G-Fees to Increase Mortgage Rates

As part of the last-minute deal for the payroll tax cut extension, Congress agreed to raise the “g-fees” on government backed loans (Fannie Mae, Freddie Mac).

A “g-fee” or guarantee fee is a charge that simply acts as insurance to protect the purchased loans from a loss in the huge mortgage portfolio. They buy loans from banks and try to ensure their health by getting insurance from the bank, which gets passed to the borrower.

Too much to handle? Basically it means that after April 1st, any loan sold to Fannie or Freddie will cost about an 1/8th more than if the bill was not passed. If rates were to hold, you’d feel it. If rates dropped, you wouldn’t know it because it get eaten up. Either way, we all pay.

On the flip side, rates are actually tremendous right now. Jumbo rates are unaffected by this “g-fee,” so don’t let this “bad news” hawked by the media bring you down. It all comes down to monthly payments and it is still an unbelievable time to buy or refinance.

Friends and Family Sale – 40% off 2008 Mortgage Payments !

In case you didn’t know, we are currently having a Friends and Family sale on real estate payments ….40% off  2008 payments!

Let’s look at the numbers since 2008. Most would agree we’ve seen about a 25% depreciation in home prices. Back in 2008 the interest rates were also in the high 5′s to 6%.

If you take a home that sold in 2008 for $1,000,000 with 80% financing, the mortgage payment before taxes and homeowner’s insurance was about $4668. Today that EXACT same house, because of depreciation and astoundingly low interest rates would have a monthly payment before taxes and insurance of $2821 ….a 40% discount !

Yes, this is not a good time for everyone. However, if you have been thinking of moving and can sell your home or are renting, it’s a great time to buy. Call Terry about pre-qualifying for a loan, then hurry up and call your Realtor.

Actually, you don’t even have to be a friend or family for this to work … spread the word !

FHA limits raised for Fairfield County

It’s tough to keep up with the news.

Two months after lowering the FHA loan limits, President Obama signed into law new limits raising an FHA loan up to $708,750 in Fairfield County and $729,000 in Westchester County.

What does this mean to you? An FHA loan, once thought as a bad thing, is today’s best bargain. It requires only a 3.5% down payment and the rates are typically LOWER than Fannie and Freddie rates. Since the loans are insured by the FHA, a borrower with a fico of 620 or higher is eligible.

While the loans have mortgage insurance, if after 5 years you can show that you have 22% equity the insurance can be dropped – you keep the sub-4 (as of today) 30-year fixed rate. Additionally, there is even an opportunity to get cash back for your closing costs !

This is a loophole in financing that you should take advantage of… low rates, low prices and an opportunity for more buyers. Don’t kick yourself later – call me today.

Terry TV …the UPDATED Zillow video !

Check the upper right side of my website for the new Terry TV video shot just last week in Westport.

I explain Zillow and give an update on just how accurate their “zestimates” are using Zillow’s own admissions. Find out how to get the zestimate accuracy for your county on the video too.

When it comes time to determining the value of your home, don’t trust a computer program. It’s mind boggling how many people rely on Zillow to check the value of their home.  A Realtor knows better.

If you have any feedback on it, pass it on !

Fairfield County is alone is the US !!

Here’s a news flash !

Starting January 1st, the maximum loan limit for Fannie Mae and Freddie Mac in Fairfield County is being raised from our current limit of $575,000 to $601,450. This is great news for Fairifeld County, and we are the only county in the United States that is having their limit raised.

Westchester County remains at $625,000 and Litchfield County remains a a low $417,000. This move opens the door to higher priced refinances and purchases, a welcome change. The limits are typically derived by looking at the median prices in the counties, thus the odd number. We’ll take it !

A Fannie or Freddie loan generally is less expensive (lower interest rate) than anything you’ll see from a portfolio bank. Take advantage of it and call me today.

Ok, Even the WSJ Says It’s Time !

Waiting for interest rates to drop ? Waiting for prices to drop … more ?

If the New York Post told you it was time to buy, you wouldn’t believe it. But now for the second time in six months The Wall Street Journal is telling you again it’s time to buy.

Warren Buffet in a New York Times Op-Ed column three years ago said to ” Fear when people are greedy, but be greedy when others are fearful.”  Here’s a link to what the Wall Street Journal is saying too:

http://online.wsj.com/article/SB10001424052970204774604576629443313035736.html?mod=WSJ_hp_mostpop_read

Call your Realtor, it’s time.

Why You Should Buy Now !

The past four years have been filled with economic uncertaintly, pessimism, fear, greed and lately, some promising news. Greece is poised on a bailout plan, and the U.S. Jobs report came back better than expected last week. It appears for many that healing has begun.

So, why is now a great time to buy? Two key factors are now clicking together – interest rates and depreciation.

I have spoken with several hundred Realtors while teaching seminars around lower Fairfield County in the past month and most agree that we have seen about a 20-25% drop in home values since 2007. So, check out the numbers.

Let’s take a home in Wilton that sold for $1,000,000 in 2007 with 20% down and  5.75% 10/1 arm mortgage. The monthly payment to carry that home (not including taxes and insurance) was $4669.

Using the exact same home and 20% depreciation, you could buy it today for $800,000. If you put 20% down and got the same 10/1 arm program at today’s 3.875, the monthly cost to carry that home (not including taxes and insurance) is now $3010.

Short and sweet, the same home that was purchased in 2007 for $4669 per month is now $3010 per month – $1659 less ! It’s a combination of depreciation and lower mortgage rates.

People buy homes not on price, but rather on what is costs per month. When prices dipped during the 1982 recession, interest rates went up to 18%. Today prices have dropped and rates have dropped.

While not everyone is in a position to buy (call about refinancing), if you have been thinking about it the numbers are indisputable. Call your Realtor today !

What your bank CAN’T do !

I have a borrower who was looking to refinance. Their condominium was estimated by a Realtor to be worth in the mid-$400,000′s.

The bank, who choses the appraiser, sent over an appraiser either unfamiliar with the complex, or unfamiliar with valuations. Remember, when it comes to estimating a value, no one beats a Realtor  … they’ve seen the inside of competing homes and recent sales. I’d prefer to get a local appraiser, but the new Dodd/Frank bill makes it illegal for me to even speak with them.

So, the appraiser inspects the home, sends their report to the bank and values the condo at $400,000 even making a math mistake on square footage. Based on the value, the rate is higher because of the risk factor. If you were applying with a bank, you’d be stuck. I’m a broker, so ….

We switch to another bank. The next bank sends out an appraiser, and the value returns at $450,000. Same condo, three weeks apart, $50,000 difference in value. The end result is the borrower saved 1/4% on their rate because of the higher value … and it was no surprise that the appraiser came in right about where the Realtor said it was worth. Remember, a condominium is easier to appraise because there are the same model units sold in the complex. It’s frustrating and insulting, but it’s the new way of banking.

While we all must muddle through the new regulations designed to ferret out the shady appraisers, brokers, bankers and yes, borrowers of the past, there has to be a better way. Until it is figured out, use a broker and not a bank !

 

Banks ARE lending money !

Last weekend I saw a Realtor who said they heard that banks really aren’t lending money anymore.

It’s far from the truth.

Here’s the rub to some people – banks want you to prove what you tell them unlike five years ago. Yes, you need paystubs, yes you need equity in your home (in most cases), and any assets need to be verified with a bank statement. Not lending … how about this ?

FHA will still lend in Fairfield County up to $575,000 and only requires 3.5% down – and the downpayment can even be a gift. The rate? Well today for an even not-so-perfect borrower you would be below 4% on a 30-year fixed ! You can even get a rebate from the bank for closing costs if you use a broker like me !

Not lending? I have a private, portfolio lender that lends 90% financing up to $850,000 – with no mortgage insurance ! The rates? Unbelievable. Again, you need a job history. Without it, you probably shouldn’t buy a house.

Lastly, there is a bank lending on “stated” income with 35% down for self-employed borrowers who might get excessive with tax write-offs. You can still buy a house, and there are plenty of great deals out there.

Not lending? We are victims of the media – turn off CNN and put on ESPN ( except if you are a Red Sox fan like me …then go Food channel).  Come on out, call me, and then call your Realtor. You’ll be surprised.

The proposed “Jobs Creation Act” – who is paying ?

Last week President Obama unveiled a new “Jobs Creation Act” which is in effect another economic stimulus package.

While creating jobs is a key to the economic growth of our country, the proposed bill also tried to answer the question of, ” who pays for it?”

According to the proposed Act, the mortgage interest deduction would be lessened, not eliminated , depending on your income. An example shown for a household making 250K was about $500 per year. The answer seems to be taking money from homeowners to create jobs … and it has not been passed. If you are against the bill, you need to let your Senator or Representative know. Realtors are fortunate to have one of the largest lobbyists on Capitol Hill, the National Association of Realtors (NAR), so let them know too.

In these times rumors fly – this proposal does not eliminate the mortgage interest deduction although other bills have suggested it. The elimination of the mortgage deduction would have a large impact on home ownership and would face a stiff fight from NAR. Keeps your ears open, but don’t get paralyzed by rumors and speculation. With interest rates and prices so perfectly aligned, home ownership is the best move to make.