About Long Beach's The Peninsula

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If you are thinking of buying or selling Real Estate in Southern California, work with a Realtor who knows the best neighborhoods in Los Angeles & Orange County. Beach, water front and golf communities. Call me today: 562.533.4003 & visit www.RicardoTheRealtor.com

Open a newspaper and you're likely to see an advertisement for a lender announcing their mortgage terms and rates. Sometimes the ad will include both the interest rate and the Annual Percentage Rate or APR. You may wonder, "What's the difference?"

The interest rate is the percentage of the loan amount the lender is charging you to borrow the money. It does not include other, less obvious, charges like interest and fees. The Federal Truth in Lending Law requires all banks and lenders to also advertise the Annual Percentage Rate because it is a more accurate reflection of the cost of the loan. The APR incorporates other costs and calculates them as a yearly percentage of the loan amount. When shopping for a mortgage it is the APR that allows you to more easily compare and contrast loans. It is designed to standardized the components and allow for an apples to apples comparison. The following fees are generally included in the APR calculation:

· Points - This covers both discount and origination points. Origination points are fees charged to cover some of the cost of providing the loan. Discount points are pre-paid interest that can be used to "buy" a lower interest rate.

· Loan Processing Fees - A charge made by the lender for accepting the loan application and gathering the necessary documentation.

· Private Mortgage Insurance (PMI) - This additional insurance is typically required by lenders for customers who provide less than a 20 percent down payment.

· Administration or Underwriting Fee - The cost for assessing the risk involved in lending to you. This includes the review of your credit, employment history, debt and other factors..

• Prepaid Interest - Different from a discount point, this is interest paid at the closing that covers from the day the loan commences to the date of your first mortgage payment.

Long Beach, Ca. There is no news today, aside from Construction Spending. Tomorrow we have the Commerce Department's November Factory Orders data. This data gives us a fairly important measurement of manufacturing sector strength, both in durable and non-durable goods, and is expected down 2.6%. Also Tuesday will be the release of the minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. The usual Jobless Claims on Thursday, and then the final report of the week comes Friday morning when the Labor Department will post December's employment figures. Current forecasts call for a 0.3% increase in the unemployment rate up to 7.0%, and Nonfarm Payroll -500,000.

Not much happened to the economy in the last 4-5 days, aside from dire numbers coming from retailers which ordinarily would help rates. Yet we find the 10-yr Treasury hit 2.50%! It has come back down slightly from there, but keep in mind that a) The market was overbought, suggesting that a correction was due, b) we have supply ahead with a 3-yr and 10-yr auction this week on Wednesday and Thursday, and a 10-yr TIPS auction tomorrow, c) how much lower did anyone think that rates were going to go, in the near term? Fortunately mortgage rates and doing better than Treasuries, which makes some sense given that they did not participate in the big move down. Currently the 10-yr is at 2.43%, and mortgage prices are perhaps .5 better in price than late last week until the last 30 minutes where are pricing has faded to no improvement. Our window of the FED buying mortgages seems to be lifted as pricing quickly has faded in the last 30 minutes.

According to Democratic aides, President-elect Obama's $775B economic stimulus plan will include more than $300B in tax cuts. The proposal appears to have the support of both parties. The dollar rose on speculation that the plan will help the economy recover from recession. Right now the futures market is pricing in an 82% chance that the Fed keeps rates somewhere between 0 and .25% until at least April 29^th, 2009.

The Federal Reserve Bank of New York said Monday it has begun purchasing mortgage-backed securities in an effort to bolster the battered housing market. The program, initially announced Nov. 25, allows the Fed to spend $500 billion to buy mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks. The program is aimed at driving down the price of mortgages and making home loans more available. When the government comes into our market, we see improvement in pricing and as quickly as it does, it begins to fade. As I said last week, I believe rates will relax somewhat further but is driven by the only buyer we have, the Federal Government for mortgage backed securities.

To apply for a mortgage, contact Kirk Mulhearn at 866-961-8042 ext.110

email: kirkmulhearn@gmail.com