I think one things for sure: we have all either have been touched (and not in such a good way!) by this "market" or know someone who has. I think it will be late '09-'10 before we start to make any kind of real headway. But we are still in for some really bad days short-term. Hiring is down, gas and food are up, homes are down, mortgages are tight, second mortgages are getting tighter.... I listened to 6 "market/economic gurus Friday night! Totally split on where we're going. As Gomer Pile would says, "surprise, surprise..!
New blood in that Oval Office might offer some relief...but if the two branches can't "play nice", we're screwed, again! We have to balance the budget, don't we have to do that at home and our businesses? What the hell! I hope it comes in the form of less spending, but there are only two choices to get it balanced, right! I think housing is always a great bet long term, the only issue with a market like this is when to buy? Monitor your neck of the woods and look for the inventory of listings to get down to 60 days or less (meaning enough buyers to purchase all the listings in 60 days).
In the mean time fix any financial or credit issues you have so you will be in a position to take advantage. Keep your house payment @ 25% of your gross income, I have seen some qualify at 50%, don't do it! Get rid of your non-deductible debt. Don't get involved in "multiple offers", have the house "inspected" (different than an appraisal), take a 30 year fixed, refi if they go lower, don't pay it off sooner if you have the dicipline to eliminate non-deductable debt and max every retirement account you can. If you still have money left over invest it in taxable places (you can usually get at this money if you need to,always helps). If you get a mortgage now, you are borrowing money at about 4.5% depending on your "tax bracket", you can make this all day long with long term investments. Keep in mind when you ay your mortgage down and the market tanks liks this, you can't get at the equity, and if the "values" went down you
lost it for now anyway! More ARMs will adjust this year than last, Kevin knows of what he speaks, the foreclosure volume will surely double in the foreseable future. That inventory will get added to what's already there and "around and around we go". Look for the Mortgage insurance companies to start going down! Keep your "House" in order, you will be fine.
The mortgage, credit guy!
PS. Donna Summer says it best " I (we) will Survive"! It was her wasn't it????
Saturday, June 7, 2008
Tuesday, June 3, 2008
What moves Mortgage rates?
(funny how we've turned into our own "networking gourp"! With all you amazing experts from so many different Industrys! Very cool!)
Mortgage rate movement: I will not be getting very technical here and you'll find out why at the end. One of you asked about the Fed's affect. Thy Fed controls the "Fed Funds" rate. This is the rate that banks pay when they borrower amongst themselves. The only way this really affects us is with Prime. The Prime rate is 3% over the Fed Funds Rate, always! Prime is 5% now, and the Fed Funds is 2%. This affects Home Equity Lines, because they are almost always based on Prime. Prime was 8.25% last year! So the Fed has no direct affect on the 30 year fixed Mortgage rate. Still might see some bounces, like what happened with Clinton-sex-gate, but not as much! Unless of course Bernanke knows Monica as well!
The Bonds guys control the fixed rates. Which really happens when the stock market is tanking, which really happens because of all the crap around the US and the World we have no control over!!! (Confused?) In general, when the stock market tanks, the Bond market does well (because people are moving their money from Stocks to Bonds, "Mortgage Backed Securities"). Considered a "safer" vehicle for your money! ( At least used to be!) When the Stock Market rally's , money moves out of the Bond side back to stocks and the rates go up.
These are all generalizations now. Too many things affect the Mortgage Rates, as noted in the previous Blog! To that end, WHO CARES! If it makes sense for you to buy a home today, for whatever your reasons are....buy it! Get the best rate at that time. You will never guess the rate bottom...and you can always refinance if they drop significantly! Normally we are worried about this issue when the values of homes are rising..(not an issue now)...and in that market you will lose more waiting for the rates to fall, because you will end up paying more for the same house...as you "wait"! You only get "one" shot at the price, you have numerous shots at the rate!
the Mortgage Guy
PS. If you do find a way to predict the rates, I will pay you a billion dollars now and you can retire to an island of your choice...I will sell the idea for ten times that amount and buy the country around your island!
Mortgage rate movement: I will not be getting very technical here and you'll find out why at the end. One of you asked about the Fed's affect. Thy Fed controls the "Fed Funds" rate. This is the rate that banks pay when they borrower amongst themselves. The only way this really affects us is with Prime. The Prime rate is 3% over the Fed Funds Rate, always! Prime is 5% now, and the Fed Funds is 2%. This affects Home Equity Lines, because they are almost always based on Prime. Prime was 8.25% last year! So the Fed has no direct affect on the 30 year fixed Mortgage rate. Still might see some bounces, like what happened with Clinton-sex-gate, but not as much! Unless of course Bernanke knows Monica as well!
The Bonds guys control the fixed rates. Which really happens when the stock market is tanking, which really happens because of all the crap around the US and the World we have no control over!!! (Confused?) In general, when the stock market tanks, the Bond market does well (because people are moving their money from Stocks to Bonds, "Mortgage Backed Securities"). Considered a "safer" vehicle for your money! ( At least used to be!) When the Stock Market rally's , money moves out of the Bond side back to stocks and the rates go up.
These are all generalizations now. Too many things affect the Mortgage Rates, as noted in the previous Blog! To that end, WHO CARES! If it makes sense for you to buy a home today, for whatever your reasons are....buy it! Get the best rate at that time. You will never guess the rate bottom...and you can always refinance if they drop significantly! Normally we are worried about this issue when the values of homes are rising..(not an issue now)...and in that market you will lose more waiting for the rates to fall, because you will end up paying more for the same house...as you "wait"! You only get "one" shot at the price, you have numerous shots at the rate!
the Mortgage Guy
PS. If you do find a way to predict the rates, I will pay you a billion dollars now and you can retire to an island of your choice...I will sell the idea for ten times that amount and buy the country around your island!
Friday, May 30, 2008
"SEX" moves Mortgage Rates!
I was minding my own business at the office a few years back and was getting ready to lock in a loan at 6.375%, 30 year fixed interest rate. I faxed the lock sheet into the Lender, patiently waiting for the "confirmation" (because back them without that confirmation you didn't have a "valid" lock)! What I got back was not a "confimation". It was a fax stating "LOCKS NOT ACCEPTED AT THIS TIME"! I had just said to my borrower they could get this rate....what the hell was going on! I made some calls, no one knew...! Can you guess! "cigar" , "free willy" "I did not have sexual relations with that woman"!.............
You guessed it, "slick willy" was being a "naughty, naughty boy" and the market got the news, before the rest of us...this is what usually happens by the way! President Clinton was caught with his pants down! Rates were locked up the rest of that day. The next day they were 7.25%! WOW! "Clinton was UP and so were our rates"! The market did settle down over the next few weeks, but you can see that occassionaly something other than "market" conditions can have a serious impact on our world!
The Mortgage Guy
PS next we'll talk about what "usually" moves the Rates! I'm done talking about what 'usually" moves, the Clinton Meister! Hillory might be willing to comment though!
You guessed it, "slick willy" was being a "naughty, naughty boy" and the market got the news, before the rest of us...this is what usually happens by the way! President Clinton was caught with his pants down! Rates were locked up the rest of that day. The next day they were 7.25%! WOW! "Clinton was UP and so were our rates"! The market did settle down over the next few weeks, but you can see that occassionaly something other than "market" conditions can have a serious impact on our world!
The Mortgage Guy
PS next we'll talk about what "usually" moves the Rates! I'm done talking about what 'usually" moves, the Clinton Meister! Hillory might be willing to comment though!
Tuesday, May 27, 2008
FHA "Secure"!
King" Bush's "new" program to save the Mortgage World! I will state ahead of time, FHA has always been a great vehicle for home buyers, first time and others. You even used to be able to do investment loans, and that was really great. But now that "King" bush has gotten ahold of it to save the "mortgage" world, I'm concerned about "its" survivability!
FHA "Secure" is meant for those that have kept their payments on-time before their ARM's (adjustable rate mortgage) adjusted. Than they went "late" ,but no more than two 30 day lates (this criteria is a moving target, obviously credit score will go down!). They can apply to refinance on an FHA 30 year fixed (around 6%), with less stringent approval guidelines ( mostly credit scores), they can get approved, get fixed in, get their payments lowered and go forward saving their "investment"! You still have to qualify, still have to have 5% or better equity (very tough, because most of the people needing this program bought their homes at "ZERO" down, "BEFORE" the values dropped!) Now FHA is asking the lenders to take losses and write down the mortgage to get more loans refinanced! Fat chance!
For those borrowers that were "on-time" with their payments but needed some of the less stringent approval guidelines, I was advised to tell them to let their mortgage to go "late" and this loan would save them! I just couldn't do it!.What if it didn't work? By the way the other creditors (credit cards, car loans...) can do "soft-pulls" (pulling your credit behind the scenes, just to monitor, doesn't affect your score) and if they see credit issues (like your mortgage payments late!) they can raise their rates! Read the fine print in your agreement with all your creditors!
This program has actually helped a few thousand compared to the few million going through this nightmare! I Don't think their recent changes will provide the CPR needed to revive more Mortgages!
Have an amazing week!
The Mortgage guy
FHA "Secure" is meant for those that have kept their payments on-time before their ARM's (adjustable rate mortgage) adjusted. Than they went "late" ,but no more than two 30 day lates (this criteria is a moving target, obviously credit score will go down!). They can apply to refinance on an FHA 30 year fixed (around 6%), with less stringent approval guidelines ( mostly credit scores), they can get approved, get fixed in, get their payments lowered and go forward saving their "investment"! You still have to qualify, still have to have 5% or better equity (very tough, because most of the people needing this program bought their homes at "ZERO" down, "BEFORE" the values dropped!) Now FHA is asking the lenders to take losses and write down the mortgage to get more loans refinanced! Fat chance!
For those borrowers that were "on-time" with their payments but needed some of the less stringent approval guidelines, I was advised to tell them to let their mortgage to go "late" and this loan would save them! I just couldn't do it!.What if it didn't work? By the way the other creditors (credit cards, car loans...) can do "soft-pulls" (pulling your credit behind the scenes, just to monitor, doesn't affect your score) and if they see credit issues (like your mortgage payments late!) they can raise their rates! Read the fine print in your agreement with all your creditors!
This program has actually helped a few thousand compared to the few million going through this nightmare! I Don't think their recent changes will provide the CPR needed to revive more Mortgages!
Have an amazing week!
The Mortgage guy
Saturday, May 17, 2008
More credit score info!
The second half of the credit card story is to keep each individual card at a 35% ratio or less as well! Be careful transfering credit card debt from one to another to play the "ratio" game. Most of them will charge a "balance transfer" fee, and its not worth it. Also did you know if you're late on one of your card payments and the others see it they might be able to raise the rates they charge you. It's all disclosed in that 1 point type that Superman can't read! Keep in mind this info is to get you into the 800's for a score. No one really needs to get there. If you have a score over 700 you should be getting the best rates available for any type of loan out there.
If some loan officer is screwing you over or saying its not true, have him call me. Nobody screws with "Hogan's Hero's" on my watch. Hope you all are having an amazing weekend!
John
PS. Some of the Credit services you can sign up with to get your scores (keep in mind the www.annualcreditreport.com doesn't give you scores) also offer recommendations on how to get your specific score "UP"! Based on your credit profile.
If some loan officer is screwing you over or saying its not true, have him call me. Nobody screws with "Hogan's Hero's" on my watch. Hope you all are having an amazing weekend!
John
PS. Some of the Credit services you can sign up with to get your scores (keep in mind the www.annualcreditreport.com doesn't give you scores) also offer recommendations on how to get your specific score "UP"! Based on your credit profile.
Friday, May 16, 2008
Credit now!
I paid off my credit card should I close it out? "NO", surprised? One of the more important items contributing to your score is total debt vs. available debt (as far as credit cards go). So if you have two credit cards and you have a $10,000 limit on each. You owe $5000 on one and none on the other. Your ratio is 25% ( 5,000/$20000). Anything below 35% is optimal. So now you pay off the zero balance one and you only have one card with a $5000 balance and $10,000 limit. Now your ratio goes to 50%! (5000/10000), "Not Good"!
Obviously making your payments on time and not having other bad info like a Foreclosure , Judgement or Bankruptcy is also very important. Also if you know someone who has done the BK thing, tell them to go out and get a couple of "secured" cards. (Secured means you deposit money with a credit card and they issue you a card with that limit!) After a BK you not only have to keep your existing credit "good" , you have to "re-establish" new, good credit history! The scores will come up sooner!
Obviously making your payments on time and not having other bad info like a Foreclosure , Judgement or Bankruptcy is also very important. Also if you know someone who has done the BK thing, tell them to go out and get a couple of "secured" cards. (Secured means you deposit money with a credit card and they issue you a card with that limit!) After a BK you not only have to keep your existing credit "good" , you have to "re-establish" new, good credit history! The scores will come up sooner!
Thursday, May 15, 2008
Ripped Apart!
Just finished talking with a gentleman heading off to prison for 18 months! He just celebrated 14 years of marraige and has two small kids. He couldn't stop crying....I felt the same. One minute everything is fine and the next your world, and more impotantly your familys' is ripped apart.
This gentleman is (was) in the Mortgage industry! What was he guilty of, not reporting his "scum bag" owner of commiting "fraud"! He just didn't report it and his kids are going to be without their Dad for 18 months! The Owner has yet to be sentenced. The guy I talked to actually helped the feds with the case against the Boss, and that's what he got! No priors!
I want to clean up this industry as well, but it seems like our focus is backasswards! Spend some time getting the guys "doing " the damage, not the ones that are bystanders! Once you nail the "kingpins" than spend some time on the guys who aren't "reporting" it! By the way as far as I know this only applies to those of us "IN" the industry! But if you hear of something, feel free to report it to the FTC, your AG's office or maybe your local news station that can catch them in the act and air it in primetime!
This gentleman is (was) in the Mortgage industry! What was he guilty of, not reporting his "scum bag" owner of commiting "fraud"! He just didn't report it and his kids are going to be without their Dad for 18 months! The Owner has yet to be sentenced. The guy I talked to actually helped the feds with the case against the Boss, and that's what he got! No priors!
I want to clean up this industry as well, but it seems like our focus is backasswards! Spend some time getting the guys "doing " the damage, not the ones that are bystanders! Once you nail the "kingpins" than spend some time on the guys who aren't "reporting" it! By the way as far as I know this only applies to those of us "IN" the industry! But if you hear of something, feel free to report it to the FTC, your AG's office or maybe your local news station that can catch them in the act and air it in primetime!
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