Mortgage Rates - Lock or not to Lock? That is the question?

If you have been considering buying a home or even refinancing, you've probably been asking one of these questions? Should I refinance now? Should I buy now? What if rates go down again? With the economy this way, surely rates will have to drop again? I heard the Feds are going to lower rates again to stimulate the economy, should I wait to lock in an interest rate then?

These are all great questions and very valid. In the past, before all the housing bubble began, the answer to these questions might of been to wait. Times have changed! It's a whole new game in the mortgage world. If you are considering waiting to buy or refinance, below is a few reasons not to:

1. Mortgage Lenders are tightening guidelines to protect against future losses. Mortgage lenders are reducing loan to value limitations. They may require you to have 20% equity or more? If you are an investor or a jumbo borrower, those equity requirements are even higher. Someone who could qualify today, may not be able to qualify tomorrow.

2. The value of your home could decline, maybe it already has and could again? Foreclosures and short sales lower the market value of every home in your neighborhood and surrounding areas. A home that is comparable to yours that ends up selling for less than yours is going to lower your home's value. Lower appraisals lead to higher loan to values and, often, higher mortgage rates.

3. Have you or someone you know lost their job in the last two years? Job losses are happening at a very rapid rate. Many are being laid off as employers fear for the future stability of the company. Many are downsizing to offset lower prof ts (or no profits at all). Without a job and a steady paycheck, lenders won't give you a mortgage loan. I work with Business Fellowship International, a ministry that helps folks get connected and possibly into a new job. If this is you, please email me and I will help you in any way I can.

4. Another rise in cost is mortgage insurance or PMI. This is required if you have less than 20% equity or down payment in your home. PMI is an insurance that protects the lenders in the event of default. Remember hurricane Andrew and the impact it made on the insurance carriers? What's going on in the housing market right now, is comparable to that. Mortgage insurance carriers are raising rates and tightening guidelines as well, making it very hard to qualify or not allowing your payment to drop with the interest rate reductions.

5. What is your credit score? Most people assume their credit is good. But what is good anymore? To get the "preferred" or "going" interest rate, you have to have excellent credit scores, that means over 700 and sometimes over 720/740. Now don't get me wrong, we are still able to do loans under 700, but we would need to review your situation to see if it makes sense for you.

If you are thinking about buying or refinancing, now's the time to do it. The pendulum for mortgage loans has swung from one extreme to the other and it may be a long long while before lenders will consider loosening guidelines again. Financial crisis has it America.

But there is hope! Jeremiah 29:11 says, For I know the plans I have for you says the Lord, plans to prosper you, not to harm you, but to give you a future and a hope. 2 Chronicles 7:14 says If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land. If you have a relationship with the Lord, He will see you through! If you don't, consider asking Jesus into your heart, ask Him to forgive you of your sin and to cleanse you and make you new. He loves you so much and wants only good for you!

Jewel and I, the InSight Team, are here to help you make sound choices with your mortgage. We have many valuable resources and offer a variety of mortgage products. Please give us a call or email us or visit us on the web at www.wantinsight.com.

Most Cordially

Michele "MAC" A. Cole
Business Development
michele@wantinsight.com

Jewel Callahan
Mortgage Consultant
816-510-1399

READY FOR A LITTLE GOOD NEWS?

Aren’t we all ready for some good news about the economy, even if it’s a modest dot of light at the end of the tunnel?

Thursday (6/11) saw reports with better than expected results in the retail sales sector and jobless claims, which pushed stocks higher. As consumer spending accounts for about two thirds of our economic activity, investors watch retail sales numbers carefully. This piece of good news has lead to reports that “the recession may be easing” by those in the know on Wall Street.

Another piece needed to put the economy on the road to well being is the recovery in the housing market. And we do have some good signs in that direction as well.

Purchase and refinance applications are remaining steady following a burst of activity the past several months, according to the Mortgage Bankers Association, despite a small uptick in fixed-rate mortgage rates. As of Thursday, the average weekly Freddie Mac rate for a fixed rate 30 year mortgage was 5.59%, which was up from the previous weeks 5.29%, BUT down from a year ago, which was 6.32% .

According to the Federal Reserve’s Beige Book, which reports on real estate transactions,many Federal Reserve districts are seeing an increase in home sales. It's reported that new home construction “appeared to be stabilizing at very low levels”. This increase can be attributed to low interest rates, declining home prices, seasonal factors, and the tax credit now available for many first-time home buyers. (Also noted is a weakening of the commercial real estate market.)

The national media has tended to overlook some recent reports that indicate the housing market could be turning upwards finally. Instead, the focus in on foreclosures and increased delinquency rates. Trying to keep up with all the data and reports available to brokers on rates, activity on loan generation, and real estate sales keeps me hoppin’. We all know we need to focus on what happening in our local marketplace. But, by looking at the overall trend nationally, and at some specific areas, we can get a look at what’s happening on a deeper level than reported on the evening news. Remember, bad news sells more than good news, or gathers more viewers.

Clear Capital just released its Home Data Index report. It shows that within larger troubled markets small pockets of price stabilization are occurring; Cleveland and Sacramento – which are among the hardest hit markets in the US – as examples.It also reports that price declines are continuing, but appear to be slowing down, and especially in the Midwest and South.

The most encouraging signs are coming from the nation’s hardest hit markets, where a turnaround has started. The past three months in the San Francisco-Bay area, American and foreign investors, as well as first time buyers, are snapping up bank-owned properties as soon as they’re listed. And, amazingly, agents are witnessing bidding wars even on short sales according to a recent RISMEDIA report. In February 2008, California’s statewide inventory of unsold homes was a 15.2 months supply, compared to March 2009’s number of 5.8! Historically, a six month supply of unsold homes indicates a stable market; neither a buyers market nor a seller’s market.

Per RISMEDIA, Las Vegas, one of the worst markets in the country, has just seen March set the fourth best month for closed sales. The record months, set back in the "boom period", is predicted to be broken during this summer. A board member of the Greater Las Vegas Association of Realtors, Forrest Barbee, said “Things have been looking up but it’s going unnoticed. It’s going to take the data a little longer to catch up to the reality.”

The National Association of Realtors reported a rise of 6.7% in the number of pending sales of existing homes in April. It’s the biggest jump in more than seven years.

By looking at how the market is improving in the most depressed markets, we can evaluate the overall strength of the national market. The markets of Florida, California, Arizona, and Nevada comprise nearly half of the national foreclosures, so an upturn in those markets will be critical. I’ll be watching those numbers and sharing this data with you.

So, cautious optimism is the phrase of the day!

We want to thank you all for your continued business, and for sending InSight Mortgage Group, the referrals from your family, friends, and business associates. Please call us at the office, 913-642-3334 with any questions or comments. Regarding purchase loans or refinancing, email me at michele@wantinsight.com or dickw@wantinsight.com. We always look forward to providing you with the best customer care. Blessings.