Mike's Financial Blog

Many economists have said that the low rates are behind us. However what rate are they talking about? Is that the Prime rate, the 15 or 30 year fixed mortgage rate, the 10 year treasury bill or the Fed Discount Rate? Yes I have confused you on purpose and here’s why. When you listen to the news they could be throwing any and all of those rates around and they always relate it to mortgages. Remember the news people are the worst ones to listen to for financial advice, period. The news often comments about the Fed lowering and raising rates as though they actually control mortgage rates falsely leading consumers to think rates will go up or down when Ben Bernanke speaks. The Fed only controls the rate that banks get and that rate has nothing to do with your primary mortgage. Mortgage rates are market driven. In fact by the time Bernanke speaks the mortgage market may have already increased rates several weeks prior so you’d have missed the boat. In many cases by the time the Fed raises their rate mortgage rates could be coming down a bit. Your retail bank loan officers don’t know this, only a seasoned mortgage broker can help guide you through this.

So back to the question what will rates do? Well while it is true that our economy is showing signs of improvement and rates have come up in the last 4 months and it’s true that rates on 30 year fixed loans have been as low as 4% in 2010, 5% is still very low historically albeit not makings of a refinance boom. These are however 30 year fixed rates. Depending on your time horizon you may be interested in a lower rate 15 year loan or even a 5-7 year ARM if your plans are to move sooner. So if this fits you then rates are still very low in the 3-4% range! It is more important to compare your current situation to the available options and see if it makes sense for you. Every loan and situation is different. In addition there is no rule that you have to save 1 percent for it to make sense. Saving half a percent can save you hundreds per month. Actually rates can move around by as much as a half of a percent every month! However barring another Enron debacle or major war effort rates will continue their slow rise with dips along the way. With that in mind you should meet with an experienced broker now to see what makes sense. If it doesn’t make sense then maybe you can wait for one of those rate dips to lock in. I look forward to helping any way they can. Contact

Have you heard, the government is helping people stay out of foreclosure and get out of bad loans? Part of the stimulus bill included The Home Affordable Refinance. For people current on their loan who may be a little upside down there is hope! I say “might” because the window is fairly narrow and the refinance program is a new loan obtained through regular mortgage channels, i.e., Me! It depends on if Fannie or Freddie owns your loan. I can figure that out for you. You may even qualify without an appraisal or without documenting income! However if your payments have not been on time then you may need to look into a loan modification. If you think you are upside down but have been ontime on your payments contact me to see if the Home Affordable Refi will work for you!

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It’s not very often low home prices coincide with historic low rates. I'm here to help you get in on these great deals. Don't think you can qualify? The truth is you can buy homes with 10% down, 5% down, 3% down even
No down in some case. And yes you can qualify! As long as you have ok credit and some income...   With 3.5% down ppayments and credit scores accepted down to a 620 or lower it just as easy as it was in the 90’s. Since 100% financing is only available through limited government subsidies, many people are going the old fashioned way, gifts from relatives! In fact many people are simply waiting and saving up the down payment themselves...Gasp!

The news would have you believe that “credit has tightened” and banks aren't lending”. This is true when you are talking about commercial, auto and student loans, but not when it comes to residential mortgages. OK so long gone are the no income, no money, no credit loans. That still leaves everything else! And we probably won;t see deals this good in our lifetime.

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