Fed Raises Short-Term Interest Rates – Apply before Monday

The Federal Reserve is making a small increase in the rate it charges banks for short-term loans, a long-anticipated first step towards backing off the easy money policy it has pursued over the past year.

The Fed announced late Thursday that it is raising the discount rate one-quarter percent to 0.75 percent, effective today. Effective March 18, the Fed will also limit the maximum duration of such loans to overnight.

The action was described as a move toward normalizing credit markets in light of improving economic conditions. The Fed said raising the rate should encourage banks to seek private sources of short-term credit rather than turning to the Fed.

It’s not clear what impact raising the discount rate might have on mortgage rates, which have held near all-time lows for much of the past year. However, the Fed’s major impact on mortgage rates has been as a result of its commitment to purchase over $1 trillion in mortgage securities, which are set to conclude in March. Most analysts do not expect mortgage rates to rise significantly until that program concludes.

Some analysts predict that raising the discount rate will have little immediate impact, as relatively few banks use the program. A more significant impact would result from raising the Federal Fund rate, the rate banks charge each other for short-term loans, which the Fed is expected to keep at zero to one-quarter percent for some time to come.

My advice is to get preapproved today and lock in that loan call us to get preapproved at 239-580-9977 or you can apply now before the after weekend rates rise 8 am Monday (after monday its too late) apply now at www.americahomekeyfl.com !

Home Ownership Lowest in 10 Years

The U.S. home ownership rate fell to its lowest level in nearly 10 years in the last quarter of 2009, according to figures released by the Census Bureau.

The home ownership rate of 67.2 percent of U.S. households is the lowest since the first quarter of 2000, and represents a decline from 67.6 percent in the third quarter of 2009. However, the rate has been statistically unchanged over the past year, due to the survey’s 0.5 percent sampling error; the rate in the fourth quarter of 2008 was 67.5.

 

Home ownership rates tend to move slowly, with small changes in the face of both booms and busts. The rate reached all-time highs of 69.2 twice during 2004, but have been gradually declining since. By contrast, home ownership had been generally rising during the previous 20 years, gradually trending up from a low of 63.5 at the end of 1985.

 

The number of owner-occupied homes increased by more than 1 million in 2009, reaching 111,711,000 units, up from 110,668,000 at the end of 2008. The number of occupied rental units increased by about 700,000 units, to 36,673,000.

 

The rental vacancy rate fell to 10.7 percent of all available rates in the fourth quarter of 2009, down from 11.1 percent in the third quarter. Rental vacancies have generally been increasing the past three years, despite increasing foreclosures that would seem to create greater demand for rental properties. The rental vacancy rate stood at 9.5 percent in the first quarter of 2006 and had been generally rising since. The peak of 11.1 percent in the third quarter of 2009 was the highest rental vacancy rate in at least 13 years.

*Courtesy Mortgage Loan.com

GOOD REASONS TO BUY NOW ! 70 DAYS LEFT TILL $ 8k CREDIT GOES AWAY!

Thinking about buying your first home? There are a lot of good reasons to do so right now – bargain prices, low mortgage interest rates and that $8,000 first-time homebuyer tax credit. But for the first-time homebuyer, it can be intimidating.

To begin with, it’s an awfully big investment – potentially, the biggest you’ll ever make – and making the wrong choices can make it even more expensive. But it can also be one of the best and most satisfying decisions you’ll ever make. So how to make sure you’re making the right choices? Fortunately, there are some general guidelines you can follow that help ensure you’re making a good decision.

One of the first things you should do when contemplating buying a home is get to know your local real estate market. Check out listings, both online and in the paper. Go to a bunch of open houses to see what’s available in different price ranges around what you think you might be able to pay. At this point, you’re not really looking for a home; you’re getting a feel for what your money will buy.

Then first Get Pre Qualified

Getting pre qualified before you go any further is key it’s like having a blank check to buy with, do this before shopping for a home! Get Prequalified!

Find a good real estate agent

Ask around, talk to friends who’ve bought a house, ASK US DURING PREQUALIFICATION FOR A REFERAL SO YOU KNOW WHO YOU CAN TRUST AND WE WORK WELL WITH,  or get a buyer’s agent to represent you. In most states, the realtor’s fees are paid by the seller, so there’s no reason for you not to get one – plus they’re supposed to look out for your interests.

How much home do you want?

Think carefully about this. A big yard is nice if you have kids or a dog, but will require more work to maintain. A fixer-upper may sound attractive, but how handy are you with tools? Those do-it-yourself shows and guidebooks make it look easy, but the unavoidable rule of any kind of home repairs are the unexpected little problems that inevitably crop up and which the books said nothing about. Don’t expect a big lifestyle change just because you’re buying a house – choose something that fits the way you live now, with a few enhancements.

Figure out your budget

How much house can you afford? NOT WHAT YOU ARE PREAPPROVED FOR AS YOU HAVE TO LIVE WITH YOUR BUDGET! The general guideline is that you can spend 28 percent of your monthly pre-tax household income on a mortgage payment, including taxes and insurance. But do you want to spend that much? Would you be happier with less house and more to spend on things like vacations or saving for retirement? You don’t want to tie up so much in your house that it’s crowding out the other things you want in life.

Anticipate future expenses

What else are you likely to buy in the next few years? Is your car getting old? Are you planning to start a family? Are you or your spouse thinking about going back to school? And don’t forget home maintenance and repairs – a new roof, septic field or furnace can set you back thousands of dollars, in addition to the regular maintenance and occasional repairs all homes need. And the older the home, the more you need to allow for.

Don’t buy the first house you like

Yes, you might miss a great bargain now and then, but it’s not likely. There are a lot of homes on the market right now. Some real estate agents will tell you that when you find a house you like, you should buy it. Of course they do. They want to sell you a house. The fact is, even if you miss out on this house, you’ll more than likely find others that you like just as much, if not more, particularly in a buyers’ market like we have today.

Don’t think of your home as an investment

Yes, it’s an investment in that you’ll have a lot of money tied up in it, but don’t look at it as something that’s going to make a profit. First and foremost, it’s a residence. Besides, there are other places you can put your money that historically outperform real estate. Better to do that than sink extra money into a bigger house in hopes you can sell it for a fat profit a few years down the line.

Get preapproved now or get more information at www.americahomekey.com

Verifying Your Down Payment, Closing Costs, Assets, Income and Debts

A critical step in the mortgage loan application process is to verify the sources for your down payment, closing costs and assets, as well as documenting income and debts. The lender uses this step to determine your qualifications as a borrower. 

Down Payment & Closing Costs

Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.

Acceptable Down Payment & Closing Costs Sources

• Cash in a bank account
• Mutual funds / stocks / IRA / 401(K)
• Proceeds from the sale of another property
• Gift from an immediate relative
   

Assets

Collect information about your personal assets that add to your net worth and help to prove your credit worthiness.

 Common Assets Considered in a Mortgage Loan Application

• Stocks, bonds, mutual funds, 401(K) and retirement accounts
• Life insurance
• Personal property estimate – cars, boats, antiques, jewelry, etc.
• Other real estate or property

Income and Employment

The lender will want to confirm your current gross income and have evidence of stable employment. Documentation requirements vary depending upon a number of factors – including the source of income (hourly, salary, salary + bonuses, salary + commission, commission, self-employed, etc.).

Debts

Your lender will want to review a list of all your current debts. This along with your credit report will provide the lender with a snapshot of your obligations. The lender will want to confirm that you will not be overextended when the mortgage payment is added to your current debt load.

Click here to view our application checklist http://www.americahomekeyflorida.com/LoanAppChecklist

Commercial Real Estate Funding

If you’re new to commercial real estate financing, you’ll want to get a firm understanding of the differences between a residential and commercial mortgage loan.  Residential real estate uses a debt-to-income formula for judging your ability to repay a loan while commercial real estate is based on the debt coverage service ratio formula to qualify.  This means that to qualify for a commercial loan, you’ll have to know what your projected return on investment (ROI) will be when making a commercial property purchase or refinance.

The cash flow generated from your commercial real estate property will be one of the factors in determining both the value of the property as well as its future return.  The type and amount of your commercial loan is also dependent on other factors, including your business and personal credit history, your net worth or financial strength, the type of property and its overall condition, its cash flow, the geographical location of the property, and the general economic outlook of the local market.

The first step to purchasing or refinancing your commercial property is to know exactly how you’ll use the property.  What type of property will you acquire?  How will the property be used to improve your cash flow and financial goals?  How long will you hold the property?  Will you be an owner/tenant or just an investor?  And do you have an exit strategy?  These are all questions you’ll want to think about before applying for your commercial financing.

After you’ve established the market need and use for the property, you’ll also want to analyze its current and future cash flow that will contribute to your ROI.  So give us a call today, at 239-580-9977 and we’ll help you get started and answer any other questions you may have.

Tips for Accumulating a Down Payment

The Down Payment

The amount you have available for a down payment will affect what types of loans for which you can qualify. Down payments typically range from 3 to 20 percent of the sales price for the property.

Tips for Accumulating a Down Payment

Save Look for ways to reduce your monthly expenditures to save toward a down-payment. You could enroll for an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Most people save a couple of years for their down payment. Borrow the down payment from your retirement plan Check the provisions of your retirement plan. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms and/or possible early withdrawal penalties. Move You may be able to save additional funds if you can move into less expensive housing. Reduce other higher interest rate debt Paying off credit cards will initially reduce your savings, but the money you will save from higher interest rates will pay-off in the long run. Make a deal with the seller In some circumstances, it is appropriate to ask the seller to carry a second-mortgage to cover your down payment. Typically, you will pay a slightly higher rate for this second mortgage. Sell some investments Get a second job and save your earnings Skip a year’s vacation Gift from Family Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

 

Alternative Sources

No-down and low-down Mortgages FHA Loans The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low- to moderate-income families qualify for mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are usually the going market rate, while the down payment requirements for an FHA loan are lower than conventional loans. The required down payment can be as low as 3 percent and the closing costs can be included in the mortgage amount.   VA Loans VA Loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA Loan, which usually offers a competitive fixed interest rate, no down payment and limited closing costs. While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.   Piggy-back Loans A second mortgage that closes with the first. Often the first mortgage is for 80% of the purchase price and the “piggyback” is for 10%. The home buyer covers the remaining 10% with their down payment. (Some lenders will write a second mortgage of 15% or even 20% of the purchase price.)   “Carry Back” Mortgage In the case of the seller “carrying back a second mortgage”, the seller loans you part of his or her equity. In this scenario, you would finance the majority of the loan with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a slightly higher interest rate on the loan financed by the seller.

 

Housing Finance Agencies These agencies offer special loan programs to low- and moderate-income buyers, buyers interested in rehabilitating a home in a targeted area, and other groups as defined by the agency. Working through a housing finance agency, you can receive a below market interest rate, down payment assistance and other incentives. The primary mission of Housing Finance Agencies is to boost home ownership in targeted areas, among first-time buyers and those with little money for down payments. Most of these non-profit agencies were funded with state government seed money and now operate independently.Click here for a list of Housing Finance Agencies.

 

Documenting Your Down PaymentDocumenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.Take extra care to document the sources for any monies to be used for the down payment or closing costs. Acceptable Down Payment & Closing Costs Sources Cash in a bank account Mutual funds / stocks / IRA / 401K Proceeds from the sale of another property Gift from an immediate relative

Click here to learn more about verifying your down payment, closing costs, income and debt.

Or visit http://www.americahomekryflorida.com

Rate Lock Advisory 2/17/2010

Wednesday’s bond market has opened in negative territory following slightly stronger than expected economic data and a positive open for stocks. The stock markets are extending yesterday’s afternoon rally, but to a much less degree. The Dow is currently up 44 points while the Nasdaq has gained 12 points. The bond market is currently down 9/32, but we may still see a slight improvement in this morning’s rates compared to yesterday’s morning pricing due to strength in bonds late yesterday.

This morning’s first piece of economic data was January’s Housing Starts. It revealed a larger than expected increase in starts and an upward revision to December’s starts, hinting that the housing sector may be stronger than thought. Rising starts of new homes indicates more sales or stronger levels of optimism by builders. But, this data is not considered to be highly important to the markets or to mortgage rates. It is the week’s least important data and has not ha d much of an influence on this morning’s mortgage pricing.

Also posted this morning was January’s Industrial Production data. It showed a 0.9% increase in output at U.S. factories, mines and utilities that exceeded forecasts. That indicates a level of manufacturing sector strength that is considered bad news for bonds and mortgage rates. However, this data is considered only moderately important, so it has not hurt mortgage rates this morning.

The third event of the day will be the release of the minutes from last FOMC meeting later today. Traders will be looking for any indication of the Fed’s next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. I am expecting some volatility in the markets after the minutes are released.

The Labor Department will post January’s Producer Price Index (PPI) early tomorrow morning. It measures inflationary pressures at the pro ducer level of the economy and is considered to be an important measurement of inflation. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show an increase of 0.8% in the overall reading and a 0.1% rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data.

Also tomorrow morning will be the release of the Leading Economic Indicators (LEI) for January. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that economic activity may rise in the near future. A smaller than expected rise would be good news for the bond market and mortgage rates.

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… Lock 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.

For more information or to apply now visit www.americahomekeyflorida.com