What You Need to Know in Today’s Mortgage Market

The media would have us believe that the sky has fallen, but the truth is for most borrowers this is just a little bump in the road. The trick is to know where the danger zones are and to navigate safely around them.

Availability of funds With the credit crisis many mortgage lenders have closed their doors. The good news is that other lenders have stepped up to the plate and there is plenty of money for qualified borrowers. Loan processing is taking longer, though, so be sure to allow ample time.

Interest Rates Amazingly, after all the wild swings, fixed rates for loans under $417,000 are about their same levels as a year ago. The softness of the economy has been pushing them down while inflationary forces are pushing in the opposite direction upwards. The result is 30 and 15 year fixed rate loans are at a very good level right now. Fixed Jumbo loans on the other hand have been severely impacted. These loans are not guaranteed either by Fannie Mae or Freddie Mac and are carrying a “risk premium” which results in higher rates. Congress increased the $417,000 limit to bring down the Jumbo loan rates but most counties in North Carolina did not qualify based on median sales prices. Fortunately as we work our way through this credit crisis, jumbo rates are beginning to improve. ARMS contrary to logic have moved upwards. The markets are “frozen” with an excess supply which drives interest rates higher to attract investors. We are faced with the odd predicament of fixed rate mortgages being cheaper than ARMS. Today the best rates are for fixed rate mortgages under $417,000.  Click for FREE REPORT for a detailed discussion of today’s mortgage choices.

Underwriting Guidelines In one breath lenders are saying how they want to help homeowners, but in the next they are increasing the hoops to jump through. Lenders can approve a loan one day and then notify us the next that their guidelines have changed. The only solution is to work with a broker who has a number of lenders to draw on. Borrowers need to be prepared to document everything, even that which is clearly obvious. The days of common sense underwriting are long gone, having been replaced with absurdity in underwriting. The good news is that we are experiencing this every day so we can guide you through it. Click for a FREE REVIEW of your loan scenario.

Housing Prices Fortunately the Triangle has not suffered as other parts of the country. Housing prices are still favorable and lenders are giving us preferred rates and terms as compared to other areas. The difficulty some buyers have been running into is selling their current home, especially if it is located in another state. Obviously planning is the key and preparing for contingencies. There are strategies and many tactics still available.

New North Carolina Contracts Recently North Carolina revised their purchase and sale contracts. Now certain tasks are to be done on a very specific timetable or the buyer risks losing their earnest money deposit. Consulting with your lender before signing is imperative because the contract imposes deadlines which must be met by your lender. Make sure that all the dates you set in the contract are reasonable and follow a logical sequence. Click here for a FREE REPORT on the new North Carolina Contracts.

No Cost Mortgages And is there a tooth fairy? No closing costs is a great enticement but I don’t know of any lender, attorney, appraiser who works for free. There are only two ways to do no cost loans. The first is to roll the costs into the loan amount on a refinance or secondly increase the rate so the lender pays the costs. Is it advantageous to pay a slightly higher rate? The answer is it depends. It is a simple math calculation. Calculate the payment with no costs and subtract the payment with costs. This is your monthly savings. Divide your monthly savings into the cost and you will have the number of months to recoup your closing costs at the higher rate. What does it mean? Generally you will save money if you go with the higher rate and no costs if you have the mortgage less than four years. Otherwise you will be paying needlessly extra money over time. Click here for a FREE ANALYSIS.

Brokers vs Banks Many customers are confused because of all the negative publicity recently about brokers. The truth is yes, there were a few bad apples, but the fact is most brokers are reputable and honest and have your interests at heart. Over 60% of all mortgage originations are done by brokers rather than banks. I think it is the service, specialized knowledge and skills and having sound mortgage solutions to create and preserve wealth which distinguishes brokers from banks. Contact us today for a FREE ANALYSIS and you will be on the way to create and preserve wealth.