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.
Tuesday, February 24, 2009
Wednesday, February 18, 2009
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.
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.
Thursday, February 12, 2009
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.
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.
Thursday, January 29, 2009
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.
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.
Friday, January 23, 2009
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.
“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.
Friday, January 16, 2009
GETTING DIZZY WATCHING RATES?!
Current state of the market: The last part of December bad news just didn’t seem that bad to investors, who reacted positively, thus keeping the market bullish. But recently investors woke up to reality as the economy comes back to earth, with the market bearish in the first full week of January. The bond market has been a volatile roller coaster just like the stock market, but we have officially crossed the threshold of the historic low 30 yr fixed rates that were available in 2003. The December job loss numbers were just released from the Dept. of Labor, making 2008 the worst year for job losses since WWII.
This weak labor data should help president-elect Obama pressure Congress to get his bailout package cleared. The Federal Reserve was actively buying mortgage backed securities this past week, keeping mortgage rates trending downward and keeping origination volume high. Hopefully mortgage rates will hold steady to offset some part of the weak economy.
But, keep in mind, rates could begin to rise if the stock market recovers. Investors who moved to the relative safety of Treasury bonds will shift money back to Wall Street if it seems more profitable. If stocks are being purchased, the market has guessed that the economy is recovering. When economies recover, rates eventually go up to stop growth and fight inflation.
So how do we, at InSight Mortgage Group, help you, our loyal clients, get the best rate for your current financial situation?
Current game plan with my clients: All the upfront work gets done now so we are staged to pull the trigger fast if rates hit a predetermined target.
Here is a quick breakdown of the next steps:
1) We take a Phone Application which takes 5-10 minutes to make sure all other things are in check. Debt ratios, etc.
2) We Pull Credit to confirm your credit scores so you know where you stand
3) We Call an Appraiser and have him pull some comparable closed sales to confirm the value of your home is where we estimate & need it to be to have the refinance make sense.
4) We Email you the Loan Compliance documents for signatures
5) You fax/email back (asap) the Loan Compliance doc’s along with your income and asset documents (paystubs, W2’s, bank statements, etc.)
6) You schedule a time with the appraiser to do his inspection (once the rate is locked)
7) We receive your package, compile and move to underwriting. With increased volumes, the underwriting turn times are escalating up to 2-3 weeks.
In essence, we are getting everyone’s loans preapproved and ready to submit so that if we see the dip we can act fast, and lock. These rate dip “windows” typically last only a few hours sometimes, so it is about getting your documentation in order and being ready!!
My team and I stand ready to assist you, so just say the word. Please call or email, michele@wantinsight.com We look forward to working with you.
Michele A. Cole
913-642-3334
www.wantinsight.com
This weak labor data should help president-elect Obama pressure Congress to get his bailout package cleared. The Federal Reserve was actively buying mortgage backed securities this past week, keeping mortgage rates trending downward and keeping origination volume high. Hopefully mortgage rates will hold steady to offset some part of the weak economy.
But, keep in mind, rates could begin to rise if the stock market recovers. Investors who moved to the relative safety of Treasury bonds will shift money back to Wall Street if it seems more profitable. If stocks are being purchased, the market has guessed that the economy is recovering. When economies recover, rates eventually go up to stop growth and fight inflation.
So how do we, at InSight Mortgage Group, help you, our loyal clients, get the best rate for your current financial situation?
Current game plan with my clients: All the upfront work gets done now so we are staged to pull the trigger fast if rates hit a predetermined target.
Here is a quick breakdown of the next steps:
1) We take a Phone Application which takes 5-10 minutes to make sure all other things are in check. Debt ratios, etc.
2) We Pull Credit to confirm your credit scores so you know where you stand
3) We Call an Appraiser and have him pull some comparable closed sales to confirm the value of your home is where we estimate & need it to be to have the refinance make sense.
4) We Email you the Loan Compliance documents for signatures
5) You fax/email back (asap) the Loan Compliance doc’s along with your income and asset documents (paystubs, W2’s, bank statements, etc.)
6) You schedule a time with the appraiser to do his inspection (once the rate is locked)
7) We receive your package, compile and move to underwriting. With increased volumes, the underwriting turn times are escalating up to 2-3 weeks.
In essence, we are getting everyone’s loans preapproved and ready to submit so that if we see the dip we can act fast, and lock. These rate dip “windows” typically last only a few hours sometimes, so it is about getting your documentation in order and being ready!!
My team and I stand ready to assist you, so just say the word. Please call or email, michele@wantinsight.com We look forward to working with you.
Michele A. Cole
913-642-3334
www.wantinsight.com
Thursday, December 18, 2008
MERRY CHRISTMAS
Merry Christmas from InSight Mortgage Group. We pray your season is filled with Joy, Hope & Love!
The Christmas Story!
And while they were there, the time came for her baby to be born. She gave birth to her first child, a son. She wrapped him snugly in strips of cloth and laid him in a manger, because there was no lodging available for them.
That night there were shepherds staying in the fields nearby, guarding their flocks of sheep. Suddenly, an angel of the Lord appeared among them, and the radiance of the Lord’s glory surrounded them. They were terrified, but the angel reassured them. “Don’t be afraid!” he said. “I bring you good news that will bring great joy to all people. The Savior—yes, the Messiah, the Lord—has been born today in Bethlehem, the city of David! And you will recognize him by this sign: You will find a baby wrapped snugly in strips of cloth, lying in a manger.”
Suddenly, the angel was joined by a vast host of others—the armies of heaven—praising God and saying,
“Glory to God in highest heaven,
and peace on earth to those with whom God is pleased.”
When the angels had returned to heaven, the shepherds said to each other, “Let’s go to Bethlehem! Let’s see this thing that has happened, which the Lord has told us about.” They hurried to the village and found Mary and Joseph. And there was the baby, lying in the manger. After seeing him, the shepherds told everyone what had happened and what the angel had said to them about this child. All who heard the shepherds’ story were astonished, but Mary kept all these things in her heart and thought about them often. The shepherds went back to their flocks, glorifying and praising God for all they had heard and seen. It was just as the angel had told them.
John 3:16, For God loved the world so much that he gave his one and only Son, so that everyone who believes in him will not perish but have eternal life.
Please call or email, michele@ wantinsight.com if we can help you with any questions you might have or for a review of your home financing needs. We are here to help you make sound choices and connect you to folks who can help you with your spending plans as well as ways to improve your credit!
Blessings galore!
Michele Cole
913-642-3334
www.wantinsight.com
The Christmas Story!
And while they were there, the time came for her baby to be born. She gave birth to her first child, a son. She wrapped him snugly in strips of cloth and laid him in a manger, because there was no lodging available for them.
That night there were shepherds staying in the fields nearby, guarding their flocks of sheep. Suddenly, an angel of the Lord appeared among them, and the radiance of the Lord’s glory surrounded them. They were terrified, but the angel reassured them. “Don’t be afraid!” he said. “I bring you good news that will bring great joy to all people. The Savior—yes, the Messiah, the Lord—has been born today in Bethlehem, the city of David! And you will recognize him by this sign: You will find a baby wrapped snugly in strips of cloth, lying in a manger.”
Suddenly, the angel was joined by a vast host of others—the armies of heaven—praising God and saying,
“Glory to God in highest heaven,
and peace on earth to those with whom God is pleased.”
When the angels had returned to heaven, the shepherds said to each other, “Let’s go to Bethlehem! Let’s see this thing that has happened, which the Lord has told us about.” They hurried to the village and found Mary and Joseph. And there was the baby, lying in the manger. After seeing him, the shepherds told everyone what had happened and what the angel had said to them about this child. All who heard the shepherds’ story were astonished, but Mary kept all these things in her heart and thought about them often. The shepherds went back to their flocks, glorifying and praising God for all they had heard and seen. It was just as the angel had told them.
John 3:16, For God loved the world so much that he gave his one and only Son, so that everyone who believes in him will not perish but have eternal life.
Please call or email, michele@ wantinsight.com if we can help you with any questions you might have or for a review of your home financing needs. We are here to help you make sound choices and connect you to folks who can help you with your spending plans as well as ways to improve your credit!
Blessings galore!
Michele Cole
913-642-3334
www.wantinsight.com
Tuesday, December 9, 2008
BIG HEADLINES, LOTS OF SPECULATION! 4.5% RATE?? ON THE AIR WAVES!
Fence sitting can be painful—don’t wait too long!
I imagine you’ve heard or read about the 4.5% mortgage rate thing being promoted by the government. The Treasury Department is being lobbied hard to consider a plan to purchase mortgage-backed securities with the hopes of driving mortgage rates down to possibly 4.5%, reported an industry source.
Timeline:
Wednesday (12/3): A story is “leaked” regarding the Treasury Department lowering mortgage rates to 4.5%
Thursday (12/4): That headline leads the news
Friday (12/5): 40+ Million American homeowners sit on the fence and Consider “Should I refinance today or wait for
something better?
The most obvious consideration is if the rates are low today, take advantage of it now! Because they may not be low tomorrow, or even 4 hours from now. Mortgage rates could fall a bit tomorrow – or not—so why take a chance? Refinance at today’s low rates, and if rates fall again in the future, you can refinance again. A wise move is to lock up your savings today!
Details of the plan remain vague at this time; each article specifically stated that there were no facts – just speculation. The plan appears to be similar to the move made recently by the Fed, in which securities backed by 30-year fixed rate mortgages would be purchased from Fannie Mae and Freddie Mac. Spokespeople from the Treasury Department and the Federal Housing Finance Agency are declining to comment on the proposed plan.
Mortgage rates dropped sharply, from 6.06% a week earlier to 5.5%, after the Fed’s announcement. The Mortgage Bankers Association said mortgage applications more than doubled as a result, with a majority of the business in the refinance sector.
An increased demand for mortgage-backed securities prompts mortgage rates to drop. In turn, homeowners can then refinance into lower-cost loans and it also makes it cheaper for potential buyers to get into the market. This move would help buyers and current homeowners with good credit, says industry experts, but would not provide much help to troubled borrowers.
Experts weigh the positives and negatives
This potential move by the Treasury has prompted mixed views on how much homeowners and the economy would benefit. Lower rates could help stabilize the housing market by bringing in new buyers, reducing housing inventory; those who refinance could have more money to spend.
Scott Talbot, senior vice president of the Financial Services Roundtable, which is encouraging the move, said “If it gets people buying homes and spending, it will help reverse the economy and get us out of this recession.” A senior financial analyst at Bankrate.com, Greg McBride, said “it is clearly designed to bring buyers into the marketplace and soak the inventory of unsold homes.”
But, rates are volatile, hovering around 5.25% on Friday, Dec.5th (dependent upon credit scores and other factors) and others have pointed out that several government attempts to lower mortgage rates this year have not had a lasting effect. Also, homeowners who have fallen behind on their payments, have little to no equity in their homes, or who have lost jobs would receive minimal benefit. And with tight credit standards, these borrowers would not be able to refinance to take advantage of the lower rates.
Sound financial decisions shouldn’t be made on speculation. So what do we know now:
*Mortgage rates are lower than they’ve been in years
*Mortgage guidelines are tight, even for “prime” borrowers
*Home prices nationally are falling, making qualifications harder
Rates are still volatile and could rise again overnight to price you out. What was that old saying of Mom’s “a bird in the hand …” And if rates fall after closing, maybe even reaching the “projected” 4.5%, we’ll refinance again.
Call me at 913-642-3334 or email me at michele@wantinsight.com with your comments or questions. It’s a great time to review your financial situation and ring in the holiday season on a positive note, and lower interest rate.
I also recently apeared on Pal Van Sickle podcast "The After Show" check out my interview on his site the after show
Michele A. "MAC" Cole
913-642-3334
www.wantinsight.com
I imagine you’ve heard or read about the 4.5% mortgage rate thing being promoted by the government. The Treasury Department is being lobbied hard to consider a plan to purchase mortgage-backed securities with the hopes of driving mortgage rates down to possibly 4.5%, reported an industry source.
Timeline:
Wednesday (12/3): A story is “leaked” regarding the Treasury Department lowering mortgage rates to 4.5%
Thursday (12/4): That headline leads the news
Friday (12/5): 40+ Million American homeowners sit on the fence and Consider “Should I refinance today or wait for
something better?
The most obvious consideration is if the rates are low today, take advantage of it now! Because they may not be low tomorrow, or even 4 hours from now. Mortgage rates could fall a bit tomorrow – or not—so why take a chance? Refinance at today’s low rates, and if rates fall again in the future, you can refinance again. A wise move is to lock up your savings today!
Details of the plan remain vague at this time; each article specifically stated that there were no facts – just speculation. The plan appears to be similar to the move made recently by the Fed, in which securities backed by 30-year fixed rate mortgages would be purchased from Fannie Mae and Freddie Mac. Spokespeople from the Treasury Department and the Federal Housing Finance Agency are declining to comment on the proposed plan.
Mortgage rates dropped sharply, from 6.06% a week earlier to 5.5%, after the Fed’s announcement. The Mortgage Bankers Association said mortgage applications more than doubled as a result, with a majority of the business in the refinance sector.
An increased demand for mortgage-backed securities prompts mortgage rates to drop. In turn, homeowners can then refinance into lower-cost loans and it also makes it cheaper for potential buyers to get into the market. This move would help buyers and current homeowners with good credit, says industry experts, but would not provide much help to troubled borrowers.
Experts weigh the positives and negatives
This potential move by the Treasury has prompted mixed views on how much homeowners and the economy would benefit. Lower rates could help stabilize the housing market by bringing in new buyers, reducing housing inventory; those who refinance could have more money to spend.
Scott Talbot, senior vice president of the Financial Services Roundtable, which is encouraging the move, said “If it gets people buying homes and spending, it will help reverse the economy and get us out of this recession.” A senior financial analyst at Bankrate.com, Greg McBride, said “it is clearly designed to bring buyers into the marketplace and soak the inventory of unsold homes.”
But, rates are volatile, hovering around 5.25% on Friday, Dec.5th (dependent upon credit scores and other factors) and others have pointed out that several government attempts to lower mortgage rates this year have not had a lasting effect. Also, homeowners who have fallen behind on their payments, have little to no equity in their homes, or who have lost jobs would receive minimal benefit. And with tight credit standards, these borrowers would not be able to refinance to take advantage of the lower rates.
Sound financial decisions shouldn’t be made on speculation. So what do we know now:
*Mortgage rates are lower than they’ve been in years
*Mortgage guidelines are tight, even for “prime” borrowers
*Home prices nationally are falling, making qualifications harder
Rates are still volatile and could rise again overnight to price you out. What was that old saying of Mom’s “a bird in the hand …” And if rates fall after closing, maybe even reaching the “projected” 4.5%, we’ll refinance again.
Call me at 913-642-3334 or email me at michele@wantinsight.com with your comments or questions. It’s a great time to review your financial situation and ring in the holiday season on a positive note, and lower interest rate.
I also recently apeared on Pal Van Sickle podcast "The After Show" check out my interview on his site the after show
Michele A. "MAC" Cole
913-642-3334
www.wantinsight.com
Tuesday, December 2, 2008
SHARP DECLINE IN MORTGAGE RATES FUEL HISTORIC LEVEL OF RATE LOCKS
On Wednesday, November 26, Secretary Paulson announced that the Fed will purchase up to $100 Billion in direct debt of Fannnie Mae, Freddie Mac and Federal Home Loan Banks and buy up to $500 Billion of Mortgage-Backed Securities.
With this news, the spread between Treasury bonds and mortgage-back securities narrowed significantly and fueled a sharp decline in mortgage rates.
So many customers who had been on the sidelines got into the game and locked their rates on refi's and new purchases. So much so, that many lenders announced that they reached recording breaking milestones!
Don't be a benchwarmer, get in the game now while rates remain historically low. Mortgage funds are available; we have a variety of programs to suit your specific needs. Call Michele at 913-642-3334 or email me at michele@wantinsight.com for the most current loan information.
Michele "MAC" A. Cole
913-642-3334
www.wantinsight.com
With this news, the spread between Treasury bonds and mortgage-back securities narrowed significantly and fueled a sharp decline in mortgage rates.
So many customers who had been on the sidelines got into the game and locked their rates on refi's and new purchases. So much so, that many lenders announced that they reached recording breaking milestones!
Don't be a benchwarmer, get in the game now while rates remain historically low. Mortgage funds are available; we have a variety of programs to suit your specific needs. Call Michele at 913-642-3334 or email me at michele@wantinsight.com for the most current loan information.
Michele "MAC" A. Cole
913-642-3334
www.wantinsight.com
Friday, November 7, 2008
STAYING PRODUCTIVE
Banish the Doom & Gloom thoughts!
How do we stay productive and motivated during these uncertain economic times, when the media is pounding us with doom and gloom stories? I try to work hard to protect myself from the negativity found daily in the paper, on TV, and over the internet. I don’t advocate a “hide your head in the sand” mentality, but I encourage us all to have faith and work on a more positive attitude.
By living a life of intention - focusing on actions to create the life we want - rather than by reaction, we can better guard ourselves from negativity. There's no sense in spending time on things that are outside of our control. Instead of focusing on the problems, we need to look for solutions. By focusing on what we can control, we can reduce worry and stress, maintaining productivity and keeping our motivation at a higher level.
Through each challenge or difficulty we experience, we need to look for a kernel of benefit or positive direction. We can gain strength through adversity, avoid thoughts of panic, by focusing on a benefit of the situation. It’s a process; adversity moves you along – you can gain strength or you can let it can weaken your resolve.
Look at Thomas Edison. In his development of the electric light bulb he documented 10,000 failed attempts. He was asked by a reporter how it felt to have failed 10,000 times. Edison replied, “I didn’t fail 10,000 times trying to invent the light bulb, I simply documented 10,000 ways that it wouldn’t work.” Where would we be today it Edison had quit?
So with the economy, maybe we accept it “as it is”. Neither bad or good, but look at todays’ situation with openness and interest, rather than fear or panic. We discover that kernel of hope and opportunity. Combine that with determination and personal focus, and we stay productive. A common trait among self-made millionaires is the willingness to persevere when times are tough.
Move the focus from the overall uncertain economic situation to your personal situation and ask “What would responsible action look like?” Do you need to adjust your spending to live within your means? Are you honoring the money you have? Acknowledging the facts of your own life is a powerful starting point for reducing anxiety and taking action that is necessary.
To weather the current economic storm: Focus on the facts of your life, the future you want to create, and take action to make it happen – irrespective of what the news is promoting or what your friends are talking about. Believe in yourself, learn from adversity and grow stronger from it, take inspired action. Create your life of intention!
Our goal at InSight Mortage Group is to provide you with the expertise, education and tools needed in making smart financial decisions and the right mortgage choice for your personal goals. Please feel free to call me, visit my website, or email me at michele@wantinsight.com.
Michele "MAC" Cole
913-642-3334
www.wantinsight.com
How do we stay productive and motivated during these uncertain economic times, when the media is pounding us with doom and gloom stories? I try to work hard to protect myself from the negativity found daily in the paper, on TV, and over the internet. I don’t advocate a “hide your head in the sand” mentality, but I encourage us all to have faith and work on a more positive attitude.
By living a life of intention - focusing on actions to create the life we want - rather than by reaction, we can better guard ourselves from negativity. There's no sense in spending time on things that are outside of our control. Instead of focusing on the problems, we need to look for solutions. By focusing on what we can control, we can reduce worry and stress, maintaining productivity and keeping our motivation at a higher level.
Through each challenge or difficulty we experience, we need to look for a kernel of benefit or positive direction. We can gain strength through adversity, avoid thoughts of panic, by focusing on a benefit of the situation. It’s a process; adversity moves you along – you can gain strength or you can let it can weaken your resolve.
Look at Thomas Edison. In his development of the electric light bulb he documented 10,000 failed attempts. He was asked by a reporter how it felt to have failed 10,000 times. Edison replied, “I didn’t fail 10,000 times trying to invent the light bulb, I simply documented 10,000 ways that it wouldn’t work.” Where would we be today it Edison had quit?
So with the economy, maybe we accept it “as it is”. Neither bad or good, but look at todays’ situation with openness and interest, rather than fear or panic. We discover that kernel of hope and opportunity. Combine that with determination and personal focus, and we stay productive. A common trait among self-made millionaires is the willingness to persevere when times are tough.
Move the focus from the overall uncertain economic situation to your personal situation and ask “What would responsible action look like?” Do you need to adjust your spending to live within your means? Are you honoring the money you have? Acknowledging the facts of your own life is a powerful starting point for reducing anxiety and taking action that is necessary.
To weather the current economic storm: Focus on the facts of your life, the future you want to create, and take action to make it happen – irrespective of what the news is promoting or what your friends are talking about. Believe in yourself, learn from adversity and grow stronger from it, take inspired action. Create your life of intention!
Our goal at InSight Mortage Group is to provide you with the expertise, education and tools needed in making smart financial decisions and the right mortgage choice for your personal goals. Please feel free to call me, visit my website, or email me at michele@wantinsight.com.
Michele "MAC" Cole
913-642-3334
www.wantinsight.com
Friday, October 31, 2008
THE FED RATE & MORTGAGE RATES: THE UPS & DOWNS
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 michele@wantinsight.com or post comments on the blog.
Michele A. "MAC" Cole
913-642-3334
www.wantinsight.com
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 michele@wantinsight.com or post comments on the blog.
Michele A. "MAC" Cole
913-642-3334
www.wantinsight.com
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