Facing Crisis with Faith and Trust

I’ve blogged in the past about positive attitude and taking personal responsibility for maintaining a focus on fiscal steadfastness. I want to share with you some wisdom that addresses these same issues. These thoughts are from the pastor of my church. No matter what your particular faith may be, the impact of facing crisis with trust and faith in God gives each of us hope and peace in these turbulent times.

To paraphrase his words: Bail out, recession, layoffs, and foreclosure -- all are media headline material, and it’s hard to ignore that a national and global crisis exists. Most of us are impacted by, or know someone being impacted by, our current economic crisis. There are different types of crisis we encounter in daily life. It’s not a matter of IF a crisis will come, but WHEN it will come. It could be when a death of a family member occurs, a job is lost, someone we care about is assaulted, a divorce, or a diagnosis of cancer.

How do we respond to this? What is a biblical response to crisis? We need to look to the response we choose when crisis comes, no matter the cause of the crisis.

Pastor Anderson shares wonderful passages and stories of persevering, standing firm in faith, a biblical response to crisis. He talks of four central truths about God and these affirmed in the face of any crisis, will help us have a Godly response to crisis:

1. God is in control
2. God has a plan for the world
3. God has a plan for me
4. I can trust God

I encourage you to click on the link provided to listen to the sermon “Trusting God in the Face of Crisis”:
http://vineyardop.org/Site Resources/Modules/MinistryTools/Sermon/default.asp

As always, any of us here at InSight Mortgage Group will be happy to assist you with your mortgage needs or questions. Please call us at 913-642-3334 or email me at michele@wantinsight.com May God bring you peace now and in your time of crisis.

PROTECT YOUR IDENTITY

Recently I attended a seminar by an FBI representative on various types of fraud affecting the mortgage and real estate industries, and of course, our buyers and sellers. Then I had an enlightening conversation with a business associate whose focus is consumer protection and education.

Did you know that identity theft is America’s fastest growing white collar crime? The average dollar amount charged in identity theft is $92,893 and only 1 out of 700 thieves are ever prosecuted. And,the identity theft victim spends on average up to 600 hours restoring their identity. Identity theft is to knowingly transfer, possess, or use without lawful authority another person’s personal information to secure services or products, or to commit crimes in that person’s name.

The mortgage industry has stringent rules and oversights in place to safeguard our business from accepting applications using fraudently obtained information. A new national Red Flags Rule was implemented recently, further enhancing safety practices. At InSight Mortgage Group we have policies and procedures in place providing for the identification, detection, and response to “red flags” that could indicate identity theft.

There are five types of Identity Theft:

1. Financial – your information to obtain money, goods, or services leaving you
with the bill
2. Drivers License – an identity thief could obtain a drivers license in your name and accumulate traffic tickets in your name
3. Social Security – your social security numbers could be used for employment purposes and you could get the tax bill
4. Medical – your personal medical information could be used to obtain
prescriptions or medical health which could affect your health or reduce your
benefits
5. Criminal – your information could be used to escape fines or jail time. You
could actually end up in jail.

Military personnel are at risk too. Social Security numbers are the basis of personal and medical administration. In our era of Internet, credit cards, and computer file-sharing, the element of risk increases. The prime target is the deployed military person who most likely will not view his/her credit report for a year or more according to a public affairs officer with Army Human Resources Command. He said contractors, soldiers, and civilians should be aware of the dangers of identity theft and know how to protect themselves from unauthorized release of personally identifiable information.

Everyone should review their credit reports and financial statements regularly for any fraudulent charges. The Federal Trade Commission also suggests being alert to signs such as bills not arriving as expected, denials of credit for no apparent reason, or calls or letters about purchases never made.

Everyone is facing challenging economic times. Finances are a concern for each and every one of us, and identity theft is a potential threat to us all. Please don’t shake it off as a “it can’t happen to me” attitude. I’ve become aware of a valuable service provided by a company with integrity. Adell Associates of Pre-Paid Legal Services offers a comprehensive service you can use right now to help with the tough decisions all families and businesses must make. Everyone needs a will/living will but puts it off, maybe you’re thinking of bankruptcy, everyone signs contracts, and everyone needs to be concerned about their credit score and identity. These are some of the important benefits this service provides. For more information and personal assistance contact Adell Associates at 913-780-2375 or visit www.adellassociates.com.

Any of us at InSight Mortgage Group would be happy to discuss how we protect your identity through the loan process, or answer questions you may have. Call us at 913-642-3334 or please email me at michele@wantinsight.com. Have a blessed day.

The HOME AFFORDABLE REFINANCE Program: Questions and Answers

Our post the other day on the new Obama Home Affordable Plan generated alot of questions from you. We appreciate our readers and welcome your inquiries. The following information should clarify the REFINANCE portion of the program. We'll address the Modification portion in another blog.

I’m current on my mortgage. Will the Home Affordable Refinance help me?
Eligible borrowers current on their mortgage but who haven’t been able to refinance into today’s lower interest rates because of decreased home valuation, may be eligible to refinance into a 30 or 15 year fixed rate loan. Through the HAR program, Freddie Mac and Fannie Mae will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.

Who is considered eligible?
* Owner occupant of a one to four unit home.
* The loan is owned or controlled by Fannie Mae or Freddie Mac (unsure? See below)
* Are current on mortgage payments – haven’t been more than 30 days late in past 12 months
* The amount owed on the first mortgage is about the same or slightly less than the current value of the home
* Have a stable income sufficient to support the new mortgage payments.

How do I know if my loan is owned or has been securitized by Fannie or Freddie?
You should call your mortgage lender or servicer (company you send payments to) and ask about the program. Both have toll-free numbers and web submission processes to make this data available. Borrowers will enter/provide information to determine if either agency owns or securitized the loan. NOTE: other qualifying criteria must be met in addition to the loan being owned or securitized by either agency.
* Fannie Mae: 1-800-7fannie (8am-8pm EST) or www.resource_center@fanniemae.com
* FreddieMac 1-800-freddie (as above) www.freddiemac.com/avoidforeclosure

Who is my “loan servicer”? Is that the same as my lender or investor?
The company that collects your mortgage payments and who is responsible for the management and accounting of your loan is the servicer. Your servicer may also be your lender, which means they own the loan. However, many loans are owned by groups of investors (like pension funds) or individuals who buy mutual funds. These loans are managed by banks and other firms that specialize in servicing loans. If you have questions about the loan OR you are behind on your payments you should call your loan servicer at the number on your payment coupon or monthly statement.

I owe more that my property is worth. Do I still qualify to refinance under MHA?
Eligible loans include loans where the first mortgage will not exceed 105% of the properties’ current market value. Example: if your property is worth $200k, but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.

I have both a first and a second mortgage. Can I still qualify to refinance under MHA?
Borrowers with more than one mortgage may be eligible as long as the first mortgage is less than 105% of the value of the property. Eligibility will depend, in part, on agreement by the lender that holds the second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

Will refinancing lower my payments?
The objective of the Home Affordable Refinance is to provide creditworthy borrowers who have shown a commitment to paying their mortgage the opportunity to get into a safe fixed rate mortgage with payments that are affordable today and sustainable for the life of the loan. You could see an immediate reduction in your payment if your rate is much higher than the current rates. But, if you’re paying on an interest only note, or have a low introductory rate that will increase in the future (variable rate), monthly payments may not go down if refinanced into a fixed rate, but may you avoid future payment increases AND you could save a great deal over the life of the loan. Your lender will give you a Good Faith Estimate that includes your new interest rate, mortgage payment and the amount you will pay over the life of the loan. Compare this to your current loan terms to see if it is an improvement. If not, then refinancing may not be right for you.

What is the interest rate and other terms of this refinance offer?
The objective of the refinance is to provide a fixed, affordable, and safe loan. There will be either a 15 or 30 term with fixed rate. The rate will be based on market rates in effect at the time of the refinance with any associated points & fees quoted by the lender. These rates may vary across lenders and over time as market rates adjust. The refinanced loans will not have prepayment penalties or balloon notes.

Will the amount owed on the loan be reduced?
No. Borrowers will be getting into safer, more affordable fixed rate loans. The principal amount owed to the first mortgage holder will not be reduced by refinancing. But the amount of interest repaid over the life of the loan will be reduced, saving you money.

Can I get cash out to pay other debts?
No. Only transaction costs, like the appraisal or title report fees, may be included in the refinanced amount.

How do I apply for a Home Affordable Refinance?
Call your mortgage servicer or lender and ask about the application process. PLEASE be patient. Detailed program requirements were just sent to lenders and servicers and it may take some time before they are ready to accept applications. Be prepared with your documents and information before you call.

What documentation will I need?
It's best to be prepared before you call. Have available:
* Household gross income (before tax), including recent pay stubs and/or other documentation of additional income sources
* Your most recent income tax return
* Information about any second mortgage on the house
* Account balances & minimum payments due on all credit cards
* Account balances & monthly payments on all other debts such as student loans and car loans.

If borrowers are delinquent on their mortgage, they will not qualify for the refinance plan.

Please call the office, 913-642-3334 with any questions or comments, or email me at michele@wantinsight.com We can provide insight and guidance to you and your specific financial picture.

THE NUMBERS GAME -- Your Credit Score

What do you consider the most important number in your life? Your social security number? Your birth date? Your phone number? While the majority of people don’t know this number, it pretty much rules your finances --- it’s your credit score.

A credit score is used by lenders in the decision making process of “if I give Person #1 a loan or credit card, how likely is it that Person #1 will pay me back on time?” This number is also called a risk score and is actually a statistical measure of the risk that a person will be able to repay the debt as agreed.

A good credit rating is essential these days if you plan on making a major purchase, apply for a credit card, or take out a loan. If your credit rating isn’t as positive as you’d like, there are ways to improve it.

WHERE DO I GO TO FIND OUT MY SCORE?

There are three major credit reporting bureaus and you are entitled to one free report per agency, per year. And, the reported score may be a different number from one agency to the other. You also have the right to dispute any errors on the report(s). Request a written report to be sent to you:

Equifax www.equifax.com
Experian www.experian.com
TransUnion www.transunion.com

You can always call any of us at the office,at 913-642-3334 or email me at michele@wantinsight.com for additional information on credit scores.


REVIEW THE REPORT

It’s been reported that nearly 80% of all credit reports contain at least one error! So, review your report carefully. Once you’ve identified any discrepancies, they’ll need to be eliminated. A dispute form usually accompanies the credit report (or request one from the website). Fill it out and send it back as Registered Mail. Documentation of each step you take is important, so keep a “paper trail”. And note that the law states that any item that is not verified as accurate must be removed from your report.

IT’S CLEAN UP TIME

Now the mistakes are cleared up, but there are still a few blemishes that are yours. What next? Identify any debts that are still pending and make a plan for eliminating them. It takes time to clear up debt, so it’s important to start now. AND, you also have the legal right to add remarks to your file. This is an opportunity to defend yourself and also highlight the positive points in your report.

WASH & REPEAT

Consistent payments (small is fine, as long as it’s the minimum due) is key. Consistency proves you are responsible enough to repay loans as promised. Over time, that consistency outweighs the possible negatives on your report.

LOOK AGAIN

Check your credit information at least once a year to avoid any nasty surprises when you’re ready to make a major purchase.

OTHER NUMBERS

It’s good to have a few open lines of credit, none max’ed out, and no more than what you can afford to pay off on your income. Cancel old cards you don’t use any more. BUT, do not use up one huge line of credit by putting your full amount of debt on it! Credit card issuers like to see no more than 30% of your limit accessed at one time. Prove your self control by having 2-4 lines of credit with a small or even no balance on each.


For help with any of your credit related questions please call me, 913-642-3334, or email me at michele@wantinsight.com

THE NEW MAKING HOME AFFORDABLE PROGRAM

Right now there’s a lot of confusion and big talk about the new government interventions in the mortgage and housing markets. The Obama administration hopes that two new programs should cut mortgage bills for up to 9 million homeowners who are having trouble making their monthly payments and there are also incentives that may pay down principal in some cases.

The government program has two parts:
* The Home Affordable Refinance
* The Home Affordable Modification.

PLEASE NOTE : The details of this program are not finalized! Most importantly, it remains 100% VOLUNTARY and mortgage servicers (the companies that collect the mortgage payments) are not obligated by law to follow these rules and guidelines…YET. Financial institutions who have already received government funding are not obligated to participate. However, financial institutions receiving new, or more, government funding in the FUTURE, WILL be obligated to participate.

SO, no one really knows yet who will participate and how it will all work from a practical standpoint. Most of the media news at this point is generally speculative. After reviewing the Making Home Affordable government program, I can share with you some insights you may find useful.

MODIFICATION Program:

Three elements in the program:
* The government is offering financial incentives to mortgage servicers who modify loans for borrowers.
* Financial reimbursement is being offered to investors if they allow servicers to modify loans and then take a hit on the borrower’s re-default if the property declines in value after the loan modification.
* The government is offering incentives to borrowers who modify their loans and make their new payments on time.

Only primary residences are eligible, investment properties and vacation homes don’t qualify. Only borrowers who have experienced some sort of financial hardship can qualify. Borrowers will need to document that their current financial situation is worse than when the original loan was made. Income needs to have gone down, and/or expenses need to have gone up. The link provided will allow you to see if you qualify for at least the minimum requirements for the program:

http:/www.financialstability.gov/makinghomeaffordable/modification_eligibility.html
Remember, even if you do qualify under these minimum requirements, your servicer might not be participating in the program yet.

REFINANCE Program:

Basics: You must be current on your mortgage payments (no late payments in
the past 12 months);
Your mortgage balance cannot exceed 105% of the current value of your home;
Your mortgage needs to be owned/guaranteed by Fannie Mae or Freddie Mac

Based on the current market conditions, a refinance might make sense for you IF:
You have an adjustable rate, interest only, or balloon mortgage that you
want to convert into a fixed rate; or
You have a fixed rate where the rate is 6% or greater. Actually, if your
rate is as low as 5.5%, I’ll put you into my rate watch program and let
you know when rates get to the point where it would benefit you to
refinance.

Other Developments of Interest:

There has been some new government legislation impacting homeowners and first time home buyers:

* Home improvement tax credit
* First time home buyer tax credit
* Reverse mortgages for home purchase transactions (age 62 and older)
* Suspension of required minimum distributions for certain retirement accounts (age 70 ½ or older)

I’d be happy to discuss any of these programs with you. Call me at 913-642-3334 or email me at michele@wantinsight.com. I can lend insight into the confusion of todays market and help you determine the mortgage and home buying choices right for you.

YOUR PERSONAL ECONOMY

I believe we need to downplay the media attitude of Chicken Little’s “the sky is falling”. All that happens is that we get emotional and become too stressed, affecting our relationships and daily activities. (Poor moods,depression,apathy)
This isn’t an ostrich move – putting your head in the sand and pretending the world away! It’s just the opposite. We must look to ourselves and focus on our own personal economy. We need to become financially responsible, so that we can accumulate enough wealth to care for loved ones, live comfortably into old age, and give generously to others.

Many financial advisors recommend having an emergency fund (no, not for the big screen TV you want) and paying down debt. Dave Ramsey suggests starting with a $1,000 emergency fund. Then begin focusing on paying off debt – the credit card or loan with the smallest balance first. Paying these off first gives you a sense of accomplishment and free’s up money to use to pay off the next debt on the list. The quicker the success, the more likely you’ll stay with the plan. After paying off a few of the bills, add to your emergency fund. Plan on having a buffer of 5-6 months of income. This fund is not an investment, it is insurance you pay to yourself!

When you have a plan, live on less than you make, and save money – you’re not in trouble. If you have no credit card debt and the card companies raise interest rates to 30%, you won't have the fears you may be experiencing now!

Given the current economic climate, it’s incredibly important to make sure you protect your largest asset – your ability to earn an income. Could you get by on half a paycheck? (www.halfapaycheck.com) One of my trusted associates, Deb Clem-Buckert, can give you some insights into recession proofing yourself. She is with HighPointe Financial Group LLC and can be reached at 913-234-0397 or dclem-buckert@finsvcs.com

Anytime you have questions, or comments on our blog, we're happy to hear from you. Email me at michele@wantinsight.com or call me at 913-642-3334. Have a blessed day.

FIRST TIME BUYERS TAX CREDIT, Part 2

The housing industry is generally happy with the $8,000 tax credit for first-time buyers. It improves upon the first credit of $7,500 passed in July, which is similar to a low interest loan as it needs repayment over a period of time and is for first time buyers only. The new tax credit is just that, a refundable credit.

But, the industry is disappointed that Congress did not adopt the Senate proposal of a $15,000 non-refundable credit for all homebuyers. An economist and director of forecasting for the National Association of Homebuilders, Bernard Markstein, stated “The Senate version would have done a lot more to turn around the housing market; we have reports of people who would be coming off the fence because of it”.

An additional 300,000 new homebuyers could come into the market due to the $8,000 credit according to NAR’s (National Association of Realtors) chief economist, Lawrence Yun. Then, a domino effect could be created, because most first-time buyer transactions will generate one or two trade-up purchases. Yun said “ I think there are many homeowners who would be trading up but they have had no buyers for their own homes.”

The first-time buyers who won’t benefit from this portion of the stimulus package are those purchasers without funds for the down payment. Buyers still have to close on the home purchase before claiming the credit.

Missouri is taking action on overcoming the down payment hurdle by creating a short-term loan out of the tax credit of up to $6,750. Missouri would loan purchasers the money to be used as part or all of the needed down payment. Then, after buyers receive their IRS refund, they pay back the state. This unique solution may be adopted by other states.

Another take on the tax credit could be a perception of a “discount” on a home price. An example would be a $120,000 home purchase effectively becoming a $112,000 one, thus reassuring buyers who are nervous about buying and then seeing home values continue to fall.

A second take is that the tax credit refund could provide a cushion for the first few difficult years when unexpected expenses and repairs crop up. Purchases needed for the new home -- a refrigerator, yard equipment, washer/dryer – would help stimulate the economy too.

We are here to help with your home loan questions and concerns. Please call me at 913-642-3334 or email me at michele@wantinsight.com
We look forward to working with you.

FIRST-TIME BUYERS TAX CREDIT, Part 1

On Tuesday, February 18, 2009, President Obama signed the economic stimulus bill and one of the provisions included a tax credit for first-time buyers. The credit claimed is worth up to $8,000 or 10% of a home’s value, whichever is less, and can be claimed on 2008 or 2009 taxes.

This is a refundable tax credit – which means that most new buyers will pocket extra cash after filing their taxes; the amount depends on various filing and withholding factors.

Examples of how this works:

A) You owe $5,000 (your tax liability). Each paycheck has withholding for taxes and by year end you’ve paid $5,000 to the US Treasury. Since you’re “paid up”, you’d receive the full tax credit as a refund check.

B) You owe $5,000 (tax liability). Through your payroll withholding you’ve overpaid by $500, which results in a $500 refund check. You’d now qualify for the $500 overpayment PLUS the $8,000 tax credit.

C) You owe $5,000 (tax liability). Unfortunately payroll withholding was underfunded by $500, and you’d usually write a check to the US Treasury for $500. But this time, the tax credit pays that $500 owed and you get a refund of $7,500.

Certain qualifications must be met to receive this tax credit, such as purchasing a home between Jan. 1, 2009 and Nov. 30, 2009. “First-time” buyers are purchasers who have not had ownership in a property for the past three years. To avoid repayment of the credit, buyers must remain in the home for at lest three years.

Income restrictions include: Singles must make less than $75,000 and couples no more than $150,000. (partial credit may be given to higher income buyers)

The credit application will be relatively easy – or as easy as doing your taxes. No additional forms needed, just claim it on the return! And, a taxpayer who has already submitted a completed return can claim the credit by filing an amended return.

I'll share some industry thoughts about the tax credit and stimulus plan in my next blog. As always, please call me at 913-642-3334 or email me at michele@wantinsight.com with any questions or comments.

AVOIDING A COSTLY MISTAKE

There’s so much financial news to absorb, what’s fact or fiction, it’s almost overwhelming. The media picked up the news of the Fed’s recent purchases of Mortgage Backed Securities. BUT, the news that rates should continue to drop into the summer due to these purchases is in error!

Yes, the Fed has been buying Mortgage Bonds. Note: what is being purchased is many 30 year 5.0% and 5.5% FNMA Bonds. These pools consist of numerous home loans with 6.0% and 6.5% rates. The coupon rate given to an investor is different than the rate the home borrower pays, and that difference is the profit Wall Street and government agencies gain. These loans are more than likely to be refinanced and paid as current rates make it very attractive to refinance a loan over 6% . In turn, the Fed gets a quick return on some of their investment.

These higher rate coupons purchased by the Feds does not necessarily affect rates to move lower as their actions do not impact the loans originated at today’s low rates.

The Problem …

Many homeowners could save hundreds of dollars a month on their mortgage payments if they would refinance now. But with the media throwing out “what if’s” and “maybe this summer” without factual basis, many homeowners are deciding to delay making the decision to save now, with the HOPE of gaining a few mere dollars of savings per month IF a lower rate MAY come their way! And, while these consumers wait, rates could turn higher. In turn, they could miss the window of opportunity entirely.

Another Thought

Suppose a homeowner was able to time the market perfectly and save a few dollars a month, it’s possible to still lose in the end. Because, while Mr.& Ms. Homeowner delayed on their refinance, they ended up losing the savings each month they could have made by acting sooner. They may have lost hundreds of dollars for every month they waited for the “perfect” rate.

So, even have gotten the rate they were looking for, it could take a few years to make up what they lost by waiting.

DON'T BE SINGIN' THE BLUES

Potential home buyers and refinancers who stay on the sidelines first quarter 2009 while rates are good, just may be singing the blues this late spring and summer.

Home loan rates are very attractive right now; it may be quite a different picture heading into summer as some inflationary factors will probably come into play. As we approach the summer driving season oil prices may be on the rise, some of the economic stimulus might begin to take effect, corporate cost-cutting measures could start to bear fruit, AND, very importantly, the Fed may no longer be buying Mortgage Bonds. All these factors add up to the real potential of significantly higher interest rates this summer.

So why would bond traders be nervous now, with no hint of inflation in the current market? Comments from Fed Governor Frederic Mishkin last week may provide some insight: “inflation could come to the forefront, given all of the government programs” and “once the economy recovers, liquidity must be taken out of the markets” …. meaning the Fed may need to rapidly hike rates down the road, to control the potential of inflation.

Renewed fears of the deepening worldwide economic slump put heavy selling pressure on global stocks last week. And this was despite the good news from better than expected earnings from IBM and Google, and with GE meeting their earnings expectations. Sometimes the downward pressure on stocks can benefit bonds, but the mention of inflation was felt – with home loans ending the week around .25% higher than where they began!


Jan 26-30th Watch report

The Fed will be holding their regularly scheduled meetings on Tuesday and Wednesday. And Wednesday, the Policy Statement is issued along with a decision regarding the Fed Funds rate.

Other factors influencing the market include the Gross Domestic Report to be released on Friday. The GDP is the broadest measure of economic activity, and given the state of our economy, a negative one might not be that much of a surprise. Thursday’s Durable Goods report will give us a look at consumer and business buying behavior. The housing market reports come on Monday, with Existing Home Sales numbers and on Thursday, reporting on New Home Sales.

NOTE: The arch enemy of bonds and home loan rates is inflation, and even the mention of it can have negative ramifications.

Reality vs possibility: don’t buy into the ‘maybe it’ll be lower later” view, take the great rate available now, save yourself those hard earned dollars and don’t get caught singing the blues ‘cause you waited for the rates to “bottom out”.

Please call me or email me at michele@wantinsight.com or 913-642-3334 for insight about the benefits of acting today, and not waiting for what may never come.

SOONER THAN LATER

I just received an email from a highly respected colleague in the mortgage business, someone I’ve worked with for many years. He had just left a meeting with his account rep at a national lender we both work with and he passed on some very interesting points for consideration. In turn, I think that my clients could benefit from these comments.

“As you know, rates were driven down when the government committed to purchase $300 billion in loans from FNMA & FHLMC. That money has been used up and they have added more on top of that. But they (various sources in the government) have also said that the current plan is for the government is to stop purchasing mortgages in June and let market driven forces do what they may. If that happens, rates could go back to the 6% to 6.25% range that they were in before the government purchase program began.

In the meantime, there is still a lot of interest by the government to keep rates low in order to stimulate the housing market. That may mean that government purchases of mortgages may continue beyond June. HOWEVER, the issue then is lender capacity. Industry experts estimate that there is $5 trillion dollars worth of loans that would benefit by a refinance at 5% interest rate. If the rate goes to 4.75%, that number goes to $7 trillion, and at 4.5% the number goes to $12 trillion. That sounds like a lot of business for brokers but lenders currently do not have the capacity to handle it. The highest annual loan volume ever was $4 trillion in 2003! At that time there were about 100 direct lenders and another 200 pass through companies to handle the volume. Now the number of lending companies is much smaller. And these remaining lenders have laid off a large percentage of their staff. They could rehire, but most will not do that if they think the volume will drop later this year if the rates go back up. So, the conclusion many in the business have reached, is that even if the government pumps in money to buy more mortgages (which would keep rates down), lenders may not give a corresponding rate decrease because they are already overwhelmed and want to restrict volume.

Along that same line, lenders may actually take steps to further reduce volume by adding more restrictions or continuing to increase fees. One particular restriction may be extra fees for refinances vs purchases. That would allow lower rates for purchases but reduce volume for refinances. (Note: this is speculation on the part of the loan company rep and is not an official position by this national lender!)

The conclusion is that people should refinance now rather than wait.

They may want 4.5%, but if 5.25 works for them, they should at least get the process started. Then, they could watch rates and lock if it gets lower, OR, they could accept the current rate and just feel good that they improved their current position.”

I feel that if the information above is at all accurate, you will want to do something sooner than later. Please contact me by phone or email, michele@wantinsight.com or 913-642-3334.