Rates take an unsurprising jump this week due to stock rallies and the lowering of the Fed Funds Rate.  Remember, when the Fed reduces their lending rate, the in turn economic change is toward inflation.  Inflation will cause mortgage interest rates to rise.  Since mortgage rates are not directly tied to the banks lending rates, this can occur.  The 30yr fixed up almost .5% this week to 6.25%, 15yr at 6%, FHA/VA at 6.375-6.5%.  Jumbo Arms still in the mid 5% range and the 5/1 is around 6%.

Help is on the way for the mortgage industry that will help as many as 3 million homeowners stay in their homes and avoid foreclosure. We have been saying for weeks that until the mortgage industry and the foreclosure pace is slowed, the economy would only decline further and stay weaker for a longer period than the Wall Street firms tout. Yesterday in a speech at an international deposit insurers conference in Arlington, Virginia, FDIC Chairman Sheila Bair mentioned the program being considered by Treasury. No real details but what we hear FDIC and Treasury are considering a program that may offer about $500B in guarantees for troubled mortgages to stem record foreclosures. The plan being talked about would require lenders to restructure mortgages based on a borrower's ability to repay. Under one option, the industry would keep lower monthly payments for five years before raising interest rates. The government until now has relied mainly on a voluntary, industry-led alliance to spur loan modifications and avert foreclosures.

Interest rates traded in a very choppy pattern this week with huge gains on Monday and large losses Thursday and today.  The 30 yr fixed ended the day to day at 6%, 15yr at 5.75%, FHA and VA at 6.5%, and JUMOB arms at 5.25-5.75%.

 Mortgages are finding support as investors finally get it; that mortgages originated in the last 15 months are a good investment with the government guaranteeing all loans of Fannie and Freddie and FHA. As we have noted in past comments, the spread between the 10 yr note and 30 yr mortgages is well wider than normal, making investments in mortgages at current rates one of the best investments fixed income investors can make. That said, investor fears remain high about anything that has to do with residential real estate. Only the brave and wise are buying now.  Hopefully we can continue the trend toward better rates.

 Please let me know what I can do to help you with your business!

Mortgage Money Is Available! 

Yes, contrary to popular belief you can still borrow money to buy a home.  Your down payment requirement will be based on credit, income, & assets - while this is not a new concept, the public has been lead to believe that documenting a loan is a new fad.  There may also be some other misconceptions as you observe the message delivered by the media on a daily basis.

Let's debunk some of the myths out there regarding mortgage lending: 

MYTH: I heard from a friend that you need at least 20% down now to purchase a home.

TRUTH: ABSOLUTELY NOT!  There are still down payment requirements as low as 3-5% down, even with not perfect credit.  FHA requires 3.5% down and conventional loans will go as low as 5% down.  Also, on FHA loans you as the buyer can ask a seller to contribute up to 6% of the sales price to go towards closing costs, but not to exceed actual costs.  The FHA loan limit is $303,750.  Conventional loans with 10% or less down will allow for you to ask for up to 3% of the sales price towards closing costs & when doing 10% down or more you can ask for up to 6%.  The conventional loan limit is $417,000.

MYTH: There are no 100% financing programs available.

TRUTH: VA loan eligible veterans can still obtain 100% financing.  A VA eligibility certificate is required.  VA can lend up to $417,000.  Also, for qualified areas & homebuyers there is the USDA Rural Housing loan that will allow for 102% financing. 

MYTH: I heard investors are not lending money & there is none available for home buyers.

TRUTH: The money you are hearing of is money available for small businesses & commercial loans - there is plenty of money to lend to homebuyers at still historically low rates.

MYTH: Interest rates must be high since there is very little money available for homebuyers.

TRUTH: There IS money available and interest rates have remained under 6.5% for the majority of 2008.  We have had some good rides where rates even dropped below the 6% mark, call your Allen Tate Mortgage Consultant today to inquire where rates are for the day. 

MYTH: Jumbo loans are to risky and are not being done

TRUTH: Absolutely incorrect.  In fact, the fixed term Jumbo (loans from $417,000- $3,000,000) rates are in the Low 5% range, better than a year ago!!  You can even obtain this money with as little as 5-10% down.

MYTH: This mortgage crisis must mean this is not the time for me to buy or sell my home.

TRUTH: This is a great time to buy!  You may get less on the selling end of the deal - that is reality, but you will realize a WIN on the buyside!   

TAKE AWAYS.

-          THERE IS MONEY TO LEND FOR THE PURCHASE OF A NEW HOME!

-          THERE ARE STILL PROGRAMS WITH MINIMAL DOWN PAYMENT REQUIREMENTS

-          THERE ARE STILL GREAT INTEREST RATES AVAILABLE!

-          THERE ARE STILL WAYS TO PURCHASE A HOME WITH VERY LITTLE IN CLOSING COSTS!

-          YOU STILL NEED TO QUALIFY FOR A HOME AS ALWAYS - SHOWING INCOME, ASSETS & A REVIEW OF CREDIT 

"How's the Real Estate Market in the Carolinas?" - click here to find out

 All the best, 

Brad D. Dinkel

Sr. Mortgage Consultant, Allen Tate Mortgage Services

704-634-2918 Direct

980-233-3909    Fax

 "Focusing on Strategic Mortgage Planning and Wealth Advancement"

To get Pre-Qualified now, click the link below so that I can assist you as quickly as possible:

http://www.bradmortgage.com/