As posted on www.activerain.com/lemeuss
We've been on a rate roller coaster for the past several months, and it is severely driving the emotions of a lot of people. Everyone obviously wants the "best" rate, however, in the pursuit of locking in when rates are low, a lot of folks miss out on the more important detail, that being the big picture.
Your likely not refinancing just because you want to see a 4 as the first number in your interest rate. It's primarily because you're either consolidating debt, freeing up some monthly cashflow, reducing the amount of time it will take to pay down your mortgage, or some other "big picture" reason. When finances come into play, it's important to focus on this rather than let emotion take over because someone you know got a rate .125% lower.
Find a good professional that will work with you and your financial network (advisor, attorney, etc...and if you don't have a good advisor get one!) to help you accomplish your long term goals. Nobody that waits for the lowest possible interest rate ever gets it, because while they're waiting for it to drop, it goes back up. A couple years ago 6% was a stellar interest rate. When rates went to 5.875%, there was a mini refi-boom. Now at 4.75%, we're a full percent lower, however some people still want a lower rate!! It's all relative folks, and the need to focus on overall benefit and cash analysis to see if a refinance makes sense takes tremendous precedence over who can say they have the lowest rate at the family BBQ.
While we're at 4.75%, it was just a few weeks ago when we were at 5.25%. A few weeks from now, we could be up in the mid 5's, as the Fed is scheduled to end their purchases of mortgage backed securities this month. Everyone knows when there is more supply, there is less demand. In the case of rates, less demand for securities always always always leads to higher interest rates.
It's important to get in now during this historic time for interest, and actually let this recession work FOR you in planning for your financial future. It's a great time for those in position to take advantage of it, so if you are in a good equity position, be sure to get in while the getting in is good!
A rare rant. THE NEW GFE FOR 2010 IS A NIGHTMARE. For one, our origination systems are not set up to properly complete the fields on the GFE. For example, I put yield spread premium in the "yield spread premium" box, and it doesn't reflect on the new GFE, making charges correct. EVERY lender out there will deny a loan due to to this. It's a huge annoyance to sit there and manipulate for 20 minutes a form which was PERFECTLY FINE the way it was before.
When an estimate has to be exact, and cannot change, it is no longer an estimate. I understand consumer protection, but there's no need for it if more loan originators acted in an ethical manner and put their best foot forward. Having to do this, and WASTING more of my valuable time on manipulating numbers to properly populate makes me despise more and more every unethical originator that these practices were implemented because of.
That's what rates are doing. We're coming back from the 4's and into the low 5's as mortgage bonds lose steam ahead of the Fed's purchase of securities coming to an end. Slated to end in a month, there's an expectation that economics 101 will take hold, and there will be less demand for mortgage bonds, thus more supply, thus lower prices, thus higher rates. A bad chain of events for a continually struggling housing market and fragile economy.
There's a good video showing the bond market movement and how securities effect everything. Hopefully the link works; if so, you can find it here, courtesy of mortgage success source.
Should be an interesting few months as rates are set to increase and the tax credit for purchases is scheduled to end for new contracts as of 4/30.
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HUD did something right! "Flipped" properties, i.e. foreclosed properties bought by investors on the cheap and resold at a profit got a nice boost. HUD had a requirement where a property purchased and repaired could NOT be sold to an FHA buyer for 90 days after the initial purchase. Meaning if an investor flipped the property in few weeks, they'd still have to wait a couple months to sell it to an FHA buyer (which many buyers in this demographic are). Now there is no seasoning, so if they can flip the house in 3 days, they can sell it in 4.
The old rule never made much sense to me (by my logic, what really changes about the risk of a purchase or the property itself between the time period 89 days after initial purchase and 91 days after???), so I'm glad to see this change take place.
Im sure a lot of investors are equally as happy : )
The 2nd edition of my newsletter is slated to be sent later this week.
Included in this edition will be testimonials from recent clients (many can also be found on www.johnsrate.com), some information about the Stanton/Newark SPCA, which is in dire need of volunteer help, Changes to FHA loan guidelines proposed in the most recent HUD mortgagee letter, the announcement regarding a great marketing campaign which will be a major focus throughout 2010, and some remarks and information regarding Black History Month, which is February.
If you'd like to be included in this newsletter distribution, e-mail a notification and the e-mail you'd like to receive the mailing at to jmeussner@louviersmortgage.com.
Please note, emailing me through johnsrate.com may delay receipt of the newsletter, please use the jmeussner@louviersmortgage.com e-mail to promptly receive the Buzz during it's normal e-mail cycle.
Best,
-JJM
As a member of the Newark Morning Rotary Club, I announce the beginning of our ONLY annual fundraiser, the Morning Rotary report to the community. This publication announces our activities over the past year, along with a bio of each member and advertisements from local businesses.
To generate funds for the activities we do throughout the year, we sell advertising space in this fine publication.
Benefits Include:
-Reasonable ad prices-All proceeds stay IN THE NEWARK COMMUNITY-Ads seen in homes of Newark Post readers-Great shelf life, an entire year displayed in local businesses-Distributed at Newark Nite, Community Day, and other events-Drawing to win free advertising space in next years 2011 Report to the Community
YOUR HELP IS NEEDED. In this time of financial uncertainty, we need your help more than ever. Folks in our community depend on your support of this project!
The Massachusetts senate vote takes place today in what will be a historic day whichever way the turnout goes. If Republicans win, it will likely be a large obstacle for the President and the Democrats Healthcare agenda. If Democrats win, they'll have the control they need over making final decisions on the healthcare bill.
Although this is a mortgage site, it seems the governments meddling in the housing market and mortgage business is having a major effect on the way I do business, so I feel it's in my right to make necessary commentary.
My major thought on this topic lies w/President Obama flying into Massachusetts in attempt at getting the Democratic party more votes, while putting down the Republican party nominee. Where does Obama have a right to tell people of a state which way to go? He completely undermines what Democracy really is. If he truly believed in Democracy, he would let the people of the state decide what is best for them. However, as he faced opposition on the stimulus package from we the people and passed it anyway, and as he's facing opposition on the healthcare package and still is forcefeeding it upon the country, this man does not care what we the people want. He seems convinced that he and the government know what's best for you and I. I feel he is wrong. I feel that a 1000+ page bill written in legal jargon does not represent the wants and needs of we the people. I feel that I'd rather have watched the major banks fail and fall than to see them reaping record profits while ripping off their clients, many unemployed due to the same economy that was causing the banks problems (or I guess you could say the many unemployed due to the banks causing the economy to collapse, thus bringing problems upon themself).
Let the people choose. If they feel the Democratic representative would better serve them, so be it. If they want to go in another direction, then guess what...that's democracy, and that's the beauty of the country we live in. That being said, I hope that the Republican party wins, not because I don't think the healthcare system needs to change, but because there needs to be checks and balances, and all the special interest groups included, and all the pork---it all needs to go. ALL OF IT. Either make a bill with the sole benefit of a better system, or don't make a bill, but don't waste taxpayer money with all of the BS hidden in the pages, and the millions of dollars that are wasted with every bill that is passed. If that's how this bill is going to play out, I'd rather see it not passed.
Good luck today, Massachusetts, I hope you make the right decision, whichever way you go.
Happy Martin Luther King Jr Day.
Dr. King was more than his "I have a dream" speech. His leadership and what he stood for is an example to be followed, and his perseverance is a quality that is tough to exceed. Some quotes from Dr. King that should be pondered and remembered.
“All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.”
Dr. Martin Luther King, Jr
“Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.”
“Injustice anywhere is a threat to justice everywhere.”
“The hottest place in hell is reserved for those who remain neutral in times of great moral conflict.”
“The quality, not longevity, of one’s life is what’s important.”
“The time is always right to do what is right.”
“Whatever your life’s work, do it well. A man should do his job so well that the living, the dead, the unborn could do it no better.”
“Every man must decide whether he will walk in the light of creative altruism or in the dark of destructive selfishness.”
As of 1/1/2010 all loans are under the new RESPA laws, which require a new Good Faith Estimate (GFE), designed to make things more lucid to borrowers when doing a loan, and comparing offers from different lenders.
This new good faith estimate is 3 pages long, does not need to be signed, still is not guaranteed after 10 days, and has so much excess verbiage that I'm not sure how anyone that's not a mortgage professional can make sense of it.
We had a 2 hour conference call with a real estate/mortgage attorney for one of our lenders, and even he isn't sure what to make of some of the verbiage. Once again, another shining example of how government intervention, and the attempt at making things better, has made them worse.
Also, rather than a simple rundown of fees (the format of the old GFE, not titled "initial fees disclosure", there is unnecessary explanation, and very stringent guidelines on what can be changed and why. For example, if a borrower wants to avoid locking in hopes for a better interest rate, and the market takes a dive for the worse, as a lender/broker I'd have to charge more up front to offer the same rate. This is no longer allowed, and considered a fee that I'd have to eat. Well folks, as much as I pride myself on outstanding customer service, I also have bills to pay, so I'd rather decline your loan than be stuck paying for someone else's mistake.
While the new GFE is designed to prevent "bait and switch" tactics that some brokers used in the past to get people in their door, these changes negatively effect the "Good guys" in the industry. All of my good faith estimates are within a couple hundred dollars, and the only differences in the rare event they're underdisclosed comes from taxes, which still aren't taken into consideration under the new rules. All of these changes are designed to help, but are really making the industry a living hell for us professionals that have been doing right by clients since day 1. It's more documentation, more waiting, followed by more documentation, followed by 10 extra phone calls, followed by more documentation, followed by more waiting, and all for nothing. Where does it end?
OK rant over. As with everything, changes need to be made to the industry, but where does it end? Licensing has proven to be nothing more than a revenue stream for states, and this new GFE and RESPA guide is a Ryan Howardesque swing and miss. HUD and the government really struck out on this one. But hey, when all those folks on capitol hill are running to get re-elected, now they can say "WE DID SOMETHING ABOUT HOUSING REFORM!". Cause really, after the banks getting bailed out and those in charge looking the other way when it comes to the struggling middle class, we all know what it's really about. Votes and money...and unfortunately, in their effort to get both, business becomes more tedious.
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