Increased Federal Loan Limits Lower Price Tag on Hundreds of Thousands of Loans

 

One immediate benefit of The Economic Stimulus Act of 2008 is the increase in loan limits for high-cost areas of the country. By raising the Federal Housing Administration's loan limits on what qualifies for lower-cost FHA, Fannie Mae and Freddie Mac loans, the bill could help a quarter of a million families purchase or refinance their homes at a lower cost. Combined with record low interest rates, the change could improve the financial picture for many now facing foreclosure. The options and loan ceilings vary, however, from county to county and only a Certified Mortgage Planner can weigh all the options to determine if a new loan makes sense for an individual homeowner.

 

The increase is only temporary, however, so homeowners looking to shed the premium they pay for subprime or jumbo loans required to live in their state need to act quickly to take advantage of these federally-guaranteed loans.

 

FHA loan limits that will range from $271,050 to $729,750 with the largest loans available in high-cost metropolitan areas such as New York, Los Angeles, San Francisco and Washington, D.C. But even smaller markets could see increased activity in the housing market when the new loans become available. In Eugene and surrounding areas we did not have any increase in the Fannie Mae limit but did have an increase in FHA limits to $343,750.

 

 

 

Money Magazine Endorses Equity Management Principles

The January issue of money magazine had a great article that reinforces what Wealth Equity Planning is all about. The article is about why pre-paying your mortgage is not mathematically supported. It looked at how over the long term investing that cash you would have put into your mortgage is dramatically superior. It also points out that investments are more liquid and can be accessed easily in an emergency making it a much safer strategy as well. It's great to see the mainstream media finally embracing these sound financial principles. To read the whole article, go to www.wealthequityplanning.com/index.php?op=articles .

Bankrate Study Shows Holes in Mortgage Planning

A recent study by Bankrate.com shows that nearly 36% of homeowners don't know what kind of mortgage they have.  Sadly, this doesn't surprise me too much.  Every day we get at least one call to the office from a person who says they thought they had a fixed rate loan but it is now adjusting and payments are going too high. 

The real problem is not just that these people don't know that their mortgage wasn't fixed but that in almost every instance these people really NEEDED a fixed rate loan.  Most of these people are credit challenged and things really haven't changed for them in the last two or three years.  It's sad to think that many people in this situation may now lose their homes because the market has changed the guidelines making these loans available have tightened. 

The moral to this study is if you're not sure what type of loan you have find out ASAP! Feel free to give my office a call and I can review all of your paperwork with you.

Historic Fed Move Cuts Both Ways for Borrowers

Hot on the heels of its surprise inter-session rate cut of 75 basis points last week, the Federal Reserve cut key interest rates again, the fifth straight cut since September 2007. In its statement last week, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth." In other words, economic data suggests the US is on the brink of recession, and the Fed is acting accordingly.

Who benefits from this cut?
If you have a loan that is directly tied to the Prime Rate, you will see an immediate benefit. Home equity lines of credit (HELOCs) and variable rate charge cards are the types of loans that will have an interest rate reduction on their next statement.

What does this mean for long-term rates?
Long-term mortgage rates, the lowest we've experienced in years, could actually increase after today's cut, based on historical performance and recent trends.

So if you're waiting for long-term rates to fall further, don't count on it. Your best chance to lock in the lowest rates since 2005 is now. Getting your application in process now will allow you to capture a great rate before it's too late.

What REALLY moves mortgage rates?
Fixed-rate mortgage rates aren't directly tied to Fed interest rate moves. Instead, they tend to follow in the direction of other long-term government bond yields, such as the 10-year Treasury, which historically moves in accordance with the economic outlook and in advance of Fed actions. The performance of Mortgage Backed Securities, issued by Fannie Mae and Freddie Mac, is what really determines long-term mortgage rates.

How does the economic stimulus package fit into the picture?
The economic stimulus package from Congress and the White House could be a double-edged sword for borrowers. Combined with recent Fed actions, the package could create inflation and bring about higher long-term interest rates.

On the positive side, conforming loan limits are likely to be raised from the current $417,000 to upwards of $625,000. This means great potential savings for purchase and refinance candidates who live in 20 high-cost areas across the country.

What should you do next?
If you're unsure how the rate-cut or the proposed legislation affects your mortgage, don't worry, you're not alone. There's no one-size-fits-all answer. Give us a call right away. We'll review your mortgage and see what, if anything, can or should be done to make the most of your individual financial goals and needs.

The Mortgage Planning Process

The mortgage planning process is different than the typical "shopping for a mortgage" experience. The typical shopping for a mortgage experience includes: Wasting your valuable time trying to save $25/month by comparing rates, fees and closing costs among different lenders. Wasting your valuable time trying to baby-sit the mortgage company you've reluctantly chosen to work with. Being promised one thing and then getting something different. Being "sold" on one mortgage product over another. The mortgage planning relationship is about you: Receiving valuable financial advice and guidance that can literally save you hundreds of thousands of dollars. Trusting a professional who is committed, qualified and equipped to deliver what they promise. Experiencing a "concierge" level of service when you are in the market to buy a home, refinance your mortgage or make cash flow changes to enhance your lifestyle. Implementing a defined financial plan of action in helping you achieve your life goals and dreams. Maintaining an ongoing high trust relationship with a team of financial advisors who can help you make necessary changes in your debt, cash flow and home equity planning strategies. This is a relationship, not just a transaction. As such, it requires a defined system of accountability in order to work effectively. The Mortgage Planning Process consists of the following five steps: 1. Establish and define the client-planner relationship. Mortgage Planner Should: Ask you for information about your financial situation and your time frame for results and success. Gather all the necessary documents before giving you the advice you need. Clearly explain or document the services they will provide to you. Explain how they will be paid and by whom. Unless you are willing to pay a flat fee for mortgage and real estate equity advice, mortgage planners are typically compensated through a commission structure set up with the lenders they work with.   You Should: Clearly explain how financial decisions are made in your household and include all the key decision makers in consultations with your mortgage planner. Be prepared to share personal and financial information with your mortgage planner in order for them to be able to advise you on how best to achieve your goals. 2. Analyze and evaluate your financial status. The mortgage planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your credit situation, real estate equity, debt situation and cash flow.

 

3. Develop and present mortgage planning recommendations and/or alternatives. The mortgage planner should offer mortgage planning recommendations that address your goals based on the information you provide. The mortgage planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The mortgage planner should also listen to your concerns and revise the recommendations as appropriate. 4. Implementing the mortgage planning recommendations. You and the planner should agree on how the recommendations will be carried out. The mortgage planner may serve as your "coach," coordinating the whole process with you and other professionals such as CPAs, CFP® professionals, attorneys, Realtors, builders, insurance professionals and other qualified advisors. 5. Monitoring the mortgage planning recommendations through a quarterly or annual mortgage and equity management review. You and the mortgage planner should agree on how you will both monitor your progress toward achieving your goals. During this review, your mortgage planner can adjust their recommendations, if needed, as your life changes. Most often, this process involves periodic assessment of: Your fluctuating cash flow needs. Changing market interest rates and mortgage strategies. Income and career alterations. Family changes including: Children's financial needs. Caring for elderly parents. How your real estate equity and investments are performing from both a cash-flow and "internal rate of return" perspective.

MythUnderstandings”--Think Like a Millionaire

 

Demystifying Real Estate Investing

Overcoming the misconceptions that keep you from investing in real estate

Most people who aren't investing in real estate are being stopped by doubt and fear. They may want to invest in real estate, but each time they consider taking action, they come up with an obstacle or a core belief that keeps them from moving toward their dreams.

According to The Millionaire Real Estate Investor by self-made millionaire and real estate investor Gary Keller, most successful real estate investors have had to overcome certain beliefs that later proved to be unfounded. Some of these beliefs center around the way they view themselves as investors, and the others are focused on beliefs about investing. By addressing these doubts and fears, and recognizing that they're unfounded, you'll eliminate the major barriers to becoming a real estate investor.

• Personal Myth #1: "I don't need to be an investor. My job will take care of my personal wealth." Truth: History indicates that few jobs pay enough to create true financial independence. Financial wealth building depends on another vehicle.
  
• Personal Myth #2: "I don't need or want to be financially wealthy. I'm happy with what I have."
  Truth: Financial wealth offers greater opportunity to care for yourself and others, and that is something most everyone wants and needs.
  
• Personal Myth #3:
  "I can't do it."
  
• Truth: You don't know what you can or cannot do until you actually try.
  
• 
  
• Investing Myth #1: "Investing is complicated."
  
• Truth: Investing is as complicated as you make it.
  
• Investing Myth #2:
  "All the best investments require knowledge most people don't have."
  
• Truth: Your best investments will always be in areas that you can or already do understand.
  
• Investing Myth #3:
  "Investing is risky. I'll lose my money."
  
• Truth: Investing and gambling are not the same thing. Investing, by definition, is not risky.
  
• Investing Myth #4: "Successful investors can time the market."
  
  
• Truth: Timing isn't about being in the right place in the right time. It's about being in the right place all of the time.
  
• Investing Myth #5:
  "All the good investments are taken."
  
• Truth: Plain and simple, every market, in every time, has its share of good investments.
  

 

There's nothing more powerful for keeping you out of action than fear and doubt. By seeking the truth, rather than relying on unfounded beliefs that lead to fear and doubt, you can overcome your greatest obstacle and get closer to achieving your dreams.

If you're interested in investing, but you have doubts about whether or not investing fits in with your current financial program, it's best to consult with a qualified and reputable Mortgage Planner who can assess your financial situation and put you on a plan that targets your goals. As with any financial program, gaining clarity on the facts is always the best place to start.

 

 

 

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.