FEDS Emergency Rate Cut

Global Banks Unite in Unprecedented Rate Cuts
Ben Bernanke and the Fed brought financial aid to the streets, lowering the Federal Funds Rate and Discount Rate by 0.50%. In an unprecedented emergency move, central banks across the globe joined in lowering interest rates.
This move follows Washington's passing of the $700 billion Rescue Plan. From Wall Street to Main Street, a common concern has been heard by Washington. "We need money... no, let me rephrase that...we need cheap money."
Rates Could Rise From HereHome loan rates have benefited from the weakness in the financial markets. Fixed rate mortgages remain very attractive. However, the Fed lowers short term interest rates to shore up financial markets. This could cause home loan rates to rise in the coming weeks and months if confidence returns to the stock markets.
ARM Holders Take Notice! Anyone that has an Adjustable Rate Mortgage (ARM), take note. The London Interbank Offered Rate (LIBOR) has soared from uncertainty in financial companies...And six million home loans in the United States are tied to LIBOR which determines the interest rate at the time of adjustment.

Builders Lender or Your Own?

RISMEDIA, May 22, 2008-The home loan packages offered by builders are often touted as being very convenient. But when it comes to evaluating the true benefits the picture is often quite different, according to the home buying specialists at the National Association of Exclusive Buyer Agents, (NAEBA). Recent difficulties in the mortgage marketplace bear this out.”Mortgage shopping can take a significant level of sophistication. In addition, negotiations with a builder’s mortgage company can sometimes be stressful and costly,” stated Barry Nystedt President of NAEBA. “Home buyers still need to compare the builder’s loan offerings to what is available on the open market. Complications arise when the buyer becomes obligated to the builder’s lender without being able to compare the rates and fees other lenders may offer months later when the home is complete.
Sometimes the builder’s lender takes advantage of a buyer by providing an overpriced loan, which the buyer accepts, not wanting to risk losing the builder’s incentives.”
Builders often offer cash or equivalent incentives to buyers for using a builder’s preferred lender. Often the builders’ lenders are related companies that are making a significant profit on this business. The builders’ incentives for the buyer can be in the form of additional landscaping options at no charge, cash credits to closing costs, or adding options to the home at a discounted price.
This is when the buyer needs his own advocate. “Ask your buyer’s agent to obtain for you all the incentives the builder is offering along with the right for you to choose your own lender when your agent negotiates your offer-to-purchase contract with the builder,” recommends Barry Nystedt of NAEBA.
“The first person you speak to normally says no, but often when you ask further up the management ladder you will get a decision maker to agree with letting you use your own lender.”
“If that is not successful, once you are close enough to completion to lock in your rate, you should compare at least 3 other Good Faith Estimates for the same loan type from three credible lenders in your market. To make an accurate comparison, you need to make sure the other Good Faith Estimates are for the same loan type, the same rate lock period, and are good for the same day. Decide objectively if the cash value of the incentives from the builder make up for the cost of any higher rates and fees the builder’s lender is charging. By law, RESPA regulations require that builders allow you to change lenders, but the builder would no longer be obligated to give you the incentives,” and, says Nystedt, “that may have been the reason you decided to purchase a home from this builder in the first place.”

Weekly Mortgage Rate remain Stable and low

Mixed economic signals kept rates low across the board and relatively unchanged this week, a nationwide mortgage survey reported Thursday. The results of Freddie Mac’s Primary Mortgage Market Survey showed the 30-year fixed-rate mortgage averaged 6.17 percent for the week, up slightly from last week’s average of 6.16 percent but lower than the average rate of 6.43 percent reported last year at the same time.
The 15-year fixed-rate mortgage averaged 5.87 percent, up slightly from last week when it averaged 5.86 percent. Last year, the 15-year rate averaged 6.10 percent.
Short-term rates were also up slightly, although relatively unchanged. The five-year adjustable-rate mortgage averaged 5.92 percent this week, up from last week’s average of 5.88 percent. One-year ARMs averaged 5.44 percent, up slightly from a 5.43 percent average last week.
“Mortgage rates have remained within a narrow band of 0.1 percentage points over every week in March,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a prepared statement. “This relative stability is due to mixed economic data releases as to how strong the economy is and whether future inflation will recede. One bright spot this week came from an unexpected increase in pending home sales for February, which suggests the housing market is still healthy.

Spring is finally here and the buyers are coming out and searching for their homes. Now is a great time to get that home ready and on the market. Let me hear any of your funny or successful stories as you are getting it ready to go! Interest rates are still at a low, so everyone who has recieved a mortage in the last 5 years, check it out, if it's an ARM, see when it is due and get it refinanced. Have any questions in regards to mortgages? Ask away, if I don't have the answer I will find someone who does.