SCARY ”MOVIE”: With the House passing the “sweeping Financial Reform” , and assuming it passes in the Senate (will the Rahm-anator be paying late night visits to Senators?) what is in store for the nation’s Lenders, and of course what is in store for YOU Mr. and Mrs. Borrower?  This legislation will give birth to to slew of Government regulators designed to protect the Consumers from themselves.  As of this writing, already in place,  there are a SLEW of Federal laws and statutes to protect the Consumer.   There are a SLEW of Federal Laws to protect against predatory Lending and shady Brokers.  There are a SLEW of Federally mandated disclosures that, if thousands of home buyers had bothered to read,  would have explained the pratfalls of the Pay Option ARM.   These are all good things..really. But enough is enough.  The Govt “boot” will now be on the throat (to borrow Obama’s term)  of Lenders and that my friend is a scary thought for the Free Market.  You know what is even MORE scary?  This quote from one of the House co-authors of the bill, Rep. Chris Dodd:  “No one will actually know how this works until it is in place…”    Be afraid. Be very afraid.

And more cheery news: Results from the HomeGain.com annual survey of Realtors nationwide has 37% of responding CA Realtors thinking home prices will increase in the near future.  That glass is half full!

*POV = Plain, Old Vanilla Home Loan: 30yr fixed, fully amortized, single family home, at least 20% equity, slightly lower rates and costs for those that use a Designated Driver this weekend.

All the News that pit to frint: Sorry! I am writing this blog while carrying out important hydration research for the historical society researching India Pale Ale.   On Monday the 28th of June, HomeGain.com will  release its National and Regional homeprice survey. With thousands of Realtor members all over the country, the input of national trends and local trends will be reflected as homeowners and Realtors opine on the state of the Administration and the results on home prices.

*POV = Plain, Old, Vanilla Home Loan: 30yr fixed, single family home, owner occupied, at least 20% equity, rate and term or purchase loans only, slightly higher fees and costs to DEAN WORMER grrrrrrrrrr!

California Mortgage Rates

SO…the Market it getting better, the planets have aligned, a mysterious bag of TARP money has landed in your assigned parking place and you are ready to take the plunge for home shopping.  GOOD!  I love it when folks buy houses.  But let’s do a little homework before you plunge into every website and open house for miles.  Sellers, by and large, are going to want to see strong offers and more importantly strong borrowers.  Your Realtor should be guiding you through this, however this is when you should be working with a Lending Professional.  There is plenty of time to bond with your Realtor later as the process unfolds.  “Get a pre-approval?”  No.  Well ok sort of. Syntax is at play here.   There is Pre-Approved and Pre-QUALIFIED.  Big difference.  I have seen “Pre-Approval” letters from Lenders that are just short of blank paper with cut up letters from magazines pasted on.  In other words they mean NOTHING.   Ask your Mortgage Professional to run the Fannie Mae Desktop Underwriter program for you.    This will require you furnishing somewhat detailed income and expense and asset information, but hey, the days of  Liar Loans are over, so you will be furnishing all that anyway.   The software program will then issue a standardized form, with a nice big “headline” at the top, which will hopefully say “Approve/Eligible”.   This means that the numbers have been crunched and barring any financial skeletons in the closet, you have a damn good chance of getting your Loan approved.

*POV = Plain, Old, Vanilla Home Loan- 30yr fixed, fully amortized, at least 20% equity, single family home, owner occupied, purchase or rate and term refi only, slightly lower rates and fees for all the Giants fans who BOO’d Tommy Lasorda at the game the other night.

In THIS corner…at about three years old, from all over the USA, RENT!  And in this corner, surviving the Mortgage Meltdown of about the same age is BUY! Let’s get readdddddy to rrrrumble!  So the debate goes on.  Real Estate Megasite Trulia has just fanned the flames with the tried and true Rent vs. Buy comparison, but also has a nifty little breakdown of what Cities come out at which end of the debate.   To simplify, they have come up with an index or formula to supposedly make this easier to figure out: (from the Wall Street Journal on this report)

The cross-over point is about 15 times annual rent, the company believes. In other words, as a rough rule of thumb, homes are probably fairly valued in a city when they cost about 15 times a year’s rent. So, for example, if you’re paying $10,000 a year to rent a place, think twice about buying a home that costs more than $150,000

Well that’s all well and good except…you have to factor in the Metro Area as well.  Ok so yeah, $150K will buy me a nice single family home in Tulsa, but in the large Metro Areas like San Francisco, all this will get you (if you are lucky) is a small Condo.  You MUST remember to factor in the Homeowner’s Association Fees which normally do not show up on all these spiffy “rent vs own” calculators.   This additional expense may be the “deal breaker” for Renters looking to buy as it will push their debt-to-income ratio over the top.

Bottom Line? BUY dammit!  I don’t make any money off Renters!  Seriously though..look at the big picture.  Rates are low and can probably only go up from here as we slide our way into turning into Greece.  Prices are low. Inventory is high.  It is still a Buyer’s Market.  Need I say more?

*POV = Plain, Old, Vanilla Home Loan: 30yr fixed rate, fully amortized, Single Family Home, Owner-Occupied, at least 20% equity, slightly lower rates and fees for the Giants’ Matt Cain because he ROCKS.

Today’s POV* came out and saw more than one Major Wholesale Lender repricing for the better.  Conforming rates at 4.875% with High Balance Conforming at 5.0%. SUPER Jumbos at 5.75%.  As always questions, scenarios or Sasquatch sightings can be sent to me at lololoans@yahoo.com

Now that I am done rendering unto Caesar what is Ceaser’s …ahem…cough…let’s clarify rate quotes.  Besides working for a Direct Lender, I also take an average of about 10 of my favorite “go to” Wholesale Lenders to get a good across the board average. Rates are always quoted at Par, and are absolutely guaranteed to be better than my buddy Miles with the green shirt pitching quick loans all over the media.

Lock that Boogie! Ok, the song was “Rock that Boogie” for all you Commander Cody fans but I digress.. Notice how I mention that most Lenders may ”reprice” during the day? They are hot on the heels of the day’s Financial Markets impact (notably the Bond Market) and can change their rates as many a 3-4 times a day. Keep this in mind when working with your Loan Professional as a quote an hour old can be obsolete. Remember to get that Rate Lock promise a) IN WRITING and b) NEVER pay up front to have a rate locked.   Get a 45 Day lock.  Getting loans through the minefield of requirements, disclosures and DNA testing now required it is pretty close to impossible to get a loan Funded 30 days from the Application, especially with the 3 day right of rescission on ReFis.

*POV = Plain, Old Vanilla Mortgage product: 30yr fixed, fully amortized, Single Family Residence, Owner-Occupied, at least 20% equity, higher rates and costs for that CLUELESS geezer driving around the Trader Joe’s parking lot…YOU know who you are!

So…was it good for you?  Rates have been steady and some will attribute that to the Federal Reserve Bank’s extraordinary move of purchasing Mortgage Backed Securities therefore adding stability to the Bond Market; however, this came to an end on the 31st of March. Already the Fed exit has had an impact on Mortgage Rates.  Uncertainty in the Market is probably what has had rates creeping up this last week so we shall all be waiting with baited breath as next week’s events and news items play out.

Heloc vs Cash out Refi:  No, this is not a Japanese monster movie from the 50′s. If you find yourself needing cash for reasonable items such as a new roof, College for the kiddies, new Kitchen etc but NOT for “mad money” to buy new shiny objects, then you will have to make the decision to go with a HELOC (Home Equity Line of Credit) OR to refinance your existing 1st mortgage with cash out to you at Close of Escrow. Remember, that as the Economy recovers, Interest rates stand to go UP and since the HELOC is based on the Prime Rate, not the Mortgage Bond rates, you stand to see that 3% rate go through the literal roof. The Cash out option allows you to get the cash, at today’s pretty good rates and fix the rate for 30yrs. Something to think about…

*POV = Plain, Old, Vanilla Home Loan: 30yr fixed, fully amortized, single family residence, owner-occupied, at least 20% equity. No witty tag-lines today, just a  Happy Easter, Passover and END of Spring Training to all!

Conforming jumped up to 5.125%.  SUPER JUMBOS inched back up to 5.75%.  As always comments, jokes, or Sasquatch sightings are welcome at lololoans@yahoo.com

Prepare YE!  Yes, a cost increase of Biblical proportions is on the way. Raise not, lest ye be raised. I am of course rambling on about the Upfront Mortgage Insurance Premium on FHA Loans.  They are going up from 1.75% of the loan amount to 2.25% of the loan amount for any FHA Case number assigned after the 5th of April so if you are leaning towards this loan, and don’t get me wrong it is still a great loan, best get thee to a Loan Officer!

It’s worth WHAT???   Which is pretty much the first response I get when advising a borrower on what value the Appraisal of their home came in at. (I just ended a sentance with a preposition..sorry MOM!)  Besides one’s FICO score, the Loan-to-Value or LTV is THE key driver in what rate and what cost you qualify for on your home loan.  Louis Cammarosano  (voted one of the Real Estate Industry’s top leaders by Inman.com in 2009) who runs www.HomeGain.comhas forwarded me the results of an exhaustive survey that Homegain submitted to their thousands of Member Realtors throughout the country for Q1 2010. Perhaps one can see the beginnings of a National trend starting from these regions? The survey is here:

 http://blog.homegain.com/homegain/1st-quarter-2010-home-prices-survey-regional/

*POV = Plain, Old Vanilla Home Mortgage: 30yr fixed, Single Family Home, Owner Occupied, at least 20% equity, Higher Rates and costs if caught returning home videos to Blockbuster.

Mar. 18, 2010 (FreeRateUpdate.com) -  Today’s rates for our POV* came out and saw a few major Wholesale Lenders reprice for the worse. Conforming Rates at 4.75% and Jumbo Conforming at 4.875%. SUPER Jumbos at 5.75% showing that rates are staying rock steady over the past couple of weeks. WHY is anybody’s guess. We shall see what happens when your Gov’t. stops its cash infusion into the secondary Market.

Build it, and they will come…

But it won’t be that easy. Here in the San Francisco Bay Area, the absolutely GREENEST place south of the Arctic Circle, home of of a Gov’t.  job title Green Czar you might want to consider something should you decide to go alternative housing construction. These would be houses a little…er….different…than your standard Ward and June Cleaver Rancher.  Houses made of Straw. Houses made of Mud. Houses made of recycled..stuff. Teepees. Even Houseboats!  In case you missed the memo, Lenders have gotten down right picky since the Great Mortgage Meltdown of a couple of years ago.  Getting a Construction Loan to build the Hut of your Dreams may be tempting,  but try Refinancing it to a better rate later on. Or let’s say you built it, ya lived in it, now you want to cash out and buy that Sailboat so you can crouch down at 10am and say “yep, the Sun is over the yardarm, Happy Hour time!”.  You may not be able to SELL it as getting a traditional Mortgage is going to be difficult. The key issue here is the Appraisal. Actually TWO key issues: 1) What are the comps? Not a lot of houses made of recycled coke cans in Danville? Hmmm…probably not. So this poses a problem for the Appraiser and trust me, when applying for a Loan, the Appraiser’s problem is YOUR problem. 2) The old HVCC.  Yes, this nasty little bit of Gov’t. regulation pretty much eliminates LOCAL Appraisers and hence any Appraisers that may be more prepared to handle the Appraisal of alternate forms of Construction.   The Journal had an interesting article on it – READ HERE :  so BEWARE of those Green Dreams!

*POV = Plain, Old, Vanilla Mortgage product: 30yr fixed, fully amortized, single family residence, owner-occupied, at least 20% equity, proof of purchase for Girl Scout Cookies 3 years in a row.

Now is a great time to refinance your Delaware home loan.  You have many options to help you refinance into a lower rate.  You can do a rate and term refinance with an FHA loan up to 97.75% Loan to Value even with bad credit.   You can do a HARP loan for up to 125% LTV if your loan is currently with Fannie Mae or Freddie Mac.  If you need to do some debt consolidation you can do a cash-out refinance for up to 85% loan to value.

Keep in mind that the Federal Program to buy Mortgage Backed Securities will be ending March 31, 2010.  This program has been credited with keeping the mortgage rates so low.  Economists are predicting rates could jump up anywhere from 0.5% to 1.0% when the program stops.  So now may be the best time ever to get a mortgage.

If you would like a free consultation on your Delaware home loan or get pre-approved to go shopping for a home loan please feel free to call your local mortgage expert John Thomas at 302-703-0727 or send an e-mail to DelawareMortgages@yahoo.com.

If you are a Delaware First Time Home Buyer then you can register for our Free Delaware First Time Home Buyer Seminar this Saturday March 20, 2010 at the Christiana Hilton Hotel in Newark, DE from 10 AM till Noon or from 1:00 PM till 3:00 PM, you can call 302-703-0727 to register or send an e-mail to DelawareMortgages@yahoo.com.  To see the monthly schedule of seminars visit www.DelawareMortgageLoans.net/seminars

Delaware Mortgage Rates could be on the rise as the Federal Reserve will be ending its mortgage backed security program on or before March 31, 2010.  This could make now the best time to buy or refinance a home in Delaware in order to take advantage of historically low rates.  For Delaware home purchasers using a Delaware FHA loan, FHA guidelines are changing in April.  The two big changes that affect Delaware home buyers are:

Decrease of seller paid closing costs from 6% to 3% of the purchase price

Increase of the upfront mortgage insurance premium from 1.75% to 2.25%

This is a great reason to find a house now and get under contract.  The first time home buyer tax credit of $8,000 and the move up buyer tax credit of $6,500 deadline of April 30, 2010 is fast approaching.  In order to qualify for the tax credit, you must be under contract by April 30, 2010 and close by June 30, 2010.

This week ahead sees the Federal Reserve Board meeting March 16, 2010.  The Fed meeting has the chance to move rates higher if any news comes out that is not bond friendly.   There is also a Free Delaware First Time Home Buyer Seminar Scheduled for Saturday March 20, 2010 at the Christiana Hilton Hotel in Newark, DE.  There are two sessions: 10 AM till Noon and 1:00 PM till 3:00 PM.  If you would like to register for either seminar call 302-703-0727 and ask to register for the free seminar. For a complete list of seminars visit www.DelawareMortgageLoans.net/seminars

For Delaware First Time Home Buyers, a great new book has been published entitled Your Guide to Buying Your First Home in Delaware.  This book is a step by step guide for how to buy a home in Delaware.  It covers everything you need to know.  You can purchase this book at Your Guide to Buying Your First Home in Delaware Book