, many changes have been instituted within the lending industry. One of those is the 0% down or 100% financing programs. Now those programs are virtually non-existent. In rare cases if you’ve got spotless credit a lender may be able to work you into one of these programs, but for all practical purposes, they’re gone.

More importantly, I wanted to let you know about the specific change which takes place on January 9th. At that time we're told the mortgage industry will put into effect a tier system for mortgage rates. What that means is your rate will be determined by what your credit score is. There are no exceptions, where your score falls determines what you will pay as an interest rate. What that means is if you’ve got a lower credit score, you’re going to pay the “normal” rate, plus a percentage penalty.

This is the tier system they’re instituting.

BELOW 620 +.75% - +1.00%
620-639 +.625% - +.75%
640-659 +.375% - + .50%
660-679 +.25% - +.375%

That means if you have a credit score of 660, you’re going to pay the current interest rate of 5.75%, plus an additional 0.25%. So your rate is now 6%. That rate increase will affect what you can afford as well as what your payments will be. They’re also looking at putting private mortgage insurance (PMI) on one of these tier systems also. PMI is required if you have less than 20% down. So if you’ve got a less than perfect credit score, you’ll now be paying more for your interest rate, AND you’ll be paying more for PMI.

If you're thinking about purchasing, it's a good idea to talk to a lender soon, to see how these changes are going to affect you. As always, if can help in any way, please don't hesitate to contact me.

Bankers Hear Discouraging News About Mortgages

Daily Real Estate News October 16, 2007

The continuing spike in foreclosures, combined with the glut of unsold homes, will prevent any rapid price rebound, mortgage experts told attendees at the Mortgage Bankers Association annual convention going on now in Boston.

"I think this year we will see a 2 percent decline in national home prices, and we're projecting about a 4 percent decline next year," says Thomas Lund, an executive vice president at Fannie Mae.

Prices will likely flatten out in 2009, Lund says, before gradually rising in 2010. Lund expressed support for legislation that aims to infuse more cash into the market and give lenders more leeway to help at-risk home owners refinance.

Source: Dow Jones International News (10/15/07)