The unannounced news outta the FHA this week is that lenders are requiring 580 credit scores to do loans at 100% with the AmeriDream 3% gift from the seller. What does this translate to in the Real Estate world you ask?? Flexibility from both the buyer and the seller if you want to get the deal done.
More often than not when facing FHA financing and you will as Real Estate professionals , buyers or sellers will be dealing with this on a more common place occurrence. If the buyer wants closing costs as part of the seller concession then the seller could be looking at close to 7% off the list price to complete the transaction. What does this mean? Value of the property rules out potentially 50% of the market for the buyer. Be careful as the seller how to price the property because the real inevitability is you may need value and flexibility to sell your house in the coming year. Appraisals are becoming much less tolerant at providing the value your home is worth so the whole equation now must make sense to the buyer, seller and the lender. Please do not hesitate to go to our website at www.tombrewerjr.com for more information.
Thursday, March 27, 2008
Forecast for the week of 3/24/2008
Forecast for the Week
So after all that...what lies in wait as the markets reopen following the holiday weekend? Yet another action packed economic calendar. We'll get a look at the housing market via the latest numbers on both New and Existing Homes Sales, but the report voted most likely to influence the markets will be Friday's Personal Income and Spending report with its imbedded data on Core Personal Consumption Expenditures (PCE)...which just happens to be the Federal Reserve's favorite measure of consumer inflation. Please do not hesitate to go to my website for more information at www.tombrewerjr.com.
Particularly on the heels of the most recent rate cut, this report will take special significance. The Fed would like to see a core inflation rate below 2.0%, but with Bernanke and crew preferring to fight a looming recession with their continuing series of rate cuts, rather than targeting inflation with rate hikes, this will be a tough target to reach for the foreseeable future.
Since inflation is the enemy of fixed return investments like Bonds, a jump higher in the Core PCE on Friday could cause Bond prices to worsen quickly, and home loan rates pop higher.
So after all that...what lies in wait as the markets reopen following the holiday weekend? Yet another action packed economic calendar. We'll get a look at the housing market via the latest numbers on both New and Existing Homes Sales, but the report voted most likely to influence the markets will be Friday's Personal Income and Spending report with its imbedded data on Core Personal Consumption Expenditures (PCE)...which just happens to be the Federal Reserve's favorite measure of consumer inflation. Please do not hesitate to go to my website for more information at www.tombrewerjr.com.
Particularly on the heels of the most recent rate cut, this report will take special significance. The Fed would like to see a core inflation rate below 2.0%, but with Bernanke and crew preferring to fight a looming recession with their continuing series of rate cuts, rather than targeting inflation with rate hikes, this will be a tough target to reach for the foreseeable future.
Since inflation is the enemy of fixed return investments like Bonds, a jump higher in the Core PCE on Friday could cause Bond prices to worsen quickly, and home loan rates pop higher.
This Weeks Market View - Buying versus Leasing
The Mortgage Market View...
Buying versus Leasing: Two Sides of the Same Coin
Despite claims to the contrary, there really is no one-size-fits-all answer to the question of whether to buy or lease a car. In either scenario, a portion of every payment is lost to depreciation, even with the best interest rate attached. With this in mind, consider your own lifestyle needs and priorities at the time of each transaction. Please go to our website for more information on this or other Real Estate topics at www.tombrewerjr.com.
Benefits of Leasing:
Lease payments are generally between 30%-60% lower than car loan payments.
It's as if you have a guaranteed buyer of your vehicle at a specified price when the lease is up. If the vehicle is worth more, you can sell it on the market and pocket the gain, if it is worth less than the lease buyout value, you just hand over the keys.
Little or no down payment is required for a lease, freeing up cash for investments with a better return.
Benefits of Buying:
With the purchase of a car, significant trade-in or re-sale value can accumulate.
There are no surprise fees or charges after the fact, for wear and tear or overuse.
Once your loan is paid off, you will have something tangible to show for the money you have spent over the years.
Buying versus Leasing: Two Sides of the Same Coin
Despite claims to the contrary, there really is no one-size-fits-all answer to the question of whether to buy or lease a car. In either scenario, a portion of every payment is lost to depreciation, even with the best interest rate attached. With this in mind, consider your own lifestyle needs and priorities at the time of each transaction. Please go to our website for more information on this or other Real Estate topics at www.tombrewerjr.com.
Benefits of Leasing:
Lease payments are generally between 30%-60% lower than car loan payments.
It's as if you have a guaranteed buyer of your vehicle at a specified price when the lease is up. If the vehicle is worth more, you can sell it on the market and pocket the gain, if it is worth less than the lease buyout value, you just hand over the keys.
Little or no down payment is required for a lease, freeing up cash for investments with a better return.
Benefits of Buying:
With the purchase of a car, significant trade-in or re-sale value can accumulate.
There are no surprise fees or charges after the fact, for wear and tear or overuse.
Once your loan is paid off, you will have something tangible to show for the money you have spent over the years.
Last Week in Review - 3-24-2008
Last Week in Review
"DARLING, I DON'T KNOW WHY I GO TO EXTREMES...TOO HIGH OR TOO LOW, THERE AIN'T NO IN-BETWEENS..." Billy Joel The financial markets endured another week of extreme bipolar behavior, with enormous intra-day mood swings that normally wouldn't be seen over the course of several weeks. While Bonds and home loan rates wildly rocketed higher and plummeted lower on a daily basis throughout the week, fixed home loan rates ended up improved by about .25% for the week overall. And last week...the action started unusually early, stemming from some almost unprecedented weekend actions by the Fed.
Last Sunday night, the news broke that the Fed had not only decided to make a move to lower the Discount Rate by .25%, just two days ahead of when their normally scheduled announcement would arrive, but also that they had helped facilitate the bailout of investment giant Bear Stearns. The 85-year-old company had its stock purchased by JPM Chase at $2 per share, for $236 Million...yep, that's Million with an M. Bear Stearns was trading near $90 at the end of February, with a 52-week high near $160. Bear Stearns was the number one buyer of sub-prime home loans, with a huge appetite for this type of paper - and they bought sub-prime transactions with both fists, a strategy that certainly came back to haunt them.
Adding to the manic-depressive mix was a huge news day on Tuesday, starting with earnings and outlook from two other major financial players - Goldman Sachs and Lehman Brothers - who reported much more positive results than had been anticipated. Particularly on the heels of the Bear Stearns situation, this was very welcome news to a jittery Stock market. New construction numbers came out mixed, along with a hotter than expected read on wholesale inflation via the Producer Price Index...and as if it all weren't enough already, the Fed released their official decision to cut the Fed Funds Rate by .75%. Many people expected a deeper cut, but they likely kept the cut to only .75% because of continuing fears of inflation.
But wait...there's still more. On Wednesday, investment banker Morgan Stanley also came out with a great earnings report, which again was seen as good news by the Stock market, but pulled money out of Bonds. But then...along came big news from the Office of Federal Housing Enterprise Oversight (OFHEO), who announced that they lifted special capital restrictions that had been put in place for both Fannie Mae and Freddie Mac. This will allow these firms to pump $200 Billion into the mortgage market by way of buying Mortgage Bonds. The anticipated increase in demand was very good news for Bonds and home loan rates, which immediately improved on the news. Please do not hesitate to go to our website at www.tombrewerjr.com for more information.
"DARLING, I DON'T KNOW WHY I GO TO EXTREMES...TOO HIGH OR TOO LOW, THERE AIN'T NO IN-BETWEENS..." Billy Joel The financial markets endured another week of extreme bipolar behavior, with enormous intra-day mood swings that normally wouldn't be seen over the course of several weeks. While Bonds and home loan rates wildly rocketed higher and plummeted lower on a daily basis throughout the week, fixed home loan rates ended up improved by about .25% for the week overall. And last week...the action started unusually early, stemming from some almost unprecedented weekend actions by the Fed.
Last Sunday night, the news broke that the Fed had not only decided to make a move to lower the Discount Rate by .25%, just two days ahead of when their normally scheduled announcement would arrive, but also that they had helped facilitate the bailout of investment giant Bear Stearns. The 85-year-old company had its stock purchased by JPM Chase at $2 per share, for $236 Million...yep, that's Million with an M. Bear Stearns was trading near $90 at the end of February, with a 52-week high near $160. Bear Stearns was the number one buyer of sub-prime home loans, with a huge appetite for this type of paper - and they bought sub-prime transactions with both fists, a strategy that certainly came back to haunt them.
Adding to the manic-depressive mix was a huge news day on Tuesday, starting with earnings and outlook from two other major financial players - Goldman Sachs and Lehman Brothers - who reported much more positive results than had been anticipated. Particularly on the heels of the Bear Stearns situation, this was very welcome news to a jittery Stock market. New construction numbers came out mixed, along with a hotter than expected read on wholesale inflation via the Producer Price Index...and as if it all weren't enough already, the Fed released their official decision to cut the Fed Funds Rate by .75%. Many people expected a deeper cut, but they likely kept the cut to only .75% because of continuing fears of inflation.
But wait...there's still more. On Wednesday, investment banker Morgan Stanley also came out with a great earnings report, which again was seen as good news by the Stock market, but pulled money out of Bonds. But then...along came big news from the Office of Federal Housing Enterprise Oversight (OFHEO), who announced that they lifted special capital restrictions that had been put in place for both Fannie Mae and Freddie Mac. This will allow these firms to pump $200 Billion into the mortgage market by way of buying Mortgage Bonds. The anticipated increase in demand was very good news for Bonds and home loan rates, which immediately improved on the news. Please do not hesitate to go to our website at www.tombrewerjr.com for more information.
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