At 1:15 CST we will know but most predict the benchmark rate (Federal Funds Rate) to be cut by .50% to 1%. Some think that unless significant recovery signals are seen in the near future the borrowing costs for large financial institutions could be at 0% by June of next year. One of the disturbing factors concerning this unprecedented move not seen since the Eisenhower administration is the fact that many of these banks are still hoarding the cash or looking for other opportunities to buy "distressed" banks instead of lending for which these moves were intended. Washington voiced a stern message yesterday to banks looking at doing this!
KEEP IN MIND....that mortgage rates WILL NOT be affected by any cut or hike to the benchmark lending rate! More over it's how the overall macro economic environment reacts to this cut that will determine mortgage rates fate. Mortgages rates are directly related to the buying and selling of Mortgage Backed Securities (MBS) which are like riding an insane roller coaster ride with their volatility. Typically in a "normal" financial environment (keep in mind we are not in any sense of the word in a normal environment) a rate cut would lend itself to higher inflationary concerns thus diminishing the value of fixed income assets (i.e. MBS) and thus their luster would be tainted. What am I saying? Bluntly in a normal world MBS would be hurt by a rate cut because of inflationary pressure thus leading to higher rates. However, with that being said I highly doubt we will see that affect. Why? Because the economy is contracting and commodity prices have tumbled leading to less of an inflationary issue and more about an economic rebound concern.
We are living through unprecedented times folks! There are no models, past experiences, graphs, or scientific projects for what we are experiencing! Anyone who tells you any differently is simply wrong. With every passing day we see new records in the DOW, huge swings in mortgage rates, further signs of a recession and other negative factors. Hang in there, buckle up and be smart. Do business with the right people, do your homework and educate yourself and things will work out.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Wednesday, October 29, 2008
Tuesday, October 28, 2008
Quick Recap Of Today's Market News
There are a few items I just wanted to briefly touch on.
Mortgage Rates
Mortgage rates have have spiked a little bit from the lows we saw last week, but as always it should turn back around again in time for people to lock in before they start the cycle again! Just refer to our rates section on www.pmg-inc.net.
Stock Market
The stock market as I type this is up 471 points so if this holds true it is a great day. The problem we have been having is sustaining these rallies. We have been having 1 great day followed by 4 bad ones, etc.. Not a good recipe.
White House Warns Banks
One problem we have blogged about and in the past is the common trend of banks hoarding cash. Ever since turmoil hit, banks have been taking advantage of their lower borrowing costs and opportunities to shore up their balance sheet instead of using these funds for their intention, lending! Lending is how these institutions make money and they are hoarding the cash instead. The new trend is taking the bailout funds and trying to use it to acquire lesser banks! Again, not the intention of the bailout. I think it is a good sign of the government voicing their displeasure. The problem is that very few strings were attached to the bailout money. We will have to keep a close eye on what develops! We really need lending to pick up and rates to come down in order to help the housing market!
Keep a lookout for our Newsletter that comes out tomorrow. This will summarize these stories and much more. If you are not currently on our distribution list and want to be, please email us.
Brought to you by:
Professional Mortgage Group, Inc.
Mortgage Rates
Mortgage rates have have spiked a little bit from the lows we saw last week, but as always it should turn back around again in time for people to lock in before they start the cycle again! Just refer to our rates section on www.pmg-inc.net.
Stock Market
The stock market as I type this is up 471 points so if this holds true it is a great day. The problem we have been having is sustaining these rallies. We have been having 1 great day followed by 4 bad ones, etc.. Not a good recipe.
White House Warns Banks
One problem we have blogged about and in the past is the common trend of banks hoarding cash. Ever since turmoil hit, banks have been taking advantage of their lower borrowing costs and opportunities to shore up their balance sheet instead of using these funds for their intention, lending! Lending is how these institutions make money and they are hoarding the cash instead. The new trend is taking the bailout funds and trying to use it to acquire lesser banks! Again, not the intention of the bailout. I think it is a good sign of the government voicing their displeasure. The problem is that very few strings were attached to the bailout money. We will have to keep a close eye on what develops! We really need lending to pick up and rates to come down in order to help the housing market!
Keep a lookout for our Newsletter that comes out tomorrow. This will summarize these stories and much more. If you are not currently on our distribution list and want to be, please email us.
Brought to you by:
Professional Mortgage Group, Inc.
Monday, October 27, 2008
What Factors Affect The Interest Rate I Get?
One of the major components of any home loan is the interest rate. Some clients have realistic expectations and others do not. With so much volatility in the market place right now I thought I would touch base on what factors affect the interest rate you could receive on a mortgage loan.
1) Credit Score: Anything below a 740 will get "hits" to their interest rate. Meaning you will get a higher rate if you have a credit score below 740.
2) Loan-to-Value / Down Payment: All things being equal someone putting 5% down will get a higher rate than someone putting 20% down.
3) Loan Amount: Any amount below $140K (at least with most brokers) will get a higher rate than someone borrowing more than $140K.
4) Escrow Account: When lenders quote a rate they are assuming you will establish an escrow account (taxes and insurance included in your payment). However, if you would like to pay them separately and "waive escrow" you will get a higher rate.
5) Occupancy Type: A "primary residence" transaction type will get a better rate than say lending on an "investment" property.
6) Documentation: The ability to document your income (i.e. pay stubs, W2's, taxes) will warrant you the ability to get a better rate than someone that has challenges doing this.
7) Loan Program: The type of loan program you are eligible for will help determine your rate. FHA, USDA, Conventional, VA all have different rates and qualifying factors.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
1) Credit Score: Anything below a 740 will get "hits" to their interest rate. Meaning you will get a higher rate if you have a credit score below 740.
2) Loan-to-Value / Down Payment: All things being equal someone putting 5% down will get a higher rate than someone putting 20% down.
3) Loan Amount: Any amount below $140K (at least with most brokers) will get a higher rate than someone borrowing more than $140K.
4) Escrow Account: When lenders quote a rate they are assuming you will establish an escrow account (taxes and insurance included in your payment). However, if you would like to pay them separately and "waive escrow" you will get a higher rate.
5) Occupancy Type: A "primary residence" transaction type will get a better rate than say lending on an "investment" property.
6) Documentation: The ability to document your income (i.e. pay stubs, W2's, taxes) will warrant you the ability to get a better rate than someone that has challenges doing this.
7) Loan Program: The type of loan program you are eligible for will help determine your rate. FHA, USDA, Conventional, VA all have different rates and qualifying factors.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, October 23, 2008
What Sets PMG Apart?
It is no surprise that consumers today are shopping around. Why wouldn't you? With the mortgage industry taking such a hit on its reputation, it only makes sense. You don't want to settle on that 1st call you made from the yellow pages. Ask around for a referral and look for testimonials. These items are very important! At PMG we do our best to set ourselves apart from our competition. We all are very similar in terms of the products we offer, it is just critical how they are delivered! What do you get when you work with PMG? Ultimately you get the best mortgage product that fits your needs, but during the process you get superb service and professionalism. We put our knowledge and expertise to use in order to make your experience a memorable one. What better way to get repeat and referral business ,right? Not only do we have the experience that matters, we utilize technology to stay on top of this wacky market! Your loan status is kept online so you can view its progress at all times. You and any realtors will be kept up to speed. www.pmg-inc.net is you one stop shop for information that pertains to your loan and the current market. We also track mortgage backed securities like a hawk! This is vital in our business. Anyone who doesn't do this or can't explain what influences mortgage rates is doing you a complete disservice! How else will they be able to take you rate expectation and make it a reality? If I quote someone 6%, I want them to get 6% or better! By tracking the market the way we do, we deliver on our promises! It is always possible for an unforeseen circumstance and no system is 100% full-proof, but we have proven time and time again that our system works wonders for our clients! Take the last 2 weeks as an example. Rates fluctuated a full 1%! Can you imagine how mad a client would be if that dream home they have under contract was locked at 7% out of fear and then a week later it was back to 6%! Sometimes time is not on your side, but in this case it was clear a rebound would occur and we took advantage of it for our current customers. Lastly, it may sound simple but we meet with almost every client in person to go over their loan and disclosures. It is amazing how many times this is not done in the mortgage world. I feel it is important to sit across from who you are doing business with and see exactly how your loan is being structured. You want ZERO surprises at closing! I would venture to guess if this step was taken on all transactions the past several years, there wouldn't be as many people out there that didn't know what they were signing! Unfortunately we are all paying the price for it now.
We approach every loan with professionalism and it shows. You don't deserve anything less!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
We approach every loan with professionalism and it shows. You don't deserve anything less!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Wednesday, October 22, 2008
Some Good News For A Change
It's not often we get to talk about a "hint" of good news with today's market woes, struggling households, and a heated election. However, I wanted to bring up two points that have or soon will be helping the average Joe get through this unprecedented year.
First, in case you haven't noticed the price of gasoline has come down from a high in Missouri of $3.99 a gallon to $2.59. So if you have a automobile with a 17 gallon tank (standard on some auto's) then you will notice a savings of $23.80 every time you visit the pump. Crude hit an all time high this year at $147.27 a barrel and now stands at $68.97 ($78.30 decrease!) Most of this due to a stronger dollar, weakening demand, and struggling world economy.
Second, it seems the "bail out" bill may be finally trickling into the financial market sector in which it was intended. We have seen overnight lending rates between banks fall, we have seen more confidence in bonds and in particular Mortgage Backed Securities (MBS). This has helped mortgage rates come down .875% to 6.0% currently on a 30 year fixed. On a $140K loan that's a monthly savings of $79.32!
I truly believe this "bail out" money will end up in the right places doing the right things to help the broad economy. The question is at what price and what will be the final implications of such drastic government intervention. But at least we have seen some changes "leak" into our everyday lives that should assist us in getting through the 2008 year and well into 2009. This is going to be a slow paced change and it will take some time to recover however, it seems we have at least started down the right path. Let's just hope we don't come to a "T" and take a left when we should have taken a right.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
First, in case you haven't noticed the price of gasoline has come down from a high in Missouri of $3.99 a gallon to $2.59. So if you have a automobile with a 17 gallon tank (standard on some auto's) then you will notice a savings of $23.80 every time you visit the pump. Crude hit an all time high this year at $147.27 a barrel and now stands at $68.97 ($78.30 decrease!) Most of this due to a stronger dollar, weakening demand, and struggling world economy.
Second, it seems the "bail out" bill may be finally trickling into the financial market sector in which it was intended. We have seen overnight lending rates between banks fall, we have seen more confidence in bonds and in particular Mortgage Backed Securities (MBS). This has helped mortgage rates come down .875% to 6.0% currently on a 30 year fixed. On a $140K loan that's a monthly savings of $79.32!
I truly believe this "bail out" money will end up in the right places doing the right things to help the broad economy. The question is at what price and what will be the final implications of such drastic government intervention. But at least we have seen some changes "leak" into our everyday lives that should assist us in getting through the 2008 year and well into 2009. This is going to be a slow paced change and it will take some time to recover however, it seems we have at least started down the right path. Let's just hope we don't come to a "T" and take a left when we should have taken a right.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Tuesday, October 21, 2008
Local Banks and Lenders
I have read a few good articles lately about our local economy and our local banks. Despite all the gloom and doom out there, this community is holding on pretty well. I am taking the data reported in these publications to be accurate, but from the looks of it we are pretty stable! Our Nation's large banks and financial institutions have bee reeling, but Mid-Missouri Banks remain strong.
There are always exceptions and some are stronger than others, but this is normally the case. For the most part local banks stuck to traditional lending practices and are not faced with the tough times that Wall Street is. Subprime was a huge factor in their troubles and our local banks didn't dabble in this. Now some did get pretty aggressive with commercial lending and are paying for it, but for the most part they are ok. Currently all financial institutions will see some sort of decline as a result of the housing downturn and the economic struggles we are all facing. Deposits are suffering on top of the bad debt and loss of loan production. These are just par for the course and will be managed until thing turn back around.
As far as lending goes, I wanted to point out that yes banks and mortgage brokers can still loan money for mortgage financing. This is a big misconception right now. Lending standards are tighter that they were previously, but money is still available. One big shift with banks that is more prevalent than in previous years is that banks broker loans just like we do. It is scary for them to hold on to loans in house these days and as a result brokering is their option. So when you are shopping around, keep this in mind. Some local banks will house high quality loans in house and you can receive some added flexibility. Otherwise, they are on the same playing field with us and we have more products and lenders to access.
I just wanted to briefly point out these items. Have faith in our local banking institutions and local lenders. Your money is safe and we will both work hard for you!
Brought to you by:
Professional Mortgage Group, Inc.
There are always exceptions and some are stronger than others, but this is normally the case. For the most part local banks stuck to traditional lending practices and are not faced with the tough times that Wall Street is. Subprime was a huge factor in their troubles and our local banks didn't dabble in this. Now some did get pretty aggressive with commercial lending and are paying for it, but for the most part they are ok. Currently all financial institutions will see some sort of decline as a result of the housing downturn and the economic struggles we are all facing. Deposits are suffering on top of the bad debt and loss of loan production. These are just par for the course and will be managed until thing turn back around.
As far as lending goes, I wanted to point out that yes banks and mortgage brokers can still loan money for mortgage financing. This is a big misconception right now. Lending standards are tighter that they were previously, but money is still available. One big shift with banks that is more prevalent than in previous years is that banks broker loans just like we do. It is scary for them to hold on to loans in house these days and as a result brokering is their option. So when you are shopping around, keep this in mind. Some local banks will house high quality loans in house and you can receive some added flexibility. Otherwise, they are on the same playing field with us and we have more products and lenders to access.
I just wanted to briefly point out these items. Have faith in our local banking institutions and local lenders. Your money is safe and we will both work hard for you!
Brought to you by:
Professional Mortgage Group, Inc.
Monday, October 20, 2008
USDA Funds Now Available
The news is in and USDA applicants WILL be happy! Late Friday October 17th the fiscal year 2009 budget passed and USDA funds are now available. As posted on this blog on September 22nd (well ahead of our competition I might ad) we reported that USDA funding would cease starting October 1st. This process happens every year as the following year's budget must be approved in order for future USDA funds to be available. This process usually takes 2-3 weeks and can vary greatly at times.
It is crucial for these funds to be available as the USDA/"Rural Development" loan is one of the last 100% financing options available. The timing is excellent as most closing will take place between now and the end of the month. It's nice to finally give some good news for a change! Continue to check back for the most pertinent and current information concerning the housing market.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
It is crucial for these funds to be available as the USDA/"Rural Development" loan is one of the last 100% financing options available. The timing is excellent as most closing will take place between now and the end of the month. It's nice to finally give some good news for a change! Continue to check back for the most pertinent and current information concerning the housing market.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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