The Blog Report

There has been much talk about HUD introducing another first time homebuyer incentive which will add to the already current tax credit.  What it sounds like at the moment is using the tax credit upfront by means of a "bridge loan" from the first mortgage provider and the loan will be paid once the individual recieves their credit. The terms have not been completely described and it seems that it may need individual State approval.  Of course Lending institutions will also have to buy into this.  So before you get too excited please stay tuned for any further updates.  In the meantime, go buy your first home before the funds are gone.  Eight grand is still eight grand before or after!

If you have any questions or comments please feel free to email me at john@centerpointemortgage.com

Well the million dollar question this week is "when do I lock my rate" or "when are rates going to be in the 4% range"?  My answer?  Let's see who's crystal ball is better.  In 20 plus years of mortgage planning I can honestly say everything I have learned about interest rate movement has been tossed out the window. 

The uncomplicated short version goes something like this, when bonds rally thats usually good for interest rates, when stocks rally thats usually bad for interest rates.  Mortgages are typically tied to the bond market so it makes sense that when bonds are attractive to investors rates usually improve.  Unless of course your in 2008!  I stopped guessing and even stopped suggesting to my clients what they should do.  Mainly because the market is very volatile and isn't responding to my above example.  Another odd phenomenon... how about three to sometimes 4 rates changes in a single day!  If you called for an interest rate quote last week, on any given day that rate may not have been available only a hour later.  It could have been better or worse.

So what do you do?  STOP WORRYING ABOUT IT.  In the big picture who cares? Remember what your mom used to tell you?  Don't cry over spilt milk.

You can't control it!  I can't control it!  If you are happy with the rate that was quoted and you can afford the payment, end your misery.  So what if it goes up $20.00 a month.  Just jump in, buy your house, enjoy life, your new backyard, think about those summer nights grilling outside with friends.  Also think about all the other times spending an extra $20.00 a month never phased you...like all those daily mocha caramel cinnamon grande coffee's you buy. 

Ok so were not billionaires, doesn't mean we can't think like one.  While we sit here and believe all the media hype about how bad the economy is, buffettologist's (yes thats what they call themselves) are like kids in a candy store.   Like all things this to will pass.  If you can see the forest through the tree's you would likely see some positive results in the next two or three years from the stocks you bought today at bargain basement prices.  Well the same is true for real estate.  Now don't get me wrong, I too feel the gas pinch and I am sympathetic to those that are struggling to pay everyday expenses, however misery does love company and I won't be a part of it.

Here are some facts:

•     Mortgage interest is still deductable rent is not!
•     Interest rates are still close to all time lows
•     FHA is more attractive than ever
•     Yes... It's a buyers market
•     Some homes are being sold with sellers paying closing costs and believe it or not... giving away cars!

What has changed for the better?  Some bad mortgage programs that should have never been offered in the first place- 110% loans, no income, no asset loans, all of the subprime prepayment penalty loans (CenterPointe Mortgage did not offer these loans even in their highest of popularity).

So I suggest you walk into your local mortgage company and get pre-approved.  Just don't over do it.  Stay within your means, don't exceed a 45% qualifying ratio if it's your first home (and be smart if it's your second).  Work with a mortgage planner not a application taker.  Use the banks money NOT YOURS!  Lets look at your future retirement accounts, do you have a plan?  Keep and open mind about never paying off your mortgage and look into other safe side accounts.  Did you know if you are in a 30% tax bracket and have a fixed rate of 6.5% that after tax it is like having a rate in the 4% range?  Why be in a hurry to pay that back?

If the next ten years get here as fast as the last 10 years did are you prepared?

Have you been paying close attention to our interest rate ride.  As the subject line suggests, what goes down must go up!  What ride are you on?  If your not seriously considering buying a home, you LOSE.  I have been in the mortgage business for over 20 years and must say I have taken advantage of every rate drop.  I now am on my 4th refinance and am happy to say I just locked in at 4.875%.  I pulled out cash and will continue to build my portfolio with CHEAP money.  This is as close to legally robbing a Bank that I have ever seen.

Don't sit back and wait for "the bottom" get organized and get in the game!