Lee Zacharczyk's Blog

Homes & Money Newsletter 4th Quart. 2008

Lee Zacharczyk (Guaranteed Rate) — Sat, 22 Nov 2008 09:43:47 -0800

Lee Zacharczyk
VP / Sr. Loan Officer
Atlantic Home Loans
Phone: (732) 577-8170
Fax: 732-577-8169
lz@atlantichomeloans.com

Mortgage News
What an Obama Administration
Means to Your Mortgage

The debates are done, the election is over, and on January 20, 2009, Barack Obama will be inaugurated as President of the United States. No matter where you fall in the political spectrum, no one knows for sure exactly what this will mean to the future of our country. With this in mind, let's put all politics aside, and take a closer look at Obama's plan for our future. And since a home is still the biggest, most important investment you'll ever make, we'll focus the limited space of this short article on Obama's basic housing measures.

More Economic Stimulus - Since trouble in the economy won't wait until January 20th, plans for another economic stimulus package are already in the works, so we might even see this happen, in one form or another, before Obama takes office.

Obama has also discussed a housing stimulus as well, to stem the tide of foreclosures, including a temporary 90-day freeze on foreclosures, as well as measures to address the demand side of the housing issue. This package includes $25 billion in state fiscal relief, which Mortgage Law Central says will help avoid "painful property tax increases."

Obama also wants to "aggressively and comprehensively" implement the recently-passed rescue plan and the Hope for Homeowners Act. This means the Treasury, HUD, Fannie Mae and Freddie Mac, and all of the banks and loan servicers who benefit from the rescue bill will continue to coordinate broad mortgage restructurings and loan modifications for struggling homeowners. No one knows for sure exactly how this will be implemented or what it even looks like yet, but we'll keep you updated as the details are released.

Reformed Bankruptcy Laws - Obama has promised to repeal the 2005 bankruptcy bill. A controversial measure, this will allow judges to alter mortgage terms during a bankruptcy, providing more protection for struggling homeowners.

New Mortgage Interest Tax Credit - Obama is expected to create a 10% universal mortgage interest credit for those who don't currently itemize. This means about $500 in savings for 10 million American homeowners.

Protection Against Mortgage Fraud and Predatory Lending - During the campaign, Obama blamed the financial crisis on lax government regulations, so look for tougher regulations, new criminal penalties for mortgage fraud violators, more funding for enforcement programs, more detailed loan disclosure laws, new counseling programs and other consumer protections, including a new Home Obligation Made Explicit (HOME) score (kind of like a new APR calculation) to help borrowers better understand and compare mortgage costs during the mortgage process.

This will go a long way in protecting new home buyers from the opportunists that have given good mortgage professionals like us a bad name in the last few years. And since so much of our business depends on referrals from satisfied clients, the good news is a lot of these people are now out of business. We hope that any new measures introduced by the Obama administration will help keep a new breed of copycats from invading our industry as the real estate market begins to change for the better in 2009 and beyond. From now until the end of the year, you can expect volatility to continue in the financial and credit markets. This means mortgage rates, too, so if you or anyone you know is looking to buy or refinance a home, give us a call. We monitor the performance of mortgage-backed securities on a daily basis, which allows our clients to capitalize on changes that will help lock in the best rate for their individual goals and needs. Also, if you'd like to discuss any of these or other changes that could affect your mortgage, don't hesitate to give us a call.

If you know anyone who is looking to buy, sell or refinance a home, please forward their name and telephone number to us. We will happily provide the same high level of service that we have provided to you. The greatest compliment you could possibly give us is the referral of your friends and family.

Finance News
Four Tips for Saving on Child Care Costs

According to the National Association of Child Care Resource and Referral Agencies, full-time child care can reach up to $14,000 a year for a single infant. And while child care is the last thing you want to be cheap about, there are a few proven and practical ways to limit your costs, which can really help in today's tough economy.

Let Uncle Sam Chip In - Working parents can claim up to $3,000 for one child and up to $6,000 for two or more children on their 2008 income taxes for qualified child care expenses. Ask your tax professional about the Child and Dependent Care Credit to see if you qualify for this valuable credit.

It's important to note that this credit can be reduced if you have a dependent-care flexible spending account (FSA) through your employer. These special accounts allow employees to set aside pretax dollars up to $5,000 for qualified expenses. Find out if your employer offers this program and discuss the benefits of each option with your tax preparer. If you need a referral to a qualified tax professional you can trust, don't hesitate to give us a call.

Don't Discount Your Employer - Be sure to ask your employer about any other child care programs it might offer. It's not uncommon for companies to negotiate discounts in your area that can offset expenses and travel time. Also, find out if your employer offers flex time or telecommuting, even on a short-term or part-time basis.

Schedule for Success and Savings - For many couples, a simple change in schedule can cut down on the amount of child care you need each week. While having one spouse work the day shift and the other work the night shift might eliminate child care altogether, this could be very stressful on your relationship. But what if you just altered your schedules slightly? For example, if one spouse works from 7 am to 3 pm and the other works 10 am to 6 pm, this would cut down on child care and might not affect your time together as much. For couples who work together or even close together, working the same schedule could be more beneficial to child care costs and your marriage.

The right school program combined with the right work schedule can significantly reduce your child care needs. Some public schools offer pre-kindergarten programs, often for free, and many schools also offer before- and after-school care for older children at much lower rates than child care professionals.

Share with Friends And Family - While finding a relative to help out would be ideal, hiring a nanny with a few relatives or a few good friends is also a great option. This will allow you to share the cost of child care and pay less individually for each child.

Creative Cuisine
Perfect Prime Rib

This is a foolproof way to make a PERFECT prime rib. Paramount to this venture is that you follow the directions to the tee.

- 1 standing rib roast of either prime or choice quality (size will depend on the number of guests - consult your butcher on this)
- Herbs d' Provence
- Extra virgin olive oil
- Kosher salt and freshly ground black pepper

In a bowl, mix together the ingredients for the marinade. Allow the rib roast to come to room temperature. In order to make it happen with a piece of meat this size, you must take it out of the refrigerator from the moment you wake up the morning of.

Preheat oven to 375 degrees.

Brush the top of the roast with olive oil and season with salt, pepper and Herbs d' Provence.

Put roast in oven and leave alone for one hour.

At the end of the hour turn off heat but DO NOT OPEN THE OVEN DOOR.

When guests arrive or whenever it's appropriate, turn the oven back on to 375 degrees. From the time you turn oven back on, roast 35 minutes for rare, 40 minutes for medium rare, 45 minutes for medium and 50 minutes for well done.

Note: the roast must sit for at least 2 hours before turning the oven back on. It can, however, sit longer.

Allow roast to rest for 15-20 minutes before serving.

Street Smarts
The Gift that Keeps on Taking

Gift cards have become extremely popular. In fact, the variety of cards offered and the sheer convenience of these little plastic gems have created a new global culture of gift-giving that few could ever have anticipated. The National Retailers Federation estimates that a total of $97 billion in gift cards - $26.3 billion during the holidays alone - were purchased in the US last year. This year, however, experts say that this hassle-free holiday gift may have met its match: a tough economy.

Earlier this year, when Sharper Image declared bankruptcy, nearly $20 million in gift cards were instantly voided, forcing shoppers to suddenly reconsider the merits of the gift card. Remember, unlike banks accounts, gift cards are not protected by the FDIC or anyone, and there is no guarantee that you can redeem the value of the card if a company goes under. And with other major retailers filing for bankruptcy protection recently (Circuit City, Mervyns, and Linens-N-Things, to name a few) giving gift cards this year could be as risky as playing the stock market.

The good news is, with US retail sales expected to shrink this holiday season, retailers will be working hard to get their share of your holiday budget, no matter how large or small. This means major sales and deals that could make going to the mall this year a much better option than simply handing out gift cards anyway. Because of these deals, what a $50 gift card would have purchased last year could turn into a much more valuable and memorable gift for everyone on your list.

Either way, if you receive any gift cards this year, or you still have a few you haven't used yet, be sure to redeem them right away.

Home News
Renovation Mistakes in a Buyers' Market

With home prices on the decline, some homeowners may be tempted to renovate their home to make it more desirable or valuable to potential buyers. But there are certain renovations that can actually decrease the value of your home - even in an up market.

If you're trying to sell your home in the next 6 to 18 months, be extremely discerning about your choices, get advice from an expert real estate agent and appraiser before you begin any major renovations, and avoid these costly projects in today's buyers' market:

An in-ground swimming pool or hot tub - In certain parts of the country, yes, a pool or hot tub can increase your home's value. But, for many potential buyers with young children, these items are a true liability and will only decrease your home's value - not to mention the built-in maintenance and energy expenses that come along with them. If you're looking to sell your home in today's tougher market, you simply can't afford to isolate a large number of potential buyers.

New additions - Of course, home additions add valuable square footage, but one false move and your addition can be an eyesore that could hurt your home's value, even when the market turns. A well-designed new addition is time-consuming and expensive and needs to be properly planned and executed. If you're looking to sell your home anytime soon, save yourself the hassle. With just a portion of what it would cost to add a new wing, you could upgrade your kitchen cabinets, appliances, and counter tops and get far more bang for your buck.

Conversions - Yes, with so much competition, it's important that your home stands out from the crowd, but following today's trends could cost you big tomorrow. Right now, space for a home office or a recreation room might be trendy, but converting a den or your garage into one can be a costly mistake. A good real estate agent can achieve the same effect by defining a space through staging. If you want to upgrade your garage, a new door is much cheaper and adds valuable curb appeal.

Facts and Figures
Companies with Unusual Perks

Chesapeake Energy Corp. - Employees can earn their scuba diving certificates on the company's tab on-site at Chesapeake's Olympic-sized pool.

Amgen Biotechnical Company - This company provides an in-house florist, photo developer and a cafeteria that fixes up family-sized meals to bring home.

Sprint - Sprint buys houses that are available for employee purchase. If an employee buys a Sprint home, Sprint will give them back 2% of the sale price.

Microsoft - As a part of the company's campus expansion, employees are allowed to design their own work stations. For example, the Zune team has a deejay booth in their meeting room.

eBay - Stressful day? eBay's office in San Francisco offers a room filled with yoga mats, pillows, and meditation music so employees can take a break from a hectic day in the office.

Healthways - The company's headquarters provides walking trails, easy-to-locate stairways and bikes for rent to their employees to stay active and exercise.

General Mills - Employees returning from maternity leave are phased back to work on a part-time basis for eight weeks to help ease the transition.

Camden Property Trust - Employees who live in one of the firm's 180 apartment complexes, receive a 20% discount on their rent.

EOG Resources - This company will match their employees' contributions to charities dollar-for-dollar, up to $60,000.

Google - Google employees receive $1,000 towards their purchase of a hybrid or electric car.

Table of Contents

· Mortgage News
· Finance News
· Creative Cuisine
· Street Smarts
· Home News
· Facts and Figures
· Five Quick Tips
· Did You Know?
· Quote of the Day
· Special Offer
· Trivia Challenge
· Book Review

Did You Know?

There are more than 1,450 recorded species of edible insects.

The AAA Foundation for Traffic Safety recommends these tips for staying safe on the road this holiday season.

Tip 1: Offer to be the designated driver.

Tip 2: Drive with extra attention.

Tip 3: Stay calm: Forget about the annoyances.

Tip 4: Stay alert in parking lots.

Tip 5: Call Tipsy Tow 800-400-4222 (12-31 to 01-01).

Quote of the Day

"Eighty percent of success is showing up."

- Woody Allen

Special Offer

Trivia Challenge

How many degrees does a bowling pin need to tilt in order to fall?

90
28.5
45
7.5

Call (732) 577-8170 or email us at lz@atlantichomeloans.com with the correct answer, and your name will be entered into our quarterly drawing to win dinner and movie tickets for two!

Book Review

Brain Rules: 12 Principles to Surviving and Thriving at Work, Home, and School
by Dr. John Medina

Developmental molecular biologist John Medina is the first to admit that we don't know much about how our brains work. But, he says, our ability to solve problems, learn from mistakes and create alliances has been the key to our survival and how we took over the world. In his best-selling book, Brain Rules, the Seattle doctor lays out 12 overarching principles, or rules, that he believes can be applied to our daily lives to help us to better teach, learn, conduct business and parent.

Brain Rules: 12 Principles to Surviving and Thriving at Work, Home, and School is available at Amazon.com.

About the author:
Dr. John Medina is a developmental molecular biologist and research consultant. He is an affiliate Professor of Bioengineering at the University of Washington School of Medicine. He is also the director of the Brain Center for Applied Learning Research at Seattle Pacific University. To learn more, visit www.brainrules.net.

Thank You

As always, we wish to thank our clients who have been kind enough to refer business to us. We appreciate the opportunity to provide excellent service to your family, friends, and co-workers.

What's happening to the Economy??

Lee Zacharczyk (Guaranteed Rate) — Wed, 08 Oct 2008 12:16:40 -0700

"With less equity, people cannot borrow in order to spend. We are a nation of borrowers. Shut off the borrowing and spending is not far behind."

I have learned through my 41 years that when things go bad, I mean really bad, it's usually not from one mistake or one error in judgment, but a combination of errors that cause things to collapse. This is true with most everything in life...including today's economic crisis. In order to understand today's crisis we have to go back in time to the 1930's.

In the nineteenth and early twentieth centuries, bankers and brokers were sometimes indistinguishable. Then, in the Great Depression after 1929, Congress examined the mixing of the "commercial" and "investment" banking industries that occurred in the 1920's. Hearings revealed conflicts of interest and fraud in some banking institutions' securities activities. A formidable barrier to the mixing of these activities was then set up by the "Glass Steagall Act" sponsored by Senator Carter Glass of Lynchburg, Virginia and Congressman Henry Steagall of Alabama, a former secretary of the treasury.

Officially known as the Banking Act of 1933, it introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Company for insuring bank deposits. The result was a seperation of lending and investment banking. In 1999 under intense lobbying pressure from Citibank and other commercial banks, congress repealed the act in overwhelming fashion. President Clinton signed the repeal on November 12, 1999 and thus began the beginning of the mortgage and real estate bubble.

With fewer restrictions now influencing bankers, large banks began buying up large numbers of mortgages and selling them for investment purposes into blocks known as "mortgage backed securities". Due to the influence of investment banking now permiating what were historically primarily conservative lending institutions, the type of securities that would be sold became riskier and riskier. This happened due to competition keeping rates charged for riskier mortgages low and a desire for more product loosening guidelines that had historically been more restrictive. In a word, banks/lenders started speculating more than ever in an attempt to keep up with their competition.

At a time when all of this was happening, interest rates were at historic lows. As such, lending ran wild in the early 2000's with most mortgage bankers showing record profits as more and more people were able to "qualify" for loans due to the low rates and less restrictive guidelines.

Well, for a few years that worked great. Then two things started happening at the same time that dramatically affected the price of houses.

Empty nest baby boomers started to sell their homes and move into adult communities.
People who had barely qualified for "interest only" or short term adjustable rate mortgages started seeing there payments go up and they could no longer afford what they could barely afford in the first place

This lead to at first a gradual and then more steady decline in housing values (more supply leads to lower prices). With housing values falling, lenders started to become more restrictive with there guidelines as they realized that the equity in homes, always thought to be guaranteed, was in fact in serious jeopardy. As more and more restrictions went into mortgage banking, fewer and fewer people could qualify for homes causing less demand to bring down prices even further. With less equity, people cannot borrow in order to spend. We are a nation of borrowers. Shut off the borrowing and spending is not far behind.

The housing and banking issues became the catalyst for the downturn in the broader economy. It is yet to be seen what effect the recent downturn in oil prices and the government bailout/rescue passed last week will have, however, until housing prices stabilize, we are in for a bumpy ride.

If you have any questions on this or your own personal mortgage situation, please feel free to call me at 732-577-8170

Lee Zacharczyk / Atlantic Home Loans

The Impact of Fannie Mae and Freddie Mac

Lee Zacharczyk (Guaranteed Rate) — Mon, 15 Sep 2008 16:00:04 -0700

Hold on for the ride!

Lee Zacharczyk (Guaranteed Rate) — Mon, 15 Sep 2008 15:34:19 -0700

WHAT A MONDAY!

If you've been sleeping today, you may not have heard that Lehman Brothers, the world

renowned financial services company founded in 1850 has announced its intention to seek chapter

11 bankruptcy protection, listing debts of 613 Billion. This comes as Merrill Lynch announced

that it would be bought by Bank of America for about $28.00 per share, a $12.00 a share premium

over its current trading value but still well below the $90.00 per share that it was trading at just last

year. This news has sent stocks reeling as the Dow was down over 250 points in early trading this

morning.

In a flight to quality, fixed income securities have been pushed significantly lower. The yield on

the 10 year treasury was down to 3.53% in early morning trading and mortgage backed securities

were following suit.

All of this translates to lower mortgage rates in the short term. If you have been waiting for

the right time to refinance, your window of opportunity may be at hand. If you are currently

in an adjustable mortgage or you have a fixed rate higher than 6% then please feel free to

contact me today to discuss your current situation. Now may be the best time of the year to

lock in a low fixed rate!

Lee Zacharczyk

Office: 732-577-8170

Cell: 908-400-6022

New Jersey Rates

Lee Zacharczyk (Guaranteed Rate) — Sat, 31 May 2008 12:34:56 -0700

Falling oil prices combined with a better than expected revised 1st quarter Gross Domestic Product (GDP) numbers helped push the 10 year treasury to over 4% this week. The commerce department revised it's 1st quarter number on GDP to an annual growth rate of .9% from the .6% previously estimated. This helped alleviate concerns of a broader slow down in the economy and pushed fixed income securities (including mortgages) higher.

Please feel free to call with any questions or any clients you have that may need a mortgage.

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New Jersey Mortgage Rates

Lee Zacharczyk (Guaranteed Rate) — Sun, 27 Apr 2008 15:15:52 -0700

Fewer jobless claims, a weaker dollar, and rising oil prices have all lead to speculation this week that the Fed's montage of rate cuts may be at an end. This has caused treasuries and mortgage backs to rise in anticipation of concerns for inflationary pressures that are already starting to hit the market. The concern is that if the Fed decides inflation is now the priority and starts raising rates, this could put even more pressure on an already severely hampered housing market. Fed chairman Ben Bernake will certainly be earning his keep this summer.

Please feel free to call with any questions regarding rates, pre-qualifying or using creative financing to qualify your "tough" buyers.

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Atlantic Home Loans | 20 Chapin Road, Unit 1013A | Pine Brook | NJ | 07058

New Jersey Mortgage Rates

Lee Zacharczyk (Guaranteed Rate) — Sat, 19 Apr 2008 10:29:24 -0700

The decline of housing values may very well be far from over as major banks continue to limit the opportunities for buying homes with no income verification. With the deterioration of credit markets has come a reduced appetite for higher risk loans such as those where income is stated but not proven. As customers are forced more and more into disclosure of income in order to qualify for a mortgage, housing values will have no choice to decline. It is estimated that we could see another 10-20% drop before the ratio of average income and average housing prices falls in line based upon standard down payment calculations.

Please contact me if you have any questions or I can be of service to any of your clients this week.

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New Jersey Rates...

Lee Zacharczyk (Guaranteed Rate) — Sun, 09 Mar 2008 14:00:05 -0700

It was a case of good news/bad news this week as both Fannie Mae and the FHA announced on Friday it's new highly anticipated loan limits broken out by county. The FNMA county limits can be found at http://www.ofheo.gov/media/hpi/AREA_LIST.pdf and he FHA limits at https://entp.hud.gov/idapp/html/hicostlook.cfm. As good as this seemed for the consumer, the market had a slightly different opinion, at least initially. Even though treasuries rallied at the end of the week on unfavorable economic data, mortgage backed securities, which directly affect the mortgage rates that banks charge, had a different take. Investors chose to sell off and wait out the potential effect this unprecedented increase in conforming limits would have on the broader mortgage market. This caused rates to jump a bit...at least for now .

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When should you refinance...?

Lee Zacharczyk (Guaranteed Rate) — Tue, 12 Feb 2008 11:42:53 -0800

"You should manage your decision to refinance just like you would manage and investment...

not with speculation, but with sound financial principals."

With mortgage rates declining, inquiries about refinancing are on the rise. Having been in the mortgage business for 15 years, I've been through a number of these markets and the questions never change: Should I refinance? Should I take a shorter term? Should I roll my first and second mortgage together into one loan? Isn't it true that rates should drop 2% before I consider refinancing? The confusion is not entirely unjustified. From an outsider's perspective, it can seem like a lot to digest.

In order to understand refinancing, it helps to have a basic understanding of how the mortgage interest rate market works. One of the most common misconceptions about mortgage rates is that the Federal Reserve controls them. That is not entirely true. To be clear, first mortgage rates are tied directly to the "Mortgage Backed Securities Market". This market is actively traded on Wall Street, just like the bond or stock market. This means that it is anticipatory in nature and trying to predict what will happen is like trying to predict where Microsoft stock will be trading next week. It's just not possible unless you get lucky. The traders, who actively trade in mortgages, take into account any and all daily economic activity that may play a role in determining the direction of the economy. This means that they are also considering any future potential Fed moves as well. In fact, it is not uncommon to see the Fed cut the fed funds and discount rates and the mortgage market actually experience a rise in rates. This usually happens if the market expects the cuts to be final or to stimulate the economy sufficiently enough. Good news for the economy generally will send mortgage and bond rates up and bad news will generally send rates down.

Understanding that trying to predict the direction of rates is risky is crucial to understanding the right time to refinance. You should manage your decision to refinance just like you would manage any investment; not with speculation, but with sound financial principals. What this means is that you should be not so concerned about where rates are going, since as we discussed there is no way to know, but rather with comparing today's opportunities with your current set of circumstances.

Three major things you want to consider when contemplating your decision are: 1) How long do you expect to own your home? 2) Where are interest rates from an historical perspective? 3) How long do you expect to be in this mortgage, i.e. will you be able to pay it off early? By combining the answers to these questions with the monetary advantage you would gain, you will be able to make an appropriate decision.

Your monetary advantage is defined as how much money will you be saving (either monthly or overall on the mortgage vs. what are the closing costs that you are required to pay in order to refinance). Closing costs will vary by state but in New Jersey there is a basic rule or thumb that you can use to figure them out. It costs around $1800.00 to refinance the first $100,000.00 and around $300.00 more for every additional $100,000.00 refinanced. If you take cash out these numbers may increase slightly due to increased title costs. They also do not include points. When considering whether to refinance you always want to consider your current set of circumstances to the current 0 point rate. Therefore, points should not be applicable for your decision. If you choose to pay them in order to reduce the rate, that is certainly an option, but it should be a matter for another discussion.

Now that we have the basis for making a decision, we need to put it all together and make the right choice about your circumstances. A good rule to follow is, lock in your savings as the market goes down. Just as an investor, would sell stock gradually in a rising market to recoup their initial investment, you should view refinancing as stakes to put in the ground as the interest rates drop. Since we never know where the market will turn, you may need to refinance 2 or even 3 times in order to catch the bottom of a market. If it ends up costing you $7000.00 in order to save $100,000.00 you are still $93,000.00 ahead!

Lock in your savings every time you can. As the market goes down, if you don't lock in your savings, you are back to speculating. Once you do that you may as well be gambling. In this case though, you are gambling with what usually will translate to tens of thousands, or even hundreds of thousands of dollars over time. If you would not normally gamble that kind of money in Atlantic City, why would you chose to gamble it on the markets?

Since there are a number of variables to consider regarding your actual monetary advantage such as interest tax write offs, future value of money, as well as pre-payment possibilities and savings rates, you should consult with a professional to lay out the details and opportunities available for your particular set of circumstances. With rates being so low, now may be a good time to act. Refinancing should not be a guessing game about rates, but a tool in your investment portfolio that can help put you way ahead for your financial future.

If you are considering whether refinancing is right for you please call me. I will be happy to analyze your situation and see if it makes sense. I can be reached daily at732-577-8170 or by e-mail at LZ@AtlanticHomeLoans.com.

Lee Zacharczyk

Atlantic Home Loans

732-577-8170

New Jersey Rates

Lee Zacharczyk (Guaranteed Rate) — Sat, 09 Feb 2008 10:37:03 -0800

The market ended with no change in mortgage rates over last week after a bit of a roller coaster in bonds dominated the weeks activities. Bonds and mortgage backs rebounded yesterday from losses earlier in the week, on comments by the San Francisco Fed president saying that the economy will be "anemic" the first half of the year due to housing and financial market turmoil. Bad news about the economy sends fixed income securities (including mortgages) lower on flight to quality by the market.

Please feel free to call with any questions or if you have clients that need creative solutions to their financing needs.

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Atlantic Home Loans | 20 Chapin Road, Unit 1013A | Pine Brook | NJ | 07058

New Jersey Rates

Lee Zacharczyk (Guaranteed Rate) — Sat, 02 Feb 2008 10:52:23 -0800

For the first time in 52 months the economy lost jobs this last month. This was countered by a report showing manufacturing actually expanding. It is this mixed picture that continues to muddy the economic waters and not allow investors to gain any certainty about where interest rates are going next. If you have clients that believe rates are going lower before they go higher, let them know there is no certainty about anything in this market.

In addition, now is a GREAT time to refinance. Call me and I can make the whole process an easy one. We are licensed in 11 states!

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Atlantic Home Loans | 20 Chapin Road, Unit 1013A | Pine Brook | NJ | 07058

New Jersey Rates

Lee Zacharczyk (Guaranteed Rate) — Sun, 06 Jan 2008 09:39:52 -0800

Well the new year brings with it continued uncertainty about future fed policies along signs of a slowing economy. The combination of a slowing manufacturing numbers and higher unemployemnt last week sent rates to their lowest levels over 2 years. July of 2005 was the last time 30 year mortgage rates got down to below 6% with no points and it's happened twice in the last 30 days. Although we are not in a recession by the official definition (2 straight quarters of economic contraction) the Fed certaintly has it's hands full over the coming months with how to handle the slow down in the face of inflationary pressure that has been rearing its ugly head.

Now is a great time to buy a home or refinance. Please call if you have any questions or are interested in possibly lowering your own mortgage payment! Thanks again and HAPPY NEW YEAR!

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New Jersey Rates

Lee Zacharczyk (Guaranteed Rate) — Sun, 16 Dec 2007 10:04:11 -0800

What a difference a week makes! As most investors try to untangle the web of economic activity painting a mixed picture on the economy, the Fed this week announced it would inject more than 40 Billion into an already struggling banking system. The Fed is giving beleaguered banks the opportunity to access funds without having to borrow money directly from the Fed at the usual short-term discount rate, which stands at 4.75 percent. This comes after the markets reacted negatively to what it perceived as a paltry 1/4 point cut in the Federal Funds and Discount rates the beginning of the week. All of this, however was overshadowed at the end of the week when the consumer price index rose a higher than expected .8% in November. This represented the largest jump since September of 2005 and has raised fears that inflation may be on the rise.

What does this all mean for mortgage rates? Well, it means the Fed has a quandary on it's hands. They will be hard pressed to continue lowering rates in the face of inflationary pressure, however, an already struggling housing market is starting to put pressure on the broader economy. Ben Bernake will be earning his stripes over the next 3-6 months.

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Atlantic Home Loans | 20 Chapin Road, Unit 1013A | Pine Brook | NJ | 07058

MORTGAGE RATES DROP BELOW 6%!!

Lee Zacharczyk (Guaranteed Rate) — Sat, 01 Dec 2007 09:44:02 -0800

We got great news this week as the Fed indicated it would continue to remain flexible when it come to using rate cuts to help offset the drag that the struggling housing markent and mortgage crisis is having on the broader economy.

There simply has not been a better time to buy a home in YEARS since we now have declining housing prices combined with 30 year fixed mortgage rates below 6%! Please feel free to contact me if you have any questions or need a pre-qualification. I would be happy to help.

Atlantic Home Loans | 20 Chapin Road, Unit 1013A | Pine Brook | NJ | 07058

How mortgages rates are determined...

Lee Zacharczyk (Guaranteed Rate) — Wed, 21 Nov 2007 12:13:18 -0800

I wanted to follow up to clarify some things pertaining to my last blog and answer some questions that were asked about the way mortgage rates work.

In response to my last blog I had gotten some questions regarding the nature of mortgage rates and why the margin on rates has adjusted considerably compared to the banks Prime Lending Rate over the last few years. The questions were good ones and also demonstrate a common misconception of the public that mortgage rates are tied to the Prime Lending rate of the bank. This is not the case.

When a mortgage is originated, the note that is signed at closing (or obligation for repayment) is bundled with other like notes and sold off in the secondary market. This is known as a mortgage backed security. Essentially, investors pay a premium up front for the privilege of having a rate of return on their investment over time. This mortgage backed security is traded, like any other investment, on Wall Street. There is a market for mortgage backs since some investors may be willing to pay a higher premium than others for the same rate of interest return over time. Most banks are not funding these loans themselves, but selling the funding off to the highest bidder.

From an investors perspective, this security represents a rate of return with some degree of risk involved. Since the basis for all rates of return on wall street are US Treasuries (guaranteed by the US government), this "risk" based security needs to demonstrate a higher return than the T-bill. The spread between the rate of returns of mortgage backs and T-bills has widened, as I expressed in my previous blog, since there is now a higher perceived risk in mortgages than there has historically been.

The prime lending rate on the other hand is what is effected by the Fed when it moves rates. If we get a 1/4 point drop in the Fed Funds or discount rate (the two rates the Fed controls that effect the rate at which banks borrow money), the banks will pass that drop onto there clients by lowering their prime rate 1/4%. Generally, any loans that the bank will be funding directly, such as home equity lines of credit, credit cards, personal and business loans, will be tied to the banks prime lending rate. Since first mortgages are generally not funded directly by the bank they are not tied to prime.

I hope that this explanation helps. Please let me know if I can be of further assistance and have a very Happy Thanksgiving!

What's happening with Mortgage Rates!!??

Lee Zacharczyk (Guaranteed Rate) — Wed, 21 Nov 2007 09:45:54 -0800

I wanted to give everyone an update on recent events in the bond market. Mortgage rates are determined by investors in FNMA and FHLMC mortgage bonds. These bonds trade in their own market and are separate from US Treasury securities. Over the past few years, credit losses on mortgage securities have been very low. As a result, prices for mortgage securities have been highly correlated to US Treasuries. Over the past few weeks, mortgage prices and US Treasury prices have not been correlated. This is referred to as "spread widening." That means the yield required by mortgage investors becomes relatively higher than the yield required by US Treasury Investors. For example, today the 10 year US Treasury Note is up 16/32 nds or .5 points. Mortgage securities are up 1/32 or .03125 points. If the markets were normal, mortgage securities would be up 8/32 nds or .25 points.

Why is this happening? There are several reasons but the biggest reason is that FNMA and FHLMC are experiencing unprecedented losses in their portfolio. FNMA's stock price has declined 60% over the past 60 days. FNMA and FHLMC are the two largest buyers of mortgages. They also borrow money to finance the loans they purchase. Most of the money that FNMA/FHLMC borrows is from foreign investors. With mounting losses, those investors are demanding higher yields to compensate for risk. As a result, FNMA and FHLMC are not willing to pay as much for the mortgages they buy. This is keeping mortgage yields relatively high.

Prices on other mortgages are also widening. GNMA mortgage securities which accept FHA and VA loans are only up 4/32nds. They should be up 9/32nds with the 10 Year US Treasury up 16/32nds.

In this environment, it is difficult to figure out what mortgage securities will do next. It may be helpful to let your customers know that the Federal Reserve and the US Treasury market are separate from the mortgage bond market. Hopefully this will allow you to address expectations when they read that "rates" are falling.

Please feel free to contact me with questions that you may have pertaining to this or any other aspect of mortgage banking.

I also want to wish everyone a VERY HAPPY AND HEALTHY THANKSGIVING!!

Lee

New Jersey Rates

Lee Zacharczyk (Guaranteed Rate) — Sat, 17 Nov 2007 08:02:35 -0800

Treasuries yields dropped this week as the Consumer Price Index rose in line with expectations. This helped offset any fears that the market may have had regarding an expectation of additional Fed rate cuts in the months ahead. As a result, the market continue to build in a level of expectation that there will be at least one additional cut at the next meeting.

Despite this, mortgage rates continue to flounder. The market is viewing mortgage backs with a bit more distain since major banks have continued to threaten write downs of their mortgage portfolios. This has widened the gap between treasuries and most mortgage backed securities. The T-bill is, at least in the short term, losing its effectiveness at being a strong indicator of the direction of mortgage rates.

Please feel free to contact me if you have any questions. I would also be happy to speak with any of your clients about our terrific mortgage options.

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Atlantic Home Loans | 20 Chapin Road, Unit 1013A | Pine Brook | NJ | 07058

Please help!

Lee Zacharczyk (Guaranteed Rate) — Thu, 15 Nov 2007 11:32:29 -0800

If you live in New Jersey this affects you!

There is an amendment being put before the state legislators that would allow local municipalities to enact their own local version of the REALTY TRANSFER TAX that is already required to be paid to the state upon the sale of a home. This tax would be IN ADDITION to to what the state government already requires. This is a bad idea on so many levels. Especially now with depreciating home prices, this could have a dramatic effect on homeowners who carry a large portion of their total assets in their home. Taking more money out of this economy is NOT the best solution for an already struggling state. Please connect to the link below and sign the petition. Tell your local legislators that new taxes are NOT what New Jersey needs right now. In addition, send this to everyone you know who lives in New Jersey. Together, we can make a difference!

Thank you!

Link: http://www.njhometax.com/Home.html

Lee Zacharczyk
VP/Branch Manager
Atlantic Home Loans
732-577-8170-Office
732-577-8169-Fax
LZ@AtlanticHomeLoans.com