In light of the negative news in regard to the economy and real estate market, I thought I would try to put some good, positive information out there! What do you say? Would that be ok?! I thought so!
First and foremost, lenders are still open for business, we have money to lend....and rates are still historically low. David Bach, financial coach and author of the book The Automatic Millionaire Homeowner, among others has created a great 2 page document for us. In it, he gives some pretty good perspective on how real estate has historically been a very good investment. Email me at scott.wittig AT wellsfargo.com and I'll send it to you.
Also, this post gives some very good perspective on the losses that we are facing in the stock market.
By no means am I saying that things are great and we should have no worries, but if there is some good news to be had, let's spread it! As David Allen says, "We're all alone in this together."
Friday, October 10, 2008
Wednesday, September 24, 2008
Lock In Your Mortgage Rate
Wow, there is a lot of volatility in the markets lately! I subscribe to a service called the Mortgage Market Guide and it has been like watching a yo-yo lately. There is no trend and nothing is very predictable when it comes to mortgage bonds.
With that said, the market volatility is not the only reason to lock in your mortgage rate these days. The investors who buy the loans from mortgage companies after they get packaged up with others have varying appetites. The changes that they are making in terms of what they are interested in buying and how much they are willing to pay are leading to an ever-changing set of guidelines for mortgage lenders to follow. Because of this, lenders are only able to honor or "grandfather" loans that are locked in. Essentially, we'll commit guidelines to you if you'll commit to doing business with us by locking in.
So, when you are getting started on a loan application, consider locking your rate to protect your rate and your ability to get approved!
With that said, the market volatility is not the only reason to lock in your mortgage rate these days. The investors who buy the loans from mortgage companies after they get packaged up with others have varying appetites. The changes that they are making in terms of what they are interested in buying and how much they are willing to pay are leading to an ever-changing set of guidelines for mortgage lenders to follow. Because of this, lenders are only able to honor or "grandfather" loans that are locked in. Essentially, we'll commit guidelines to you if you'll commit to doing business with us by locking in.
So, when you are getting started on a loan application, consider locking your rate to protect your rate and your ability to get approved!
Thursday, September 11, 2008
Fannie Mae, Freddie Mac bailout and me
We've had a little bit of time to digest what this bailout / takeover / expansion of government - whatever you want to call it - means for the world of mortgages going forward. It will certainly bring stability and create some sort of a floor or foundation for us to move forward. Over the last six months we've seen mortgage rates hit a low, stop and then radically turn upward on a few occasions. The windows to grab low rates have been really small; sometimes a matter of hours. This was likely because investors buying bonds didn't have any certainty about the stability of the entire market.
Our hope going forward is that the interest rate drops we see will be more sustained. However, my advice to homeowners who are considering a refinance or homebuyers considering a purchase is this -- work with a lender who understands the markets, don't be greedy about rates and get your application in so that you have the ability to lock quickly if the market does happen to turn.
I will continue to post about Fannie Mae and Freddie Mac and what it all means to you, as we learn more. For now, we can at least say that we've gone from a pending implosion in the mortgage market altogether to a much more positive outlook.
Our hope going forward is that the interest rate drops we see will be more sustained. However, my advice to homeowners who are considering a refinance or homebuyers considering a purchase is this -- work with a lender who understands the markets, don't be greedy about rates and get your application in so that you have the ability to lock quickly if the market does happen to turn.
I will continue to post about Fannie Mae and Freddie Mac and what it all means to you, as we learn more. For now, we can at least say that we've gone from a pending implosion in the mortgage market altogether to a much more positive outlook.
Monday, September 08, 2008
Fannie / Freddie and Mortgage Rates
Over the weekend, the government took unprecedented steps to save the mortgage market by taking over control of the two largest buyers of mortgage loans, Fannie Mae and Freddie Mac. While this news, and all of the ramifications of it, still needs to be digested and analyzed (as though we didn't know it was coming!), it may prove to be very good news for mortgage rates and the Triangle real estate market.
Why? Mortgage rates are based on what happens in the bond market. The bond market (and stock market) doesn't like uncertainty. Put simply, this move adds a little certainty to what has been a really uncertain market. So far this morning the bond market and mortgage rates are really liking the news! If this is sustainable, the news of lower mortgage rates may very well be what is needed to release some of the pent up demand for homes that is likely out there in the Triangle market.
STAY TUNED!
Why? Mortgage rates are based on what happens in the bond market. The bond market (and stock market) doesn't like uncertainty. Put simply, this move adds a little certainty to what has been a really uncertain market. So far this morning the bond market and mortgage rates are really liking the news! If this is sustainable, the news of lower mortgage rates may very well be what is needed to release some of the pent up demand for homes that is likely out there in the Triangle market.
STAY TUNED!
Friday, August 29, 2008
Back to Basics
So we're in a down market, I get it. What happens when that happens? Lenders and Realtors start to re-think what they are doing to get and take care of customers. We get back to basics.
My thought here is to help out members of the real estate community, but my hope is that this will also be helpful to potential home buyers and sellers. We all suffer from "the curse of knowledge" -- the idea that we know so much about this industry and, because of that, we may lose sight of things that our Clients don't know anything about.
Closing costs-
I can't tell you how many buyers (first-time and move-up) that I've talked to in the pre-qualification / pre-finding a house phase who are afraid to ask the seller to pay closing costs. They think that it might hurt the seller's feelings or keep the seller from taking their offer. Some even think that, if the seller is paying these costs, that the seller is going to have to write them a check to get the money to them.
BACK TO BASICS --
Home sellers - go ahead and offer to pay X closing costs for a buyer. If you have a buyer come along who does not understand that they can actually negotiate for you to pay them, you've taken away an objection and offered something of value that might help your home sell more quickly.
Home buyers - know that home sellers typically look at the bottom line (offer price - any concessions like closing costs) to decide if they are going to take an offer. So (without getting into tax implications) an offer of $105,000 with the seller paying $5,000 in closing costs is essentially the same as an offer of $100,000 straight away. If they have read this post and are already offering to pay the 5k, you've got one less thing to worry about! ;-)
My thought here is to help out members of the real estate community, but my hope is that this will also be helpful to potential home buyers and sellers. We all suffer from "the curse of knowledge" -- the idea that we know so much about this industry and, because of that, we may lose sight of things that our Clients don't know anything about.
Closing costs-
I can't tell you how many buyers (first-time and move-up) that I've talked to in the pre-qualification / pre-finding a house phase who are afraid to ask the seller to pay closing costs. They think that it might hurt the seller's feelings or keep the seller from taking their offer. Some even think that, if the seller is paying these costs, that the seller is going to have to write them a check to get the money to them.
BACK TO BASICS --
Home sellers - go ahead and offer to pay X closing costs for a buyer. If you have a buyer come along who does not understand that they can actually negotiate for you to pay them, you've taken away an objection and offered something of value that might help your home sell more quickly.
Home buyers - know that home sellers typically look at the bottom line (offer price - any concessions like closing costs) to decide if they are going to take an offer. So (without getting into tax implications) an offer of $105,000 with the seller paying $5,000 in closing costs is essentially the same as an offer of $100,000 straight away. If they have read this post and are already offering to pay the 5k, you've got one less thing to worry about! ;-)
Should I Refinance?
It is a common question that many of us have and that we as Loan Officers hear all the time...including at cocktail parties! Well, in these days of government intervention into the financial markets and mortgage world, let's turn to the government for help with the answer! It has put together a pretty comprehensive tool that helps educate potential borrowers here
Hat tip to Mike Mueller
Hat tip to Mike Mueller
Friday, August 15, 2008
Help for Realtors
Based on the craziness that has occured in the mortgage industry, here are some (candid) tips for real estate agents as you move forward with your business:
ON LISTINGS:
1) Demand pre-approval letters or, at the very least, pre-qual letters that reference that credit has been pulled and reviewed. With guidelines changing frequently, it is that much more important for the buyers loan to have been reviewed by an underwriter (i.e. pre-approved) rather than the Loan Officer just having a conversation with the buyer and saying that it looks ok (i.e. prequal).
2) Watch who the letter is coming from. Who is the lender? Is it a name you know? Is it a banker or a broker? This distinction didn't use to be such a big deal, but the wholesale (broker) side of the business has been hit harder than the retail side (banker), so guidelines are often tighter for brokers. I'm not saying brokers are bad, but they are seeing more restrictions in a lot of cases and many banks have closed their wholesale lending business completely.
3) Who is the Loan Officer? Do you recognize the name? Are they local? Ask around your office or check with other agents you know to see if they are familiar with the loan officer. Experience in the industry and local knowledge goes a long, long way with all that has happened. Your paycheck is dependent on the loan officer as well as the company they work for. Take the time to be sure you are dealing with someone who is up on all of the changes going on.
WITH BUYERS:
See 1,2,3 above! Also...
1) Make sure that they are aware of the fact that the industry has changed greatly. This is not meant to dissuade them from buying, but they should know that everything is looked at much more closely than it used to be. They need to be completely honest from day one when talking to you and their lender. Quality control / quality assurance is a big deal for lenders these days, so the chance of a file being audited prior to closing to make sure that all of the t's were crossed and i's dotted is much more likely.
2) If they are in the process of packing, make sure to suggest to them that they keep all financial documents out and handy. This could mean documents from previous closings as well as paystubs, bank statements, etc. Setting this expectation up-front is huge and can make you a hero!
3) Let them know that it is not hopeless and that there are still a lot of options available. If it happens that they cannot do something right now let their lender be the one to tell them, not their next door neighbor. You hear the term "Mortgage Consultant" -- it means a lot these days.
ON LISTINGS:
1) Demand pre-approval letters or, at the very least, pre-qual letters that reference that credit has been pulled and reviewed. With guidelines changing frequently, it is that much more important for the buyers loan to have been reviewed by an underwriter (i.e. pre-approved) rather than the Loan Officer just having a conversation with the buyer and saying that it looks ok (i.e. prequal).
2) Watch who the letter is coming from. Who is the lender? Is it a name you know? Is it a banker or a broker? This distinction didn't use to be such a big deal, but the wholesale (broker) side of the business has been hit harder than the retail side (banker), so guidelines are often tighter for brokers. I'm not saying brokers are bad, but they are seeing more restrictions in a lot of cases and many banks have closed their wholesale lending business completely.
3) Who is the Loan Officer? Do you recognize the name? Are they local? Ask around your office or check with other agents you know to see if they are familiar with the loan officer. Experience in the industry and local knowledge goes a long, long way with all that has happened. Your paycheck is dependent on the loan officer as well as the company they work for. Take the time to be sure you are dealing with someone who is up on all of the changes going on.
WITH BUYERS:
See 1,2,3 above! Also...
1) Make sure that they are aware of the fact that the industry has changed greatly. This is not meant to dissuade them from buying, but they should know that everything is looked at much more closely than it used to be. They need to be completely honest from day one when talking to you and their lender. Quality control / quality assurance is a big deal for lenders these days, so the chance of a file being audited prior to closing to make sure that all of the t's were crossed and i's dotted is much more likely.
2) If they are in the process of packing, make sure to suggest to them that they keep all financial documents out and handy. This could mean documents from previous closings as well as paystubs, bank statements, etc. Setting this expectation up-front is huge and can make you a hero!
3) Let them know that it is not hopeless and that there are still a lot of options available. If it happens that they cannot do something right now let their lender be the one to tell them, not their next door neighbor. You hear the term "Mortgage Consultant" -- it means a lot these days.
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