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100% financing and approvals still exists but ask questions.

August 28th, 2007 11:38 AM

Are you seriously shopping for a house? It doesn't matter if you have done this before or even if you are a first time homebuyer.

If you have bought before, don't think it's the same way as once before. The market changes every day. Mortgage programs can change at the blink of an eye. First time home buyers, just because your friend or family member had an easy time when they bought their house doesn't mean that it could be as easy and or simple as their purchase.

The number one rule of advice, try and get a referral of a good loan officer before you head out into that jungle. You want someone that is going to take the time to educate you while giving you options and not someone that is worried about their own pockets. Make the effort to obtain a pre-approval.

What is a pre-approval? It's one step ahead of being pre-qualified. This is a must read. The difference between a Pre-Approval and a Pre-Qualification letter. For a short breakdown of this article, a pre-approval is worth a hole lot more in most cases than a pre-qualification. You actually go through the process of buying a home without having a home in mind and or contracts. Why is this a good choice?

-- Right now, it's a buyers market for the most part. If you place almost the same bid on a property, but your did/offer is accompanied by a pre-approval letter instead of a pre-qual letter, you might have a better chance. (I have had clients in the past whose offer was slightly lower, but it was still accepted because they were approved already) There are many reasons why for this.
-- Many programs have been changing as of lately and it's a good idea to see what you can be approved for now instead of later.
-- If you are a buyer that doesn't have much money to work with and possibly average credit, you might need 100% financing. This can only be approved by an online service and not by the naked eye. Better to know now than later.

Overall, understanding your options and how the financing process takes place is the most common mistake made amongst buyers. No, I am not saying that you need to be an expert. But why not become slightly educated on how the process works? Why not be one step ahead of everyone else.

Conclusion : What I am about to state is from experience and past clients. This just happened again as of today. Keep these next few thoughts in the back of your mind as you seek a professional in the mortgage industry.

Don't fall for those that don't spend much time with you asking you questions and your goals. This is so key.
Watch out for someone that acts as a true sales person. Someone that uses such words as or phrases as : "I promise", "I guarantee", "don't worry", "not a problem", ...and some of the worst? "I am the lowest", "I have the best rates and or fees".... and "TRUST ME".
Don't fall for someone that says they will take care of you just because they are a manager or possibly the owner. They shouldn't have to use their title to make you feel comfortable or like you will get a great deal. This is sometimes called sales.
Overall, use your gut feeling at times. Don't be afraid to ask many questions. And if you get someone that is hard to reach, this could be a red flag. Especially once you start the process with that loan officer. If they were easy to reach prior to application, but now don't return calls or e-mails like they did in the beginning... BIG RED FLAG.
We can still provide 100% home financing backed by the US Government and FHA.

Posted by Chuck Davis on August 28th, 2007 11:38 AMPost a Comment (0)

Pending sales up!!!!

August 15th, 2007 11:07 AM

The Pending Home Sales Index, based on residential home contracts signed in June was 102.4, 5 percent higher than the downwardly revised May index of 97.5. The index was still lagging behind the 112.0 pace in June, 2006 by 8.6 percent, but the increase over May was the biggest jump in more than three year, since March 2004 pending sales were 6.1 percent higher than those in February 2004.

Posted by Chuck Davis on August 15th, 2007 11:07 AMPost a Comment (0)

Rates speculation for the first week of August

August 6th, 2007 9:09 AM

This week brings us the release of only one piece of economic data. However, the biggest event of the week will be the Federal Open Market Committee (FOMC) meeting Tuesday. We may see some pressure in bonds tomorrow as investors prepare for the meeting, but most traders will likely make their moves post-meeting Tuesday.

There is no relevant data scheduled for release tomorrow. The only piece of economic data of interest this week will be posted Tuesday morning. Employee Productivity and Costs data for the second quarter will give us an indication of employee output. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don't see this being a big mover of mortgage pricing, especially since it is the same day as the FOMC meeting. Analysts are currently expecting to see an increase in productivity of 2.0%. A higher than expected reading could help improve bonds, but until we get the results of the FOMC meeting, we will likely see little movement in mortgage rates.

The FOMC meeting will adjourn at 2:15 PM Tuesday. It is expected to yield no change to key interest rates. Usually, the post-meeting comments seem to have more of an influence on the markets than the rate adjustments themselves as the rate changes, or a lack of one, are quite often already expected.

Bond traders will be watching the post meeting statement very carefully. Generally speaking, a hint of more rate hikes in the future will be construed as an indication that inflation is still a concern and would likely lead to bond selling and increases to mortgage rates. If the statement gives an indication that the Fed is not as concerned with inflation as previously noted, the bond market should rally, leading to lower mortgage rates.

Also worth noting are two important Treasury auctions this week. The sale of 10-year Notes will be held Wednesday while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as they are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted. Those results will be announced at 1:00 PM each sale day. If there will be revisions to mortgage rates because of the results, look for them to be made during afternoon trading Wednesday and/or Thursday.

Overall, I am expecting to see a choppy week in trading and mortgage rates. We will likely see the most movement in rates Tuesday with the only important data of the week and the FOMC meeting. Wednesday's Treasury auction may also affect rates during afternoon trading. I suspect that the rest of the week will be driven by stock market gains or losses. If the major stock indexes continue their downward trend, bonds should benefit as investors seek safe haven from the volatility. But, if stocks rally, those safe-haven funds that we have seen over the past few weeks could move back into stocks. This would drive bond prices lower and mortgage rates higher. If stocks remain flat those days, so should mortgage rates. Accordingly, I am holding the lock recommendations for the time being.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2007

Posted by Chuck Davis on August 6th, 2007 9:09 AMPost a Comment (0)