Archive for May, 2008

May 2008 Customer Newsletter

May 1st, 2008 by admin | No Comments | Filed in Flagship Newsletters

Foreclosure filings jumped 57% in March compared with the same month last year and rose 5% versus February. RealtyTrac, an online marketer of foreclosure properties, said last month that 234,685 homes were hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. Though a tremendous increase from a year ago, the rate of foreclosures was below the peak hit in August of last year and within the same range of the last three months (see graph in previous column). As indicated in the previous story, the Fed lowering rates can help decrease the rate of foreclosures because of the effect upon adjustments of adjustable rate mortgages. In the long term, foreclosures will subside when consumers come back into the markets and purchase homes for sale. A recent poll by AOL-Associated Press indicates that 60.0% of Americans think that it is a good time to purchase real estate. Though 11.0% are certain or likely to purchase soon, 60% are not likely to purchase for two years. Rising gasoline prices are one factor cited as making house payments unaffordable.

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May 2008 Flagship Article

May 1st, 2008 by admin | No Comments | Filed in Flagship Newsletters
 We are in a credit crisis in America. If you listen to the media, there is nothing but bad news when you hear about the real estate and financial markets. But with every challenge comes opportunities. For example, the precarious financial markets have caused the Federal Reserve to lower interest rates many times. This is lowering interest costs for many consumers. The problem is, many consumers are getting “shut out” from taking advantage of these lower interest rates. Why? Because the financial crisis has also brought tighter lending guidelines. Many who purchased homes in the past five years can’t even qualify to refinance these homes. We would like to help you take advantage of these low rates and not get “shut out.” We mentioned tighter qualification guidelines. What does it take to qualify for a mortgage at a lower rate? Good credit is becoming more of a  rerequisite. During the real estate boom of the past five years, lenders had programs for anyone of any credit level. Now tighter guidelines are causing those with moderate credit issues to pay more and those with severe credit issues perhaps not to get approved at all. Typical credit scores range from 500 (poor credit) to 800 (great credit). Just one year ago, someone with a credit score of 660 was considered moderate credit and was not asked to pay more. Now lenders are charging small premiums for this “moderate” credit score. Many with credit scores below 600 are being asked to pay major premiums and if they are significantly below 600 and don’t have a good deal of equity in their homes or have other qualification issues, there may be no program available at all. Income is also another issue. It makes sense that lenders would verify that you have enough income to make sure you can repay the mortgage. But again, during the real estate boom years many lenders did not even ask for income data or let borrowers qualify at very low adjustable rates even if the loans were likely to adjust upward very quickly. Once again, lender tightening is taking away options for those who do not make enough income to pay for loans. It is a “catch-22” because refinancing at lower rates will help consumers afford their payments and avoid foreclosure. Related to the measurement of income is someone’s debt levels. It is important to note that when a lender “qualifies” someone for a loan, that lender must look at all the payments a person is obligated to make, not just the mortgage. Americans have run up a significant amount of debt in the form of credit card, car and other payments during the past several years. And these debts are also helping to prevent qualification for low rates. Finally, another issue may prevent qualification. That is the value of the home. Many lenders have been more restrictive on the amount of the loan they will approve versus the value of the home. The mortgage divided by the value is considered the “loan-to-value” (LTV). During the boom LTVs at 100% (or no money down) were proliferating. Now these programs are scarcer. To make matters worse, the value of homes are going down in many areas of the country.   
 Refinancing? Don’t Get Shut Out!   

So even if you have good credit, adequate income and a small amount of debt, if the home is not worth as much as what you owe, refinancing could be a challenge. Many American’s are facing these challenges. How do you take advantage of low rates when you have challenges? The first step is to work with a mortgage representative that will help you with more than obtaining a good rate. A representative can also help you with services that will increase your credit score, lower your debt load and even accelerate the repayment of your present mortgage so that you can refinance more quickly. How quickly? Results will vary dependent upon your situation. For example, severe credit issues take more time to correct than moderate credit issues. The higher your debt load, the more time it will take to bring it under control. But one thing is for sure, you can’t take advantage of these historically low rates without taking the first step. So contact us today and let us help you either obtain a lower rate now or get in position to lower your payments soon.