Friday, October 31, 2008


Will Mortgage rates drop since the Fed cut its rate?

On Wednesday, Oct 29th, the Fed voted to cut the Federal Funds Rate by ½%. This cut is seen as positive news for consumer loans, home equity lines of credit (variable rates) and adjustable rate mortgages. So, will fixed mortgage rates automatically drop too? NO, there is no direct correlation between the two rates.

Unfortunately the media isn’t always clear when these announcements are made. The economics underlying the cut is thought to be boring to the general public, and boring is not in the media vocabulary.

The Federal Reserve doesn’t control stock prices nor mortgage rates. Sometimes the rate change by the Fed can influence mortgage rates: sometimes in the same direction at the same time, but often they move in opposite directions. After the rate cut was announced on Wednesday, the fixed mortgage rates improved – for about 15 minutes. But then the mortgage pricing started to climb; within the first half hour lenders had issued new rate sheets indicating an increase of nearly .250.

Basically it’s short term vs. long term. The Fed Funds Rate is a short term interest rate. The FFR is a base for the Prime rate, with 3% added. The rate is adjusted by the Federal Reserve Bank to help control inflation, to help balance prices & stimulate economic growth, and to provide the financial markets with liquidity. The cost of short term borrowing is adjusted.

It’s the mortgage-backed securities market that influences fixed mortgage rates, not the Fed. Generally they are 30 year bonds (at fixed or variable rates), and are considered as long-term products. Investors often move their money into the stock market and out of the mortgage bond market when the Fed cuts rates. It’s these daily ups and downs in the bond market that causes mortgage rates to fluctuate.

With the most recent cut, the Federal Fund Rate is at its 50 year low, and we see mortgage rates closing in on their 3 year high point.

The Fed hopes to stimulate the economy with lower rates. In the long run, a healthy economy positively impacts the real estate market and that benefits the mortgage market by keeping rates competitive. So there is an indirect influence, but no direct tie to one another.

Feedack is always welcome so please send us your comments. You can call me at 913-642-3334, email me at or post comments on the blog.

Michele A. "MAC" Cole


Thursday, October 23, 2008



Want to generate a vigorous discussion at the office or over dinner with friends? Just ask the question: “has the housing market reached bottom yet?” Although the current outlook is a bit sour still, and no one is forecasting a fast national rebound, there are encouraging signs to be seen. The factors that inflated the bubble, speculative pricing and overbuilding, seem to be working their way through the system in various sections of the country.

The good news in Kansas City is that the area’s home sales were up in September and the inventory is down. The Kansas City Regional Association of Realtors reports a drop in new homes on the market. September saw 3,596 new homes listed, which was 27% fewer than in September 2007. And 15,284 existing homes were available in September, which was 7% lower than a year ago. The inventory of both new and existing homes for sale in September was 11% fewer than for the same period last year.

The KCRAR also reports a 15% increase in sales from a year ago for existing homes. The average price of an existing home is $142,966. This is 5% down from a year ago, while the average price of a new home was up 3%, to $291,243.

The Kansas City market is edging towards a balanced market (traditionally a 6 month inventory) with a 7.1 month supply of existing homes at this time. The formula is based on inventory divided by sales pace. The supply of new homes is a 12.5 month level.

It’s important to look at your local real estate market, not the national figures promoted in the media. The national sales figures quoted are brought down by the east & west coast boom and bust markets. (Phoenix, Las Vegas, Miami, So. California cities, etc) If the hard hit areas are removed from the statistical picture, the numbers are much more encouraging. And now that the government passed the recovery plan, the housing market could see an upswing with making borrowing a bit easier for buyers. Let us give you insight into today’s mortgage availability – there is money for purchases despite what the media indicates! Call me at 913-642-3334 or email your questions to

A few other cities with an upturn:

Des Moines: After an agricultural debt crisis in the 1980’s, there was a successful push to diversify. There has been no run up, no crash, no flipping frenzy – just a steady demand for housing. Affordable homes, with the median price of $156,600.

Raleigh, NC: The city has been experiencing good job growth. The first quarter of 2008 saw the 5th highest total quarterly sales on record. And prices are up 3.5% over last year.

Salt Lake City: The metropolitan area has a diverse economy and shown steady jobs gains, which in turn provides a cushion under home prices. Salt Lake City County saw median prices rise April-June 2008 in 7 zip codes.

Some suburban areas of Denver and Philadelphia had even seen prices jump as much as 16%. Birmingham, AL has also weathered the slump with low labor and land costs. Some local areas have seen the median home price increase just under 5% in the first half of the year. There are other cities faring just as well across the nation. Real Estate is a LOCAL market. So take the national numbers with a grain of salt, and read the local news for an accurate view of your community marketplace.

So talk to your professional real estate agent to learn about your market conditions and give us a call at Insight Mortgage Group to discuss your financing options: Michele at 913-642-3334 or email me at

Michele A. "MAC" Cole


Monday, October 13, 2008

Kansas City Loans- ARM's Adjusting - Mortgage Money Still Out There

With the recent news of financial turmoil and tightening credit availability, many people are asking:

Are there still mortgages out there?

YES! Mortgage loans are still available in Kansas City.

Anyone that has reasonably good credit and is looking to purchase a home should be able to get a mortgage, as long as they have enough income to cover the loan. Seems simple enough, doesn't it? Unfortunately in recent years the limits were stretched for many buyers in order to get them into homes beyond their means. And now we're looking at a high rate of foreclosures across the country. Affordability is the key to a purchase. Currently in Kansas City it's a buyers market; it's an especially good time for first time buyers to purchase a home. Money is there for these purchases. Even if your credit scores are in the low 600's, there is mortgage money available.

There are 100% rural development loans available for people that are willing to live on the outskirts of town. These are 30 year fixed loans with no down payment and you might be surprised by some of the areas that qualify. VA loans are another possibility. FHA is still a good option for the home that is in move in condition.

If your credit scores are a little lower than you’d like, then find a good credit repair service and take a proactive approach in raising your score. We can recommend a few very good companies that will work with you on improving those scores in a timely manner. Feel free to call me at 913-642-3334 or email at

What if you had an ARM (Adjustable Rate Mortgage) and you couldn’t refinance before the the ARM adjusts? This is the problem that a lot of people are facing today. They cannot refinance the mortgage that is ready to adjust, are unable to sell their home, and will not be able to afford the new payment. Where does this leave them? Are you, or anyone you know, in this situation? Give us your story. We also offer a product for note modification - if you are not able to refinance, maybe a modification would better help your situation?

Traditional advice says you should not spend more than a quarter of your monthly net income for housing. This still works and is more appropriate than ever before. Apply this rule to renting or buying. Additionally, a fixed rate, whether it is a 20 or 30 year mortgage, is a better option for financial stability.

Most of us may need to scale back and try to live within our means. This doesn't have to mean the end of your dream of becoming a homeowner, or "stepping up" to a larger home. It means making smarter decisions. Isn't a home that is truly affordable a much better choice than the "biggger, better, newer" house that straps you financially and is an emotional burden? The good news is that there is money available now and that you have a source for honest answers, compassion, and integrity in the loan process. So please

Feel free to call, visit my website, or email me at

Michele “MAC” Cole

Friday, October 3, 2008



On Wednesday, Oct.1, a government program took effect which will change the financial picture of many home purchasers and homeowners.

A program, known as ‘Hope for Homeowners’, is part of a huge housing bill passed this summer by Congress, as an effort to help alleviate the mortgage crisis. Its goal is to prevent foreclosures by allowing borrowers in default, and those in
distress, close to default, to refinance their mortgages to more affordable loans.

$300 billion is allocated for the refinance to fixed rate FHA insured loans, at no more than 90% of current market value. Also, borrowers mortgage payments must exceed 31% of their income to qualify. NOTE: loans originated in 2008, except Jan 1 are excluded. Additionally, 6 months of payments must have been made by borrowers.

But, the impact on the foreclosure rate is questionable, as lenders are not required to participate in the program. The lenders actually take a loss on the original loans. However, lenders from the top mortgage businesses indicated they’re adding new staff to assist the implementation of the program.

Other noteworthy issues addressed:

• Seller funded down payment assistance programs for FHA loans have been eliminated.This will practically eliminate no down payment offers. This ban was requested by the FHA, citing the 3 times higher default rate for down payment assisted loans over the traditional FHA loans. Also, they feel market values are inflated with those programs.

• A one-year freeze on “risk-based” FHA loan insurance premiums is in effect. The risk-based program charged borrowers on the basis of the likelihood of the loan repayment.

• FHA-insured loans on condominiums has been streamlined.

• The FHA loan process for manufactured homes has been reformed.

• A new program has been put in place for generating alternative credit-rating information for people with little credit history.

• Reverse-mortgage borrowers are affected by a requirement for “adequate counseling” from a third party not tied to the lender. The government, with funds from mortgage insurance premiums, can create a counseling program.

• Possible conflicts of interest will be reduced due to reverse-mortgage loan originators being forbidden from selling annuities, insurance or other financial products.

• A cap of $6000 was placed on origination fees, and can be adjusted periodically for inflation.

If you have questions or comments, please call me or email me at 913-642-3334 or

Michele “MAC” A. Cole