What is an Interest Only Loan? An interest-only loan program is a loan program that has an interest-only payment option. The loan can be a fixed rate or variable rate program. The interest only monthly payment is the amount of the interest rate times the original loan amount divided by twelve. No principal is paid, and the loan balance does not decrease. You may pay the interest only payment amount or pay the fully amortized payment amount. The interest only payment option is only available in the initial years of the loan term. Conforming loan programs have the interest only term for ten to fifteen years. Jumbo programs vary from three years up to ten years.
Interest only loan programs provide the same features as fixed and variable rate programs, and they additionally offer a lower payment option. With an interest only loan payment option, you pay only the interest portion of the payment but no principal.
Loan Program
Advantages
Disadvantages
Interest Only Programs
Several payment options
Lower monthly payments
Qualify for a higher loan amount
Qualify at the interest only payment
Option to pay the full principal and interest payment
Interest only payments for up to ten years
Higher rates
Principal loan balance will not decrease during the interest only payment period
Payment will be higher for the remaining term
An interest only loan can be more expensive compared to a fully amortized loan. Many lenders add a fee of one-quarter point for the interest only option.
Interest only payment options allow you to qualify at the starting interest only payment. This gives you more buying power and a lower monthly payment compared to an amortized loan.
You pay interest based on your principal balance. On an interest only loan, your principal balance does not decrease, therefore, you pay more interest with this option.
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Interst only calculator, Visit my website for great financial information. http://www.davidmennen.com/
A properly documented loan application makes your loan process go smoothly. This checklist will help you gather your paperwork.
Complete and sign the residential loan application, Form 1003, and the attached loan info sheet, credit authorization and fair lending notice. Page 5 of the application is a continuation page in case you need additional space for your assets or liabilities. If you make a mistake while filling out the application cross it out, and make a change. Do NOT use whiteout.
If you are salaried: provide W-2's for the previous two years and one month of pay-stubs. If you are self-employed, provide tax returns for the previous two years, including all schedules, and a YTD profit and loss statement. (Note: provide copies of all requested documents. Do not provide original documents.)
If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules.
To speed up the approval process, provide bank statements for the most recent three months, and recent statements for stock, mutual funds and IRA/401K accounts.
If you are requesting a cash out refinance, provide a letter explaining how you will use the refinance proceeds.
If applicable, provide a copy of your divorce decree and settlement agreement.
If you are NOT a US citizen, provide a copy of your green card (front & back). If you are NOT a permanent resident provide a copy of your H-1 or L-1 visa.
If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors.
If you are applying for a home equity line of credit or loan (second loan), also include your first mortgage note. (This should be with your closing loan documents.)
Get Qualified
Getting qualified before you apply for a loan can help you understand how much you can borrow.
When buying a home, you may be pre-qualified or pre-approved. You can be pre-qualified over the phone or on the Internet in a few minutes. Pre-qualification is not as useful as pre-approval. Pre-approval requires a more rigorous process, including verification of your credit, income, assets and liabilities. It is highly recommended that you be pre-approved before you start looking for a home.
Being pre-approved will:
Inform you of your maximum affordable home value, and save you from previewing properties outside your price range.
Put you in a stronger negotiating position with the seller, because the seller will know your loan is pre-approved.
Help you close quickly, since your loan is pre-approved.
Shop Loan Programs and Rates
What loan program is best for your situation? Lenders offer many different loan options:
Think about how long you plan to keep the loan. If you plan to sell your home in a few years, you may want to consider an adjustable rate or balloon loan. If you plan to keep your home for a longer time, you may want to consider a fixed rate loan.
Understand the relationship between rates and points. Points are considered prepaid interest and may be tax deductible. Each point is equal to 1 percent of the loan. For example 1 point on a $150,000 loan is $1,500. The more points you pay, the lower your rate.
Compare different loan programs. With so many programs to choose from, it's hard to figure out which program is best for you. Consult an experienced loan officer who can help you find a loan program that best fits your short- and long-term plans.
Obtain Loan Approval
Once your loan application has been received, we will start the loan approval process immediately. This involves verifying your:
Credit history
Employment history
Assets including your bank accounts, stocks, mutual fund and retirement accounts
Property value
Based on your specific situation, additional documents or verifications may be required.
To improve your chances of getting a loan approval:
Fill out the loan application completely.
Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
Do not make any major purchases. Do not buy a car, furniture or another house till your loan is closed.
Anything that causes your debts to increase might have an adverse affect on your current application.
Do not move money into your bank accounts unless it can be traced. If you are receiving money from friends, family or other relatives, please contact us.
Do not go out of town around the closing date. If you do plan to be out of town when your loan is expected to close, you may sign a power of attorney, to authorize another individual to sign on your behalf.
Notify your loan officer before applying for any other credit, including credit cards, personal loans or even with another mortgage company. Some loan programs have strict guidelines regarding your credit score. Credit inquiries may lower your credit score and may have an adverse affect on your loan approval.
Close the Loan
After your loan is approved, you will be required to sign the final loan documents. This will normally take place in the presence of a notary public. Be prepared to:
Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally NOT accepted.
Review the final loan documents. Make sure that the interest rate and loan terms are what you were promised. Also, verify the accuracy of the name and address on the loan documents.
Sign the loan documents. The notary will require that you have your picture ID with you. Some lenders also require to see your Social Security card.
Your loan will normally close shortly after you have signed the loan documents. On refinance and home equity loan transactions, federal law requires that you have three days to review the documents before your loan transaction can close. Purchase transactions do not have a three-day rescission period.
Contact me today to find out the right loan program for your needs!
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette, Crawfordsville, Monticello, and the rest of Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
If you are thinking of putting your house on the market this summer, you will find yourself competing with some tough company. Increased foreclosures, builders spec homes and fall out properties, as well as short sales are increasing inventories. With this in mind here are a few pointers to help you get your house sold:
Small Fixes Make a Big Impact.
Don't sell your property "as is". You can really stand out in a crowd just by completing minor repairs and improvements to your home and property. Faucet drips, re-grouting tile, touch up painting and freshening the flowerbeds all go a long way to get your home an offer.
Get Rid of Clutter.
Stash the family photos and memorabilia. You want potential buyers to see the home as "their" home not yours. It is to your advantage to let them move in emotionally. The best way to do this is to create a clean fresh space so they can use their imaginations.
Hire a Professional.
It is the wrong time and the wrong market to be going alone. You need to be able to access the client base that real estate professionals have at their fingertips. The Multiple Listing Service (MLS) makes your home available to all the members of that particular service, not just your listing agent and their company. Otherwise you will never have a crack at people who are relocation from outside your area. Without exception these folks come to look at homes during a very short time frame and are not familiar with the area. They will be working with professionals and you should too. A real estate professional will also assist you in pricing your home competitively which may be the difference between marketing your home and selling your home.
Find the First-time Buyers.
Year in, year out first-time homebuyers comprise 40% of the buyers in the market. In order to access the largest percentage of purchasers it is very advantageous to offer to pay closing costs or down payment assistance. In many cases you won't even have to come off of your asking price if you are willing to provide sellers concessions.
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
Even with all the challenges surrounding FHA and conventional lending there still are two 100% choices. Following is a terrific loan that is geographic specific:
USDA Rural Housing Guaranteed Loan
100% financing
No monthly mortgage insurance
Fixed rate
Property must be outside the city limits of Lafayette/West Lafayette-small towns such as Mulberry, Romney, Monticello, and Crawfordsville are included
No mortgage limits, however income guidelines based on family size apply. The good news is that these income limits are scheduled to increase at some point this fall
Alternate credit sources allowable
VA = A Great Loan For Veterans
100% financing
No monthly mortgage insurance
Fixed rate
No geographic limitations
Buyer must be on active duty, a Veteran, Reservist or in the National Guard
Alternate credit sources allowable
To determine whether any of these financing options are possibilities for your particular situation apply online at: www.DavidMennen.com
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
One question that I receive frequently these days is, "How's business?" The questioner is often surprised when I answer, "Great!" Most of the news is gloom and doom these days and it is true that over 260 lending institutions and private mortgage insurance companies have gone bankrupt. But there are still loans to be done and I feel that due to some of the choices we have made in the past few years Tippecanoe Mortgage has weathered the storm quite well. I like to think that a big part of our business has to do with the fact that a large percentage is comprised of repeat clients and referrals. I have always made it a priority to try and stay in touch with those we have assisted (newsletters such as this being one method) to let you all know what is happening in the markets. But one thing I pride myself on and try to instill in all the people who work for our company is that I believe if possible, everyone who wants to have their dream of home ownership realized should have the opportunity to make that happen. We have frequent instances in which we can obtain a loan for a client that other lenders have turned down. It's not that we have special programs that others don't but we do have tenacity. We have the ability to turn credit and employment inside out to see if a loan is possible. If we believe it is, we just don't give up. We know our programs and our investors about as well as anyone can, which means knowing the strengths and weaknesses of each. Every investor is different and we have tried to assemble a group that offers variety so if one doesn't work another will. I am proud to say that I have been able to assemble a team of loan originators who are excellent at analyzing a situation to see if a loan is possible (Be sure to read the comments of two of them in this publication). If we can't do a loan today we will try to give our clients the information that they can use to make them "Mortgage Ready" in the next few months to a year. I often tell people that it isn't always about the best rate (though we try to do that too) it is about common sense and a program that meets the client's needs. I am a lifelong resident of Lafayette. My business will be here when others pull out. It isn't just about making a quick buck when times are good. I care about the community and the people in it and will always endeavor to do the best job I can for those who come to Tippecanoe Mortgage for financing.
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
The second big change covered by the 2008 housing bill is the loss of down payment assistance from not-for-profit organizations to fund down payments for FHA loans. What this means to the consumer is that they will have to provide their own down payment money, or obtain gift money from family in order to fund their own down payments. In addition the required down payment on an FHA loan will increase to 3.5%. While this could not necessarily be construed as a positive development, down payment assistance will be available until September 30th of 2008 so consumers who wish to avail themselves of these programs should begin looking seriously to purchase as soon as possible. To recap on the benefits of the FHA loan:
Loan amounts up to $271,050
3.5% down payment required vs. 5.0% for conventional financing
Lower monthly mortgage insurance
Higher debt ratios than conventional mortgages
Broader credit score tolerances than conventional mortgages
Common sense underwriting
The ability of a parent or family member to be a non-occupying co-borrower
FHA still remains an outstanding loan product for many consumers. Past credit issues, no reserve requirements, and the new higher loan level make it the best loan for many borrowers, not just first-time homebuyers. The days of assuming that conventional lending is the best product for the high credit score buyer are over. In many cases due to changes in rules by Fannie Mae and Freddie Mac, FHA is less expensive for the buyer.
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
On July 30th President Bush signed into law a bill that is designed to assist the housing market in its recovery from the issues that have plagued it for the past two years.
The two biggest ramifications of this bill to consumers are the $7500 tax credit to first-time homebuyers and the elimination of down payment assistance as provided by not for profit organizations.
The tax credit is retroactive to April 8, 2008. It provides up to $7500 in tax credits for any consumer who hasn't owned a home in the past three years or who purchases a home between April 8, 2008 and July of 2009. This is an excellent opportunity for purchasers to invest in a home with extra benefits for doing so.
The tax credit is really structured as a no interest loan...to be paid back in 15 years. This tax credit is important and we suggest that if you are interested in buying a home or know someone who is-please give us a call. We have a business partner who is a great CPA and have arranged for him to give advice on how this affects YOU!
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
Rocketing gas prices this year have prompted the Internal Revenue Service to increase the standard mileage-rate deduction for qualifying business-related driving expenses by 8 cents per mile. This means that the rate in effect for the first half of 2008 (January 1 to June 30), which is 50.5 cents, will jump to 58.5 cents for the second half of the year (July 1 to December 31) - that's almost 16%!
Normally the IRS updates this rate only once a year in the fall for the next calendar year. That means this is the first special mid-year increase since 2005 when gasoline prices spiked after Hurricane Katrina. And while an additional 8 cents a mile may not seem like much, it can really add up over a six-month period, so it is definitely worth it to keep accurate records for your 2008 tax return. If you're not sure how this new deduction affects your business, give us a call. We work with some great CPAs and tax preparers in our community and will gladly refer you to someone you can trust.
Sky-high Airline Fees
The major airlines are doing anything they can to cut costs and increase revenue as they struggle with record jet fuel prices. Measures include massive lay-offs, decreasing the number of domestic and international flights, increasing airfares, and tacking on additional fees. You've probably heard about fees for second and even first checked bags by now, but did you know that some airlines have also increased fees for changing tickets and have now begun charging for those "free" tickets you thought you "earned" through your frequent-flyer programs?
The real problem, however, is that not all fees are equal, as different airlines have different fees for the exact same services. What this means is that shopping for the lowest flight is going to require a bit more investigative work than just finding and booking the lowest fare you can find on the Internet. Airlines don't calculate these costs in the "real price" of the advertised ticket. You'll have to find out for yourself and then consider the cost of all the "extras," including food, drinks, entertainment, and where you sit on the plane.
Don't Pass up on Free Money
Stock and bond funds in 401(k) accounts have taken a beating this quarter, leaving many investors worried about their long-term financial goals. A recent USA Today article, however, revealed something much more worrisome: almost half of all Americans 25 to 34 years-old are not saving for retirement at all - even those with employers who match contributions to their 401(k) or similar retirement plans.
If you fall into this category, here's something to consider: if you had $1,000 in a CD or bank account paying 7.2% (and good luck finding one that high), it would take 10 years to double your money. 10 years! However, if you deposit that same $1,000 in your employer's retirement plan, it could double overnight. For many plans, the employer will generally match about half of your total contributions for up to 6% of your salary. In other words, if you save 6%, your company will give you 3%. That's 9% of your salary saved in your first year alone. Talk to your company's human resources department to find out how to start a 401(k) plan.
ARM Yourself Against Higher Payments
According to CoreLogic, nearly 300,000 subprime adjustable-rate mortgages (ARMs) are scheduled to reset throughout the summer months of 2008. For many borrowers, this means higher monthly mortgage payments with a rate increase of 1 or 2 percentage points -- or more in some cases -- when their loan adjusts.
The peak month for the resetting of mortgages, however, will come this October when, according to Credit Suisse, more than $50 billion in mortgages are scheduled to adjust to a new rate for the first time. If you or someone you know has an ARM, be proactive. Find out how much your payments will increase before your loan adjusts this fall. Remember, while interest rate cuts from the Federal Reserve over the last year will definitely help some borrowers, many others could have trouble making increased monthly payments with food and fuel costs on the rise -- especially if the Fed begins increasing its key interest rates in order to fight inflation.
It's also important to note that credit guidelines have tightened dramatically in the last year or so, and it may be harder for you qualify for a fixed-rate product if we don't have enough time to address certain credit issues. So don't wait until October. Give us a call today. We'll review your adjustable-rate mortgage with you and see what's best for your individual goals and needs.
The #1 FHA Lender in Tippecanoe County - Since 2003!
P.S. If you are ready to talk with us right now, call 765-448-3200. If you miss us, please leave your name and number. We will get right back to you.
P.S.S. On my website I offer tons of free consumer reports to help renters, buyers, sellers and homeowners looking to refinance. To get your own FREE copy of these reports, just go to http://www.davidmennen.com/buyer_reports.html!
Local Mortgage services for Greater Lafayette, West Lafayette Indiana, Purdue, Tippecanoe County, and the surrounding areas. Local Service with internet rates! Free Quotes! Visit my website for great financial information. http://www.davidmennen.com/
Panting Like a Dog in August! Summer's on its way out... but before it leaves, it's sure to blast us with its rays of sun and those endless blue skies. That means, families and friends across the country will be getting in their last minute vacations and barbeques--while trying to beat the heat.
The articles below can help you make the most out of the last month of summer. The first article describes how you can stay cool while still saving on cooling costs. And for all those cookouts, barbeques, and get-togethers make sure you follow some simple tips for summer food safety. Finally, if you're planning a last-minute getaway before summer fizzles out, you'll want to follow the advice on where to send your mail while you're gone.
As always, please forward these tips on to your friends, coworkers and family members to help them make the most of their last month of summer. And if you need any help or advice, please call or email any time.
SAVE ON COOLING COSTS
Heating and air conditioning usually represent the biggest portion of home energy bills. As we head into the hottest part of the year, here are some ideas from author and home improvement expert Don Vandervort that will help you stay cool...and save money in the long run:
Get 'In the Zone': Creating heating and cooling zones that let parts of your house become warmer and cooler than other parts is a great way to save both energy and money. If your home has a ducted system and wasn't originally designed with a zone system in mind, you can have a professional install a series of motorized dampers in certain ducts that will create a zone effect.
Install Room Air-Conditioning Units: If your family spends a majority of time in one room or area of your home, like the family room or TV room, you can install a window unit or portable unit in that room and use that unit for part of the day instead of turning on your central air conditioning. You can always turn your central air conditioner on for those times of the day when your family is dispersed throughout the house.
Install Ceiling Fans: The latest technology means that ceiling fans achieve better air circulation and can now help you save as much as 30% on your energy bill. Be sure to look for the Energy Star designation for energy efficiency.
Inspect Your Ductwork: Recent research has shown that central heating and cooling systems that use ductwork can lose as much as 50% of their energy through leaks. It is important to have your ductwork inspected by a contractor every three years to make sure your system is operating at maximum efficiency.
Install Heat-Recovery Ventilators (HRVs): Not only do HRVs get rid of air contaminants like odors, dust, and mold, they also grab much of the cold or heat from the outgoing air and recycle it back into your home with the incoming fresh air. These units are especially helpful if your home is tightly sealed.
For even more great home tips and ways to save this summer season, visit www.hometips.com.
SUMMER FOOD SAFETY TIPS
Summer time is one of the best times of year to enjoy fresh fruits and vegetables, especially those that aren't available year-round. But recent salmonella outbreaks are an important reminder about handling food properly. The Centers for Disease Control (CDC) notes that there is no way for consumers to detect salmonella since it can't be smelled, tasted, or seen. Here's what they recommend to reduce the risk of exposure:
Wash, Wash, Wash
One of the best ways to protect yourself is to wash all produce, including organic produce, with cold running water. You should scrub your produce gently with a vegetable brush, or you can use your hands if you don't have a brush. Make sure you remove outer layers of cabbage and lettuce. And make sure you wash fruit, too, even if you don't eat the peel.
In addition, wash your hands with soap and water before handling food and also wash cutting boards, counters, and utensils to avoid cross-contamination. When you are preparing fresh vegetables, make sure you avoid any kind of contact with raw meat. And don't forget to refrigerate sliced up fruits and vegetables.
Make the Call
Salmonella poisoning typically resembles the flu, and symptoms usually appear 12 to 72 hours after infection and include abdominal cramps, headache, fever, diarrhea, nausea, and vomiting. If you suspect that you've contracted a case of salmonella poisoning, call your local health department. Reported cases help the CDC and FDA track the source of salmonella.
Think about what lands in your mailbox...bank statements, credit card bills, and maybe even DVD's. Where do they all go when you're gone? If you've been asking a nosy neighbor to pick up your mail--or worse, letting your mail pile up in the box--there's a better option and it's easier than ever!
Whether you're on vacation or an unexpected business trip, you can rest easy knowing your mail is safe and sound by asking the Post Office to suspend delivery while you're gone. They'll hold your mail from 3 to 30 days, and then resume normal delivery on the date you specify. It's convenient, easy to do, and most of all SAFE!
Make It Easier with the Internet
Now you can notify the Post Office to hold your mail in two minutes flat without even leaving your house. Just hit this link, and you can quickly fill out the form online: USPS Mail Hold. If your area isn't served online, simply call 1 800 ASK USPS (1 800 275 8777) and a representative can assist you. Then, have the time of your life...without worrying about your mail while you're gone!
The material contained in this newsletter has been prepared by an independent third-party provider. The material provided is for informational and educational purposes only and should not be construed as investment, financial, real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.
As your Trusted Advisor, I always want to make sure you are clear on all details of the home financing process. If you or someone you know are interested in purchasing or refinancing a home, give me a call today!
Mortgage Market Guide, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Market Guide, LLC does not grant to the recipient or distributor a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content except as otherwise provided in our Terms and Conditions of Membership, for any purpose.
"THE FIRST THING A HURDLER LEARNS...IS HOW TO FALL." Tonie Campbell, 1988 Olympic Bronze Medalist, 110m Hurdles. And that's a lesson Bonds and home loan rates have now learned, too. After finally leaping over a big technical hurdle called the 50-day Moving Average (a moving average is the average closing price of a financial instrument over a given time period) for the first time in weeks, Bonds and home loan rates then quickly plunged to some of their worst levels of the week.
So what happened? Bonds and home loan rates began the week facing a tough inflation hurdle, when the Producer Price Index (PPI) came in at the biggest year-over-year increase in 27 years. The Core PPI, which excludes volatile food and energy prices, also came in at the biggest year-over-year increase since 1991. However, the recent drop in oil prices kept the topic of inflation from being too high a hurdle for Bonds and home loan rates, and they managed to leap above the 50-Day Moving Average to some of their best levels in weeks on Wednesday.
However, the quick rise in Bond prices pushed them into "overbought" territory, which pulled the reins back on their momentum. Combining this with Friday's news that the Korea Development Bank may be interested in acquiring Lehman Brothers - which added confidence to the financial sector, causing traders to move money from Bonds into Stocks - caused Bonds and home loan rates to stumble and end the week only slightly improved than where they began.
WONDERING IF YOUR BANK DEPOSITS ARE FULLY PROTECTED? CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW TO MAKE SURE YOU AREN'T FACING ANY UNEXPECTED HURDLES!
Forecast for the Week
And if any improvement is in store, Bonds and home loan rates will again have several big obstacles to face this week. Right off the bat, we will get a read on the housing market as the Existing Home Sales report will be released on Monday followed by the New Home Sales Report on Tuesday. Also on Tuesday, the minutes of the Fed's latest meeting will be released, and it will be important to see if any comments about inflation will cause Bonds and home loan rates to trip up.
And more hurdles still will follow in the last half of the week. On Thursday, the Gross Domestic Product (GDP) Report will be released and on Friday we will get the details on the Fed's favorite gauge of inflation, the Core PCE (Personal Consumption Expenditure) data, from the Personal Income report. If either of these reports show inflation as a big barrier looming ahead, Bonds and home loan rates may not be able to regain any headway before the markets close early on Friday at 2:00 pm in advance of the Labor Day holiday weekend.
Remember when Bond prices move higher, home loan rates move lower...and vice versa. As you can see in the chart below, Bonds and home loan rates managed to stay above the 50-Day Moving Average line despite the losses they incurred. I will be watching to see if Bonds and home loan rates can surpass additional hurdles and regain some ground this week.
Chart: Fannie Mae 6.0% Mortgage Bond (Friday Aug 22, 2008)
The Mortgage Market View...
The Low Down on FDIC Insurance
After last month's failure of California-based IndyMac Bank, many people have wondered how safe their accounts really are. While the Federal Deposit Insurance Corp. (FDIC) guarantees most bank deposits, here are some important details to remember.
What types of accounts are covered?
The FDIC protects checking and savings accounts, certificates of deposits (CDs), Christmas club accounts, and money-market savings accounts. However, Stocks, Bonds, and mutual fund shares...even those purchased through an FDIC bank...are not protected.
What are the limits of FDIC insurance?
Bank accounts that have less than $100,000 in them and certain retirement accounts (IRAs held in CDs and money market accounts) that have less than $250,000 are fully protected by the FDIC even if the bank fails. If you want to exceed these account limits, you can keep your deposits fully protected by:
Dividing your money among several different bank companies. Note that dividing your money among several different branches of the same bank does not guarantee full protection.
If you prefer to keep your money in the same bank company, you can still be fully protected if you divide your money among various "ownership categories". Ownership categories include a personal account in your name, a personal account in your spouse's name, a joint account co-owned by you and someone else, and a trust account that names someone other than you as a beneficiary.
What are some common ways customers end up with uncovered deposits?
If you purchase a CD through an investment broker, this CD will often be placed with a bank at which you already have an account. If the CD and your other accounts exceed the $100,000 limit, you may not be full protected. Before purchasing CD's through a broker, ask where they will be placed.
In addition, keep track of the interest your accounts earn so you don't exceed the limits this way.
What will happen if your bank fails?
In most cases, depositors can fully access their funds by the next business day. Typically, failed banks are closed on Fridays, and funds are available by the following Monday. People can also usually use their ATM cards and write checks over that weekend as well. And for customers whose accounts exceeded the FDIC limit, all hope is not lost. Though this amount has varied, they can generally expect to recover 70 cents on the dollar of their uncovered funds after the bank's assets are sold.
The good news is that the vast majority of US banks are secure, but the above information will help you stay fully protected.
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of August 25 - August 29
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. August 25
10:00
Existing Home Sales
Jul
4.90M
5.00M
4.85M
Moderate
Tue. August 26
10:00
Consumer Confidence
Aug
53.0
56.9
51.9
Moderate
Tue. August 26
10:00
New Home Sales
Jul
525K
515K
503K
Moderate
Tue. August 26
02:00
FOMC Minutes
8/5
HIGH
Wed. August 27
08:30
Durable Goods Orders
Jul
0.1%
0.8%
Moderate
Wed. August 27
10:30
Crude Inventories
8/23
NA
9390K
Moderate
Thu. August 28
08:30
Gross Domestic Product (GDP)
Q2
2.7%
1.9%
Moderate
Thu. August 28
08:30
GDP Chain Deflator
Q2
1.1%
1.1%
HIGH
Thu. August 28
08:30
Jobless Claims (Initial)
8/23
NA
NA
Moderate
Fri. August 29
08:30
Personal Income
Jul
-0.1%
0.1%
Moderate
Fri. August 29
08:30
Personal Spending
Jul
0.3%
0.6%
Moderate
Fri. August 29
08:30
Personal Consumption Expenditures and Core PCE
YOY
NA
2.3%
HIGH
Fri. August 29
08:30
Personal Consumption Expenditures and Core PCE
Jul
NA
0.3%
HIGH
Fri. August 29
09:45
Chicago PMI
Aug
49.9
50.8
HIGH
Fri. August 29
10:00
Consumer Sentiment Index (UoM)
Aug
62.3
61.7
Moderate
The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors. As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you. In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: dmennen@tippecanoemortgage.com If you prefer to send your removal request by mail the address is: David R. Mennen Tippecanoe Mortgage, Inc. 1221 S. Creasy Ln., Suite J Lafayette, IN 47905
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If you are thinking of putting your house on the market this summer, you will find yourself competing with some tough company. Increased foreclosures, builders spec homes and fall out properties, as well as short sales are increasing inventories. With this in mind here are a few pointers to help you get your house sold:
Even with all the challenges surrounding FHA and conventional lending there still are two 100% choices. Following is a terrific loan that is geographic specific:
One question that I receive frequently these days is, "How's business?" The questioner is often surprised when I answer, "Great!" Most of the news is gloom and doom these days and it is true that over 260 lending institutions and private mortgage insurance companies have gone bankrupt. But there are still loans to be done and I feel that due to some of the choices we have made in the past few years Tippecanoe Mortgage has weathered the storm quite well. I like to think that a big part of our business has to do with the fact that a large percentage is comprised of repeat clients and referrals. I have always made it a priority to try and stay in touch with those we have assisted (newsletters such as this being one method) to let you all know what is happening in the markets. But one thing I pride myself on and try to instill in all the people who work for our company is that I believe if possible, everyone who wants to have their dream of home ownership realized should have the opportunity to make that happen. We have frequent instances in which we can obtain a loan for a client that other lenders have turned down. It's not that we have special programs that others don't but we do have tenacity. We have the ability to turn credit and employment inside out to see if a loan is possible. If we believe it is, we just don't give up. We know our programs and our investors about as well as anyone can, which means knowing the strengths and weaknesses of each. Every investor is different and we have tried to assemble a group that offers variety so if one doesn't work another will. I am proud to say that I have been able to assemble a team of loan originators who are excellent at analyzing a situation to see if a loan is possible (Be sure to read the comments of two of them in this publication). If we can't do a loan today we will try to give our clients the information that they can use to make them "Mortgage Ready" in the next few months to a year. I often tell people that it isn't always about the best rate (though we try to do that too) it is about common sense and a program that meets the client's needs. I am a lifelong resident of Lafayette. My business will be here when others pull out. It isn't just about making a quick buck when times are good. I care about the community and the people in it and will always endeavor to do the best job I can for those who come to Tippecanoe Mortgage for financing.
The second big change covered by the 2008 housing bill is the loss of down payment assistance from not-for-profit organizations to fund down payments for FHA loans. What this means to the consumer is that they will have to provide their own down payment money, or obtain gift money from family in order to fund their own down payments. In addition the required down payment on an FHA loan will increase to 3.5%. While this could not necessarily be construed as a positive development, down payment assistance will be available until September 30th of 2008 so consumers who wish to avail themselves of these programs should begin looking seriously to purchase as soon as possible. To recap on the 
Rocketing gas prices this year have prompted the Internal Revenue Service to increase the standard mileage-rate deduction for qualifying business-related driving expenses by 8 cents per mile. This means that the rate in effect for the first half of 2008 (January 1 to June 30), which is 50.5 cents, will jump to 58.5 cents for the second half of the year (July 1 to December 31) - that's almost 16%!
The major airlines are doing anything they can to cut costs and increase revenue as they struggle with record jet fuel prices. Measures include massive lay-offs, decreasing the number of domestic and international flights, increasing airfares, and tacking on additional fees. You've probably heard about fees for second and even first checked bags by now, but did you know that some airlines have also increased fees for changing tickets and have now begun charging for those "free" tickets you thought you "earned" through your frequent-flyer programs?
Stock and bond funds in 401(k) accounts have taken a beating this quarter, leaving many investors worried about their long-term financial goals. A recent USA Today article, however, revealed something much more worrisome: almost half of all Americans 25 to 34 years-old are not saving for retirement at all - even those with employers who match contributions to their 401(k) or similar retirement plans.
According to CoreLogic, nearly 300,000 subprime adjustable-rate mortgages (ARMs) are scheduled to reset throughout the summer months of 2008. For many borrowers, this means higher monthly mortgage payments with a rate increase of 1 or 2 percentage points -- or more in some cases -- when their loan adjusts.
Heating and air conditioning usually represent the biggest portion of home energy bills. As we head into the hottest part of the year, here are some ideas from author and home improvement expert Don Vandervort that will help you stay cool...and save money in the long run:
Summer time is one of the best times of year to enjoy fresh fruits and vegetables, especially those that aren't available year-round. But recent salmonella outbreaks are an important reminder about handling food properly. The Centers for Disease Control (CDC) notes that there is no way for consumers to detect salmonella since it can't be smelled, tasted, or seen. Here's what they recommend to reduce the risk of exposure:
Think about what lands in your mailbox...bank statements, credit card bills, and maybe even DVD's. Where do they all go when you're gone? If you've been asking a nosy neighbor to pick up your mail--or worse, letting your mail pile up in the box--there's a better option and it's easier than ever!
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