30 Jun, 2009
Sounding Off
Posted by: Scott Swinford, Mortgage Planner & Credit Expert In: Real Estate Finance| Renters| refinance| tax credit
OK… I’m going to rant and rave for a minute or two and then be done. I need to sound off and I want everyone within shouting distance to hear!
If you are still sitting on the fence deciding whether or not you are going to buy or refinance your Indiana mortgage, let me ask you this. WHY???? WHAT EXACTLY ARE YOU WAITING FOR???
Let me give you a few reasons to fall off onto the “right” side!
First, mortgage interest rates are at near 30 year lows. Right now, FHA rates are in the mid to low 5% range. Do you remember back in the early 80’s (I don’t) when rates were 18-20%? Thank goodness for the adjustable rate mortgage that could be had for the paltry rate of only 16%… Yes, now is a great time to take advantage of the rates and stop trying to time the bottom. The difference of 1/8thof a point (0.125%) on a $150,000 mortgage is about $9 a month. Is it really worth it if rates go back up and you missed your opportunity?
Next, houses are on sale. With the amount of inventory currently and sellers needing to sell to buy their next home, prices are very attractive. Remember, the deal of the century comes around about once a week now!
OK, so you say the credit requirements have increased and qualifying is harder. Yes, you actually do have to have a job and your income has to be in the area of your peers. The days of the “Liar Loans” are gone. No more claiming to make $60,000 a year working part-time at McD’s. If you have read any of my blogs, you know that I work a lot with clients that have credit challenges. Just because you do not qualify right now does not mean you cannot in a couple months. You just need to work on it to reach your goal.
For those of you who have lost your income, I am truly sorry. There is not a lot we can do for you right now, but once you get your steady income back, I can help. Even if you had some issues during your time off, let’s see what can be done. I have a number of options available.
If you are worried about the economy, so am I. Here’s my take and it seems that several people smarter than I agree. First, the government is pumping money into the mortgage market to keep the rates artificially low. This is to stimulate buying to get this glut of homes off the market. They are also offering the $8,000 tax credit to help push you off the fence. Want your (up to) 8 grand? Gotta close on your home by November 30. While there has been talk of extending and/or modifying the terms of this program, there is nothing set in stone.
Many people are worried about inflation on the horizon. Will it happen? Maybe! If it does, it could be mild, moderate or severe. No one knows, but the government seems to be watching very closely and making adjustments as needed. One of the best ways to weather it, however, is in real estate.
Even though many areas of the country have seen drops in property values, this was really to be expected. When the cost of a home is rising much faster than the size of your payroll check, you know something has to give. Sooner or later, the rising prices become unsustainable and we see a crash. Fortunately in Northwest Indiana, the crash wasn’t as big as in other areas, but we didn’t see the huge increases in property values like in Vegas, Arizona, Florida, etc.
Ok, I’m off my soapbox! I just hope that what I have outlined makes some sense. This pain we are feeling is not going to last forever, nor are the government incentives to purchase now. In the long run, real estate is still a great investment, even if it is just a place to live. At least any equity will go into your pocket instead of your landlords.
I hope you take advantage of this position we are in now, as there really may not be a better time to buy for years to come. If you have questions, I am always will to answer them. As your Northwest Indiana Loan Guy and FHA loan professional, I’m here to guide you in the right direction.
Scott
Scott Swinford, your Northwest Indiana Loan Guy
Your source for Indiana FHA loans, Indiana FHA 203(k) Streamline loans, Indiana USDA Rural Development loans, and much more.
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