New Housing Law Passed!

Yesterday President Bush signed off on the housing rescue law. This easily passed the House and the Senate and then was passed on to the President. He initially had indicated he would veto this, but announced recently he had lifted this threat. This is a controversial measure, but one that looks to be necessary during these tough times. It remains to be seen whether this will work, but it surely can't put us in a worse position that we currently are in. It is obvious that the government, the financial sector, and economists are pulling out all stops to try to help. As an example recently we have the passing of this housing rescue bill, Project RESTART, and news of a mortgage plan in the works that will try to utilize covered bonds in a shift away from the normal securitization method. These are 2 big steps. Like I said before, we will have to wait and see if they work. Since we are not yet at the bottom of the housing crisis, it will more than likely awhile before we actually know the answer.
Since the big news is yesterday's housing rescue bill, I wanted to highlight the key components for you. They are as follows:

• The FHA will be allowed to insure up to $300 Billion in new 30 year Fixed rate mortgages for at -risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes current appraised value.

• A Stronger Regulator for Government Sponsored Enterprises

• A permanent Increase in Conforming Loan Limits. This will permanently increase the loan size cap on Fannie and Freddie guaranteed mortgages to $625,500 .

• A New Home-Buyer Credit. This includes a tax refund for the first time home buyer worth up to 10% of purchase price, but not to exceed $7500. This actually looks like this must be paid back interest free over the course of the next 15 years. So keep that in mind.

• A ban on down-payment assistance from sellers.

• An increase in the down payment requirement for FHA loans. Now 3.5% instead of 3%.

• A new affordable housing trust fund will be established and paid for by fees from Fannie & Freddie.

• Grants to Stated to buy foreclosed properties. This allows states to buy and rehabilitate foreclosed properties.

• The Treasury will lend a temporary financial hand to Fannie and Freddie as long as they deem it necessary to stabilize the market.
  
  
• These are the highlights of this new bill that was passed into law.
  
  Your comments are welcomed.
  
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  Professional Mortgage Group, Inc.
  "Your Columbia, MO Mortgage Broker"

USDA Funds Secured

As most everyone knows the lending environment has changed drastically the last 12-18 months and with this has come the elimination of the Fannie Mae and Freddie Mac 100% loans as well as more strict and scrutinized lending guidelines. As alternative means to try and fill this niche the familiarization and utilization of the USDA / "Rural Development" loan has taken the lead as one of the biggest growing programs. Volume for this program has almost doubled since Fiscal Year 2007 and is accelerating. USDA (United States Department of Agriculture) is adding approximately 50 new participating lenders each month. The tremendous growth and utilization of this program has put a strain on the original appropriation amount of $4.1 billion plus the $1.5 billion of carry over and disaster funds. USDA guarantees are limited by the budget; so when demand exceeds supply additional funds must be sought and found.

To try and meet the demand for the program USDA Secretary Ed Schaefer has directed $1.1 billion of additional guarantee funding be moved into the Section 502 Guaranteed Loan Program. This program has become very popular for two very specific reasons. First, its currently the only 100%+ financing available in today's market. Second, in case of default the USDA guarantees 90% of the financed amount so the risk to the servicers and holders of this product are extremely limited. Continue to check back for updates as we will do whatever is necessary to keep our audience up-to-date with ongoing news and changes.

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Your Columbia Missouri Mortgage Broker

6 Critical Indicators of a Mortgage Professional

How do you know when your dealing with a true mortgage professional? Not a loan originator, loan officer, mortgage consultant, broker or any other host of names that are given to individuals involved in originating mortgages these days. But a true, ethical, honest and educated mortgage professional. Well, hopefully some of the tips below will help educate you as a consumer in the mortgage environment and what to look for in choosing someone to be your representative in getting the best mortgage possible for you!

1) Does he/she speak fluently and without hesitation?
More often than not when an individual is "dancing around" questions it usually means they are trying to cover something up. For obvious reasons you do not and should not have to deal with this. Choose a mortgage professional that answers your questions head on and with confidence. I say this because if the individual speaks, thinks, and acts like a professional and gives you honest feedback then this should always be taken as a plus! Its not the end all be all because we all know there are some great speakers out there.

2) Do they possess the Lending Integrity Seal of Approval?
This is a designation not required by most states but is encouraged. Basically, its a seal of approval by the NAMB (National Association of Mortgage Brokers) which signifies the completion of 6 hours of continuing education annually (2 of those hours in ethics), 3 professional business references, a background check, and a signed commitment to abide within a stringent code of ethics.

3) Do they have testimonials to back their claims?
The old saying holds true "If you do one good thing 1-5 people will hear about it if you do one bad thing 25-50 people will hear about it." Why do I say this? Doing things the right way, at the right time and with the right tools is crucial. It takes a lot for someone to actually show their appreciation by writing a testimonial and greatly adds to the individuals creditability as a solid mortgage professional.

4) Do they provide a complete and accurate set of disclosures?
Do there GFE's (Good Faith Estimate) include everything you will see at closing? Have they left off the recording fee, appraisal, title charges etc. I cannot tell you how many times I run across this on a day to day basis. Look for someone who discloses everything to you up front! At least that way you know what to expect and who is doing things the right way and who isn't. Do they have a privacy disclosure, truth-in-lending, patriot act, mortgage origination, etc. A true representation of disclosures should be approximately 22-28 pages. Watch out for individuals who disclose significantly less than this.

5) Do they have the knowledge and tools to make float and lock recommendations?
I am not one for recommending doing business with the company with the absolute lowest rate. However, I do understand that this is a crucial piece of the puzzle but just one piece of the puzzle. Understanding what effects mortgage rates, the market, and technical indicators is an attribute that cannot be duplicated. A true mortgage professional will be able to recommend decisions that will greatly impact your rate and hence your payment and interest charges. Do not do business with someone that simply goes off of "gut" decisions rather someone who has an enhanced knowledge and system in place to make recommendations and the instruments as to why.

6) Do you trust them?
I know this one is a little remedial however it is probably the single best indicator in whether or not you should do business with them. Like life trust is earned and not deserved. Have they done the right things to make them earn your trust? Were they recommended by someone you trust and whose opinion you value? If you do not trust them or value their recommendations, opinions and insight then you should turn to someone whom you do trust.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

Boone County Missouri 2nd Quarter Stats 2008

If you remember just a week or so ago I posted the 1st quarter numbers and to say the least they were not good. So rather than babble on with needless chat I'll just give you the figures and let you form your own conclusions.

APRIL 08 vs. APRIL 07

• Down 35 units or 9.5%
• Down $5.65M in volume or 9.3%
• New construction was down 1 unit and $698,736 in volume

MAY 08 vs. MAY 07

• Down 26 units and $5M in volume
• New construction was down 15 units and $2.65M or 14.6%

JUNE 08 vs. JUNE 07

• Down 59 units or 11.4%
• Down $10.7M in volume
• New construction was down 22 units $4.99M in volume or 29.7%

2nd Quarter 08 vs. 2nd Quarter 07

• Down 123 units
• Down $21.57M or 8.8%
• New construction was down 39 units and $8.56M or 38.2%
• Existing homes were down 84 units and $13M in volume or 6.6%

1st 6 mos 2008 vs. 1st 6 mos 2007

• Down 205 units
• Down $34.2M in volume or 9.1%
• New construction was down 78 units and $14.97M in volume or 18.5%

Brought to you by Professional Mortgage Group, Inc.

Your Columbia Missouri Mortgage Broker

Project RESTART

I have been searching online today trying to find something positive to blog about. I finally found this article on CNN Money.

Project RESTART is a program in the works that its founders hope will help revive the mortgage market. When I see anything like this, I am all ears! Mortgage Backed Securities are the key component in todays market. These are formed when mortgages are packaged together and sold. If nobody is buying, we have big problems. Mortgage rates go up and this only causes more problems in a market that is already spiraling downward!
Well buyers are very sparse these days and this programs goal is to try and change this!
In the past lenders packaged loans as these securities and sold them. This allowed them to become more liquid. Due to many of these performing poorly, interest fell off and liquidity problems arose. Lately this power has mostly shifted to Fannie Mae and Freddie Mac. This is because they provide the majority of mortgage funding these days. Investors obviously feel more comfortable buying MBS's that are packaged through these 2 companies. Due to these factors, it is no wonder why they are under such a strain! This program hopes to shift some confidence back to solid lenders who package MBS's. This is necessary to get the market back to normal. The program plans to do this by making these investments more transparent and understandable for investors. To make it simple, in the past you just purchased an bundle of mortgages. With the new format, you can select the risk pool of mortgages you buy. Lower risk means a lower return and vice versa. It makes perfect sense. Will it work? Only time will tell. Whatever happens, it is refreshing see that people much smarter than I am are working hard to fix this mess!

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"Your Columbia, MO Mortgage Broker"

"Hot" Weather Seems to have "Cooled" Off The Buyers

There are many things in life that are left to uncertainty. However, one thing at least in the real estate community that remains a truism even today is the fact that most real estate markets are VERY cyclical. What do I mean? Take for instance the extremely hot, almost unbearable weather the Mid-West has had the last 7 or so days. Obviously in my profession I am surrounded by real estate professionals such as appraisers, title companies, inspectors, realtors and other colleagues. It seems with the hot weather smoldering around a lot of our buyers have disappeared. Now I'm sure this can be partly attributed to other factors such as vacations, waiting for further prices decreases, children's athletics, and rising prices at the pump. But things have continued to go up and down in this industry with one week being very busy to the next not so much.

The key is never getting too high or too low. Professional Mortgage Group, Inc. has been very steady from January 1 to the present. However, that's not to say there haven't been lulls. The good news is the lows have been followed by highs. Many of the realtors I have contacted have confirmed my suspicion that the hot weather has seemed to keep buyers on the sidelines. Like I have stated in earlier posts I have been impressed with Columbia's resilience!

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

Money Magazine's Top Places To Live

If you received our Newsletter yesterday, you may have already read about this topic. We featured a link to this story. I wanted to summarize this list and how Columbia compares.
Columbia used to be featured on this list. I do not recall the last time we were featured, but it is clear we are no longer. Now this doesn't mean Columbia is a bad place, it just shows we have been standing still while others have passed us by.

Topping the list is Plymouth, MN. Here is how Columbia stacks up in a few categories.
Plymouth, MN Columbia, MO
Median Income: $111,631 $64,131
Sales Tax 6.65% 7.55%
Job Growth 7.89% 6.32% (lower than any city in the top 10)
Some College Ed. 83.3% 79.5%
Median Home Price $288,950 $150,000
Crime 2 / 28 5 / 33 (Among the highest)
(personal crimes/property crimes per one thousand)

Here is how we stack up against the averages of the top 100 Places to Live.
Median Income: $93,075 $64,131
Sales Tax 6.60% 7.55%
Job Growth 18.72% 6.32%
Some College Ed. 73.7% 79.5%
Median Home Price $291,949 $150,000
Crime 2 / 25 5 / 33
(personal crimes/property crimes per one thousand)

To view the article click here
To view how Columbia compares in all categories click here.

So as you can see Columbia does lack in some areas, but we are not way off. The most glaring issues are our job growth and crime. As far as crime, keep in mind we are comparing this area and all the others to the best of the best. So we are probably in pretty good shape. If we can just lure some new businesses to Columbia to stimulate the job market, we will be moving in the right direction. With such an improvement many other positives will come to this community!

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Professional Mortgage Group, Inc.

VA Approved!

I am happy to say that as of Friday July 11th Professional Mortgage Group, Inc. has officially been approved through the Department of Veterans Affairs. Yes, that's right we can and will deliver our same great service, knowledge and ethical advice to our veterans out there! This is a new product line for us that we have not had since our inception so we are very excited about having the ability to work with another customer base that we have not been able to in the past.

In connection with this we (Professional Mortgage Group, Inc.) have also begun the process of getting our Lending Integrity of Seal Approval through the MAMB (Missouri Association of Mortgage Brokers). Basically, this is a true seal that is only issued upon completion of 6 hours continuing education, professional references, back ground checks and application diligence. Hopefully sometime within the next 30 days we will be the first mortgage broker in Mid-Missouri with this designation.

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Your Columbia Missouri Mortgage Broker

Something Positive Please!

If you have been paying attention to the news and this blog lately, you have no doubt noticed a common theme. Negativity! We follow all of the industry news very closely and the economy has been topic #1 lately. The problem is that all the news that I have read has been bad. Rates going up, Indymac collapsing, gas prices increasing, Fannie and Freddie bailout, etc.. It goes on and on. This on top of all the Housing Slump talk. Don't get me wrong, I know it is bad out there and we are going through a very very tough time. However, I also know that there is a lot of good news out there as well. Since we are in Columbia, Columbia is what I want to focus on. Our numbers are down, but I have talked to several different Realtors and they are still having solid years. Same goes for Mortgage Lenders. We are all down off of our high times, but things are still steady for the ones who are on top of their game. Our June was a record month for us and after a slow start around the Holiday, July seems to be shaping up just fine! I am sure many of you have success stories to tell. I know we all like to hear positive comments rather than negative! It is human nature! Who wants to be in the dumps all day long!
This blog is meant to be interactive. You can remain anonymous if you want, but please post a comment on any positive news you have to offer! We welcome the feedback and I am sure all of our readers will to! Also be sure to click through to our complete blog page and vote for your opinion of the Columbia market.

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Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"

IndyMac; A failure for the ages!

I was really wanting to talk about something positive for the housing community today however, in light of the IndyMac collapse and just how rare this phenomenon is I thought it better served to talk about just that, a failure for the ages!

It's official starting today the former bank called IndyMac Bancorp will now be operating as IndyMac Federal Bank. Why? Because the FDIC (Federal Deposit Insurance Corporation) took the bank over effective today Monday July 14, 2008. This was the fifth U.S. Bank to fail so far this year and had assets of $32 billion as of March 31st. It will rank as the third largest bank failure ever in the U.S. and the biggest in two decades; following those of Continental Illinois National Bank & Trust Company, which went down in 1984 and the collapse of American Savings & Loan Association in 1988.

Behind much discretionary talk are the reasons for the failure and a letter addressed to the FDIC and the OTS (Office of Thrift Supervision) by U.S. Senator Charles Schumer was made public on June 26th concerning the banks viability given today's economic woes. By July 10th the bank had lost $1.3 billion in deposits. This "run on deposits" put a HUGE financial strain on the bank that was already in financial distress due to the credit crunch, rising delinquencies and foreclosures, and liquidity crisis! However the letter by Senator Schumer was received by much criticism both by the general public and those in power. Director of the OTS John Reich was quoted as saying "the institution failed today due to a liquidity crisis. Although the institution was already in distress. I am troubled by any interference in the regulatory process." Senator Charles Schumer then countered by saying "had the OTS done its job as a regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today." Instead of "pointing fingers of blame, OTS should start doing its job to prevent future IndyMac's." Another prominent professional stated that "Schumer's letter did have an impact, IndyMac's collapse was only a matter of time. What Schumer did was wrong and irresponsible and I'm not sure what he was trying to accomplish but IndyMac was already well-known to be a forthcoming failure."

It's projected that this banking failure will result between $4-8 billion or more than 1/10th of the FDIC's insurance deposit fund. IndyMac's shares were trading at 11 cents this morning compared to $29.91 one year ago.

Like I stated earlier in the post this is truly bad news for the mortgage community as IndyMac was a prominent U.S. "wholesaler" of mortgages for broker's however like everything else we have been faced with we will "roll with the punches" and move forward.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

Newsletter Feedback!

As most of you know we rolled out our E-Newsletter yesterday. This is titled "Mortgage Market Update" and we will do our best to issue this once a week; normally on Wednesdays. We received quite a bit of positive feedback and we want to thank all of you who responded. We really try to provide a service to the real estate and mortgage community. If any of you have any additional feedback, please email us directly or comment on this blog. This is for good and bad feedback, we want it all. This is the only way we can customize it to cater to our readers. If you are reading this and would like to be added to the distribution list, please send your email address. We will gladly add anyone who is interested!
We also wanted to mention that we realize the overall theme and news links were a bit negative. This is not our goal. We don't want to put out a Newsletter that highlights the bad each and every week. However, as all of you know the economy is a mess right now. When it came time to distribute this weeks newsletter it seemed like all the relevant news that day was bad. We also didn't want to ignore the 1st Quarter stats for Boone County. There are positives out there and we will do our best to highlight those as well. Lets all keep our fingers crossed that in the future there will only be good things to make note of. Wouldn't that be nice!!!!!

Thanks again to everyone that took time to read the newsletter and an even bigger thanks to those who commented. Please let us know of ways to improve.

Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"

Boone County Missouri 1st Quarter 2008

Monday of this week I decided to analyze our housing figures for the first quarter of 08'. To my dismay I was a little shocked, disappointed, and very surprised at what the actual numbers told me about our great community. It seems at times we get so tied up in our day to day work and career that we sometimes forget about what is actually happening out there. This post is a little hard to type as there is so much negativity surrounding the national housing market and the Columbia market for that matter that the numbers did not help matters. I will point out both the negative aspects of the first quarter for Boone County Missouri and the positive factors; yes there were some positive attributes we can take from the first quarter. Please keep an open mind and don't kill the messenger as some of the figures are little disturbing.

NOT SO GOOD NEWS!

- January 08' was the worst first month in over 6 years; down 7.9% from 2007 numbers and 11 units.
- March 08' was the worst 3rd month in over 6 years; down 14.8% from 2007 numbers and 37 units.
- The first quarter as a whole was down 9.7% and 86 units and was the worst quarter since 2003 by volume and was the worst quarter in over 6 years by units with only 323 units sold as compared to 404 1st Q 07', 467 1st Q 06', 377 1st Q 05', 361 1st Q 04', and 378 1st Q 03'..
- Overall we are down over $12M compared to 2007 and we all know what a great year that was!
- New construction continues to take a beating with only 58 units sold through the first 3 months down from 97 units in 2007's first quarter.
- The first quarter for new construction was by far the worst over the last 6 years with only $12.9M in volume compared to $19M in 07', $28M in 06', $22.6M in 05', $17.7M in 04', and $17.3M in 03'.

Well hopefully you get my point about the first quarter. There are many other areas I could point out but these are the most pertinent and "eye popping" numbers. Now on to the good news!

THE GOOD NEWS!

- The list price to sold price seems to be very strong somewhere between 97-98%. This is great news for the homes that do sell!
- Construction has REALLY slowed down so as the inventory of homes on the market diminishes hopefully the demand and a "sense of urgency" will rise.
- Existing homes sales are actually "holding there own" as we exceeded 05, 04, and 03 in volume and were really close if not exceeding in units sold.
- We has real estate professionals and a community have continued to address the issues that put our fine city in this position to begin with.

The bottom line, at least based what I see, hear and analyze is that we simply do not have enough buyers given our current supply of homes; especially "higher-end" buyers (buyers that are looking at $300K+). It also seems the buyers we do have, again especially high-end have something to sell before they can buy. As always your comments are welcomed and I hope you enjoyed the post.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

PMG's Newsletter is on the way.

We at Professional Mortgage Group are rolling out an E-Newsletter. This could start as early as tomorrow. It will be distributed once a week via email and will include the following features:

• It will highlight our blog post for that day and link directly to our entire blog page.
• It will also provide links to the most pertinent industry news stories for that week.
• It will provide testimonials from Realtors and Clients.
• It will link directly to our website. (http://www.pmg-inc.net/)
• It will link directly to our loan status portal.
• It will highlight mortgage rates for that day.

We are excited to provide this useful tool. By combining some of these features, it will eliminate a few of the different emails you receive from us. We know email "inbox" management can be a pain at times and wanted to come up with a way to provide you with the same information with fewer emails.

Be on the lookout for this new tool!

Brought to you by:

Professional Mortgage Group, Inc.

"Your Columbia, MO Mortgage Broker"

What's On Tap?

Very light week on the forecast there are only two potential "market and rate movers"; weekly jobless claims on Thursday and University of Michigan Consumer Sentiment report on Friday (keep in mind this could not do much at all). So basically once again "headline" news will be moving the markets this week.

On the front already this morning are congressional efforts to curb speculative trading on the oil platform. I read an article last week that stated speculative buyers on the oil platform account for over 70% of the rising gas prices. I truly do not know if this is true however a representative from Exxon Mobil stated that given the current supply and demand parameters oil should be trading between $50-$55 a barrel less than half of what it is trading at this morning. I don't want to get into a big debate over this so early in the week but at least you get my point on "headline" news.

Another big piece of news that will hit "close to home" is InBev's proposal to try and "re-organize" Anhueser-Busch's board of director's to "push along" it's takeover/buyout of the company. Some of you may have missed this but about a week or so ago InBev, a belgian brewer offered to buy Anhueser Busch for cash even though it was not interested in being sold. Since then the belgian brew giant has been trying to "entice" Anhuser's executive management team to bite on the deal.

Hopefully things will turn positive for rates this week it seems we have been hovering around 6.25%-6.5% for the past two weeks as traders are more interested in putting their money else where in the market. With the DOW below 11,300 I must say that I am a little hesitant on this happening any time soon!

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

Mortgage Pre-qualifications

How many times as a realtor have you had the phone call stating "we cannot close" or "I'm sorry the loan was turned down"? All of a sudden you have upset buyer's, seller's and your pay check and lively hood are put in jeopardy. Let's not even bring up your reputation should you have recommended the lender that "botched" the deal! Why do I bring this up? Doesn't this happen to everyone? Can this be prevented?

The answer to the later is yes! We has mortgage lenders must do our due diligence when evaluating any file to ensure that there are no surprises. If there are going to be "unknowns" or possible "hiccups" then all parties need to know about them upfront. Every file is different and to our defense at times we get misinformation or a "unique" property and a wholesale list of other items that are involved in properly piecing together a mortgage loan. However, there are things we must do in order to ensure that when a pre-qualification is given the loan is 99%-100% going to close. I truly believe that's why PMG has been so successful in light of a "challenging" housing market. Now we're not perfect but I can only recall one file that was not able to close within the last 24 months and with that being said I was able to line up alternative financing for the client and the closing date was still met! How is that possible when there have been a wholesale list of changes in the real estate community?

We have a professional responsibility to do what is best for the client and one of those "responsibilities" is "due diligence". This means collecting all income and asset documentation up front (i.e. pay stubs, taxes, W2's, bank statements, IRA information, 401k statements, and any other necessary financial documentation). Taking a complete application and by complete I mean never leaving a stone unturned. Do they pay child support, alimony, have they been divorced, how many children do they have and what are their ages, have you had periods of being laid off repeatedly, what is the employment situation like, what has the residence situation like, do they pay rent and if so how much and to whom, do they pay cash or check and lots of other "pertinent" information. By pertinent I mean; what type of home are they purchasing, is it on acreage or in a subdivision, will there be seller paid closing costs, does it need any repairs or are there foundation issues, etc. Not only is this beneficial for the sellers and real estate agents but it is also extremely beneficial for the buyers. This way they know what to expect upfront on exactly what they qualify for and the piece of mind that the "leg work" has already been completed in connection with the biggest purchase they will ever make. This also helps us determine what product is going to meet the buyers needs while at the same time being more effective and efficient in the manner in which we deliver our services!

I had a situation just this week where I met with an individual who thought they were in good shape to purchase a home and I agree their credit and housing information were fine. However, when I collected all the income and asset information and put everything together there was no way to make the deal work. A portion of the income she was including in her figures could not have been used in the application and she ended up not purchasing a home. However, I did not leave her empty handed and gave her a small list of items she needed to do in order to purchase a home in the coming months. Should she do the things I recommended the home buying process will go just fine when she is ready to pull the trigger again. The buyer's agent really appreciated my "due diligence" in not stringing this file out and I would like to think the listing agent and seller also appreciated their home not getting tied up on a deal that had no chance of closing.

Professional Mortgage Group is actually in the process of updating their Quality Control plan to more closely resemble our current lending environment and real estate market. Rest assured when PMG issues a "pre-qualification" or "loan commitment" that we have done our "due diligence" and that deal will close just fine.

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Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

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First Time Home Buyers Are The Key!

I read a good article today on the current housing crisis. While none of this information was particularly new news, I thought it would be worth mentioning. It was actually one of the few semi-positive articles I have read on this topic in awhile. The gist of the story circled around the idea that we are at the bottom or at least near it. It is now time for the rebound to start and the First Time Home Buyer holds the key! I know this is a bit obvious and simplistic, but after all the solution to this crisis isn't rocket science. There are just way too many homes out there and not enough buyers. Joe Blow can want to sell his home and buy a new one, but this just doesn't fix the housing surplus does it? A "New" buyer that doesn't have a home to sell needs to arise and save the day. In today's market, this needs to happen millions of times over! Every market is different and the story I read was no doubt talking about a large market like California instead of something comparable to Columbia, MO. Nevertheless it's worth discussing even if it all doesn't apply here.

A couple different factors are influencing First Time Home Buyers right now. These are the elimination of 100% loans (except USDA loans- read Monday's post) and slightly higher interest rates. What better to scare off a new buyer than telling them they must save even more money and their monthly payment will be a tad higher due to the interest rate! However, if they look a bit deeper things may not be so bad! Positive factors to help offset the negatives are the reduced sales prices these new buyers are enjoying and the fact interest rates are still pretty darn good. First Timer's are now able to get into nicer homes that at one time they couldn't afford!

I know I for one bought at the peak of the boom! I didn't get much bang for my buck and had I been in California I would be hurting pretty bad since I would be dealing with such rapid depreciation! Luckily Columbia, MO won't experience this as bad as California! Our Market has been fairly stable considering the mess that is out there! These super deals are not quite as prevalent here, but they are out there to find. I know first hand because we have loaned to several First Time Home Buyer's that have taken advantage of some sweet deals!

With all this being said, if rates do continue to creep higher I may want to re-visit this topic. Higher rates will definitely put a cramp in any deal you get!

In getting back to the article, the rebound being discussed had a few steps that will need to take place over several years.

First, the return of First Time Buyers must shrink a good deal of the new home surplus out there.

Second, these new buyers must turn to existing homes since the new home surplus has been reduced and very few new homes are being built. This is great news for the sellers who are wanting to upgrade to a new home. However, these sellers are taking a hit due to these new buyers needing a deal since there are no new homes to snatch up. The sellers saving grace is that they too should catch a break when they trade up!

Third, new housing starts should start to occur at a slightly higher rate. However, this should be very gradual. It will take a few years to gather steam because they will be competing more than ever with existing homes still selling at a bargain.

Lastly, the surplus of existing and new homes will eventually disappear. This will take several years, but it will eventually happen. Once this finally happens, prices can start to rise again.

As you can see this model sure makes more sense in a larger market that is experiencing larger sales price reductions, but it still makes sense.

I am just keeping my fingers crossed that mortgage product offerings and interest rates stay at reasonable levels. If they don't then this models concept will be the same, but it time frame will surely be adjusted for the worse!

I just wanted to pass this information on. After all it was a positive article instead of another piece of news to keep you down in the dumps!

Your Comments are welcomed.

Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"