Changes in the Mortgage Market

What a market lately for mortgage loans. Since my last post there have been some very interesting changes in the mortgage market. Here are just a few of the changes.

1. The new economic stimulus plan has passed which will allow for new home growth as well as higher conforming loan amount limits.
   
2. The new conforming loan limits are: For the salt lake area the new loan limits are around $729000 as for other surrounding areas of Utah the loan amount differs.
   

   This is great because it will allow for people who in the past or currently have what used to be called a jumbo mortgage loan can now refinance to a new conforming loan. This will mean lower interest rates for the home owner.
   

   The down side to this is that the higher loan limits will probably go down December 31, 2008. So refinance now!
   

3. There is a new bill that was just passed by congress which will only allow for mortgage lenders to order appraisals. In the past "Mortgage Brokers" such as myself have been able to order appraisals and then find a lender. What will happen now is once we find a lender that the borrower is happy with the lender will in turn order the appraisal.
   

   A down side to this is that this may affect home values in our market. It may in fact hurt the market values on homes.
   

4. And of course I have saved the best for last. We still have record low interest rates. It is still a good time to refinance or buy a home. The mortgage market is very uncertain, but don't let that stop you from getting into the home of your dreams.
   

Give me a call today and let me help you find the right home mortgage loan for you and your family.

When Lenders Compete, Who really wins?

An ongoing lawsuit against a website that allows advertisers to post
their rates, suggests that when lenders compete, you still may not get the
best rate. The lawsuit alleges that lenders post rates so low they can't honor them.
Then when the borrower is committed to the loan, they switch him or her to
a higher rate. That higher rate is often worse than the honest rate offered
by other lenders.

This all starts out by a home owner going online to shop for a new mortgage
loan. Most of the time when online shopping for a loan you come across
what is called a Lead Broker Site. Lead Broker Site's usually advertise
saying things like 'When Lenders Compete You .........etc. etc.' Lead
Broker site's usually push the idea of shop for the best rate, or Let
lenders compete for your business.

Lead Broker site's after they capture your information online what they do
next is sell your information, usually to the highest bidder. An online
lead's price can range anywhere from $10.00 to $120.00 per lead, and
depending on the company.

Now here is where it gets good. The Lead Broker site's will usually sell
your information anywhere from 1 to 4 times, and even more. This means
that the home owner will be getting a pluthera of phone calls from Lenders,
and brokers all wanting to earn your business. Most of these companies will
tell you exactly what you want to here as well. If you were to ask the
question 'What's your rate' they would probably quote you a rate right then
on the spot. If not they will take down some brief information and then
put a fast quote together without even knowing your true financial goals.

Most websites that advertise the offer of "let lenders compete for your
business" or anything similar to that don't necessarily guarantee that you
are going to receive the lowest rate or the best deal. By submitting your
information to these types of websites or companies you are really
submitting your information to a company who provides your information to
the mortgage companies who will pay them the most money. Therefore, the
companies that are buying your information from these lead companies have
to recoup these costs somehow and they will generally do that through "junk
fees" or higher interest rates than what you might actually qualify for

Keep in mind as well when multiple mortgage brokers run your credit ( if
you are giving it out to everyone) you are hit with multiple inquiries
which could lower your actual FICO score. Lower scores limit your ability
to qualify for certain loans and also may increase your interest rate which
could cost you thousands of dollars over the life of the loan.

My point is when shopping for a mortgage loan through lead broker sites
keep in mind the following and remember, this is just advice for your
protection:

First, you have to make sure you're comparing apples to apples. Unless
you have a long discussion in regard to income, assets, credit, short and
long term goals with each broker and hang up knowing exactly what program
you're talking about, it will be impossible to get a good comparison...I
can tell you this, the lowest rate out there is only on a program that
isn't the best program for over 90% of borrowers, so just shopping a rate
may end up costing you more..

Second, find out what program is going to help you realize your financial
goals, understand the program and how it's going to get you there, take
nothing on faith...It only costs you time to get the best deal!

And last of all if the program sounds to good to be true, it probably is.
If you were to follow some of the complaints filed by some of the home
owners even here in Utah, you would find this same advise from the state.

A good mortgage broker is not always going to tell you what you want to
here. He most likely will not quote you a rate right their on the spot.
The reason why is that their are so many loan programs available that its
hard to just throw a rate out their, especially not knowing the borrowers
true financial situation.

One last peace of advice when shopping rates. Look for an actual mortgage
company online instead of a lead broker site. Do your home work on the
company, and the loan officer. Yes get a quote, but learn what type of
program and qualifying guidelines are required for that program. This
takes a bit of work but can save you lots of time and even money in the
long run.

If you have any questions, please feel free to ask?

Ed Bates
Wasatch First Financial

801.330.4964
http://www.mloans.net/

Apply online for your home mortgage today!

Bushes new economic stimulus plan

Bushes new economic stimulus plan is now approved with congress and just needs to be approved with the senate now. That’s Great! I just wanted to share my excitement about the program. I have a past blogg that explains more about this program.

The Federal Government lowers the federal funds rate to 3%

This article is taken from their website located at http://www.federalreserve.gov/newsevents/press/monetary/20080130a.htm

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.

Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Today's policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
--
For more information please go to their website at http://www.federalreserve.gov/default.htm

Ed Bates
Wasatch First Financial
MLoans.net

801.330.4964 cell
ed@mloans.net
Apply online www.mloans.net

Where do we go from here?

I have been reading news articles lately and wonder about the whole mortgage market in general.  We know that the sub prime market is in trouble.  We know that Bush and Congress have an economical stimulus plan that could help the mortgage and real estate market.  The feds have slashed rates again this week with the possibility of another rate cut next week. 

 

I read through all this and "WOW" What an industry to be in. 

 

Mortgage guidelines are changing on a daily basis.  The reason why I bring this up is that in order to stay on top of the mortgage business it takes a lot of time, reading and emails to stay updated. 

 

The reason for my blogg today is to say that even though the real estate industry is having some trouble, it is still a great time to buy a home, or refinance.  Interest rates have never been this good.  It's true that lenders have changed their guidelines, some on a daily basis and made it harder to obtain financing.  But still it is a great time to buy a home.  I cannot predict where rates will go from here, up or down.  But for now, there is a lot of money saving loan options still available on home financing. 

 

Ed Bates
Wasatch First Financial
MLoans.net

801.330.4964 cell
ed@mloans.net
Apply online www.mloans.net

Bush new economic stimulus plan

Their was an article that I read by CNN on Friday the 25th of January 2008
it talked about an economic stimulus plan that was announced Thursday by
congress. Congress and the Bush administration announced this bill that
addresses the mortgage crisis. From what I read and have looked into it
aims to make getting a mortgage easier and cheaper in high-cost markets.
It talks about refinancing as well as foreclosure

The bill talks about lifting the Freddie Mac/FannieMae loan amount from
$417000 to $625000 for a period of 12 months. I think that this would be
great for most markets due to the high cost of homes..

Some of the benefits of this program I think will be helping those with
Jumbo mortgages to even refinance as well as save them money. It would
help to get homes sold faster. It will also help homeowner who are
distressed to be able to refinance and may provide a way out.

I think that a home losing value affects some people mentally. What I mean
by this is that its like I would be more likely to spend money on other
goods if I new that I had growing equity in my home. On the other hand I
would not spend as much if I were loosing equity in my home.

Ed Bates
Wasatch First Financial

801.330.4964
www.mloans.net

Apply online for your home mortgage today!

"My adjustable rate mortgage is adjusting up way too much!"

That's a complaint Loan Officers are hearing a lot lately.
You're not alone. Different estimates are that between 500 billion and 1
trillion dollars of adjustable rate mortgages (ARMs) are set to adjust by
the end of next year.
For some people, interest rates are going up 3-4% once their adjustable
rate mortgage adjusts. This is resulting in a payment increase of anywhere
between $100 and $500 a month, possibly more depending on the size of your
loan.
Remember that your not alone. Many homeowners are facing the same
dilema. As your rate rises so does your payment. As your payment rises so
does the stress. When purchasing a home it's important to take these
changes into account. If your already in the home then it's time to look at
some financing options.
Stop the "PAYMENT SHOCK" Blues and look into a Fixed rate until the trend
of Adjustable Rates has settled.

Thanks

Ed Bates
Wasatch First Financial

801.330.4964
www.mloans.net

Apply online for your home mortgage today!