Round 1, 2, 3......

Will it ever end? QE 1, 2 and 3? The Feds are once again making an attempt to improve the housing market by lowering rates and with the looming bond crisis in Europe, investors are supporting the Feds with their buying of US Treasuries and Mortgage Backed Securities to help drive up bond prices and thus reducing rates again.

With 30 year fixed rate mortgages now under 4.0% and 15 year fixed rates in the low 3s, rates continue to move south.

However, this low interest rate environment has still not stabilized the housing market as foreclosures continue at a record pace and a weak job market has many would be buyers sitting on the side lines waiting for a bottom. Interestingly enough we have seen several markets in Michigan actually begin to increase in value.

In regards to refinances, many have already benefited from the Home Affordable Refinance Program (HARP) and a new revision to the program is slated to take affect this coming March 2012. Under this revision, eligible home owners will be allowed to refinance REGARDLESS of the value of their homes. Currently there are caps between 105 - 125% of the Loan To Value.

In addition, the current fees that are associated with the HARP loan are being revised, providing further incentive to many borrowers who may currently qualify but have refained from refinancing because of prohibitive costs.

Mortgage Rates At 2.99%?!?!

The recent drop in rates over the last 30 days has presented multiple opportunities. Home buyers are able to take advantage of significant discounts in home prices, coupled with extremely low payments, to make housing more affordable than ever.

I have also been advising current clients that this is a perfect opportunity to utilize low mortgage rates to cut the term on their existing mortgages --- many of my clients are taking advantage of this and moving to 15 and even 10 year mortgages.

For clients who are being VERY aggressive with the pay-off of their mortgage, we are now offering 5 year fixed rate mortgages below 3%!!!!! Absolutely unbelieveable!!!

To see the effects of selecting a short term mortgage vs. a 30 year mortgage, call or e-mail me, and I can provide you with a detailed schedule showing you the incredible interest savings and how this can help you build wealth by freeing up cash flow after your pay-off, assist in accelerating retirement savings, funding education accounts or to simply live without STRESS being debt free!!

NO-COST LOANS

Refinancing at today's extremely low interest rates can prove to be a tremendous savings. But with increased closing fees and stricter underwriting guidelines, how do you know whether refinancing is right for you?

One sure way to guarantee savings is to use a No-Cost Loan. A No-Cost Loan is designed to eliminate closing fees that often run around $2,000 ---- and even as high as $5-6,000 with some of the new government refinance programs such as the Home Affordable Refinance Program (H.A.R.P.). By using a No-Cost Loan there is no need to calculate a "break even" point or worry about the savings in the reduced monthly payment being enough to recoup the closing fees that you would pay otherwise.

No-Cost Loans will generally have a slightly higher interest rate than a mortgage with fees. Over a longer period of time, a lower rate may save more in interest expense, but the savings on a short term mortgage is almost inconsequential. For example, I am currently recommending 15 and 10 year mortgage options to many of my clients. The time that it takes to recoup closing fees is often near the end of the term on a 10 year mortgage, so a No-Cost Loan provides flexibility and IMMEDIATE savings.

For more detailed information regarding No-Cost Loans at First Place Bank, call me direct at 734-433-0922 or apply on-line at www.firstplacebank.com/jonmykala. A direct link to the application can be found to the right of this blog.

Having A Hard Time Finding A Nice Home?

With foreclosures at an all time high you would think that you would have your choice of homes in the market. But the reality is, the inventory of nice homes is dwindling.

What can you do to help with this dilemma?

Consider adjusting your focus. If you are looking for homes in a lower price range with the hope of "making improvements", you will often find that after all of the time and costs involved with purchasing a "rehab property" that you can buy a slightly higher priced home in better condition, better neighborhood and also save yourself the headache and frustration related to buying a rehab home.

If you are looking for a property in need of attention, you should also investigate a rehabilitation loan to help you with funding your new project. Rehab Loans are extremely useful tools, but you should be fully aware of all the issues related to a rehabilitation loan and the risks associated with this type of loan.

For more information on rehabilitation loans or further suggestions that may help you with finding your dream home, please call my office for an individual consultation.

Will Mortgage Rates Blow Up?

There has been much talk lately about the Feds raising interest rates to fight off the potential risks of inflation from a recovering economy. As far as I can see, this is a mistake that will only exacerbate a problem that we have not yet solved.

While some of the Fed Governors continue to point to signs of a recovering economy, based on economic data, it doesn't take a rocket scientist to know that a significantly large portion of interest only and adjustable rate mortgage loans are coming due in the next 18 months. This is going to present a wave of more foreclosures and cause additional inventory on real estate market that is already full of supply.

The positive comments yesterday from the Feds regarding the potential extension of the Asset Purchase Program for Mortgage Backed Securities, was encouraging. I do hope that our Fed Insiders look at these practical matters and don't react to soon to 'interpretive data'.

What's New In Mortgages For 2010??

As we approach a New Year, be prepared for more stringent lending standards. The new Good Faith Estimates to be released in 2010 will be another step forward in protecting the consumer against predatory lending practices, especially the "Bait & Switch" tactics used by many unscrupulous lenders during the peak of the mortgage boom. I personally am glad to see this type of regulation. However, other tighter underwriting guidelines will have a negative impact on the availability of credit and only exacerbate the issue of a weak economy in my opinion.

In general, new home buyers would be wise to take advantage of the combination of low house prices, historically low interest rates and government funded subsidies through tax credits, but take an ultra conservative approach that allows you to pay-off debt, including home mortgages, at expedited rates.

Stay tuned for the launch of my program in 2010, THE BIG PAY-OFF, as our country reconsiders the definiton of weatlth & debt in the New Economy.

Homeowner Affordability & Stability Plan

The long awaited Homeowner Affordability & Stability Plan was launched last week. As with any government backed program, it has its advantages and disadvantages.


How do you know if you are qualified for refinancing under the plan?


I have broke it down into several steps that I take for my clients:

1. First determine who the original investor of your mortgage was. If Fannie Mae, any lender eligible to origniante refinances under the Affordability & Stability Plan can help you with your refinance. If Freddie Mac, ONLY the current lender servicing your loan can help. If your loan was through any other lender than Fannie Mae or Freddie Mac (examples: a local credit union, a non-conforming or sub-prime lender, etc.) you will not be eligible for the Plan.


2. Next we review credit scores and income to determine qualifiying eligibilty and if any additional 'delivery fees' will be required for utilizing the Plan.


3. After receiving credit, we make our best attempt, with your help, to determine an estimated value range for your home. Even under the Affordability & Stability Plan, the current value of your home has an impact on your eligibility for the program and the potential fees related to refinancing under the Plan.


4. Upon completing these first 3 steps, we will determine the costs/fees of the new loan and the corresponding interest rate. This allows you to determine the potential savings/benefits to you in terms of real numbers.

Points of interest about refinances under the Affordability & Stability Plan

• It DOES NOT allow you to consolidate or roll in a second mortgage. If you have a 2nd mortgage on your home (ie: home equity loan, line of credit, home improvement loan) I suggest calling the lender and asking them if they will subordinate the loan to a new 1st mortgage originated under the Affordability & Stability Plan. If the sum of your first and second mortgage exceed 95% of the new appraised value, you can expect to pay up to 1.5% of your new loan amount in a 'delivery fee' plus normal closing costs.
• Condos - if your current appraised value is requiring you to utilize the Plan and your loan was originally sold to Fannie Mae, you will pay an additional delivery fee of 1.0% of your loan amount.
• Credit Scores - if your loan was sold to Fannie Mae, credit scores have a substantial impact on the fees associated with your loan. Additional 'delivery fees' can begin at .25% of your loan amount and go as high as 3.0% of your loan amount.
• Appraised Vaules also have a considerable impact on the fees associated with your loan. If your mortgage amount exceeds 95% of the appraised value you can expect to pay as much as 1.0% of your loan amount in an additional 'delivery fee'. Loan amounts exceeding 105% of the appraised value will be ineligible for refinancing under the Affordability & Stability Plan. In some instances, appraisals may not be necessary. Fannie Mae and Freddie Mac each have their own version of automated property valuations.

For more details regarding the Homeowner Affordability & Stability plan, you can call my office direct at 517-783-1780 or e-mail me at jmykala@fpfc.net