Kirk Mulhearn

Long Beach, California. I want to wish everyone a Happy New Year for 2009.

Where there is confusion and chaos, there is also great opportunity. The question that you must ask yourself: How do you take advantage of market conditions?

Home prices are extremely low and so are interest rates. Today, I booked two loan applications. The funny thing is that there seems to be almost a 50%-50% chance that a home buyer will not show up for a loan application. Today, both buyers not only showed up at the same time with all of the information in tow necessary to consummate the pre-qualification. I see people, that intuitively sense that this is the time to purchase property.

The tone in the media has been obviously negative in regard to the status of the current market place. As an experienced loan officer, I roll my eyes at the quickening of the changes in the market place. One thing for sure, is that the market will be as bad as people think it is....as much of a realist as I am, and the following facts are definitely dismal, I would suggest everyone to think positively and practically about 2009 and the markets therein. I say this because, I have seen experienced professionals, in all walks of life, simply shut down. It's as if some of my friends have crawled under their desks and have died...

The index of leading U.S. economic indicators fell in November for the fifth time in seven months, reflecting the worsening outlook that led the Federal Reserve to slash interest rates and pledge unlimited purchases of securities. "There is no end to the recession in sight," said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburg, who correctly forecast the decline in the leading index. "The economy is likely to continue to fall hard."

Crude oil fell below $38 a barrel for the first time since July 2004 on speculation that OPEC hasn't trimmed production enough to bolster prices as demand drops. JPMorgan Chase & Co., the largest U.S. bank by assets, reduced its 2009 average oil price forecast to $43 a barrel from $69 as a global economic slowdown causes a contraction in demand. The prospect of oil falling to $25 is "hard to dismiss amid a serious deterioration of economic conditions and building stocks," the bank said in a report released yesterday.

The labor market remained an albatross after a report showing more than 500,000 people filed for unemployment benefits for the first time last week. Buckling demand and deflation have combined to create an environment of layoffs and little new hiring. In Washington, as the Bush administration puts the finishing touches on the Detroit bailout, the Obama administration is authoring a broad stimulus package designed to inject roughly $850 billion into the economy of the next two years, the AP reported.

So where does that leave our mortgage rates? Everyone keeps asking how low will rates go. All of you know by now, the government intervention in the credit markets has destroyed the normal differences between higher coupon and lower coupon bonds. Why would anyone be willing to pay 102 for a 6% coupon when the governments says they want rates to go to 4.5% or lower. So the government will continue to try and lower rates. They should be lower if normal spreads for mortgage backed bonds and treasuries existed. But they still do not. I said earlier I thought we would see 4.75% at a par price. If spreads can be compressed further, it is possible it will get below this to perhaps 4.5% at PAR. But I think to achieve this the rest of the world finance ministers will have to lowers their rates as well. The dollar is starting to weaken again against foreign currencies and will put a floor on how far this can go. Not to mention since we are in debt as a Nation up to our high brows, we cannot expect the rest of the world to continue to say they will take these risks in buying our debt at such low rate of returns. So my best advice, get on the phones to borrowers that can take advantage of these rate levels while they last. There is one guy named to the incoming Obama economic team by the name of Paul Volker who is not afraid to raise rates when the time comes to stamp out inflation. For those of you not around in the1980 to 1982 time period, we lived through 18% 30 year mortgage rates. This is a cake walk compared to that time period and economic issues. Remember, inflation is the one big enemy of our bond market. Right now, they are worried about deflation, but we would expect that to turn sometime next year and that is when they will be taking away the low rate punch bowl. Your rate window can now be measured in hours compared to days, so you have to be ready to move in this artificial credit market environment.

Kirk Mulhearn can be reached at 562-989-4608 Ext. 110

Mortgage Rates fall again

Long Beach,Ca. For the third week in a row, 30 year fixed mortgage rates have fallen to record lows while borrowers take advantage and have been making refinance applications soar to the highest levels since 2003. While the Federal Reserve is about to start directing hundreds of billions of dollars into the hard hit housing market, rates have continues a nine week slide.

Current rates are at an all time low since Freddie Mac started to report back in 1971. These fantastic rates are a great opportunity for borrowers with high credit scores and good job incomes ton lower their mortgage rates and save up to hundreds of dollars a month. However, considering that across the board, real estate values have dropped approximately 48% in Southern California over the last two years, a refinance boom will be dependent on whether or not home owners can show sufficient equity in their homes.

Typically, Fannie and Freddie want more and more the home owners to have a min. of equity in their homes. On the other hand, FHA refinancing allows for borrowers to cash out as much as 95% of the value in their homes.

Freddie Mac reported the average 30-year fixed interest rate at 5.1% this week, down from the previous record of 5.14% set last week. This has made nine straight weeks of interest rate drops. All together, mortgage rates have dropped 1.3% since late October.

Understandably, mortgage applications have increased to the highest level in over 5 years. per the Mortgage Bankers Assn. More then 80% of applications came from smart property owners attempting to lower their interest rates. Those unfortunate home owners who have missed a lot of payments due to loss of employment or defaults on their mortgage will simply have to sit out and not be able to reap the benefits of these rates due to the new high standard of lending required Fannie Mae and Freddie Mac.

In order to see if you qualify for a lower interest rate and house payment, you may contact Kirk Mulhearn, Mortgage Planner @ 562-989-4608 ext.110, www.kirkmulhearn.com from for a free copy of your credit report and a mortgage consultation session to see if it is a good time for you to make a move for a lower rate.

Long Beach, California. I want to wish everyone a Happy New Year for 2009.

Where there is confusion and chaos, there is also great opportunity. The question that you must ask yourself: How do you take advantage of market conditions?

Home prices are extremely low and so are interest rates. Today, I booked two loan applications. The funny thing is that there seems to be almost a 50%-50% chance that a home buyer will not show up for a loan application. Today, both buyers not only showed up at the same time with all of the information in tow necessary to consummate the pre-qualification. I see people, that intuitively sense that this is the time to purchase property.

The tone in the media has been obviously negative in regard to the status of the current market place. As an experienced loan officer, I roll my eyes at the quickening of the changes in the market place. One thing for sure, is that the market will be as bad as people think it is....as much of a realist as I am, and the following facts are definitely dismal, I would suggest everyone to think positively and practically about the 2009 and the markets therein. I say this because, I have seen experienced professionals, in all walks of life, simply shut down. It's as if some of my friends have crawled under their desks and have died...

The index of leading U.S. economic indicators fell in November for the fifth time in seven months, reflecting the worsening outlook that led the Federal Reserve to slash interest rates and pledge unlimited purchases of securities. "There is no end to the recession in sight," said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburg, who correctly forecast the decline in the leading index. "The economy is likely to continue to fall hard."

Crude oil fell below $38 a barrel for the first time since July 2004 on speculation that OPEC hasn't trimmed production enough to bolster prices as demand drops. JPMorgan Chase & Co., the largest U.S. bank by assets, reduced its 2009 average oil price forecast to $43 a barrel from $69 as a global economic slowdown causes a contraction in demand. The prospect of oil falling to $25 is "hard to dismiss amid a serious deterioration of economic conditions and building stocks," the bank said in a report released yesterday.

The labor market remained an albatross after a report showing more than 500,000 people filed for unemployment benefits for the first time last week. Buckling demand and deflation have combined to create an environment of layoffs and little new hiring. In Washington, as the Bush administration puts the finishing touches on the Detroit bailout, the Obama administration is authoring a broad stimulus package designed to inject roughly $850 billion into the economy of the next two years, the AP reported.

So where does that leave our mortgage rates? Everyone keeps asking how low will rates go. All of you know by now, the government intervention in the credit markets has destroyed the normal differences between higher coupon and lower coupon bonds. Why would anyone be willing to pay 102 for a 6% coupon when the governments says they want rates to go to 4.5% or lower. So the government will continue to try and lower rates. They should be lower if normal spreads for mortgage backed bonds and treasuries existed. But they still do not. I said earlier I thought we would see 4.75% at a par price. If spreads can be compressed further, it is possible it will get below this to perhaps 4.5% at PAR. But I think to achieve this the rest of the world finance ministers will have to lowers their rates as well. The dollar is starting to weaken again against foreign currencies and will put a floor on how far this can go. Not to mention since we are in debt as a Nation up to our high brows, we cannot expect the rest of the world to continue to say they will take these risks in buying our debt at such low rate of returns. So my best advice, get on the phones to borrowers that can take advantage of these rate levels while they last. There is one guy named to the incoming Obama economic team by the name of Paul Volker who is not afraid to raise rates when the time comes to stamp out inflation. For those of you not around in the1980 to 1982 time period, we lived through 18% 30 year mortgage rates. This is a cake walk compared to that time period and economic issues. Remember, inflation is the one big enemy of our bond market. Right now, they are worried about deflation, but we would expect that to turn sometime next year and that is when they will be taking away the low rate punch bowl. Your rate window can now be measured in hours compared to days, so you have to be ready to move in this artificial credit market environment.

Long Beach, Ca. Finally, Dave Avery, an honest real estate economist and head of the Los Angeles Economic Development Commission, discusses the State of Southern California Real Estate. Mr. Avery, recently gave an address on the way things are moving at the Income Property Lending Conference in Long Beach, California. In regard to the housing market, Mr. Avery was the first economist that I have ever heard talking about a housing "Depression."

This was refreshing since no other economist, to my knowledge, in a public forum has had the guts and fortitude to call a spade a spade, address the problem, offer some solutions, and get on with it. Mr. Avery detailed the current housing situation, and addressed the question, "How much further will prices fall?"

Between 15-20% more was his answer. Considering that since February of 2007 until April of 2008 the medium sales price in the five Counties in Southern California, including: Ventura, Los Angeles, Orange, San Bernardino, and Riverside has fallen from $505,000.00 to $375,000.00, it appears that an additional slide will be a boon for people interested in purchasing real estate.

Now, if Mr. Avery is right and the average property in Southern California goes down to between $300,000.00 and $320,000.00, it will be a great buying opportunity that only seems to come along every 15-30 years.

Consider this, that while food prices in the last year have gone up between 30% and 40%, and gasoline prices have gone up by almost 100%, that real estate is going down 20-25%. This is an amazing figure when you consider that this percentage in reduction does not include regular inflation. Remember that the government figures of 4% does is not a real number in that it does not take into account the aforementioned prices of gas and food stuffs. The truth of the matter is that the true inflation rate when these are included is between 10-15% a year. Add this inflation number to the current correction in housing prices and true prices are really off between 25% and 40% depending on what market you're in.

Also consider the fact that current interest rates for thirty year fixed rate mortgages are between 5.5%-6% and you get housing at the most affordable price in years.

Long Beach, Ca. In the current economy where Americans are strangled at the pump, squeezed in the grocery market, worried about finances, and trying to save every dime possible. It is with pleasure that I share with you how my personal family recently accrued an approximate savings of $285.00-$300.00 a month by changing our mobile phone service company.

In the old days, before mobile phones, every household had at least one hard land-line phone. Granted, if there were teenagers, an occasional second line was installed to handle the traffic. Nevertheless, telephone service was pretty straight forward:

one home+one phone=one bill.

Today in America Life, with the advent of mobile technology, mobile phones have become considered "essential." Phones are not just for talking anymore, they supply the tools for web access, photography and video, text messaging, video gaming and e mail not to mention contact management and calendar access, and emergency life line.

A simple 4" mobile phone has become a mobile Computerized World Access Portal(CWAP) and if we modify the letter "W" to an "R," we as parents can relate to what it is our children are spending their time doing with these devices besides using them for there best and most important use: Parent/Child communication. That said,

Unfortunately, the world is not as safe as it was when I was growing up and today, it is considered good parenting to make sure that your child has emergency phone access and a mobile phone is the best child locator tool. As long as it is monitored carefully, I agree with allowing youngsters access to a mobile phone, if not on a daily basis on a case by case basis. For example, if they are going on a field trip at school, a Sporting event, or some other supervised outing wherein it is convenient and smart to be able to communicate via a phone.

Meanwhile, the old formula of one home+one phone=one bill has morphed into:

one home+one phone(a land line)+internet service(DSL)+cable access+several mobile phones=multiple outrageously expensive monthly multimedia bills that can cost thousands and thousands of dollars a year.

Let's take a residential phone service at home that with taxes can cost a min. of $50-$100 a month, sometimes the DSL is provided by the same phone company, sometimes you have to pay for the internet access separately.

Cable television access that routinely runs between $50- $100 a month for a minimal plan. Again, you may be able to combine cable with hard wired internet access for an extra charge.

Then there is the litany of mobile phone service providers including: Sprint/Nextel, AT&T,Trac Phones, Cingular, Verizon, etc. Although, most of these have some type of family savings plans, I have to share with you the recent advent of Metro PCS in the Southern Californian Market Place and how it is saving my family a considerable amount of dough. Hopefully, without sounding too much like a commercial, for a limited time, Metro PCS is offering four lines with unlimited calls for $100/month. Although, the phones are limited in area coverage(not so good outside of Los Angeles, Riverside, San Bernardino, Ventura and Orange Counties, the service is inexpensive and meets most families needs.) Note that is $25/ month per phone with unlimited calling including local, text messaging, and long distance. Best of all, Metro PCS did not require my family to sign a contract.

If you are a business traveler, this system will simple not work for you. This is not as of yet, a nationwide company. The coverage is mostly local. There is no coverage as of this writing in Portland; however, Las Vegas in connected. Also, another draw back is as of today, this plan does not work with the Blackberry Phone.

The draw back for the plan is that you must pay for the phones up front and this plan does not include web access. But for $5/month more per phone you can add the web access.

Now, compare what I was recently paying at a competitor:

For unlimited web access and phone calls my old phone was $135/m.

I added a second phone for my wife which cost another $100/m.

My daughter was paying at least $50/m for her own service.

Our land line at the house is normally around $70/m.

Imagine putting out almost $400/m just to be able to communicate via mobile and home service.

This was costing us an average of $285-$300/m with taxes for just three mobile phones and an additional $70/ month for our home line! Imagine putting out almost $400/m just to be able to communicate via mobile and home service. Now, with Metro PCS's plan, we have increased the amount of mobile phones from three to four phones. We use one for my business, one for my wife, one is being used by our 17 year old daughter, which leaves a spare at the house for any of the other four younger children that might need it for a special occasion all for only $100/m.

Now, because of the unlimited long distance part of our plan,we can cut back our land line service to a more basic plan and save an additional $35/month. All together the total savings for my house hold by utilizing the Mobile PCS is between an astonishing $215/m-$250/m. Now that's a monthly savings of between $2500-$3000/year.

I see that my family members are going to be able to fill our gas tanks, after all this summer!