Think Outside the Box

After enduring a year of fluctuating interest rates and mortgage industry trends, current and potential homeowners are opting to think outside the box, the 'big box' that is. They are relying on their local lending agent, instead of online big box lenders, to provide the best mortgage products and interest rates to fit their needs.

Over the next year, industry experts predict that each home purchase and mortgage arrangement will be as unique as the people purchasing the home. Home buyers are seeking out their local mortgage brokers in order to ensure they obtain a variety of lending options that will fit their lifestyle and budget. These unique buying and lending options not only allow home buyers to take advantage of the rates and products that match their current and future financial situations, but it also provides a level of flexibility that might not be available through an online-only lender.

Below are a few advantages to consider when purchasing loans from your local lending agent:

Competitive Rates
A couple of years ago interest rates were at an all time low, meaning home buyers could receive the best loan rates from just about anyone in the mortgage business. Now that local and big box lending agents share the same pool of wholesale lenders, both are able to offer the same mortgage products and rates. But, unlike big box brokers, local brokers have the ability to offer an additional set of geographic specific lending options which may better fit a borrower's niche market.

Easy Access
In order to ensure a speedy lending process, it is important to work with a broker who is accessible. By using a local mortgage broker instead of an online big box lending agent you can ensure you have personal first-hand access to the people underwriting your loan. Having the ability to phone or meet your broker and underwriter will help keep your loan on track towards quick approval.

Customer Service
Home buyers often find it comforting to know that their broker can meet with them in person as they guide them through one of the largest and most important purchases of their lives. This level of personalization allows the local broker to accurately evaluate the borrower's financial situation and provide superior loan options and customer service. A local mortgage broker's knowledge of the surrounding real estate and their dedication to offering flexible, innovative loan and payment options ensure you receive a loan that fits your specific needs.

Understand the Market –Shop With Confidence

Rates go up rates go down. In case you haven't been paying attention, the market has been very volatile lately. Every day it seems as if it's an absolute crapshoot as to where rates will be for that day. The good news is that rates are still low by historical standards.

Over time, small changes can add up to thousands of dollars so it's important to have at least a basic understanding of what drives interest rates and how the market works. My goal for my clients is that they know the answers to some basic questions so that they can understand how the market works and they can be armed with the right questions when they go shop for a loan. Unlike a lot of my competition I actually encourage shopping.

Here are some of the questions we give our clients:

1) What are mortgage interest rates based on?
The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.

2) What is the next Economic Report or event that could cause interest rate movement?
A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, visit www.suewoodard.com and hit the green MMG Weekly banner - this is a copy of our weekly newsletter, let us know if you want to be added to my weekly distribution list.

3) When Bernanke and the Fed "change rates", what does this mean. and what impact does this have on mortgage interest rates?
The answer may surprise you. When the Fed makes a move, they can change a rate called the "Fed Funds Rate" or "Discount Rate". These are both very short- term rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the financial markets in response to inflation. For more information and explanation, just give us a call.

4) Do you have access to live, real time, mortgage bond quotes?
If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading yesterday's newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday's paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!

Be smart... Ask questions. Get answers!
More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life. but we do this every single day. It's your home and your future. It's our profession and our passion. We're ready to work for your best interest. www.jeffnunley.com    

America's Balance Sheet Moving Again as House Equity Falls – Todd Ballenger

The net worth of U.S. households hit a record high $58.6 trillion in the third quarter of 2007 according to the Fed's Flow of Funds report. This is surprising, when you consider that net equity in homes declined in the third quarter for the first time in 16 years. Growth is at further risk in the current quarter. We often speak about managing assets and liabilities and how they tend to move in different uncorrelated cycles.  As house prices drop, growth in stock and mutual fund holdings drove the gain in wealth this past quarter for most Americans.

Net Wealth

Borrowing grew 7.9% from last year - the slowest growth in borrowing since the start of 2001.

Asset grew 7.4% last year. While borrowing is growing faster than assets, the level of assets is larger than borrowing, so there was still a balance sheet increase in wealth.

Household assets continued to grow at a rate of about $5 trillion per year.  Growth in the total value of stock and mutual fund holdings by consumers increased by more than the net equity in real estate for the fourth consecutive quarter and by the largest amount since the first quarter of 2004.

Shifting Demand For Money

Consumers are shifting the nature of their borrowing. As standards have tightend for mortgages, overall borrowing by consumers using credit grew by over a percentage point over the last year to 5.3%. If consumer continue this trend of moving to harder money, they'll increase their debt and lose tax benefits associated with most mortgage borrowing, further creating their own version of the current credit crunch.

Real Wealth May Drop

Housing wealth is likely to decline further. Many believe that the OFHEO 1.8% growth for the year through the third quarter is off, as they use lower priced homes and exclude jumbo properties, which according to NAR and Case-Shiller studies were much lower in the same quarter.

Time To Think Different

Equities are expected to slow in the shorter term, and a decrease in real house values will continue to put pressure on cash flow and spending habits as loan reset to higher interest rates.  A shift is possible as people see housing stall, investment slow, and find the only way to really impact their savings may be to actually save more (meaning spend less).  While this isn't appealing to most, it may be a simple fact of the forces that are lining up... and as we say the timing for good financial education of spending and savings habits around the consumer assets and liabilities will be more valuable than ever.