UTAH MORTGAGE BLOG

Utah's Mortgage Blog

It is my goal to make this site the most candid and interesting Mortgage Blog not only in Utah but anywhere in the Nation.  I wanted to have a forum where I can come to post in sites and tips about a wide variety of topics including buying your first home, upgrading and financing your next home, refinancing for home improvements, refinancing to lower your payments, building and financing your dream home or getting into and the advantages of real estate investing through purchasing residential investment properties.

To my readers please use this platform as a place to ask your mortgage and financing questions, ask for a rate quote, post what your up to and see how I can help.

If used properly this Mortgage Blog can become a powerful tool to help everyone in Utah obtain better Mortgage Financing and become more informed on what is most people's single largest and most important asset & liability YOUR HOME!

I hope you enjoy and check back often.

Cheers,

Stetson Lowe - 801-318-4996

How to refinance your home - Video

How to Refinance a Home The first step in refinancing is to contact your local mortgage lender (if you are in Utah give me a call 801-318-4996) to get a quote on a possible refinance. Some of the things he's going to need to know in that initial contact is an approximate appraised value. If you can kind of keep track of what similar homes in your neighborhood are selling for recently. He's going to need to know your approximate credit score or he can pull a credit report for you. He's going to need to know your job history and how long you've been employed and how much you make each month so he can compare that with your liabilities from your credit report and come up with a debt to income ratio. Once we've done this, he can then put together a loan scenario based on your loan to value or how much your loan is going to be compared to the value of your home based on your credit score and your debt to income ratio. For the very best interest rates, you're going to want to have about a 740 credit score, 20 percent equity in your home, and have a good job history. Although one or all of these things may not be apparent, it still is possible to refinance. There are some mortgage loans that are not even FICO-score driven at all. So once he has all these pieces of the pie put together, he can come up with a really good quote for you. And if it looks like it's going to be a monthly savings or you're going to be able to consolidate debt to pay it off quicker or save money and put that back in your pocketbook each month, if it's a good idea for you, then you'll just get started by telling him to lock in the rate and sign your compliance documents and get the process started by ordering an appraisal and title work. It's simple so if you would like to lower your payment or need to cash out some of your equity give me a call today to get started.

First Time Home Buyer Check List

First Time Home Buyer Checklist -- powered by eHow.com My name is Stetson Lowe and in this clip we're going to be talking about a first time home buyer and a checklist of items that may be helpful when getting ready to buy your first home. First of all I would recommend to do is obtain a copy of your credit report through annualcreditreport.com, that's a free service, it won't have your credit scores but that's not really necessary, you can look at the information in there make sure it's all accurate, address any inaccuracies, if it looks good you're moving right along to gathering your income documentation together. This includes such things as your past two years W-2s and your most current one month's worth of pay stubs. Once you have that together, I'd visit your local mortgage lender (in this case me:) seek references from the mortgage lender of happy and satisfied clients that they've worked with. Once he's taken you on as a client, he will go through the pre-qualification process and give you two to three options of a loan that may work for your scenario. Sometimes a 30 year fixed is the best way to go or 15 year fixed, some people like an ARM, Adjustable Rate Mortgage if they're going to be in the home just a short time because the rates are usually lower. Once you've identified a loan scenario that works for you, you can zero in on a purchase price based on the payment that you're comfortable with and what works for your qualifying with the lender. Once you've identified a purchase price, it gives you a payment that you're comfortable with, then you're going to want to find a good real estate agent who specializes in first time home buyers and they're easy to find, seek referrals from your lender, references from family and friends who have bought their first home and maybe had a good experience with a Realtor. It's important to find one who does work with first time home buyers as there are some additional forms sometimes, maybe if you're doing an FHA loan they'll need FHA addendum's and things and need to find you a property that is FHA insurable. So the realtor's a big key once you've found the good Realtor, he or she will show you a myriad of properties for you to choose your dream home. Find the one you want and make an offer. That's a great checklist, if you follow those steps you'll be right on line to having a great home buying experience and to make it your first time a great time

What is a Short Sale, and how do they work?

What Is a Short Sale in Real Estate Terms? "Hi my name is Stetson Lowe and in this clip we're going to go over short sales. A short sale is where a seller is trying to sell their home for less than what they owe on the mortgage. Typically this would happen in the case of a financial hardship such as a divorce, bankruptcy, loss of a job, something that has financially made it impossible for the borrowers or the homeowners to continue to pay for their mortgage. What you would typically do is call up the loss mitigation department of the bank or the lender and he will have you fill out a financial hardship letter and fax that in to them for their review board or committee to review and see if you get approved for a short sale. Once you are then approved for a short sale you can then list your home with a real estate agent and have them market it as a short sale. A lot of investors are out looking for short sales and looking for homes that are a great deal. As you market the home you will initially have to approve all offers that come in and then you'll send them on for the lender or the bank to review and approve as well. They ultimately have the last say in how much they are willing to take since it is less than what you owe them or what the seller of the home owes on his current mortgage. So it is quite a lengthy process, sometimes offers take three to four maybe even up to six weeks to get reviewed by the lender and decide if they are going to accept the offer or not. It is hard sometimes to keep buyers motivated and continue waiting that long. A lot of times they want to back out and move on to another home so it is good to set the expectations up front and find out from the loss mitigation department how long they are taking currently to review short sale offers and finalize them or accept or counter offer them so that you can properly set the expectations of the buyers for how long it is going to take for that process to take place. Short selling is great way to get out of your home. Another thing to be careful about with the lender is it is kind of on a lender by lender basis. Sometimes they will either 1099 you for the difference of what you owe on the mortgage versus what you sell it for so that you have to pay the taxes on that or they will file for a judgment at the county level or court level where your home resides and slap that judgment on your credit so that you would have to pay it back at some point in order for your credit to ever be fully restored. It does look like a foreclosure on your report so if people tell you that it will save your credit that's not true. Your credit is still going to be, for financing and all intents and purposes it does look like a foreclosure to a lender when you do go through a short sale but it is often times better than completing the full foreclosure process."

Mortgage APR Vs interest rate: The difference clarified

 

When you consider taking out the most affordable home mortgage loan, its possible you may only be looking at interest rate. Though an affordable interest rate is essential for a good loan, you must also understand that there are other fees associated with a mortgage that might make it costlier than the interest rate suggests. For assisting consumers to figure out the true cost of borrowing a home loan, lenders create what is known as the APR or annual percentage rate on the mortgage. We are required by law to advertise this useful figure in addition to the base interest rate of the loan.

 

The interest rate on your mortgage (Note Rate) is the interest rate that the lender charges you as a cost of using the loan for a particular period of time. If you have good credit, then you can qualify for a better interest rate. The interest rate is not the only cost for a mortgage. There are other mortgage fees and charges that make a loan more expensive.  This is where the APR comes into play.

 

The annual percentage rate is formulated to take into consideration the overall cost of the loan by including not only the base interest rate but also the points, closing costs and other fees.  For instance, you might need to pay a particular amount of points for getting your mortgage. One point is equal to 1% of the total loan amount. You typically pay points in addition to origination fee’s for reducing the interest rate on your loan. A reduced interest rate implies the lender would lose in the long term. Hence, he would ask for the points as an upfront fee to compensate for the loss in profit. If you paid one point on a loan amount of $300,000, you would be paying $3,000. With the annual percentage rate, this amount would be summed up with the base interest rate to show the cost of the loan more precisely.

 

The other major charges included in the APR are the closing costs. These include fees like private mortgage insurance (PMI) and application fees. Any service offered by the lender during loan processing is incorporated into the APR. Closing costs can amount anywhere from $2000 to $6,000 depending on the size and type of loan your choose.

 

To calculate the APR we take the amount you are financing, lets say that amount is $200,000 for this example.  We then subtract from $200,000 all of the APR affecting closing costs, for this example we will say all of those add up to $4,500.  You would then use the new base loan amount of $195,500.  If your Note rate (the rate you will actually be charged by the lender each month) is 5.5% you would then increase that note rate until the payment at $195,500 matches the payment at the original $200,000.  This increase in rate would take into account what the closing costs of the loan are going to cost you in the way of an interest percentage over the life of the loan.  In this example the APR would be 5.707% roughly.

 

Knowing the difference between the APR and the interest rate will help you become a more informed home buyer or consumer who may be looking to refinance. Use the annual percentage rate to compare loans. This will make sure you compare apples to apples, helping you choose the cheapest loan for your needs.  Beware of lenders that do not include all of the required fee’s into the APR.  You can email me if you would like a copy of a correct TIL document showing the APR and a Good Faith Estimate showing all the fee’s that should be included in the APR.

 

If any of that was over your head no worries this post will be here for years to come for you to come back to again and again until it makes more sense:)

 

Stetson Lowe

Cheap Air Travel

Here is a link to a video I came across today that talks about how most airline travel is down over 40%. It also gives tips on the best days of the week to fly and the best days and time of day to go online and buy tickets. I think all of us are itching for a vacation right now. 

http://money.cnn.com/video/pf/2009/03/26/money.hd.0326.airfare.moneymag

Stetson Lowe - The Mortgage Insider See todays unbelievably low rates on my website @ www.utahloantips.com

Utah Real Estate Update

By Stetson Lowe

It's funny to me how the media and in this case the Salt Lake Board of Realtors send out this press release that sales were up in February over January.  Of course they are, they are every year as any home that sold in January went under contract during the Christmas weeks of December and I don't know to many people that are out house hunting while they are still rocking around the Christmas Tree.

That said I do agree that the $8,000 tax credit did help along with the warming weather to increase sales in February.  The two parts of this press release I found the most interesting is that the median home price Salt Lake County has only dropped 8% from its high in June 2007, and that "Based on current sales trends over the past three months, the absorption rate (an indication of how long it would take to sell existing inventory) is 11.9 months" that is not as bad as people think either.

Here is the entire press release for your reading pleasure:

February Home Sales Climb 32 Percent Over January, According to the Salt Lake Board of Realtors

by PR or News Wire

27 March 2009—

The Salt Lake Board of REALTORS said that existing home and condominium sales in

Salt

Lake

County

in February climbed 32 percent over January sales. Sales were down 23 percent compared to February 2008.

In February there were 584 homes and condos sold, up 32 percent from 444 sales in January. The increase in sales can be partly attributed to an aggressive incentive campaign by the federal government that offers an $8,000 tax credit to first-time home buyers or buyers who have not owned a home in the past three years.

“Sales will continue to increase going forward because of record-low mortgage interest rates and a second program that offers a $6,000 state grant for buyers of new homes,” said Ryan Kirkham, president of the Salt Lake Board of REALTORS. “With these incentives and mortgage interest rates below 5 percent, buyers have a tremendous opportunity.”

The Federal Reserve’s move last week to buy as much as $300 billion in long-term U.S. Treasury securities pushed down mortgage interest rates – which are bench-marked to Treasury bonds – to below 5 percent. Interest rates could fall as low as 4.5 percent, according to Kelly Matthews, economist at Wells Fargo.

The median price of homes and condos sold in February was $224,450, down 3 percent from $231,500 in January, but flat compared to a median price of $224,956 in February 2008. The median sales price of all homes and condos sold in

Salt

Lake

County

 peaked in June 2007 at $243,500. When compared to February 2009, the median sales price has fallen 8 percent.

The median cumulative days on the market to sell a home was 120 days in February, up from 99 days in January and up from 96 days in February 2008.

Based on current sales trends over the past three months, the absorption rate (an indication of how long it would take to sell existing inventory) is 11.9 months.  End Press Release

 

We are still in the eye of the storm right now but I think we will begin leading out of the storm this year.  Anyone who is waiting to buy at "the bottom" will be sorely disappointed when the house they are thinking is going to drop another $20,000 ends up selling out from underneath them for the exact listing price, trust me this will happen, then this same person will go and make another low ball offer on their 2nd choice only to find out that while they were trying to play "hard ball" someone else offered closer to the listing price and had their offer accepted. 

In essence they will have whiffed, swung and missed at the bottom of the market and will look back and wish they would have moved on their first choice, instead now they are paying more for a home that was not even in their top two choices.

Just my prediction.

Stetson Lowe - The Mortgage Insider

Check my daily rates @ www.utahloantips.com

Some Good News, but its still a Long Road Ahead

   

Existing home sales increased by 5.1% in February to an annual pace of 4.72 million units compared to market expectations for a small decrease to a rate of 4.45 million. February’s gain was the strongest since July 2003 however; sales remain 4.6% lower on the year and are down 34.9% from their September 2005 peak. The rate of decline has slowed in recent months suggesting a bottom may be near. February’s gain was broad based with sales increasing in all regions of the U.S. The inventory of homes available for sale climbed 5.2% to 3.798 million which represents a 9.7 month-supply at the current sales pace. Home prices continued to plunge because of the high number of distressed sales. It is estimated that 40-45% of all home sales are foreclosures or short sales but up to half are first time buyers. The median price for an existing home fell 15.5% over the past year to $165,400 as the average price declined 13.4% to $209,700. While the upside surprise in sales figures last month was welcomed news it is a long road to recovery for the housing market. Inventories remain high and prices are depressed because of the distressed properties coming on the market. The NAR is hopeful that demand can be fostered through the $8000 first-time buyer tax credit and other economic stimulus programs that help create jobs.

Much of this is good news but with more and more home owners at risk each month of losing their home to foreclosure you can count on a Long Road to recovery for the housing markets.  I don't want to be a doom and gloomer but in all reality our economy is in the tank and it doesn't correct itself or repair itself over night.

The good news is that Utah is predicted to be on the leading edge of the recovery.  We were one of the last states to see home prices plummet so how fortunate we would be to be one of the first to find the bottom.

With $8,000 tax credit from the fed's combined with the $6,000 home run grant from the state of  Utah you have $14,000 in free money (restrictions apply).  Put that together with the lowest interest rates in 50 years and the lowest home prices in 10+ years and you have the makings of a strong push upwards in the housing market.  Spread the word...

Stetson Lowe

Utah Mortgage Insider - Apply @ www.utahloantips.com

Utah Home Run Grant Money

Many of you have heard about the $10,000,000 that the state of Utah has set aside in what is called the Utah Home Run Grant Fund.  It will fund over 1600 grants valued at $6,000 per grant.  These funds are going to be administered by the Utah Housing Corporation and will be available through approved brokers.  Envision Lending is on the approved broker list so I will be doing my part to match home buyers up with these funds.

The $6,000 will be available to ANYONE buying a newly constructed home that has never been lived in.  The money is a gift with no repayment required.  Since there is only $10,000,000 allocated for these grants it is important for people to act fast.

I feel like this is a great thing that the state of Utah has put together and I applaud Governor Huntsman for singing it into action so quickly.

If you have been waiting on the sidelines because you did not have a down payment, wait no longer.  I can match you up with a Realtor that will find you a home priced closed to $180,000.  With an FHA loan your required down payment is 3.5% or $6300.  With the Utah Home Run Grant of $6,000 that would leave you coming in with $300.  If you cant come up with $300 then you are obviously not ready for home ownership, but if $300 works for you then this scenario could be a reality in just a matter of a few weeks.

More information can be found at Utah Housings official website www.utahhousingcorp.org

If you are looking to purchase a new home that has never been occupied And if you would like a $6,000 gift to be received at closing give me a call today at 801-655-5111.

Stetson Lowe

Utah Mortgage Insider - apply @ www.utahloantips.com

Rate Adjustments move up for Lower Fico's and Cash Out Refinances

It was just recently announced that Fannie and Freddie were increasing the rate adjustments for borrowers with fico scores under 720 as well as all cash out refinance transactions, especially those that exceed 60% loan to value.  Lenders were very quick to come out with the new hits included in their daily rate sheets, so don't be surprised to see the higher rates reflected if you have a score under 720 or are cashing out on a refinance.

In other fico score related news I have had almost all of my FHA lenders send word that they are no longer underwriting files with a fico score under 620 even if I receive an approve eligible finding from Fannie or Accept from Freddie. 

It is sad that the pool of borrowers that we can lend to is continuing to shrink, but that being said it is a necessary correction in order to further protect the integrity or whats left of it of our US housing market.

Hey I have an Idea that may help as well.  How about going after some of these builders that were doing the investment schemes and selling homes to straw buyers.  Lets make sure they never ever build another home in Utah.  Without this glut of inventory that was built under false pretenses an sold to investors (suspecting or unsuspecting) we would have a lot less homes to compete with on the market.  Right now there is literally nothing selling that is not bank owned or in short sell.  Ok there are some homes selling but the majority of the appraisal comps I am seeing on my appraisals that come back are listed as short sales or bank owned.  That is the market right now.

I can't wait until it all sells off at what ever ridiculous prices they want to sell it for so we can get back to selling home at Market value.

Stetson Lowe - The Mortgage Insider - www.utahloantips.com

The Lowe Down - by Stetson Lowe

Tonight as I sit here and unwind from yet another hectic day in the office I felt impressed to get out the laptop and share some insider mortgage insite.  There is so much going around out there about the mortgage industry and today's economy but I am going to hit you plain and as simple as I can, and I will not patty cake you.

I had a very candid conversation today with an executive from a national bank.  One of the biggest in the US today.  It was interesting to hear his point of view and to see what we agreed on and to see what we admittedly disagreed on as well.  One of the most interesting facts he brought to my attention today was in regards to the Fed's "setting the rate" so to speak in the bond market.

This is something that the government did in the student loan sector of the banking world some time ago and it has all but alienated all of the lenders from that industry so that now the government is the only player in the game.  They are standing there holding the bag on almost all student debt today which makes the industry far less competitive and all but impossible to navigate for borrowers.  You see it is not worth it for private investors and banks to play along with the government in a game that is rigged.  One where it is hard to turn a profit and the red tape and bureaucracy force the lenders to spend more then they earn just to stay compliant.

This fiscal policy has failed miserably and yet the talking heads in DC seem to think that this same policy should be adopted in the mortgage industry as well.  Yeah that usually works, if at first a policy doesn't succeed do it again in another industry?? Whatever...

Back to the Feds setting the rate.  This is where they are basically buying coupons (bonds) at a certain rate no matter what the market is dictating that day or no matter what supply and demand are bearing.  Essentially falsely inflating or deflating the rates for that day in an attempt to "set a target rate".  It has been proven that our market is much more effectivein setting its own rates from day to day and from week to week then the government falsely trying to replace supply and demand.  I'll take free and open markets any day of the week for a healthy economy.  I am not saying that there is not a need for the government to sure up a badly damaged credit market, I just think they may be going about it the wrong way.

What I am seeing in the wholesale and retail markets is Banks so unsure what the feds next move is that they are loosing interest in the game all together.  I believe that it was Chase that all but completely pulled out of the mortgage business at the end of January.  They are "over it" so tospeak in all the games and tricks that the government is trying to pull.  Basically saying "we are out" let us know when things get back to normal and then maybe if we feel like it we may jump back in at that point.  Until then we can more then replace our mortgage income by buying up troubled banks for pennies on the dollar and then selling off their assets piece by piece making billions of dollars, oh and by the way we will take a multi billion dollar line of credit from the government to help us do this if they are stupid enough to give it to us.

We now have 28 major players left in the Mortgage Market.  Just over 2 years ago there were over 200 lending institutions, private equity firms, insurance companies and more fighting over these bundles of loans....fast forward to today there are 28.  Less demand means over abundance of supply, couple this with Fannie and Freddie changing their guidelines almost every single month and mortgage insurance companies announcing at the drop of a hat that they will no longer insure mortgages with this credit score or that loan to value and you have what we are facing today, banks that are so gun shy that they are going to get stuck with loans that are unsellable on the secondary market, uninsurable thereby making them unsellable, or with rates that are far to low to attract any buyers in a market that has had less and less interest domestically and internationally.

I hope that this has shed some light on what is really going on in the mortgage market today.  Why yields are at or below all time lows yet the yield spreads are as large as they have been in a decade. And why underwriting times are longer and longer and why you hear it is harder to get approved today for a loan then even 2-3 months ago.

2003 was the largest mortgage origination year ever with over 4 trillion dollars in mortgages originated during that year alone.  It is predicted that if rates stay low there will be a demand for 15 trillion dollars in mortgages to be originated between refinances and purchases this year (2009) in the US.  That is 4 times the all time record and with only 1/10th of the banks actually funding loans compared to 2003.  The numbers don't add up and something has got to give or we will see 4-5 month turn times to close a loan...it feels like a train wreck waiting to happen.

If I were the one setting policies I would see how we could make the mortgage market more attractive to investors with incentives, warranties and tax cuts.  I certainly would not be competing with or falsely setting a market to the detriment of that market.  Hey but that's just me.

The key to obtaining financing this year is going to be working with someone that will help you navigate through these treturous waters that are the mortgage industry today.  I am here to help, so give me a call 801-318-4996 or email me at stetsonlowe@gmail.com and we can get the ball rolling right away.

Dedicated to giving you the inside scoop.

Stetson Lowe - The Mortgage Insider - www.utahloantips.com

Feast or Famine these days

Its feast or famine these days in the mortgage business and right now I have been invited over to the biggest feast I have ever witnessed in my time in the business. 

I truly appreciate all of the referrals you have been sending in and the email requests for Free Quotes.  I have been truly blessed.  But I am no dummy and my memory is longer then 5 minutes so I realize that this to shall pass.  So in preparation for that I am continuing to educate myself and stay up to date as much as possible with all the new loan programs and market trends. 

 It is very apparent that FHA loans are going to come back in full force as a leader in home financing, it will be more important then ever to be originating FHA loans in Utah and staying compliant with all of the new FHA guidelines and codes.  I have been spending any spare moment I can reviewing all of the fannie and freddie changes as well as the FHA guideline changes which can throw a wrench in your loan process if not addressed up front sometimes.

Government Auctioning Record Amounts of Debt

I have been looking into the bond auctions the last 2 weeks as interest rates have been on a Slow but steady incline.  From what I can tell there are 2 main reasons for the increase in rates. 

1. There is so much debt being auctioned off ($230 billion) in the last 2 weeks that even though the demand for these bonds is very good the supply is out weighing that demand. 

2.  Lenders have their little tails between their legs after being smacked in the nose with a rolled up news paper all last year at the end of every quarter and with each posted loss.  This tail between their legs effect is causing lenders to be very conservative on their rate pricing.  Typically the higher the rate the bigger the premium on the wholesale market, NOT True today.  In fact a quick look at the rate sheet shows 6% paying roughly the same premium as 5.5% which is barely paying more then 5%.  Don't get me wrong this flat pricing from what I have been told is not coming directly from Fannie Mae and Freddie Mac they are still paying large premiums for the higher rates but the lenders are keeping those premiums and not passing them through to those of us on the wholesale level.  They are trying to make up for a year and a half of losses here in the next few months.  LAME.

Heres are Novel Idea for all of you lenders out there.  Be fair, don't lend to people that can't afford their loans and you wont have the losses, then you wont have to penalize the mortgage brokers and the consumers with much higher rates then the present bond yields should be well, yielding.  In my opinion right now there is 1 maybe 2 lenders that are still playing ball on a level playing field and not making todays borrowers make up for yesterdays borrowers short sells.

I'm not here to promote 1 lender over another but if you apply with me trust that your loan will be going to a lender that is rewarding you today for todays actions and not living or being stuck in yesterdays losses.

Lock in your loans.  Call today and get started if you have not already.  We have a new administration in office that is ready to spend a lot of money and to do that they are going to continue to auction off debt as fast as the printers can print it.  Translation for you means bond yields can not come down until there is a supply issue in the bond market and that is not going to be anytime soon, so rates have no where to go but up for the short term.

Call me today to get started 801-655-5111 or email me @ stetsonlowe@gmail.com

Comments always welcome even if your wrong haha.

Stetson Lowe - Utah Mortgage Insider - www.utahloantips.com

Dont Wait Until it is to Late Refinance Your Loan Now!

Hello everybody and thanks for all of your emails and phone calls inquiring about rates.  Simply put, they are Amazing.  There has probably never been a better time to lock in a low fixed rate on a refinance or purchase here in Utah or anywhere around the country (if your fortunate to still have equity in the area which you live).

I hope every one had a Merry Christmas and a Happy New Years celebration.  By now you have all made your new years resolutions and are still sticking to them, good for you keep it up.  I have hardly had a spare minute to breath but I have made some personal and business goals or resolutions that I am very excited about this year.  Planning is the key, a wise man once said "if you fail to plan, you plan to fail."  I truly believe that.

Just as the title to this post states, Don't Wait Until it is to Late Refinance Your Loan Now.  Take action this year, don't be fence sitter guy who sits on the fence for so long waiting for the "perfect opportunity" that he ends up with nothing but an aching butt with slat prints firmly imprinted.  Have the courage to take action, call me and fill out a loan application or visit my website www.refinanceinutah.com either way you can be well on your way to saving $1000's of dollars just by spending 15 minutes with me on the phone or on my site. 

No one know's where the bottom is and if someone tells you they do run don't walk away from that person as they are just as full of it as Bernie Madoff the latest schemer to swindle billions, yes I said billions of dollars away from his unsuspecting investors.  I have yet to meet someone that would be unhappy with a 4.875% 30 year fixed loan and if you meet that person let them know there are hot-lines for people who are that negative and cynical:)

From Saint George to Logan and everywhere in between I can take care of you and your family and friends with world class service.

Speaking of Saint George and World Class Service my family and I were fortunate enough to spend a few days down at The Inn at Entrada this last week for new years.  If you ever get the chance to stay there Do It.  We had a beautiful 3 bedroom casita.  I loved the huge windows across the back that over looked the 16th hole of the Entrada Golf Course and behind that was amazing views of Snow Canyon and red rock buttes.  It was a little piece of Heaven carved out and put in Santa Clara Utah.  You can check out their website at http://www.innatentrada.com/ It was the perfect place to get away for a few days and go for some hikes, watch bowl games and eat really really good food.  The warm cookies and mild delivered to your door each night is a nice touch too.

I will try and post some pictures from our trip in the next few days.  I cant wait for the golf season to get started again up here and I know it will be here before we know it.

The Fed's are finally spending that money that they pledged (and I blogged about) back in July.  They have changed the way they are using it though, initially they were going to buy troubled or bad MBS (mortgage backed securities) from banks to free up their balance sheets and liquefy some of their assets.  After further review the ruling on the field is that they are now showing up to the bond auctions and buying their own bonds.  They are actually bidding against the private sector from what I have been told in an attempt to inject more capital into the bond market, lesson the credit freeze and kind of artificially drive down the yields on these bonds thereby lowering long term mortgage rates and creating a refi boom which leads to home buying, remodeling, debt consolidation and ultimately creates jobs and spurs on the anemic economy.

This would be their attempt to make this recession as short as possible and try to help people stay in their homes and keep more foreclosures from hitting the market.  We will have to watch and see what the long term will bring with this play.  I know an artificial bubble of any kind is never good.  We have all seen the .com bubble burst and most recently we witnessed the commodities bubble and more specifically the Oil bubble go POP.  Is this bond market going to be the next bubble that literally over night pops like a balloon that floated up and hit my grandma's old asbestos ceiling?  Proceed with caution and we all need to take advantage while we can.

2008 was not my year in the sporting world.  The cougs ended the year by laying an egg that Mother Goose would be proud of, the Red Sox went down, the Jazz showed up to the playoffs with their bags packed in the back seat of the escalades and Ferrari's just waiting by the exits for their series to be over, OK I shouldn't include all the Jazz in that statement but I still have a bad taste in my mouth for the biggest dud C Booz.  New England lost Tom Brady right out of the gates this season and they actually did better the rest of the year then I would have ever guest.  The bitter sweet ending to the sporting year for me was watching and actually cheering at times for Utah while they were laying a whooping on Bama.  My hats off to those guys for this season and for how they finished it off but I hope I never have to watch that again.  A nice 2nd place finish in the Mountain West Conference would be just fine with me for the boys in Red.  The one bright spot in the sporting world for me in 2008 was when the US Ryder Cup team layed a gold old fashioned butt kicking on the Europeans.  That was as close to a championship that any of my teams made it to this year and I was pumped when Sergio plunked two in a row in the water when he was playing match play against Anthony Kim, that was euphoric for me.

I do have to give props to the US Basketball team for representing very well and of course to Michael Phelps who is the only swimmer I can still name off of that team and probably will be the only swimmer I will ever remember again in my life time, what he did was very Tigeresk don't you think?  Maybe even more dominant?

I feel like 2009 is going to be a very very big year in my life and in many of our lives.  We have a new President and for better or for worse he's there so I wish him the best.  I don't envy him in anyway coming in to take over this mess but then again I don't think anyone in their right mind envy's Bush and all that he has had to take on in his 2 terms as President.

I hope America can use this time to take a step back and reevaluate ourselves as a country and as a people.  I would love to see us all go back to when a hand shake was a deal.  When your word was your bond and when everyone was looking out for their own best interest but never at the expense of another.  I hope we are weeding out the Madoff's of the world right now and getting back to how it is supposed to be. 

I can always hope....

Stetson Lowe - Utah Mortgage Insider - www.utahloantips.com

30 Year fixed for 5.25% Simply Amazing

It has been a long time since someone has been able to lock in a 5.25% fixed rate on a mortgage in Utah, but the wait is over.  I have locked several loans in the last week at that exact rate.  With the recession finally being officially called it seems investors had enough of the stock market and started pouring huge sums of money into the bond market which has paid out as much as 7% so far this year and gaining every day.

The government is even buying it's own bonds in an attempt to give some liquidity to the bond funds and lower yields that were stuck at an unnatural point much higher then where the market indicators show they should be.

We broke through that invisible floor last week when the government announced its pledge to spend up to 600 billion to purchase bonds and mortgage backed securities.  That coupled with the recession call and continued economic weakness all have contributed to the bottom falling out of long term fixed rates.

If you are at or above 6% you can really save money by locking into one of these incredible 5.25% 30 year fixed loans or you can do as many of my clients have done and shorten your term to a 25 or 20 year loan while maintaining  close to the exact same payment.

If you are considering home improvements, debt consolidation, or buying a home there really will not be a better time to lock in your low rate I can promise you that much.

Thanks for those of you that have called in and please if you haven't yet called give me a quick ring to see what we can do to save you money 801-655-5111.  We can still get you closed by Christmas if you call me in the next few days and you wont have a January payment so it will give you time to catch up from the Christmas whirl wind of spending and fun.

Happy Holidays Everyone.

Stetson Lowe - Utah Mortgage Insider - www.utahloantips.com - 801-655-5111

Here is a news clip that explains the market right now and applies fairly well to whats happening in Utah. The only part I would disagree with is when she says the bank are requiring assets right now, I just got 3 loans approved with showing $1 in their bank account, score and a good payment history is still what the banks are looking for the most.

Utah Mortgage Update

Sorry I have been away for so long but I am back and ready to Blog each and every week again and sometimes more if you need it.

I was in Disney Land this past week with my family and I couldn't help but realize that it really is a magical place.  I was there for an entire week and each day I was excited to go (tired but excited).  I think that being around so many people that were having fun and checked their worries at the gate was refreshing.

Every day now I am asked the question "Is this mortgage market killing you? Is that hard that there is no money to lend?"  Initially I would give in to the depressed feeling and go along with the questions when asked, nod my head and agree.  But the truth is, the mortgage market is NOT that bad.  I had 2 loan closings while I was in the Magic Kingdom last week and they both closed in less then 2 weeks start to finish!  The conservative lenders that I have always worked with and will continue to work with are doing just fine and have billions of dollars to lend, and they are eager to lend it.

It is true that our economy is really struggling right now and that home values have receded, but again every market it cyclical and all economies have corrections and down turns, this one is just a lot bigger then most.

The banks that were greedy and engaged in buying junk bonds or sub-prime mortgage backed securities are toast or are losing billions every year, but there are a handful of lenders that never looked at a sub-prime loan and they are reaping the rewards for being conservative in the face of all the other banks that were turning huge profits there for a while.

It is true that I can not get any one with a pulse a loan.  I never did anyway.  Chances are the loan officer or company you got your last mortgage from is no longer in the business.  I say that based on the 1000's of people and companies who have failed to renew there licenses this year.

Now more then ever it is really important that you work with a loan officer that uses cutting edge technology and has maintained relationships with the lenders and banks that still have billions of dollars to lend.

The bond markets have been soaring these past few weeks as foreign investors are dumping billions of dollars into US Bonds as they are still seen as one of the safest investments in the world.  This is giving investors nice returns (7%) year to date on one of the bond funds, it also drives the yields down on long term bonds which is awesome for mortgage rates that are down to 6% and below on some programs Apr of 6.255%.

I have also been working very hard to roll out my commercial financing programs which will include financing for apartments 5+units, offices, medical buildings, franchised hotels, warehouses, storage units, gas stations, raw land and much more.

Give me a call today if you are looking to refinance or purchase this month or next, now is a great time with rates being low and you can skip your December payment!

Talk to you soon,

Stetson Lowe - Utah Mortgage Insider - www.utahloantips.com - 801-655-5111

Emergency Rate Cut by the FED - World Markets Crumble

This morning amid another Huge sell off in the markets the Fed announced an emergency rate cute to the Fed Funds Rate.  The Fed decided it was necessary to cut the lending rate by 1/2% to 1.5%.  This will affect most everyone that has a variable Home Equity Line of Credit as these lines are attached to the Wall Street Journal Prime rate which is directly affected by the Fed Fund Rate.

This will also affect credit cards and personal lines of credit associated with this index.  It will not however lower long term mortgage rates as they are Not associated with Prime or the Fed Fund Rate.  Long term mortgage rates will be affected by how Wall Street digests this information and if it causes the markets to rally then long term mortgage rates may feel a negative impact if traders ditch their heavy positions they have taken up in the past weeks in Government Treasuries. 

Treasuries or Bonds as they are widely known do directly affect long term mortgage rates.  As bond prices slide due to sell off's in the bond market yields increase and as yields increase so do mortgage rates right along side them.  Mortgage rates are much like gas prices in that the slightest increase in the bond yields sends rates soaring, just like gas prices do immediately when the price of oil increases.  Just like gas prices mortgage rates take their sweet time coming back down even when bond yields drop.

There is no question that the bear's are ruling the market and have traders running for cover.

Since my last post on Citi ingesting Wachovia there has been a new cowboy roll into town and they want part of the action.  The new cowboy is Wells Fargo, they literally overnight stepped on Citi banks head as they entered the ring to negotiate with Wachovia.  It was announced by Wachovia the very next morning that they had dumped Citi like a bad habit and were in exclusive negotiations with Wells Fargo now.  Keep in mind guys I had already received emails from Vertice (Wachovia) and Citi reps talking about the transition to Citi and how seamless they were going to make it as this was a done deal.  Then in an instant not only was it not a done deal but I was getting emails from that same Vertice (Wachovia) rep saying stay with us things are changing but Wells Fargo is great and its going to be a great marriage.

Now they are all tied up in a legal suit that was filed by Citi on the grounds that "hey you can't come in here and still my girl friend I saw her first."  Wells Fargo seems more then poised to have a draw with Citi if that's what it comes down to.  Wells still carries it's six shooter which is it's AAA rating with the ratings agencies, it is the only bank in the US to pack that power, it also boasts the Oracle of Omaha Sir Warren Buffett being a huge investor and backer of the bank.  Citi on the other hand is down to a BB Gun and is running out of BB's at that. 

My money is on Wells not only in this transaction but to come out on top after all of this is said and done.  The real standoff to see who will be King of the Hill is going to be between Wells Fargo and JP Morgan Chase. 

Go long on these two banks as they have what it takes to weather this storm, gobble up the competition for pennies on the dollar and become the World Powers in the Banking industry.

Rates are near 5 year low's right now so if you are the guy or gal who has had that brother in law that is always bringing up his 5.5% 30 year fixed rate that he got back in 2001 and your sick of hearing about it, call me and lets see if we can put an end to his rate dominance once and for all.  Act quick these bond prices can't last.

Keeping you Informed,

Stetson Lowe - Utah Mortgage Insider - www.UtahLoanTips.com

New World Record Elk from Utah - The Spider Bull

Well I guess it was only a matter of time until the World Record was broken and preliminary reports have verified that it has been done!  The Spider bull as they are calling it was green scored at 500 1/2 B&C points. The bull was shot on September 30, 2008 near Richfield, UT has been nicknamed the Spider Bull due to all of the Long points that seem to curl like spider legs off of every spare inch of its main beams.  The shear mass of the Spider Bull is amazing in and of itself.  Each point is as thick as the base of most trophy bulls and Spider Bulls palmation is like no other bull I have ever seen. 

 

The Spider Bull was taken by a hunter who owned the prized Governors tag in Utah which allows the hunter to hunt for almost 5 months and with any weapon and in any area in Utah.  This tag auctions off annually and is pulling in close to $100,000 at the auction.  The owner of this years governors tag and proud hunter who harvested this bull is named Denny Austed.

The Hunter that shot the bull was guided by Mossback Outfitters and specifically Doyle Moss there has been a lot of controversy over this outfitter and their "supposed" tactics they use year in and year out to successfully harvest Huge trophy bulls each and every year.  My opinion is that there are a lot of Jealous Hunters out there who need to quit whining.  If Doyle or Mossback is found doing anything illegal or unethical then report it to the local authorities and the DWR.  If you can't prove it and you are just spreading rumors, then stop, and quit hating and start saving so you can hire them when you draw your tag.  Or call me about borrowing the money to go on your next hunt.  We may even be able to save you $100's of dollars per month AND get you the cash to book your next hunt.  Trust me your wife will be happy with the monthly savings and you get the hunt of a lifetime. (shameless plug for my business I know). Apply Now

The Spider Bull was seen all summer long by locals in neighboring towns to Monroe mountain and was thought to be around a 450 bull.  There was also controversy whether this was a Native bull to the area as it seemed to spring up out of nowhere this year and have a massive rack that no one had ever seen before.  Since that time there has been confirmed reports that there is video of this bull prior to this year (2008) thereby dispelling any stories that the Spider Bull may have been farm raised and then planted on the mountain by a outfitter in an attempt to have his hunter shoot the new world record.

 

Utah is harvesting more Boone & Crockett bulls each year now then any other state and more then most of the rest of the States combined.  The spider bull is proof that Utah is the #1 state in the nation to hunt trophy elk. 

Some of my readers may not be hunting enthusiasts and that is ok.  For those of you who are not into hunting, it is good to know that the Utah Division of Wildlife is doing an outstanding job managing our wildlife and by so doing they are bringing tens of thousands of hunters into our state each year to hunt these animals which significantly impacts our economy in a positive way.  It is especially beneficial to these small rural towns close to the mountains which feed, house and fuel all of these hunters.

I hope you enjoyed my post on the Spider Bull.  I will be returning to the mortgage business news and inside information now.

Keeping you informed,

Stetson Lowe - The Mortgage Insider - www.UtahLoanTips.com

VIDEO OF THE SPIDER BULL

Wachovia Ingested by Citi - Market Throws a Hissy Fit Over Bailout Rejection

 777

777 and NO I am not talking about a new Boeing luxury dream liner, I am talking about the number of points the Dow shed today while I was busy closing loans.  -6.98% to be exact, the largest single point loss in the Dow Jones history!  Let me clarify that it is not the largest loss by percentage, that still stands somewhere near 20%.  By the time I fired up the old lap top this morning at 8 am or so the Dow was already getting beat like a pi~nada at a fiesta and Bonds were being bought up as faster then the traders could hit buy on their trading domes. 

As the day progressed there came news that the proposed Bail Out hadbeen declined in its current form.  This sent the Markets into a giant hissy fit, temper tantrum that would have had my 2 year old running for cover.  He is the king of those types of fits and this one put him to shame.

The Dow was in a full scale avalanche and taking everything in its path with it.  I have been watching the markets closely for years now and have not seen a day like today, to be honest I would be fine not seeing another one like it, wouldn't hurt my feelings a bit.

Wachovia the nations 3rd largest bank by assets called it quits when the FDIC stepped in and helped broker "a deal" with former banking giant CITI.  There was a time when CITI was on top El Numero Uno, and with todays purchase  or virtual taking of Wachovia, CITI could be poised for another run at the big Kahuna #1 spot.  They will have a lot of work to do to catch JP Morgan and the solid acquisitions they have been making as of late (bear stearns, Washington Mutual).  It will be interesting to watch these 2 players and see what transpires over the next 5 years with them.  It was no surprise that Wachovia threw in the towel, it had been rumored for the last few months that they were on the brink of being down graded which can have nasty consequences in the banking world and severely affects one's borrowing power. 

It continues to amaze me that these big banks like the big oak tree's of their industry, have weathered all sorts of financial storms and have grown despite them, are now being chopped down and sold off as firewood probably never to be thought of again as the years go on.

There are many that are trying to use this bail out to further their political agenda's and for that shame on them.  This is serious business the likes not a single person in the White House, the TTreasury, the Federal Reserve Board, the Congress or the Senate have ever seen.  My prayer tonight is that there is a thread of inspiration left on Capital Hill.  That between the hundreds and even thousands of people involved in this legislation will know that we need to put aside any and all agenda's for a few weeks while this initial package, this literal crutch to the economy is put in place.  It's time to put our way of life, our dreams and our liberties first and go to work to figure out what is best for Our Country and not just Our Party.  I say this to both sides of the isle.

In the meantime we as Americans need to be wise and use good judgment each and every day.  Don't cancel your trip to Disney land and certainly don't stuff the mattress with what would become worthless money.  Be Smart.

Now will be a great time to lock in a LOW fixed rate mortgage and lower your interest rate by over a point for a lot of you.  When the markets suffer one of the silver linings for all of us is that long term fixed rates are low low low.

I heard someone say that if they increased the tax credit for first time home buyers to $25,000 from $7500 that it would spur on the housing sector like you wouldn't believe, and we all know what a stagnant, lifeless housing market which we are in right now can do to the economy.  On the other hand if we could get the fence sitters off the fence with a larger tax credit that may pay much larger dividends in the future and stop this economic spiral in its tracks.  Something to chew on....

Here are links to the proposed bailout legislation, abbreviated summaries, and Statements by Key Government Leaders.

Emergency Economic Stabilization Act

One Page Summary of the Act

Section by Section Summary of the Emergency Economic Stabilization Act

Treasury Secretary Paulson Statement on Emergency Economic Stabilization Act

FederalReserve Chairman Bernanke Statement on Emergency Economic Stabilization Act

We will see the Dow below 10,000 if not tomorrow it will be soon.  My prediction my be bold but it would not surprise me to see it hit 8,000 this year (next 12 months).

Keeping you informed,

Stetson Lowe - The Mortgage Insider - www.UtahLoanTips.com

P.S. BYU being voted into the top 10 in the AP poll helped a little to off set the sting of a day like today.  Go cougs keep giving us something to cheer about!

700 Billion Bail Out Package - What do you think?

This past weekend secretary Paulson and President Bush presented a 700 Billion bailout package that includes but is not limited to the government exchanging government debt (good debt) for troubled defaulting mortgage backed securities (bad debt).  This plan would allow banks to rid their balance sheets of this bad debt and allow them to free up capital or reserves set aside to compensate for this bad debt.  When rumors of this plan hit the press on Thursday or Friday (I cant remember what day) last week it sent the markets into orbit to the upside with traders gladly grabbing hold of this news and running with it.  They haven't had much to run with lately, that being said I was still surprised how much a rumor at that point could affect the markets.  It's actually a little bit scary.  We saw today after the official package had been announced traders are not so optimistic about the plan, if it has what it takes to make it through congress, and there is even some doubt as to what effect the package would have on our current situation. 

Why make our children pay?

The question I pose is why make our children and their children pay for mistakes that bankers and CEO's made over the last decade?  And why are we trying so hard to make sure none of these institutions fail?  I know there are going to be some of you morons out there that are screaming at your computer right now while you read this all hyped up on Diet Coke and No Doz because you haven't been able to stop watching the news and reading on-line message boards about how the market was mere ticks away from totally imploding, well I would say to you go put the tinfoil back on your head and keep looking for Elvis.  Tinfoil heads is our economy troubled? Yes!  Are there steps that should be taken to help ease the credit fears? Yes! Is the only answer to throw 700 Billion at the banks and say here's a free do over?  No do overs are for kick ball in elementary school when the pitcher throws the ball and you don't get the baby bouncies you called for.  Do overs should not be issued to Investment Banks and Traditional Banks who's CEO's were still pulling down 20+ million a year right up until they got their butts kicked out the door or they closed down the shop. 

I am not going to pretend to have all the answers, all I am saying is lets ease up on the dose of the main stream media who will say anything in their teaser to get you to keep your remote locked in on the next story, to suck the logical thought right out of very intelligent peoples brain's until they no longer have the ability to think with logic and understand that our country is in dire need of REFORM not free handouts.  It has been said that the democrats never have seen a tax they didn't like, well that may be true but in all fairness I might add that sometimes it seems that the republicans never have seen a debt they didn't like either.

I enjoyed this interview with Ron Paul immensly because even though CNN's Wolf Blitzer threw everything and the kitchen sink at Paul including stirring the emotional pot by saying "they are saying people could lose their life savings, their IRA's, their 401k's, it has been said this could be like the great depression" Ron Paul just shunned that aside and kept saying very calmly "No the real problem is what we are doing to our dollar by creating money and credit out of thin air."  "Inflation is what we really need to be worried about.  It wont matter if every one still has their savings and social security checks if they dont buy you anything."  I felt he did a great job.  CNN and others are going to continue to stir that pot because that is what gets the message boards blown up with conspiracy guy making comments all day long about the end of the world and his love for Art Bell.  Bottom line is we need to save more.  Spend less then you make!  Seems so simple yet our entire country seems to struggle with it. 

Interest rates are still amazing, home prices have dipped significantly, it's time to buy.  Call me guys, even you conspiracy guy give me a call but don't give me your social or date of birth over the phone "they are listening" HA enjoy the interview with Ron Paul.

Stetson Lowe - The Mortgage Insider - www.UtahLoanTips.com

A Dark Day on Wall Street

Lehman Brothers Bankrupt - Merrill Lynch sells out to avoid probable disaster

I found myself in awe through out the day today and into the night.  I was not surprised by what happened today on Wall Street but it was a feeling inside me, a feeling of "I cant believe this plague just keeps going" feeling.  The plague I am referring to is the Sub Prime Plague.  The one that has claimed so many banking lives this past year and the same one that just wont stop.  Today it claimed to more lives Lehman Brothers and Merrill Lynch.  These two institutions were not the type that I though would succumb to the Plague, they were not the New Century, Argent, Green Points.  These were 2 of the BIG BOYS.  Two of the rocks that have been perched over looking Wall Street for more then a century.  They have weathered the biggest recession and even The Great Depression, and now one could not secure the financing it needed to stay alive, and the other sold out before most any of us new it was for sale in an attempt to keep what value it had left.

I feel like we have crossed a line today.  Along the roadkill highway of what was mortgage death row there were the usual suspects those of which were mentioned above, but today we crossed the median and took out some of the Trophy animals that have avoided pitfalls, and traps of all shapes and sizes for decades.  For what some might ask?  To end up a name on some public Bankruptcy Papers filed in the state of New York today.  Amazing really.

A Little Perspective

I think its important after days like today and times like we are experiencing to sit back, take a deep breath and look at the Big Picture.  The markets are up over the last 5 years and the markets are really up over the last 20, 30 and 40 years.  And it is my opinion that the markets will be back up again in the very near future.  For those that have extra money to invest it is a virtual blue light special on every isle of the Stock Markets.  Everything is on sale Big Time.  You name the industry and you may be able to pick it up at 70% off.  Back when I had time to shop for clothes I liked to go to a store called TJ Max, I like the feeling of buying a $100 pair of pants for $25 or a $50 neck tie for $6.99.  Well the next few months might be the TJ Max or the Marshals (if your from the east coast) stock market clearance sale.  The thing I didn't like about the discount stores is that you had to wade through piles and racks of clothes to find the diamond in the rough.  I would plan on sifting through piles of less then desirable companies and earnings reports to find the diamonds in the Market that are at clearance prices right now.  Call your financial planner and put together a plan, a plan to continue investing in America and in our economy.  Call me if you need to review your mortgage and make sure you are in the best mortgage loan possible to help you accomplish your investment and retirement plans.  The silver lining about a day like today on Wall Street is that rates are unbelievable!  As stock traders flee to safer bond investments the yields drop like a lead balloon.

A Mortgage Brokers Perspective

It's all a little bit unsettling, what the Fed's reaction might be, how the markets will react, how this will affect Home Sales?  The bottom line is that the show must go on.  The Strong in some ways are getting stronger and the weak for the most part are systematically being thinned out.  Underwriting is reverting back to (what I've been told) how it used to be.  Much more thorough and complete.  I'm still closing loans purchases, refinances everything but I do have to set the borrowers expectations a little more up front.  Gone are the days of Fast & Easy's, here are the days of Make Me Queasies.  I may need to trademark that one.

Too Easy

It was just to easy there for a while, at the end of the day the average Joe isn't ready to own 5 homes with out ever proving his income.  A lot of people should rent for a year or two before jumping head first into a mortgage and not every guy with a general contractor license should be calling them self a home builder and building spec homes as fast as they can cash their draw checks.  It's just not good for the long term health of our economy.  We as a country showed up to the Thanksgiving Dinner of a housing boom with eyes far bigger then our stomachs.  We ate and we ate and we ate and when grandpa (greenspan) asked us if we wanted seconds we took him up on it and had 2nds, 3rds, and oh yes why not 4ths.  Well we are now paying the price and we are sick.  Stuffed to the brim and bursting at the seems we are yakking up the housing dinner getting back to where we can function and see clearly.  There are a few banks and lenders that took a small portion and chewed like their Mom taught them and they are doing just fine, Thank Goodness for them.

I prefer the couch watching football and just snacking the whole day through.

Stetson Lowe - Utah Mortgage Insider - UtahLoanTips.com

THE GREAT BAILOUT OF 2008

In this tumultuous year of 2008 that will undoubtedly go down in history as one of unprecedented government intervention in the private banking and business sector, Sunday September 7th may very well be the day they talk about in economics classes maybe even high school history classes. 

September 7, 2008 was the day I predicted would come in a blog post back on July 7, 2008(read it for yourself if you don't believe me).  It was on that day even in the midst of Henry Paulson the United States Treasury Secretary stating that Fannie Mae and Freddie Mac were well funded and had adequate liquidity and that the US Government would not need to step in or take action, it was on that day that I predicted that in fact there would be a Big Huge Government bailout as I called it.  Well as it turns out I was right on about one thing, that there would be a government bailout, but I have to admit that even I may have underestimated just how Huge this bailout would be.

September 7, 2008 Paulson announced the Governments plan to take over Mortgage Colossal Fannie Mae and Freddie Mac.  This is NOT just a plan to lend these Government Sponsored Entities more money at discounted rates which the FED had announced (1 week after my prediction) would be the case if it became necessary.  This is a full fledged take over of the companies, the kind where the government walks in to the CEO's offices and says thank you but your services are no longer needed please kindly show yourself to the door we'll take it from here.

Many are outraged that the CEO's are being kindly shown the door when they feel that both have been involved in some of the biggest accounting scams in modern day history.  Accounting errors to the tune of around 6 billion dollars.  Just to give you an Idea of how massive an error that is I will compare it to a little company we all remember called ENRON.  The CEO of that company and accounting overstated earnings to the tune of $550,000,000, compare that with the $6,000,000,000 in earnings restatements that came after a government probe of the Fannie and Freddie.  We all know what happened to the Enron executives still in prison and dead.  What has happened to the Fannie and Freddie execs that were padding their earnings in a way that would have made the Enron execs proud?  From what I have heard so far they took early retirement and are probably sipping on pina coladas somewhere in  the Cayman Islands.  Oh it was not without punishment, one of the CEO's a former adviser under president Clinton was fined 24 million for his wrong doings. 15 million of that fine came in forfeiting stock options he still held which enabled him to buy stock at $71 per share.  When the order was made the stock was at $9 a share, Ooohhh you guys really showed him forcing him to give up $15,000,000 in options that you couldn't have forced him to exercise at gun point.  Abetter thing to do would have been to make him exercise those options and buy that stock at $71 per share don't you think?

Sorry about getting off on that tangent, I don't have a lot of patience for the individuals who are ultimately responsible for the whole mess that our industry, our market and our country are in right now that is directly affecting my own family and those of millions more.

The Take Over and What it Will Mean To Us

It was necessary lets just get that out of the way right now, it was necessary to ensure the stability of our lending market going forward.  Do I like it?  Absolutely not!  When was the last time that the government ran any for profit business and did a better job then the private sector?  Granted anyone could have done a better job then the scandalous bonus seeking greed filled execs that have been there over the last 8 years, but prior to that Fannie Mae and Freddie Mac and provided an absolutely necessary and vital role in our US Housing Market and thereby in our Economy as a whole, and they have done it pretty well.  What I would like to see is for there to be some accountability, some punishment handed down to the preferred share holders of Fannie and Freddie, a literal wake up slap for those that have continued to invest in these companies over the last 4 years that they have been under continued investigation and shown that they were at fault for some serious wrong doing.  As it stands right now the stock holders are not going to be wiped out.  Which means that they are not helping to offset the amount of money that the US Government and we as the tax payers are going to invest to stabilize and rebuild these firms. 

How Much Is This Going To Cost?

I laugh now as I think back to when the credit crisis first began and there were analysts who went out on a limb and said they thought the crisis might cost US Banks upwards of 200 billion.  We flew past that number in about 4 months and the limb those analysts went out on must have snapped like a twig under the weight of that mis guided estimate.  Oh what the banks would give now to have the bleeding stop at 200 billion.  Some of the latest reports are that we are nearing the Big T 1 Trillion for US Bank.  Fannie and Freddie alone could exceed that number and could be as high as 1.2 Trillion that the US Gov will need to pump into these deflated and defeated lenders over the next few months and years.  I would only hope that the government will turn them back over to the private sector as quickly as possible, it doesn't need to be a complete charity act the Fed's should make a profit on the deal where possible but I would implore them to sell them back to the private sector as quick as they can.  Give Mitt Romney a call as well, he would be up to the task of reshaping and reforming these companies and he happens to have 4 years on his hands before he will get the Nod from the GOP for president. 

Your comments are welcomed.

Keeping you informed,

The Mortgage Insider - Stetson Lowe - UtahLoanTips.com

I dont agree 100% with all of the views expressed in the video below but I do believe there are some valid points made and therefore have chosen to add it to my blog. Enjoy.

Another One Bites the Dust!

Home Comings Financial (GMAC) bit the dust this week.  They have said they plan to cut between 5000-6000 jobs and close over 200 offices nationwide.  They were a pretty good lender but their heavy heavy exposure to sub-prime mixed with the huge losses GM is reporting right now proved to be to much for them to over come.

Stay tuned for more insider information.

The Mortgage Insider

HUD Good Neighbor Next Door Program

In my daily "sift" of ton's of emails that I receive from Lenders, Banks, Realtors, and UMI faithfuls I came across a link to a HUD program that is amazing.  This program is called the Good Neighbor Next Door Program.  I have heard of this program in the past but this was the first time that I took the time to visit HUD'S website and delve into what exactly this Good Neighbor Next Door Program is and what it entails.  What I found was nothing short of amazing to me, that there is actually a program out there, in existence today, run by a government agency, that offers up such a potentially huge reward to certain citizens of our community, and yet even though this program exists you rarely if ever hear of it.

This is how the HUD Good Neighbor Next Door Program works as explained by HUD on their website:

Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.

Eligible Single Family homes located in revitalization areas are listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for five days.

 

How can you participate?

 

I have done all the research for you and provided the links.  Click on this link to find Good Neighbor Next Door Homes in Utah.  When I checked today there were no homes currently available in Utah so you better set this page to your favorites and check back daily to make sure you don't miss them.  They are only available for 5 days and then they are gone!

 

Find a good real estate agent that is familiar or would like to become more familiar with this HUD program and put them in charge of looking at the listings daily.  If you don't have a good agent then call me and I will get you set up with one of UMI's preferred agents.

 

Make an appointment to get pre-qualified.  Not just pre-approved but pre-qualified.  Call me or email me today to set up that appointment 801-655-5111.  We need to have a full package ready to go with all of your income and employment information.  With only 5 days to submit an offer we need to have your file ready for underwriting so we can plug in an appraisal and title work and be off to the underwriting races!

 

HUD does require a silent 2nd mortgage be recorded on the property with no payments and no interest due unless you sell the home or fail to owner occupy the residence in the first 36 months.  What a small price to pay to receive 50% off your home purchase!

 

I would like to thank our teachers, police officers, fire fighters and emergency medical technicians for the Noble work they perform each and every day to make our communities a better and safer place to live.

 

For more information or more detailed requirements click on HUD'S Good Neighbor Next Door Program or email me at stetsonlowe@gmail.com or give me a call @ 801-655-5111.

 

Keeping you informed,

 

Stetson Lowe - Utah Mortgage Insider - www.UtahLoanTips.com

 

 

 

 

 

How Much Should Your Down Payment Be?

When looking for the right home loan, a major consideration may be the amount of money to put down to purchase the property. After all, the amount of money you can afford to put down will significantly affect your monthly loan repayments, the size of the loan, and the type of loan you qualify for. 

 

Due to the rapidly changing Home Loan rules and guidelines I thought it would be helpful to post today on some of the down payment standards and options for home buyers.

In general, it's ideal to come up with 20 percent of the price of the home. This means that if you want to buy a home for $200,000, you will need $40,000 as your down payment. If you can come up with at least a 20 percent down payment, you can not only keep the cost of your monthly payments down, but also achieve a lower interest rate on your loan. The primary reason for this is that you are creating equity in the home and if you default on the loan, the bank will get the majority of its money back. This incentivizes the bank to give you a more attractive interest rate.

Because many people have difficulty coming up with at least a 20 percent down payment, many lenders will allow people to contribute a smaller down payment towards the purchase of a home. Today, many lenders accept as low as 5 or 10% percent of the purchase price in the form of a down payment. This is approved by Fannie Mae and Freddie Mac for most conforming loans.

It is important to remember that when you only put down 5 percent rather than a full 20 percent of the home price, your interest and principal repayments will be considerably larger. As such, you might need to accept a cheaper home and smaller loan to be able to afford the monthly payments.

If you don’t have any money for a down payment, it may still be possible to obtain a NO money down loan. Some of the 100% financing options include:

VA (veteran’s administration)

USDA (rural development)

Utah Housing 

There are very specific criteria that you as a borrower would have to meet for each of the above mentioned loans including being a veteran for the VA loan, living in rural Utah (including Saratoga Springs and Eagle Mountain) or having a lower income to qualify for Utah Housing.   

Coincidentally very few Mortgage Brokers are approved to originate all of the above mentioned loans.  I am licensed and approved to provide you with all of these 100% financing options, I would be happy to provide you with a quote so give me a call today 801-655-5111.

When considering purchasing a new home, definitely take into account the amount of money you can put down. The more money you put down the less your loan repayment and overall loan cost will be.

Stetson Lowe – The Mortgage Insider – UtahLoanTips.com

What is "Private Mortgage Insurance" and who needs it?

If you're planning to take out a home loan you may have heard the phrase “private mortgage insurance” thrown around. So what is it and who needs it?

In general, a lender will require you to obtain private mortgage insurance when your home loan is worth more than 80 percent of the purchase price or appraised value of the home.

Basically, most lenders consider the ideal borrower as someone who can fund 20 percent of the home price. This shows that the borrower has significant “skin in the game” - by investing a significant amount of money in the home they demonstrate a high level of commitment to the home and to meeting their loan repayments.

Moreover, it means that should the borrower default on the loan they will have equity in the home which then can be sold and used to pay off a good chunk of the outstanding mortgage. Accordingly, by lending to such a borrower the bank is taking less of a risk than if they lend the same amount of money to a borrower without such equity.

However, the bank won't necessarily refuse to lend to you if you have less than a 20 percent down payment. What they will do to reduce their risk is to require you to purchase private mortgage insurance!

Private mortgage insurance or “PMI” provides security for the bank in assuming the risk associated with lending to someone with less than a 20 percent down payment. This is because if the homeowner purchases PMI and they default on the loan, the insurance company will kick in and continue making interest payments to the lender and in cases of complete foreclosure the insurance company may also be required to pay any deficiency balance that was not covered when the home was sold at auction.  This type of insurance policy all but guarantees the lenders will not lose money on a loan with PMI.

The Federal Government has established regulations governing the imposition of PMI since it presents a significant additional expense for consumers. In particular, the Homeowner’s Protection Act specifies particular rules that lenders must follow in relation to private mortgage insurance. These rules are designed to protect the borrowers and save them money. For instance, when a lender requires you to obtain PMI they must inform you of the amounts you must pay, when you must pay these amounts, the date you can stop paying them, when the PMI will automatically be canceled, your rights to terminate the PMI, and a phone number you can call to cancel the insurance.

Although many home buyers who borrow more than 80 percent of the purchase price of a home must buy PMI, there are also other circumstances where you will also have to pay for such insurance. The most common instance is where you have a poor credit score. A poor credit score means that you are a higher “credit risk” to the bank, such that they will desire you to have PMI.

So how much does private mortgage insurance cost and when do you need to pay it? Well, you will typically be required to pay around .5 percent of the total loan value for PMI. What's more, a lender will usually want the entire first year's premium up front at the close of the home purchase. So if you have a loan of $200,000, your PMI will cost around $1,000. In most cases, you will need to continue paying for the private mortgage insurance until you have paid at least 20 percent of the loan value down. Once you have built this level of equity in the home you will no longer be required to pay for the insurance.

Despite the additional expense presented by PMI – and the obvious attraction of having at least a 20 percent down payment – PMI is not all bad news. In fact, it may be a small price to pay to get into home ownership earlier rather than later. However, it's best to discuss the best strategy – whether it's saving a larger down payment or using a smaller down payment and buying PMI – with your mortgage planner.  Reply to this post under the comments section with any questions you may have concerning PMI.  For an independent review of your current PMI and when you can plan to cancel it email me at stetsonlowe@gmail.com.

Here is a link to a PMI company that I use to quote PMI rates you can shop for your own PMI using their easy pricing engine.

 

In my first few years in the mortgage business I rairly originated a loan with PMI because it was cheaper to do an 80/20 loan.  With the passing of these 80/20 loans PMI is something we are all having to come to terms with.  I hope this post will help you understand the basics of PMI.  The dreaded insurance that WE have to pay for that only BENEFITS the dang lenders!

 

Keeping you informed,

 

Stetson Lowe - The Mortgage Insider - UtahLoanTips.com

First Time Home Buyer Tax Credit

I have been receiving a lot of calls lately about HR 3221 and more specifically about the $7500 First Time Home Buyer Tax Credit.  As The Utah Mortgage Insider it is my duty to post about it today and answer everyones questions about exactly who qualifies and how it works.

Anyone who has not owned a home during the last 3 years falls into the governments definition of a first time home buyer and would therefor qualify for the tax credit.

The tax credit is not a typical tax credit, it is set up as an interest free loan of up to 10% of the purchase price of the property (not to exceed $7500).  This tax credit (should you choose to receive it) will come to you as a credit on your filed income tax return.  For example if you are a first time home buyer by definition and you are owed a tax refund from the IRS of $2000 and you have purchased a home between April 8, 2008 and July 1, 2009 then you are entitled to a refund of up to $9500.

The $7500 tax credit is an interest free loan for 15 years with payments made each year when you file your taxes.  The minimum payment due each year is $500.  If one chooses to pay the minimum each year the interest free loan will be paid in full in 15 years.  If at anytime during those 15 years you should sell your home or cease to occupy the home as your primary residence, the balance of the loan becomes due.

There are some income restrictions for qualifying for the credit.  Singles making up to $75,000 and married couples making up to $150,000 qualify.

Should you take the money?

Sure when I was a first time home buyer there where many things I could have used the money for, here are a just a few you may want to consider: Home improvement (if you purchase an older home, things that add the most value are bathroom remodels and square footage additions), build your slush fund for unexpected expenses, fund an IRA, or pay off a high interest rate credit card.

You can't beat interest free but just remember that it is a loan and not free money all together.

For more information

As always consult your CPA or Financial Planner for professional tax and investment advice.

Thanks for your calls and emails.  Feel free to call me with any of your mortgage questions at 801-655-5111 or email StetsonLowe@Gmail.com.

Keeping you in the Loop,

Stetson Lowe - The Mortgage Insider

Beijing Olympics 2008 Mens 4x100 m Event

If you only watch 1 event this entire Olympic games you MUST watch this amazing 4 x 100 m mens Olympic relay race.  This is an instant classic and may go down as the biggest come back win in this years games.  Enjoy

Click here to watch the replay http://www.nbcolympics.com/video/share.html?videoid=0811_HD_SWB_HL_L0194

More insider mortgage information to come very soon.  Stetson

Housing and Economic Recovery Act of 2008

This act has been making its way through the House and the Senate very rapidly and was signed into effect today by George W. Bush

Here is the best summary I have found of what it will mean to those in the real estate and mortgage industry.  For any questions you may have on any of these items give me a call at 801-655-5111.

H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:

• GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

• FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
  
  
• Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

• FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

• Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

• VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

• Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.

• GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

• Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

• National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.

• CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

• LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.

• Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

For the most part a very positive set of legislation.  The only real big losers today are the first time home buyers who have been able in years past to take advantage of Down Payment Assistance with an FHA loan.  This assistance was paid for by the seller and then gifted to the buyers for their down payment.  As of October 1, 2008 those arrangements will not be accepted.  So long Nehemiah!!!

The $7500 tax credit repayable over 15 years sounds interesting.  It raises the question in my mind, "If I have a borrower who needs the money today to close on their house but tax credits are given with a filed tax return how does that work?"  And if you have to buy the home to receive the credit it becomes the chicken and the egg, you can't have one without the other.  I will look into it for every one and I will be ready with the appropriate answers so bring on the first time home buyers in Utah.  Give me a call today 801-655-5111.

Stetson Lowe - The Mortgage Insider

www.utahloantips.com

Funny Clip of the day

 

Wachovia - Huge Loss - Wholesale Shutdown, or is it?

Today Wachovia reported a nearly 9 billion dollar loss for the second quarter of 2008, it simultaneously reported that it was closing its wholesale operations effective July 25, 2008.  This is the second "Major" Bank to recently announce its plans to stop originating mortgages through Mortgage Brokers on the wholesale side, Bank of America being the other.  However a close look into B of A's recent acquisition of Countrywide will quickly show you that they are lending more then ever through Mortgage Brokers as Countrywide is still one of the largest wholesale lenders in the Nation (formerly the largest), thereby making B of A one of America's largest wholesale lenders by default.

A closer look into Wachovia Corporation will show that they own a plethora of subsidiary lending institutions one of which being Vertice.  Here is an email I received today from a Vertice account rep; "Dear Broker/Partner,
VERTICE IS OPEN FOR BUSINESS , so you are OK to LOCK n LOAD your loans with us .  PLEASE SEE VERTICE ANNOUNCEMENT BELOW ...We thank you for your continued business.  Our current turn times are 4-5 days on initial UWing, 24-48 to clear conditions once ALL have been received and less than 24 hrs for docs out.  OUR PRICING IS STILL VERY ATTRACTIVE and we look forward to closing some of your loans.  Have a super selling day@!"

Kind regards, 
--- ------
Account Executive
C#1-***-***-****
EFAX#:1-***-***-****
---.------@wachovia.com  
Vertice Lending, a division of Wachovia Securities

Notice this lender reps email address is even a Wachovia email address and it says right on his signature line that Vertice is a division of Wachovia Securities.

I am not sure what it accomplishes for these lenders to claim they are exiting the wholesale market when they in fact have their feet firmly planted in the wholesale soil.  My feeling is that it is an attempt to create a diversion a smoke screen if you will from the embarrassing and down right shameful announcement of an 8.86 billion dollar quarterly loss.

Wachovia was already back on its heals from a horrible purchase they made in 2006 of Golden West Financial Corp otherwise known as World Savings.  This is the lender that started and just recently was still bragging in my office about their pick a pay product.  This is the loan that allowed people to pay less then interest only payments on their mortgage, thereby allowing the borrowers to add to their principal balance each and every month.  Wachovia liked this loan product so much and they must have fallen in love with World Savings business model to the tune of 25 billion!  That is what they paid for a lender that may have single handedly come up with one of the worst loan products ever produced.  The pick a pay loans or (option arms) as they were called in the mortgage business allowed people to neg am (add to their principal balance) up to 120 or 125% of the appraised value.  That is when values were holding strong and the market was at fever pitch. 

World Savings reps were still selling this loan as recent as a few weeks ago and were marketing it as their "portfolio" product.  When I questioned them on how they could sleep at night knowing they were selling such a risky product they proceeded to spout of well rehearsed statistics of how few of he loans were in default (currently) and how very few had hit the reset limit of 125% of the appraised value.  I said that is because they are using the appraised value of when people got into the loans, in CA for example some property values have gone down by more then 25% which means there are tons of these borrowers that should be resetting to principal and interest at 125% of the value of their home.  I am sure that is going to go over well to have people's payments increase by 1000's the borrowers already extended to the max using the minimum payment to qualify for a home they had no business buying.

Through an inside contact a Wachovia today I was told that most employees will be paid 2 months paid vacation and 6 months severance pay, at least the company is stepping up to the plate with their compensation package. 

From The Mortgage Insider this is Stetson Lowe saying Good Night.

Stay tuned tomorrow for more insider information on WAMU and their 3.3 billion dollar Q2 loss.

Here is a quick video on the Wachovia announcement.  If you have any comments on todays post please leave us your comments.

What is a Mortgage Planner?

Lately I have been asked the question over and over, "What is a Mortgage Planner Stetson and why should I use you (a mortgage planner) for my next Mortgage transaction."  To answer that question for every one who is asking I have written the following post.

What to Look for In a Mortgage Planner

By Stetson Lowe

Nowadays, it seems as though there are almost as many types of people offering home loans as there are  home loans themselves! So before it comes to choosing between different home loans, you need to choose between different loan providers.

That being the case, here are a few considerations for what to look for in a mortgage planner. These relate to whether they are really a mortgage planner or just a broker, what services they offer, what loans they can source, their level of responsiveness, and their fees.

The first thing to take note of is whether a given professional is a mortgage planner or a mortgage broker. Mortgage brokers focus on matching people with loans. While they aim to recommend the most appropriate loan for someone, they don't really consider the “big picture”. Mortgage planners, on the other hand, consider a borrower's home loan in the context of their overall financial plans. On that basis, a mortgage planner will consider your current situation and aims, as well as your future likely circumstances and goals, in order to select and assist in structuring the most appropriate loan for you.

As a practical matter, you'll want a mortgage planner who can source the types of loans that are likely to suit you. If you have general needs, then someone with access to a broad range of loan products may be suitable. If your needs are very specific – for instance you are self-employed and may not qualify for the typical home loan – someone who focuses on sourcing loans for people like you is likely to be better. 

You should also seek to work with a mortgage planner who is responsive and accessible. Put it this way, if they're not there to answer your questions or assist with matters that are worrying you... they probably won't be of much use to you!

Equally, you want someone who will provide guidance and explain everything to you in plain English. Buying a home can be challenging, especially as you're unlikely to understand all of the jargon and complexities associated with real estate and banking. Therefore, it's a good idea to find a planner who will take the time to explain these things to you.  Buying a home is one of the biggest decisions you will make in your life and you need to be clear on the commitment you are making.

A good mortgage planner should not require you to pay any unusual fees. Most planners will typically charge a commission (usually a percentage of the value of the loan) and may also charge extra fees for conducting an appraisal of the home you want to buy. They will also pass on other costs such as the closing costs and a down payment for the home.

That said, it's not generally wise to simply go with the person offering the lowest fees. They may not provide the level or range of services you need... which, long term, may end up costing you far more than the slightly higher fee charged by an expert mortgage planner.

To sum up, when looking for a good mortgage planner keep in mind these factors: are they really a planner, or just a broker? Will they source the kind of loan you need? Are they open and responsive? And are their fees appropriate for what they're offering?

I hope that helps answer the question What is a Mortgage Planner? 

The Mortgage Insider - Stetson Lowe

Fannie - Freddie Video / Inflation reachs 17 year high

Today bond investors worst nightmare's were realized when an economic report was released showing inflation at it highest rate since 1991. This sent bond investors to sell sell sell. In the massive sell off of bonds we saw a huge repost worse to long term mortgage rates throughout the afternoon. Will it be short lived? That is the million dollar question. With the feds hands tied by the crumbling economy the main tool used to tame inflation "raising the feds interest rates" is simply not an option. The markets need the cheap money to continue to function and provide some vibrance to the economy. If you are looking to close a loan in the next 30 days I would lock. If you are still weighing the pros and cons of purchasing or refinancing right now it may be time to jump down from the fence and get things moving.

Heres a good report on the in's and out's of whats going on with Fannie and Freddie

Until next time,

The Mortgage Insider - Stetson Lowe - www.UtahLoanTips.com

Like Clockwork

It was 1 week ago today that I posted last and the title of that post was "Fannie - Freddie getting crushed".  I posted about the 2 mortgage giants and there roll in the mortgage market and subsequently the economy.  I ended the blog with "I smell another big huge government bailout."  Was it that predictable that in less then a week 7/13/08 the Fed unveiled a plan to shore up the 2 800 pound gorilla's? 

The Announcement

Yesterday Sunday the 13th of July the Fed came forward with a plan to open up their wallets to Fannie and Freddie once again and increase their credit line with the Federal Reserve.  This will allow fannie and freddie to be more liquid and increase stability in the secondary market.  Already today we have seen the results of this announcement as there was a huge turn out at Freddies auction for short term (2 Month) bonds.  The bid to cover ratio was 50% greater the it has been for the last 3 months.  Yields actually decreased slightly which is good for mortgage rates.

The Effect

The over all effect of this plan should be calming to the real estate markets and bond investors which have been jumpier then cow in a slaughter house.  I would look for rates to ease over the next 2-3 weeks as the market digests this new found security.  Keep an eye out for more bad news and additional write downs in the banking sector.  One of my Trader contacts predicts the mid-size regional banks i.e. (Indy Mac, National City) to continue to be slammed with the liquidity crisis.  He says to look for more and more of these banks to file bankruptcy.  I hope the FDIC can shake the rust off and get ready to go to work here for the next few years, sounds to me like they are going to be Busy.

To get all the Insider Information before it hits, check back often.  Email me your mortgage questions anytime day or night at stetsonlowe@gmail.com

Stetson - The Mortgage Insider

UtahLoanTips.com

Fannie - Freddie Getting Crushed 7-7-08

The Mortgage Giants Fannie Mae and Freddie Mac stocks are being absolutely pummeled today.  In mid day trading both of the companies stocks are down more then 20%!!  From what I can tell this is due to two things.  1. The continued spike in foreclosures of which Fannie and Freddie both have massive exposure to and 2. The both companies are running in the RED for 2 consecutive quarters which is severely cutting into the companies liquidity.  The companies main function is to be liquid and to keep the mortgage markets liquid.  Fannie and Freddie were purchasing bundles of the Sub-Prime loans originated by and for any one with a pulse during the last 5 years.  Because of this their individual portfolios both contain Billions of dollars of these loans which are currently experiencing foreclosure percentages as high as 25 - 30%.  Investors are fearing that the 2 Giants are going to run out of money to purchase new loans with.  This would have a rapid trickle down effect to all the major lenders that sell their mortgages to these companies (which is everyone).  Simply put in Fannie and Freddie run out of money to purchase mortgages, then every bank in America runs out of money to lend for new mortgages. The government can't let that happen or our entire economy is going to be at risk of not only a recession but maybe even a D________n.  Snnnf Snnf do you smell that?  I smell another big huge government bailout, one that could make the Bear Sterns bail out look small in comparison.  Let's hope these 2 big player's can get their ships righted before that has to happen.

Stay Tuned....

Stetson Lowe_The Mortgage Insider

www.UtahLoanTips.com

Jobs Report - Some Patriotic Flics

The market was up slightly today after the Unemployment report fell in line with what analists had predicted.  Unemployment rose again slightly in June which had the markets in the red in early going before news of the Europe Central Bank raising interest rates and some better then expected manufacturing reports helped the market to rebound post a gain for the day.  Bonds were battered with the ECB decision and ended the day in the red with yields up 4/10ths of a percent for the day.  Watch closely next week as I spoke with several traders today that are expecting a big bounce back day and possibly a 400 point rally for the Dow sometime next week.  That would be bad for the bonds and rates so I will be watching it closely.

I wanted to leave you with some of my favorite "Country" videos for the 4th!!  It has to be country to feel like the 4th to me.  Have a great weekend and a happy and safe Holiday.

Stetson

The Mortgage Insider www.UtahLoanTips.com

OIL TOUCHES NEW HIGH

It seems like almost daily now oil is reaching and breaking its previous days records.  For us that means no end in sight to the sky rocketed gas prices.  Who's to blame for this run up??  Every one is pointing fingers at one another, from the producers to the refiners to the distributors to the futures traders and finally to the end users US.  I would say we have dug our own grave on this one...hold on there for a minute before you start sending me hate mail, here me out.  We the people of the United States have become so heavily reliant on oil, and more importantly foreign oil, that we cant function with out it.  Not only can we not function with out it we have shown recently that we can't even trim our usage.  I am guilty as charged on this one.  I am not here to point fingers at everyone else but I do think it is something I need to start coming to grips with and so for me to blog about it and get it on the table may do me some good.  A few years ago when gas was "cheap" I decided I wanted to get my wife the safest car I could find.  I in turn thought safest meant biggest so I went online and bought her a Hummer H2. 

She has loved driving the Hummer with our 2 boys Zayne (in the picture saying hi from the back seat) and Cooper and she has always felt very safe especially during our Utah winters.  Recently our conversations about gas prices have us considering selling the beast and slimming down our fuel waistline if you will by going with a Hybrid or at least a more fuel efficient car. 

BY THE NUMBERS

I am a numbers guy and after running the numbers it doesn't seem like the best move to dump the Hummer right now as we would have to almost pay someone to take it off our hands.  That got me thinking, there had to be another option out there?  And then it was a brother in law that said "you should convert it to Natural Gas".  Like I said I am a numbers guy so I started looking into the numbers and this is what I found.  $12,000 for the conversion...ouch right, well maybe not lets look a little closer.  Up to $2500 tax credit (not write off but credit means cold hard cash) from the Feds, up to $2500 credit from the state of Utah, and up to 1/3rd of the actual cost from a gift or grant from a non-profit clean air organization.  That leaves me holding the bag for somewhere between $3,000 - $6,000 depending on what I get approved for.  At 13,000 miles a year and getting approximately the same gas mileage (11 mpg) it would take me about a year and a half to recoup the cost of the conversion.  All the while I would feel good paying $16 for a fill up that is costing me $80 right now.

THE SOLUTION

I don't know if anyone has the magic answer to this fuel crisis and yes I am calling it a crisis.  More off shore drilling and exploration in Alaska would help (a little) but with demand in countries such as India, China and the former Soviet Union increasing daily we would be kidding ourselves to think that this increase of a couple hundred thousand barrels a day would really solve anything.  Instead I think it is up to us to park the gas guzzlers more, stay closer to home for vacations this year, and take the smaller car more often if you have one in your household.  I will let you know if we make the change to Natural Gas with the Hummer anytime soon, just the thought of a $16 fill up really excites me.

More on Mortgages this week I promise,

Stetson The Mortgage Insider www.utahloantips.com

Post your comments on what some of your solutions might be.

FED HOLDS RATE STEADY

Fed day today and as expected they announced their decision to hold rates steady today at the end of the policy setting session.  The word on the street is that they have adopted a "wait and see mentality", possibly learning a lesson from what some are saying was an over reaction to the market conditions earlier this year when they made multiple emergency rate cuts. 

What does that mean for long term mortgage rates?

Bond traders where initially spooked by an artificial run up of the market after the Fed announcement, so initially bonds took a dive and yields increased but as traders took profits and the market corrected the bonds eased back to opening bell levels and yields were almost unchanged for the day. 

Looking ahead

I hate to put myself out there with any bold predictions as they are sure to be wrong, but I will say that I think that we are headed back down.  It may not last long but my feeling from watching the markets is that there is still some room to go down in July. Check back with me in July to see how I did.

I have been receiving a lot of questions from people to the effect of "is now a good time to buy a home or are interest rates and home values going to drop again?".  My answer to them is always the same.  History is one of the best ways to predict the future.  Historically we are still near all time lows for interest rates (not going to get much better and if it does a refinance is always possible).  As far as home prices going any lower?  That is the million dollar question and it depends fully on the value of the home.  If we are talking luxury homes $500,000+ we may still have a little more softening over the next 6 months.  Under $417,000 its hard to predict what will happen.  I would have to break it down into 2 more categories from there.  Under 417,000 but above $300,000 still show some signs of weakness.  Under $300,000 make your offers today bubba there are some deals to be had and I don't think they are going to last.  If I were in the market to buy a home right now I would certainly be looking for the deal and calculating everything by price per sq foot.  Its a simple calculation that I taught my wife while we were looking for our last house and she did on every home she wanted to show me.  She new I wasn't interested in anything above $90 per square foot and so she wouldn't bother showing me.  She would look at all the new listings every day and do the following calculation $350,000(price of the home) / 4000 sq ft (square footage) = 87.5 per sq ft.  Its a simple calculation that can quickly let you compare multiple homes and give you a solid number to base your decision on.  If the basement is finished you should add $7 to $10 per square foot to make a good comparison. Right now I would be looking for something at $80 a sq ft or better with an unfinished basement and I would not be looking at anything over $85 with a finished basement.

Leave me your comments and happy house hunting.  Call me for your mortgage analysis today.

Stetson (The Insider) www.utahmortgageinsider.com / www.utahloantips.com

Home Prices, Consumer Confidence, State & City Layoffs

I wanted to touch on a few of these topics that are affecting interest rates and the housing market today. 

HOME PRICES

Home prices nationally posted a 15.3% decline.  The S&P Case Shiller 20 City Home Price Index fell to a record low of 15.3% on a year over year basis for April and was down 1.4% from March. The only glimmer of hope is that the pace of the decline has slowed some what and there were even two city's in the index which posted small gains, Cleveland, OH (2.9%) and Charlotte, NC (.02%).  Although Salt Lake City is not included in the index we did somehow post a 3.5% gain during the first quarter of 2008 in the median price of a home which increased to $225,700.  Anything under $275,000 seems to still be selling very well, it is when you cross that threshold that you see homes sitting longer and longer.

CONSUMER CONFIDENCE

A key measure of consumer confidence dropped in June to its 5th lowest level of all time as Americans grew more concerned about their jobs and more pessimistic about the economy. 

Pierre Ellis, an economist at consulting firm Decision Economics in New York said Tuesday's report indicates a "soured mood" among consumers. The danger, he said, is that if consumers' lack of confidence translates into fewer dollars spent.

"Consumers will be much more cautious now if they don't know what the job market will look like, especially in terms of buying a car, or buying a house. To put money down to buy something big involves confidence," Ellis said.

STATE & CITY LAYOFFS

45,000 & Counting is the number of state and city employees that have lost their jobs recently due to job cuts relating to budget deficits.  Bank, Airline, Automaker employees are no longer alone in the fight to find new jobs, now they are being joined by more and more state and city employees.

The city of Vallejo, Calif. filed for bankruptcy last month due to a ballooning budget deficit from soaring employee costs and declining tax revenue. Labor contracts with the city's unions were part of the problem but the city's plunging real estate market also was a factor.  Foreclosures are on the rise and for that reason cities across the nation are seeing depleting income from their tax bases.  High labor costs and ill-planned budgets were the kindling that is now fueling the fire caused by these failing tax bases.  I am going to keep an eye on this sector, I think this is a new kink in the spokes for economists in an already unstable job front, they might not have seen this one coming.

These 3 items will keep pressure on the bond market today which "should" keep rates in check.  Or we may even see a slight improvement.  All eyes will be on what the FED says tomorrow in their FED DAY meeting.  FED DAY is huge in the mortgage industry as the stock market and bond market will usually swing one way or the other depending on what the FED decides to do with the FED rate.  Analysts are expecting the FED to keep the rate steady tomorrow, any variance from this will send huge waves through the markets so stay tuned.

Stetson (The Mortgage Insider) www.utahmortgageinsider.com

What's up these days?? Well lets see, Rates...Wheat...Oil...just to name a few

Today I wanted to post a little bit about interest rates and how they are being affected by INFLATION.  It seems that people are fleeing long term bonds as INFLATION fears keep creeping in.  As investors pull there money out of US Bonds yields spring up because yields and prices of bonds move in opposite directions, if I have thoroughly confused you then try to think of it this way, when lots of investors are buying bonds (normally in shaky economic times) the prices of those bonds increase just like a popular stock would, the difference between stocks and bonds is that with bonds the yields actually decrease during those times thereby curbing the amount of people purchasing them and thereby keeping the supply and demand intact.  We are certainly in uncertain economic times right now, you have half of the so called experts and economic gurus calling this a recession and you have the other half fighting that term like the Laker's are trying to fight off the Celtics, in either case we know what is inevitable, none the less they both agree that the short term outlook is bleak at best.  So why then are interest rates going up when we are in the midst of all of this uncertainty and I just said that bonds rally in times like this making prices go up and yields go DOWN??? This is where the thief in the night called INFLATION climbs in to all of our savings accounts and robs us blind.  Bond investors are a different breed, not to much rattles them in the markets after all they are investing in arguably the safest investment known to man, but there is 1 word that rocks them to there core INFLATION.  You see one of the only things that can effect their "guaranteed returns" is cost, cost of gas, cost of food, cost of coffee at the corner store where they pick up their copy of the Wall Street Journal.  If all these costs INFLATE rapidly then they are in essence losing money every day as their "guaranteed" buying power is turning to dust in the wind.  So even though we are in some tumultuous times economically that INFLATIONword is the trump card!  All Big Ben Bernarke has to do is even so much as think the word INFLATION and I swear everyone of them hit the sell button on their trading domes so fast your head would spin therefore dropping the bottom out of the prices and increasing the yields (remember prices and yields move in opposite directions).  Long term debt (mortgage loans) are directly affected by bond yields.  As the bond yields go up, mortgage rates almost instantly follow.  The exception to this close following is when bond yields dip mortgage rates seem to lag behind for days.  The old analogy of taking the 'elevator up and stairs down' seems to apply nicely. 

As recently as 2 weeks ago the 30 year bond was yielding 4.57% currently right now as I type this post it is sitting at 4.77% almost a quarter point higher, just a couple months ago that same bond was yielding just 4.22%, a full half a point lower.  Sadly rates have climbed over a half of a percent in just the last 2 months.

Todays 30 year fixed rate with 20% equity and a 720+ fico is between 6.25-6.50% depending on the lender.  I closed a loan in April at 5.625% on a 30 year fixed (thats .625% lower in just over 2 months).  The reality is that the markets are volatile, inflation mixed with a weakening US Dollar and sky rocketing oil are to blame, not to mention a horribly mismanaged credit market for the last 5 years that is trying to work its self out right now.

Buckle up, grab some popcorn because we are in for some interesting times here in the next few months as inflation forces the hand of the Federal Reserve to raise the federal reserve's interest rates (We will talk about the difference between the Fed Rate and our mortgage rates in an upcoming post) all the while our housing market continues to shutter at every new report that comes down the pipe.  Questions, Comments, Ideas anyone, Did you find this helpful??? Post your comments.

 

Stetson "The Mortgage Insider"

Time to get Blogging

The time has come in my career where I need to embrace the technology and stop fighting it.  For almost a year now I have been aware of blogging and that it is out there, but it was not until recently (in the last 2-3 months) that I learned how powerful a tool it can be.  Over the next few months I hope you all will bear with me as I figure this out.  It is my goal to have content rich articles and discussions almost daily on my blog.  Your comments and posts and conversations will be important in getting all the questions answered that others might be thinking but not ask. Please bookmark this page and check back daily for mortgage news, political discussions and much more!

Stetson Lowe (The Mortgage Insider)

Welcome to Stetson Lowe's Blog

Hi, my name is Stetson Lowe and I am a "mortgage insider". I hope you enjoy my blog. I look forward to sharing with you "insider information" about the mortgage industry that will keep you in the loop and up to date with what's going on in the business. Please post all your comments and check back often for more insider information.

Your friend,

Stetson Lowe
www.UtahLoanTips.com