With thanks to Dan Green, here are several reasons you should not wait for mortgage rates to “fall”…

Last month, we saw mortgage rates dip into the mid 4% range…. for a couple hours. If you were lucky enough to get locked into that rate during that time, I would like to congratulate you. If not, well… there’s always next time, maybe.

Although rates are in fact trending down, it is impossible to predict what they will do day to day, much less over the next several weeks or months. It is important to be able to lock those low rates when they appear, as they could disappear just as quickly.

Want in? Here’s what you need to do.

• Fill out an application and get me the information that I need to make an informed decision about whether or not you will qualify now. If you don’t, let’s work on it.
• Make sure you are doing everything in your power to help yourself. Pay the bills on time (or at least < 30 days late), keep your balances low, don’t quit your job, etc.
• Most importantly, work with me. Together, we can make it happen!

Here is why we need to start now!

• Mortgage rates could rise, not fall. The banks got a HUGE infusion of our tax dollars, but have you seen them loaning it out??? They are being very cautious. The Fed may lower rates, but they don’t control what the lenders charge.
• Your home’s value could drop. A nearby foreclosure or natural disaster could hurt the value and without enough equity, refinancing could be difficult, if not impossible.
• Your credit could take a hit. Missing one payment and getting a 30 day late on your credit report could ruin your ability to get a new loan. Even if you have less-than-perfect credit now, we can help.
• Lending guidelines may change. In fact, there are new guidelines in place today, January 1, 2009, that negatively impact a lot of borrowers.
• You could get injured or even lose your job. The top three reasons for foreclosure include loss of job, divorce and death / injury of the primary income source. Lenders lend on the ability to repay, not the asset. You may have $250,000 equity in your home, but without showing income to make the monthly payments (before you get the equity out), you may not get the loan.
• Mortgage insurance rates could rise. What’s more, for borrowers who do not qualify for FHA financing (investors for instance), not only will increased MI costs hurt the pocketbook, but the loan-to-value that the insurance companies will lend to will decrease. Are you able to put 15-25% down in cash? Investors and holders of jumbo mortgages (currently > $417,000) may fall into this trap.
• Your house could sustain damage. Here in NW Indiana, we have seen flooding in several areas over the past several years. Damaged homes do not get new loans! Also, even if your home is not damaged, it could cause the closing to be held up just by being declared in a “disaster area”.

Although a topic for another day, a cash-out refinance could be a life (and home) saver during difficult times. Taking out cash and investing it for safety, liquidity and a greater rate of return than your mortgage interest rate, can help if you should find yourself in one of the above situations.

Are you ready to get started now? If so, give me a call at 219-695-0369 and let’s see what we can do.

Still sitting on the proverbial fence? Give me a call at 219-695-0369 and we can discuss your concerns. If you are trying to “time the market”, you could very well get burned.

Scott, your Trusted Advisor

Your first and last stop for Indiana FHA loans, Indiana FHA 203(k) Streamline loans, Indiana USDA Rural Development loans, and Indiana VA loans.

The Worst Predictions About 2008

Courtesy of Yahoo! News, here are some of the worst predictions that were made about 2008. Savor them — a crop like this doesn’t come along every year.

1. “A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!” — Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008

At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.

2. AIG (NYSE:AIG - News) “could have huge gains in the second quarter.” — BijanMoazami, analyst, Friedman, Billings, Ramsey, May 9, 2008

AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.

3. “I think this is a case where Freddie Mac (NYSE:FRE - News) and Fannie Mae (NYSE:FNM - News) are fundamentally sound. They’re not in danger of going under I think they are in good shape going forward.” — Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008

Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.

4. “I’m not an economist but I do believe that we’re growing.” —President George W. Bush, in a July 15, 2008 press conference

Nope. Gross domestic product shrank at a 0.5% annual rate in the July-September quarter. On Dec. 1, the National Bureau of Economic Research declared that a recession had begun in December 2007.

5. “I think Bob Steel’s the one guy I trust to turn this bank around, which is why I’ve told you on weakness to buy Wachovia.” —Jim Cramer, CNBC commentator, Mar. 11, 2008

Two weeks later, Wachovia came within hours of failure as depositors fled. Steel eventually agreed to a takeover by Wells Fargo. Wachovia shares lost half their value from Sept. 15 to Dec. 29.

6. “Existing-Home Sales to Trend Up in 2008″ — Headline of a National Association of Realtors press release, Dec. 9, 2007

On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million — down 11% from a year earlier — in the worst housing slump since the Depression.

7. “I think you’ll see (oil prices at) $150 a barrel by the end of the year” — T. Boone Pickens, June 20, 2008

Oil was then around $135 a barrel. By late December it was below $40.

8. “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.” — Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008

In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup (NYSE:C - News) needed an even bigger rescue in November.

9. “In today’s regulatory environment, it’s virtually impossible to violate rules.” — Bernard Madoff, money manager, Oct. 20, 2007

About a year later, Madoff — who once headed the Nasdaq Stock Market — told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.

10. “There’s growing evidence that parts of the debt markets…are coming back to life.” —Peter Coy and Mara Der Hovanesian, BusinessWeek, Oct. 1, 2007.

Oops.

This just goes to show that even the so-called “experts” don’t make the right call all the time….. Let this be a lesson. The next time you hear someone preaching doom and gloom, ignore them!

2009 will be filled with great opportunities and together we will find them.

Scott Swinford, your Trusted Advisor.

Visit my site at www.nwiloanguy.com

This is the first in a series of columns written by Scott Bilker, an author, publisher and past guest of my radio show. Your comments are always appreciated.

It seems that almost everyone is getting excited about the Fed cutting the Funds rate. “That must make money cheaper to borrow, so interest rates will go down”, they seem to be saying.

In fact, rates on 30 year fixed mortgages are as low as I have every seen them.

“This must be a positive sign?”  or “This will surely stimulate the stagnant real estate market which many seen to blame for this mess!”

Not so fast…

Enter our enemy “Deflation”.

See, we are used to financing things and feeling fairly secure that the dollars we pay them back with will be less valuable later on. For instance, a $300 mortgage payment was a lot in 1960, but seemed very small when you made that last payment in 1990.

What if prices declined and the dollar was now worth more? People would hold off making purchases thinking the products would be cheaper… sort of like waiting to refinance until the rates drop a “little more”. This could potentially cause orders of goods to decrease, factories to shut down, unemployment to increase and …….

It would also make people put off borrowing, as things would be more expensive by comparison in the future (remember the $300 mortgage payment) because the dollars would be worth more than when you borrowed them.

To read an excellent article talking about this phenomenon, go to the MSNBC website.

Hope this helps you understand the risks involved and what the government is up against as it tries to turn around an economy in shambles.

Your Trusted Advisor,

Scott

Your first and last stop for Indiana FHA loans, Indiana FHA 203(k) Streamline loans, Indiana USDA Rural Development loans, and Indiana VA loans.

Owning a home is the American Dream!

I was searching online the other day and came across a great little article written by the Department of Housing and Urban Development (HUD).  It states that they want all Americans to manage their money and have the option of preparing for homeownership.

So do I.

They list five “Key” steps to take to when preparing to purchase a home. You can remember them because the acronym is “OWNER”. Here are the five steps with a brief description of each.

O - Organize.  Set money goals and have a plan to reach them. Decide what is important to spend your money on now and save the rest for a rainy day - or a downpayment on a home.

W - Watch spending and savings.  Putting a little money away each month can be hard work and a difficult choice, but the rewards are great. Learn about the power of compound interest.

N- Negotiate.  Many consumers, including homeowners, feel trapped by debt, but there are other options. Contact your creditors and ask if they would be willing to work with you to develop new payment plans. This shows you are serious and smart about money.

E - Elevate your credit score.  The importance of good credit is a fact of life. Your ability to borrow money for a mortgage or an automobile, as well as the interest rates you pay on credit cards and the amount you pay for insurance is based on your credit score. If you need assistance with your credit issues, visit USCCRAonline, our credit repair website.   

R - Read the fine print.  Consumers have more ways than ever to buy a home. Know your rights. Homebuyers should understand the mortgage contract and be on the look-out for scam artists and predatory lenders. For a mortgage planner you can trust, visit the Northwest Indiana Loan Guy site.

To get a copy of the entire article, click here to go to the HUD website.

If you need a plan to help get on track to buying a home, or you are ready now and need an established lender you can trust, you can email scott@nwiloanguy.com or visit our website at www.nwiloanguy.com.

Scott

PS. Visit our websites to get information on Indiana FHA loans, Indiana 203(k) Streamline loans, and Indiana USDA Rural Development loans.

PPS. Is your credit an issue? Not for us. Find out how our association with multiple benefits including attorney facilitated credit restoration can help improve your credit scores as much as 127 points in about 6 months.