Virginia mortgage rates and industry news

I've received a lot emails and phone calls recently regarding mortgage companies going out of business, so I thought I would address the issue!

Here's some good advice from Ali Velshi:

 If your mortgage company goes out of business, your mortgage is still safe. ... The mortgage part of that business, the good mortgages get bought by another bank. So nothing will happen to you or your home at the moment.

All of this is having an effect on the price of your home or the ability of someone to buy your home because they can't get credit easily. But your home and your mortgage are not affected by the fact that your mortgage company may go out of business.

If you hear that your bank or mortgage company is going out of business, your obligation is to continue to pay your mortgage unless you get in writing that that situation is changed. Sometimes, your bank sells your mortgage to someone else. Then you follow those instructions.

But when you hear your company is in trouble, that doesn't give you the option of not paying your mortgage. So please continue to do that because if you don't pay your mortgage, it will affect your credit rating and that will affect your money -- your ability to raise money, to borrow money at a good interest rate.

THIS BRINGS US TO OUR NEXT ISSUE....

With a $700 Billion dollar national financial crisis, stemming mainly from the mortgage meltdown, how will it affect the way you borrow money for a home in the very near future?

As the government continues to "bail out" Wall Street, Fannie and Freddie, mortgage lenders will continue to increase credit standards and increase down payment requirements. 

Over the past twelve months alone, we've seen;  100% financing and stated income loans all but disappear, sub-prime loans vanish, and credit and equity standards go through the roof.

How should YOU react to all of this?  If I were interested in purchasing a home or refinancing an existing one, I would act now, rather than run the risk of not being able to get financing in the future.  That risk is VERY REAL.  I know many people out there are waiting for rates to drop another 1/2 percent, but that may not happen, and waiting for it to happen only decreases your chances of potentially getting financing in the future.  Rates are still historically low RIGHT NOW!  It's important to analyze your current situation and determine if now is the right time. 

Feel free to call or email to discuss your own personal situation and concerns.

Until then...hang in there!

Paul Thistle, President

Loan Planet

RATES FALL!    NOW WHAT?

Over the weekend, the Federal Government stepped in and seized control of floundering Fannie Mae and Freddie Mac, which in turn boosted the bond market and sent mortgage rates falling.  Just how far did rates fall?  Last week Loan Planet was quoting 6.00% for a 30 year fixed conforming loan amount with zero points.  Today, that same loan is just 5.50%!  Based on a $300,000 loan, the difference in payments is almost $100/mo!  That's huge! 

How long will it last?  That will most likely be determined by what the Federal Government plans to do with the two mortgage giants, and how lenders and investors react to the changes.  For now, the mortgage market has responded favorably to the take over and has boosted lender/investor confidence. 

Is it a good time to refinance?  If you have good credit and equity in your home, now is a fantastic time to refinance if your rate is at least a 3/8 percent higher than the current market.  If you're in an Adjustable Rate Mortgage (ARM) and want the stability of a fixed rate, pull the trigger and get that fixed rate loan NOW! 

What if I wait a little longer to refinance?  Rates may not get much lower, but waiting for rates to fall even further isn't a bad idea unless you:  A)  Have very little equity in your home and your property values are continuing to drop; or B)  Your credit is good, but it isn't improving, and your credit card and installment debt is rising.  WHY??  Right now, lenders are only concerned with two things....Home values and credit.  If either one is slipping away, act now rather than wishing you had.  Credit standards are becoming more stringent every week, stated income loans are almost gone, and sub-prime lending is a thing of the past.  Common sense underwriting no longer exists, so you must truly "fit" inside the box to get the best rates available.

Will this ease the pain of the current housing market crisis?  Yes and no.  Interest rates are again at historic lows which makes home ownership much more affordable.  Low rates will get many prospective buyers off the fence and out there looking!  Unfortunately, banks and lenders aren't exactly "giving" loans away to everyone with a pulse anymore.  New home buyers must have decent credit and in most cases, a down payment to get into a home, provided they still fit inside the ever-shrinking "box".

Will we go from crisis to boom?  Probably not.  Why?  The "boom" market was not only fueled by low interest rates, but also by weak credit standards and creative financing.  With credit standards at historic highs and creative financing a thing of the past, only those with good credit will find what they are looking for.   

What's the most "scarce" commodity right now?  Mortgage money.  If you are able to qualify for a lower rate or purchase that home you've had your eye on, I would start making plans to do it soon.  Home prices are still very affordable, rates are low, and lenders will only increase their credit standards until the meltdown is far behind us. 

Do you agree or disagree?    Id love to hear your opinion on the subject, and if you think the upcoming presidential election will have a big impact on the housing and mortgage market. 

As always, feel free to contact me for any mortgage related advice or new mortgage financing!

Sincerely,

Paul Thistle, President

www.loanplanet.net