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A great article came my way through email this afternoon. It described exactly what’s going on in the market today with our interest rates and why we might or might not see 4%. The Federal Reserve recently said that it plans to continue purchasing large quantities of Mortgage Backed Securities to provide support to the mortgage and housing markets, and "it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant".
The statement is true, the concern is as always, the media will take their own spin on the words; telling the customers their own version. Something along the lines as: "Good news, the Fed's words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the Summer" Some people hearing this will delay and try to wait it out until a “lower rate” comes around. Bad move!
Here's the truth.
Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds...which won't have much of an impact on present interest rates. Why? First, see the Fed's purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying - http://www.newyorkfed.org/markets/mbs/index.html.
So why is the Fed buying these Bonds? Well if you think about it, it's very smart of the Fed...and maybe even a little sneaky...because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today's great interest rates.
Stay with me here...
With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today's low rates.
Here's the most important part.
Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.
The clincher is this:
Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.
I don't want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let's talk further on this - call or email me and let's discuss what this might mean for you.
STAY AWAY FROM FAST CREDIT REPAIR AND LOOK INTO REFINANCING INTO AN FHA LOAN!
If you’re looking to repair your credit due to consumer lates your best option may be through an FHA loan.
Getting an FHA loan will allow you to pay off the bad debt and allow you to build credit back up by paying on your mortgage!
Don’t think you qualify for an FHA loan?
Don’t worry! First contact your local lender who specializes in FHA mortgages and talk with that person about refinancing into an FHA secured loan. FHA has lower qualification standards than a conventional mortgage –so in return it makes it easier to qualify and get you back on track.
Through an FHA loan you are allowed lates on consumer debts and as long as your credit score is 580 or above you can refinance up to 95% Loan to Value without huge penalties to the interest rate!
For more info please feel free to contact me.
Regards,
Will
The terms annual percentage rate (APR), nominal APR, and effective APR[1] describe the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage, credit card, etc. Those terms have formal, legal definitions in some countries or legal jurisdictions, but in general: [1]
The nominal APR is calculated as: the rate, for a payment period, multiplied by the number of payment periods in a year.[1] However, the exact legal definition of "effective APR" can vary greatly in each jurisdiction, depending on the type of fees included, such as participation fees, loan origination fees, monthly service charges, or late fees. The effective APR has been called the "mathematically-true" interest rate for each year.[2][3] The computation for the effective APR, as the fee+compound interest rate, can also vary depending on whether the up-front fees, such as origination or participation fees, are added to the entire amount, or treated as a short-term loan due in the first payment. When start-up fees are paid as first payment(s), the balance due might accrue more interest, as being delayed by the extra payment period(s).[4]
In some areas, the annual percentage rate (APR) is the simplified counterpart to the effective interest rate that the borrower will pay on a loan. When not using the term "effective APR", the use of "APR" is an early term for nominal APR. In many countries and jurisdictions, lenders (such as banks) are required to disclose the "cost" of borrowing in some standardized way as a form of consumer protection. APR is intended to make it easier to compare lenders and loan options. The APR is likely to differ from the "note rate" or "headline rate" advertised by the lender, due to the addition of other fees that may need to be included in the APR. APRs can be found by asking the lender or by reading the appropriate section in the contract.
In the U.S. and the UK, lenders are required to disclose the APR before the loan (or credit application) is finalized (although the definition of "APR" is not the same in these two countries - see below). Credit card companies can advertise monthly interest rates, but they are required to clearly state the annual percentage rate before an agreement is signed. APR is a term used with regard to deposit accounts as well. However, when dealing with deposit accounts, the annual percentage yield (APY) or annual equivalent rate (AER) is quoted to consumers for comparison purposes.
As of October 2008 you are eligible to refinance your sub prime mortgage into a VA guarantee loan up to $729,000 and 100% LTV.
For more information pleae feel free to contact me.
If you're like me you've found the internet to be a great place to network! But what if you found that one of your strongest networking tools is NOW infected??
Facebook users beware - VIRUS ATTACKS!
Facebook Worm Comes From Infected Friends
The Koobface worm has surfaced in a new form and is again menacing Facebook users with spammed links to malicious Web sites.
For more info follow the link.
Hopefully its not to late!
"Where There Is Will There Is A Way!"
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