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.

Deal or No Deal ?

Last week a shopper called about a 15-year mortgage rate for their son. According to Mom, his credit was pristine, and he had virtually no debt…  I mean, what do you tell Mom?

Anyway, based upon the pristine scenario, the 15-year mortgage rate was quoted at 3.25% for a 45 day rate lock. Mom’s  response -”If we shortened the lock period, could we get a lower rate?”

After about five seconds of silence, Mom said, ” I guess that sounds kind of silly, huh?”  For the first time, we reached an agreement.

The record low mortgage rates need to be taken on face value …if you can save hundreds per month, ( I have one borrower saving $1200!) waiting presents two issues. First, if the rate went down in two months, you’d lose the two month’s of guaranteed savings that you already had. Second, if rates went up, you’d lose the initial guaranteed savings, plus pay the additional cost of the monthly mortgage increase. Our initial instinct is to always try to get a better deal, but who knows for sure what will happen with rates in the short-term ? The answer is no one does, so it is a flip of the coin. However, since the rates are so low right now, the chances of them staying the same or going higher outweigh the chance of them dropping.

If I told you four years ago that mortgage rates would be in the low 4′s and prices would be at least 10% less, would you be excited?

Take the deal.

$708,750 loan limit almost over, there is an option !

I’ve been getting calls about the lowering of the Fannie, Freddie and FHA loan limit in Fairfield County to $575,000 as of October 1st. With a drop of $133,750 to our previous loan limit, this could take a toll on low down-payment purchases in the $700,000 range.

Fear no more.

I have a lender who will do 90% financing with no mortgage insurance up to $800,000. Yes, you need very good credit, but you can still take advantage of the great rates and low prices to buy a home. It’s an exciting alternative.

As a broker and not a bank, I have options. This particular bank has the unusual niche that works perfectly for Fairfield, Westchester, and Litchfield Counties. No more frowning, we’re back in business !

A new twist on refi’s …the $264,000 answer !

Yes, if you haven’t looked into refinancing, you should. If your loan is a Fannie Mae or Freddie Mac product (below $575,000), you can get a rebate for some closing costs too – because I’m a broker !

I look at myself as a liability manager -  everyone talks about having an asset manager, but so many people have a mortgage higher than their 401K. So, here’s a new way you might want to think about refinancing, if you can afford it of course.

Let’s say five years ago you took out a 30-year fixed for $400,000 at 5%. You would have 25 years left to pay and a balance of about $368,000. If you took a 15 year mortgage today at 3.25%, your payment would go up by $377, but you would slash 10 years off your mortgage ! This would save you ten years of making a total payment of $264,960 … and you’d own your property free and clear. Isn’t that everyone’s goal ?

As a mortgage advisor, I believe you should look at all options, and once informed, make the decision that makes you most comfortable.  Most people wouldn’t think of switching, but if you can afford it, there has never been a better time!

Historically low rates? Yes, now they REALLY are !

The last week has been unsettling for everyone. Debt, stock market turmoil, ugly headlines.

When investors leave the stock market, they park their money in U.S. Bonds. The more that switch over, the less interest has to be paid …the old supply/demand rule. Mortgage rates are tied into the 30-year and 10-year bonds.

With the unprecedented flight to safety and the Federal Reserve’s announcement that rates will be exceptionally low for two years, rates plummeted to an area I have never seen. NOW is the time to think about converting your 30-year fixed to a 15-year with a minimal payment rise (if any) and saving hundreds of thousands by shaving years off your loan !

If you need relief in your monthly payment, think about refinancing your 30-year fixed. If it is a Fannie Mae or Freddie Mac product (under $708,750 until Sept 30th), you can get a rebate for your closing costs too ! Wall Street turmoil is creating mortgage rate opportunity. Tell your friends, and call me for a free mortgage check-up.

A Dead Cat Bounce?

Volatility has been the key to the stock and bond markets during the past week. Was the U.S. going to default?

As a result of the “safe haven” flight to bonds (investors switch from buying stocks to investing in a guaranteed bond), the interest rates have plummeted.

Here’s where the cat comes in. There is a saying that “even a dead cat will bounce if dropped from a great height,” or better known on Wall Street as a dead cat bounce. It means that when something goes down fast, it typically corrects by “bouncing” back up. In other words, grab and lock while you can.

While an important economic report is due on Friday, these rates are too good to pass up. Yes, they could drop a hair more, but Fannie and Freddie are lowering their limits as of October 1st (you must close by then) and there’s that dead cat lingering.

 Interesting to note, that while our politicians were waffling and threatening to put the U.S. in a default position, the world was buying our Treasury bonds like crazy. In the end, no one really believed that we’d let it go that far. These are truly amazing times we are living in ….

Lower loan limits start October 1st !

If you are looking for a high balance conforming ( Fannie Mae or Freddie Mac) loan or high balance FHA loan, time is running out ! Effective October 1st, the loan limit will be dropping from $708,750 to $575,000. In other words, if you are thinking of buying a home with only 3.5% down and it is over $600,000, you have two months to CLOSE the loan.

These historic limits were put in place to stimulate home sales by making more government backed mortgages available to the public. The National Association of Mortgage Brokers has petitioned Congress to extend these limits, but no answer has come back.

Think about it. Last week I had a client refinance their home for 95% of it’s value into an FHA loan for $617,000 and got a 4.25% 30-year fixed rate with no points! Another buyer took a $708,000 loan with 3.5% down and got back $8000 for closing costs. While the naysayers have been touting the difficulties of getting a loan, others have been scooping up low priced homes and getting a low rate in return.

Time will soon run out … don’t let this slip away.

Why do people pay retail prices for mortgages?

Last week I encountered a client who was shopping for a mortgage loan.

She went on to tell me that she wanted to go to one of the “big four” banks and got a quote. When I gave her my rate, she was surprised to find it lower … and I could have gone to the same bank. Why ?

As a wholesale broker, I can choose between 35 lenders. Depending on the scenario, I might narrow it down to the five that I know are most competitive and then check the daily rate. Some lenders have great adjustable rates, others might have an appetite for fixed products, and others are just plain ugly yet business trickles through to them.

When we deal with the wholesale department of a bank, they pay us a commission only if the loan funds. The wholesale department of the bank has no risk and even charges a processing fee (we don’t) to cover the administrative cost. The retail side of the bank has marble floors and full-time employees who get paid salaries. The wholesale side has little overhead, so the smart lenders love wholesale and therefore prices can be lower.

I walked the client through a retail “giant” bank via their website and the published rate was 1/4 point higher than my rate – and they charged a point.

Think about it. I have naming rights on about 20 Stop and Shop carts – other banks have arenas. I can pass the saving on to you !

FHA loan limit to drop on October 1st !

The “temporary” increase in loan limits that were enacted in 2008 are coming to an end. However, there is still time.

Through September 30th, the limit for an FHA loan is $708,750 …and the rates are better than Fannie Mae rates. An FHA loan only requires a 3.5% down payment and Fico scores are more flexible and less punitive than Fannie Mae. If you’ve got a job and not a lot of savings, this is a perfect way to take advantage of today’s housing market. Today for example, a $708,750 loan on a 30-year fixed would be 4.25% … you’ll be telling your grandkids about it someday. Get this, only 3.5% down (and the downpayment can even be a gift), flexible fico scores and lower than low rates.

Effective with loans after October 1st, the loan limit will drop to $575,000. This means until September 30th you can finance $133,750 more than you will be able to after that day. A loan over that amount  starting October 1st will require a higher down payment and higher interest rate.

If you’ve been thinking about buying, especially over $600,000 … stop thinking and call your Realtor. Get in on these tremendous rates and high loan limits while you can… it’s cheap money and such an opportunity !