Archive for the ‘Credit Info’ Category
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Mar
06
Posted by Pam Novak
Effective today March 5, 2008 the FHA has increased the loan limits on Single Family Home Mortgage loans. The maximums are decided by the county the property is in.
King County $567,500
Pierce County $567,500
Kitsap County $475,000
This should help a large number of people needing to refinance out of an Adjustable Rate loan with a large balance. FHA along with having lower down payment/equity requirements also is a bit more forgiving with credit requirements and issues. Anyone needing assistance on making a decision to complete a refinance please email me and I can offer references to a number of excellent lenders in the area.
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Feb
28
Posted by Pam Novak
During a new conference this morning at the White House. The President said that he believes we are not headed for a recession. He acknowledges the slowing growth but, he went on to say that Congress should wait for the stimulus package that was just passed to take effect before they do anything else.
If everyone keeps running around continually saying we’re going to have a recession or that we’re already in one. We will force it upon ourselves. If you tell yourself something enough times you’ll start believing it and make it come true. Remember the media is in the business to sell news. Bad news sells.
To view the entire article on MSNBC Click Here
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Feb
13
Posted by Pam Novak
This afternoon the President signed off on the stimulus package. It is anticipated that the IRA will start sending out checks in May. The extra refunds will range from $300 for singles to over $1,200 for couples with children. The Congress and the President hope that the money received will be spent immediately and help the economy. I’m not so sure that is going to happen. Everyone I’ve spoken to intends on either putting it into savings or paying down current debt. But that’s what is said now, we’ll just have to wait and see what happens in the spring when they have the money in their hands.
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Jan
22
Posted by Pam Novak
Chairman Bernanke has been saying that he could and would step in if things worsened. He did this morning in response to world market drops yesterday.
The global markets have been reacting to fear of a US recession. Hopefully this cut with the stimulus package to follow will be enough to start a come back. Considering the size and timing of this move it should get some positive results. This is the first time since Sept. 17, 2001 that there has been an inter-meeting cut, along with it being the largest cut since August 1982. The markets should see that the Fed and Congress are working to stabilize and help turn the markets around.
Opinions are all over the map. So we’ll have to wait and see. The chance that there will be another cut at the Jan. 30th meeting is still a possibility.
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Jan
17
Posted by Pam Novak
President Bush and Federal Reserve Chairman Bernanke agree that an economic stimulus package is needed and it needs to be put into effect quickly. What is being looked at is a combination of tax and interest rate cuts. Along with other government actions.
Chairman Bernanke made a comment about slower growth in 2008 but not a recession. He did state that “the design and implementation of the fiscal program are critically important.”
I hope Congress works out a plan before it’s too late.
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Jan
10
Posted by Pam Novak
Earlier this afternoon in a session with the Women in Housing and Finance and Exchequer Club in Washington, D.C. Federal Reserve Chairman Bernanke said that the Fed “must remain exceptionally alert and flexible, prepared to act in a decisive and timely manner and, in particular, to counter any adverse dynamics that might threaten economic or financial stability.”
Most of the comments being made are assuming that there will be a .50 percent cut in the fed key federal fund rates at the January 30th meeting. There is always the chance that a special meeting could be called and a cut could come sooner. We’ll have to wait and see.
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Dec
27
Posted by Pam Novak
I was just reading the above titled article on CNNMoney.com it was reviewing the different view points of the on going Mortgage Market Meltdown. It really doesn’t matter which side you agree with. We are all going to be paying for this mess for a long time. It’s only a matter of how long and in which way.
Please remember this is just my opinion. I’ve seen a lot of ups and downs in my time as a Loan Processor/Underwriter and now as a licensed Realtor. In the early 1980’s the interest rate went up to 18%. We still had people that qualified for and closed loans. Yes, they didn’t like it but they wanted the house and knew how high the payment amount was going to be. The payments started high and stayed that way, they paid them anyway. This was prior to people doing refinances every couple of years. People got a house and a 30 year Fixed Rate loan and that was it until they sold the house.
Over time lenders invented the Adjustable Rate Mortgage or ARM loan. A loan that started at a bit lower than the going rate and then after a specific amount of time adjusted up till it was at or a bit above the going market. The original idea was that people could get a loan for a bit more than they could currently afford on a Fixed Rate loan. They would count on getting a raise from their employer and/or that the interest rate would stay the same or go lower prior to the adjustments. Keep in mind that everyone that has applied for an ARM loan is given a written copy of the payment adjustments under the worse case scenarios. This is just one part of the mess. Lenders started making loans to people that could only marginally qualify and the borrowers didn’t really look at the future payment possibilities.
I keep seeing headlines saying Sub Prime this and Sub Prime that. What is going on is happening in all areas of lending. Not just in the Sub Prime market. A lot of people have refinanced their home continuously every 3-4 years for the past 15 years and taken money out to pay off credit cards, put down payments on vacation homes, buy boats, etc. Currently the appreciation on property has been less over the past couple of years. People have continued to run up the credit cards and now they don’t have the equity in their home to do another cash-out refi to pay off the credit cards. They’re stuck paying between 12 to 18 percent interest on the credit cards. Making minimum payments on credit cards covers the interest and not much more. This year the credit card companies have been required to raise the minimum payments amounts. This has put pressure on Spend-a-holics. They can’t refi themselves out of the credit card payments and are now paying either late or not at all. It’s just a matter of time before the trickle down effect hits the “A” paper mortgage holder.
Article after article comments on the government needing to step in and help. Help who??? The guy that got a new house that he couldn’t really afford, and then went out and got new furniture and a plasma TV. He’s now in trouble and can’t pay his bills. Or help the guy that started with a 525 credit score (cause he’s never made any payments on time). Who with the help of some unscrupulous lender somehow managed to get a 100% loan. Made one payment and is now crying that the payment is too high to pay.
All Borrowers and Lenders need to take a minute and really look at the reality of living with the payments they are getting into. Just because a Loan Officer says that they can get a person approved on a loan doesn’t mean you’ll really want to have payments that high.
In all my years in the business I don’t remember ever hearing a Loan Officer advising a first time home buyer to remember that when you own a home you’ll have additional expenses compared to renting. Most renters don’t have to pay water or garbage, and they don’t think about painting either the interior or exterior of the property, or any yard maintenance items, etc. I know just my water and garbage is almost $100 per month. For a lot of people that is all they have left over every month, and suddenly it’s gone.
Again, my opinion. I think that over the last few years, Lenders have done a dis-service to borrowers in the Sub Prime area. These people need to be educated and taught how to budget and work with the income they have. And really it’s not just Sub Prime. It’s the majority of the country. We need to think before we spend. Put the plastic away. If you can’t pay cash for it and still have money to pay your bills don’t buy it.
This type of situation is exactly the reason I got my license as a Realtor. I wanted to step to the front of the line. To help people plan how to own a home that they could be comfortable affording.
OK, I’m off my soap box, but. We need to remember that when “THEY” talk about the government helping that means ALL of us that work and pay our bills on time will be paying higher taxes, higher mortgage interest rates, high credit card interest rates, etc. from now till who knows when. Government help means another department to be setup and run (at our expense). The banks have to take a loss on the ARM loans that have had the increases frozen for the next three years. They will be looking for other sources of income to make up that lost revenue. I can hardly wait to see what they come up with.
Whatever happens with this situation in the end we will all lose.
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Dec
22
Posted by Pam Novak
Earlier this week President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007.
In a nut shell this bill for the next three years prevents the IRS from collecting income tax on debt that has been forgiven by the bank.
Prior to this bill being signed you could be in a situation where your home value is falling, your getting behind on your payments, things are not going well. You work with your Bank/Lender they forgive part of your debt and reduce your payment. You think everything is going to work out OK. Then you go to file your taxes and the IRS tells you that the $30k the Bank forgave on your loan is viewed as income and you owe taxes on it.
For anyone wanting to read more details please Click Here
you’ll be seeing articles by Larry Cragun at Real Estate Undressed
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Dec
11
Posted by Pam Novak
In an effort to prevent the current mortgage and credit meltdown from causing a recession, the Feds cut the rate by 1/4 percent to 4.25%. This is the 3rd drop this year. They hope that this will have a positive trickle down effect.
The people that currently have Adjustable Rate loans will be looking at smaller increases. People with large credit card balances will eventually have a lower rate as the rate the banks charge on them has also been reduced.
People that have been holding off on a new home purchase should now move forward and the real estate market will start to recover.
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Dec
07
Posted by Pam Novak
For those of you that read the Business section of the paper on a daily basis you’ve probably read this at least 4 times this week. But, for those of you that don’t I’ll hit the high points and give you a link to another expert opinion.
Over the past few weeks Treasury Secretary Henry Paulson has been working on a plan with major lenders to prevent a foreclosure flood.
The plan at this point, although still unapproved would work at freezing the adjustments for 5 years. They hope that during that time borrowers could refiance to a fixed rate product.
According to Pat Maddock - President of Tacoma Pierce County Association of Realtors, the plan that they are trying to get approved would help the following people. “Those who purchased homes from early 2005 through June of this year may well be eligible for this relief if their adjustable rate mortgage increases place them in an untenable position. This applies to those borrower whose loans are due to reset to higher rates between New Year’s Day 2008 and July 31, 2010. Now, if they have not even made the low introductory payments, this offers no relief and it probably shouldn’t, but if the sub-prime lending packages will leave them in a position where they will soon be beyond their budgetary capabilities, there may well be some help coming.”
One of the biggest opportunities that people miss is getting help prior to actually missing a payment. If borrowers would call the lender and ask for assistance most of them have counseling programs. Homeowners that have missed payments won’t be able to participate in the plan.
For anyone wanting to read more on this topic or other real estate related info by expert Larry Cragun Click Here
