Forecast for the Week
So if you love all the excitement, drama, intrigue and crazy volatility of late...you'll love the week ahead, as it is loaded full with market movers. We'll get the latest readings on the health of the manufacturing and housing sectors, but the main event will take place on Tuesday when the Federal Reserve announces its latest interest rate decision and Policy Statement. For more information contact me at www.tombrewerjr.com.
The Fed is expected to cut the Fed Funds Rate by another .75%. However, as we've seen following every Fed rate cut in the recent cycle, chances are very good that Bond pricing will worsen following the cut...which results in higher home loan rates. This happens because Fed rate cuts help to stimulate the economy, by making it less expensive to finance personal and business purchases...and this in turn fuels inflation, the arch-enemy of fixed return assets like Bonds, which home loan rates are based on.
So a word to the wise - if you or someone you know has been ready to move forward on a purchase or refinance, there's no time like the present. Be sure to get in touch with me, so I can explain your options and help plan a great strategy for your home loan.
Monday, March 17, 2008
100% Financing on Home Loans
For all conventional purposes 100% financing will only be available through the VA and the FHA effective March 31st 2008. So, for all of the fence sitters you have 2 weeks to secure financing at the 100% level from either Fannie Mae or Freddie Mac. These companies offer the purest forms of 100% financing because they do not involve gift funds and you do not have to be a veteran.As of April 1st, 2008 Freddie and Fannie will be offering 97% financing at a FICO score of 680 or higher. For more information contact me at www.tombrewerjr.com.
Most prospective home buyers say well so what's the point. The point is that most buyers seeking FHA financing with the Neamiah Program to get 100% financing are not in a buyers market becuse they will bw asking the seller for around 7% off of list price to get the transaction done.While this is done all the time the houses that have the value and ability to fit this criteria are less.
So if you want to be in the market for every house and in a position of transaction leverage to your side you will need 3% down in the future or you will have to narrow your chices for the 100% programs of the FHA.The upside to the FHA is that currently it is not FICO score driven so you can qualify at a FICO score of 540 or above.
Most prospective home buyers say well so what's the point. The point is that most buyers seeking FHA financing with the Neamiah Program to get 100% financing are not in a buyers market becuse they will bw asking the seller for around 7% off of list price to get the transaction done.While this is done all the time the houses that have the value and ability to fit this criteria are less.
So if you want to be in the market for every house and in a position of transaction leverage to your side you will need 3% down in the future or you will have to narrow your chices for the 100% programs of the FHA.The upside to the FHA is that currently it is not FICO score driven so you can qualify at a FICO score of 540 or above.
Bond Market - Week in Review 3-16-2007
Last Week in Review
"JUST WHEN I THOUGHT I WAS OUT...THEY PULL ME BACK IN." Al Pacino in the 1990 film, The Godfather III And if Bonds and home loan rates thought they were out of the days of volatility...they got pulled right back in, as last week brought daily price swings of almost historic proportions. For the week overall, fixed home loan rates improved by about .25%. For more information contact me at www.tombrewerjr.com.
What led to the dramatic action this week? The bipolar emotional state of the markets began deeply depressed on Monday, but then were filled with joy Tuesday, when the Fed made an interesting move by announcing the creation of the new Term Securities Lending Facility (TSLF). The TSLF will provide borrowing banks with $200 Billion to draw on to help inject liquidity into the credit markets, and further, will accept some mortgage-backed securities as collateral, which effectively may help to "upgrade" the value and perception of battered Mortgage Bonds.
But in the meantime...struggles are still being played out related to the downgrade and losses experienced by companies holding massive amounts of mortgage-backed securities. Headlines hit on Thursday about The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell off large amounts of mortgage paper into the markets at great financial losses. Then on Friday, the news broke that financial brokerage and investment banking giant, Bear Stearns had suffered enormous losses, and their lack of liquidity endangered them from going out of business...or "sleeping with the fishes". The new aforementioned TSLF is designed to help this type of liquidity problem, but it will not go into effect for a few weeks, and Bear Stearns would not last that long. Coming to the rescue with loans were both the NY Fed and JP Morgan Chase. These sure are exciting times.
One bright spot for the financial markets was a low consumer inflation reading. The Overall and Core Consumer Price Index (CPI) figures were reported unchanged, far cooler than the expected increases of 0.3% and 0.2% respectively. These tame inflation numbers give the Fed a green light to cut the Fed Funds Rate by another .75% at Tuesday's meeting...but read on to understand exactly how this cut may impact YOU.
IF THE IDEA OF KEEPING BUSINESS IN THE "FAMILY" CONJURES UP IMAGES OF MICHAEL CORLEONE AND OFFERS THAT CAN'T BE REFUSED - YOU'LL WANT TO READ THIS WEEK'S MORTGAGE MARKET VIEW TO LEARN SOME TIPS ON RUNNING A SUCCESSFUL FAMILY BUSINESS, WHERE YOU LIKELY WON'T HAVE TO WORRY ABOUT EITHER GUNS OR CANNOLI'S.
"JUST WHEN I THOUGHT I WAS OUT...THEY PULL ME BACK IN." Al Pacino in the 1990 film, The Godfather III And if Bonds and home loan rates thought they were out of the days of volatility...they got pulled right back in, as last week brought daily price swings of almost historic proportions. For the week overall, fixed home loan rates improved by about .25%. For more information contact me at www.tombrewerjr.com.
What led to the dramatic action this week? The bipolar emotional state of the markets began deeply depressed on Monday, but then were filled with joy Tuesday, when the Fed made an interesting move by announcing the creation of the new Term Securities Lending Facility (TSLF). The TSLF will provide borrowing banks with $200 Billion to draw on to help inject liquidity into the credit markets, and further, will accept some mortgage-backed securities as collateral, which effectively may help to "upgrade" the value and perception of battered Mortgage Bonds.
But in the meantime...struggles are still being played out related to the downgrade and losses experienced by companies holding massive amounts of mortgage-backed securities. Headlines hit on Thursday about The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell off large amounts of mortgage paper into the markets at great financial losses. Then on Friday, the news broke that financial brokerage and investment banking giant, Bear Stearns had suffered enormous losses, and their lack of liquidity endangered them from going out of business...or "sleeping with the fishes". The new aforementioned TSLF is designed to help this type of liquidity problem, but it will not go into effect for a few weeks, and Bear Stearns would not last that long. Coming to the rescue with loans were both the NY Fed and JP Morgan Chase. These sure are exciting times.
One bright spot for the financial markets was a low consumer inflation reading. The Overall and Core Consumer Price Index (CPI) figures were reported unchanged, far cooler than the expected increases of 0.3% and 0.2% respectively. These tame inflation numbers give the Fed a green light to cut the Fed Funds Rate by another .75% at Tuesday's meeting...but read on to understand exactly how this cut may impact YOU.
IF THE IDEA OF KEEPING BUSINESS IN THE "FAMILY" CONJURES UP IMAGES OF MICHAEL CORLEONE AND OFFERS THAT CAN'T BE REFUSED - YOU'LL WANT TO READ THIS WEEK'S MORTGAGE MARKET VIEW TO LEARN SOME TIPS ON RUNNING A SUCCESSFUL FAMILY BUSINESS, WHERE YOU LIKELY WON'T HAVE TO WORRY ABOUT EITHER GUNS OR CANNOLI'S.
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