Most homeowner's that have an adjustable mortgage believe their loan can only adjust higher.  Fortunately, that isn't always true.  Adjustable Rate mortgage are comprised of two parts an "index" like the LIBOR and a "margin" the fixed portion added to the the index.

For a more detailed explanation on Lake Geneva Real Estate Mortgage click the link.

Lake Geneva Mortgage rates are low right now but pinning them down this week could be a challenge.  As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause mortgage rates in Wisconsin to get jumpy.

As Lake Geneva real estate mortgage rates change, so does the long-term cost of owning a home.  Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between "vacation days" and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

1. Conforming mortgage rates are based on the price of mortgage-backed bonds
2. Mortgage-backed bonds can't trade without a buyer and a seller at a specific price

So, as the week progresses and more traders leave for their respective "extended" 3-day weekends, there's fewer buyers and sellers left on Wall Street to connect for a trade.   As a result, Lake Geneva mortgage bond prices move across larger gaps than on a "normal" day which, in turn, translates into faster, larger changes in rates.

This phenomenon can be exaggerated during periods of economic uncertainty -- like what we're in now -- and, furthermore, there's a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week.  The presence of Labor Day just piles on.

Lake Geneva mortgage rates may rise this week, or they may fall.  Either way, if you have a chance to lock something favorable and within your budget, consider doing it.  Rates are at all-time lows and likely won't last.

Travis Egan

Lake Geneva Real Estate, Lender

If your adjustable rate Lake Geneva mortgage is due to adjust this year, don't go rushing to replace it just yet.  Your soon-to-adjust mortgage rate may actually go lower. It's related to the math behind the ARM.

Conventional, adjustable-rate mortgages share a common life cycle:

1. There's a "starter period" in which the interest rate remains fixed
2. There's an initial adjustment period after the starter period called the "first adjustment"
3. There's a subsequent annual adjustment until the loan's term expires -- usually at Year 30.

The starter period will vary from 1 to 10 years, but at the point of first adjustment, conventional ARMs become the same. A homeowner's new, adjusted mortgage rate is determined by the sum of some constant, and a variable.  The constant is most often 2.25% and the variable is most often the 12-month LIBOR.

As a formula, the math looks like this:

(Adjusted Mortgage Rates) = (12-Month LIBOR) + (2.250 Percent)

LIBOR is an acronym standing for London Interbank Offered Rate. It's the rate at which banks borrow money from each other and, lately, LIBOR has been low. As a result, adjusting mortgage rates have been low, too.

Last year, 5-year ARMs were adjusting to 6 percent or higher. Today, they're adjusting to 3.375%.

Based on the math, it may be wise to just let your ARM adjust this year.  Or, depending on how long you plan to stay in your home, consider a refinance to a new ARM.  Starter rates on today's adjustable rate mortgages are exceptionally low for Lake Geneva real estate, as are the rates for fixed rate loans.

Either way, talk to me or another Walworth State Bank loan officer about making a plan.  With Lake Geneva mortgage rates as low as they've ever been in history, homeowners have some interesting options.  Just don't wait too long. LIBOR -- and Delavan mortgage rates in general -- are known to change quickly.

Travis Egan

Lake Geneva Real Estate, Lender

If you plan to finance your Lake Geneva real estate home with a conforming interest only mortgage, get your loan application submitted no later than this Friday, June 18. 

Starting next week, Fannie Mae is clamping down on the popular loan product.

An "interest only" mortgage is exactly what its name implies -- a mortgage for which the monthly payments consist entirely of interest with no principal reduction.  Because there's no amortization, payments are less costly on a month-to-month basis.

For example, assuming principal + interest payments at 5 percent, a $250,000 mortgage carries a monthly payment of $1,342.  The payment on a comparable interest only mortgage, however, drops to $1,042.

That's a payment difference of $300 and the size of the cost savings, not surprisingly, is the biggest reason why Fannie Mae is making its changes.

In its official announcement, Fannie Mae says it wants the give the interest only option to "borrowers who are in a position to choose it as a financial management tool" rather than allowing homeowners use it as an affordability tool for their budgets.

Going forward, there are new minimum standards for interest only home loans.

• Applicants must have a 720 credit score or better
• Applicants must have at least 24 months of reserves
• The property type may not be a 2-unit, 3-unit or 4-unit
• The property must be a primary residence, or vacation home

Furthermore, only purchase and rate-and-term refinances are eligible.  Cash out refinances are prohibited.

Interest only Lake Geneva real estate home loans aren't for everyone, but if you plan to finance with a Fannie Mae mortgage and interest only is your preference, get your loan application submitted as soon as possible.  Starting Monday, approvals will be tougher to come by.

Travis Egan

Lake Geneva Real Estate, Lender

According to foreclosure-tracking firm RealtyTrac.com, bank repossessions reached record levels for the second straight month in May, topping 93,000 properties nationwide.

As compared to May 2009, all 50 states now show an increase in annual REO (Real Estate Owned) activity.

Data like that won't surprise today's active Lake Geneva real estate home buyers.  Foreclosed homes are prevalent, available and accounted for one-third of all home resales made in April. 

Furthermore, total foreclosure actions -- the sum of REO, default notices, and foreclosure auctions in May -- topped 300,000 for the 15th straight month.

Foreclosures remain a huge influence on the housing market.

However, two interesting trends emerged in the data:

1. 9 of the top 10 metro areas for foreclosure posted annual activity decreases
2. Each of the top 4 states for Foreclosures per Household posted annual activity decreases

We can infer, therefore, that foreclosure activity may be in permanent decline in the areas hardest hit through 2007, 2008, and 2009.  In 2010, the data shows, foreclosures are waning.

This is reason for optimism -- especially as FHA delinquencies slow nationwide.  As fewer homeowners go delinquent, the pace of foreclosures will slow further and that should help boost home values on every block in the country.

If you've been considered bank-owned homes for your own purchase, give a look at the RealtyTrac foreclosure report.  It's provides insight on a state-by-state level, and in the nation's largest metropolitan areas. 

 Then, to complement your research, talk to your real estate about the foreclosure market and what opportunities may exist.  If you don't have a fantastic Lake Geneva real estate agent you should call me so I can introduce you to one.  Competition for bank-owned homes can be fierce at times, but there's plenty of "deals" out there.

You just have to know where to look.

Travis Egan

Lake Geneva Real Estate, Lender

As I have been writing about recently interest rates have hit a low in the last few days we haven't seen in some time.  Many people are considering refinancing their Lake Geneva mortgages.  The questions emerges, is now the right time to do this?  The linked article and video will give you an insight into whether this makes sense or not.

Check out this informtion about Lake Geneva real estate & refinancing. 

Travis Egan

Home values rose in March, according to the Federal Home Finance Agency's most recent Home Price Index.  Values were reported higher by 0.3 percent, on average, from February.

We use the phrase "on average" because the Home Price Index is broad-reaching, national housing statistic.  It ignores the dynamics of neighborhood real estate markets as well as citywide markets like Lake Geneva real estate , too.

Instead, the Home Price Index focuses on state and regional statistics.

For example, in March 2010 as compared to February:

• Values in the East South Central region rose 2.5%
• Values in the Mountain states rose 1.1%
• Values in the Middle Atlantic states fell 1.0%

Of course, none of this data is especially helpful for today's home buyers and sellers.

Real estate is a local phenomenon that can't be summarized by state or region.  What matters most to buyers and sellers is the economics of a neighborhood and that level of granularity can't be served up by a national housing report like the Home Price Index.

The Home Price Index data is additionally unhelpful to buyers and sellers in that it reports on a 2-month delay.

In other words, Home Price Index is not even a fair reflection of today's market -- it highlights the real estate market as it existed 60 days ago.

So why is the Home Price Index even published?  Because government, business and banks rely on the reports.  As a national indicator, the Home Price Index helps governments make policy, businesses make decisions, and banks make guidelines.  This, in turn, trickles down to Main Street where it impacts every one of us -- and eventually influences Lake Geneva real estate.

Since peaking in April 2007, the Home Price Index is off 13.44 percent.

Travis Egan

Lake Geneva Real Estate, Lender

The national foreclosure rate is finally falling.

According to foreclosure-tracking firm RealtyTrac.com, the number of foreclosure notices dropped 2 percent between April 2009 and April 2010.

2 percent may not seem like much, but it's the first time in the history of the RealtyTrac report that the annual foreclosure rate has dropped.

To be sure, foreclosure rates remain elevated -- more than 300,000 were reported last month, but default notices appear to be approaching a plateau.

The RealtyTrac report shows some other interesting statistics, too:

• 6 states accounted for more than half of April's bank repossessions nationwide
• For the 40th month in a row, Nevada topped the nation's foreclosure rate
• Foreclosure rates dropped in both California and Arizona, 2 foreclosure hot-spots through 2009

The good news for housing doesn't stop there.  9 of the top 10 leading metropolitan areas for foreclosure-related activity showed a drop in annual activity.  Only Reno, Nevada showed an increase.

Buying distressed homes is big business, according to the National Association of Realtors®, accounting for 35 percent of all home resales with a typical discount ranging near 15 percent on value.

But with the discount comes some caution. You need to know how buying a foreclosed can be different from buying a non-foreclosed home.

For example, distressed properties are often sold as-is and may have defects that render them "un-lendable."  Secondly, "quick closings" aren't usually possible with bank-owned homes -- you're often at the bank's schedule and mercy.

And, lastly, not all foreclosed homes are searchable online.  You'll usually find more stock if you work with a real estate agent versus searching online.

The RealtyTrac foreclosure report is thorough and can help you gauge what's happening on a state-by-state level, and in the nation's largest metropolitan areas.  Once you've done your research, talk to local real estate agent about what to do next.  If you don't have a great Lake Geneva real estate agent call me & I'll intorduce you to one.

There's still good deals in the foreclosure market - you just have to know where to find them.

Travis Egan

Lake Geneva Real Estate, Lender

The national foreclosure rate is finally falling.

According to foreclosure-tracking firm RealtyTrac.com, the number of foreclosure notices dropped 2 percent between April 2009 and April 2010.

2 percent may not seem like much, but it's the first time in the history of the RealtyTrac report that the annual foreclosure rate has dropped.

To be sure, foreclosure rates remain elevated -- more than 300,000 were reported last month, but default notices appear to be approaching a plateau.

The RealtyTrac report shows some other interesting statistics, too:

• 6 states accounted for more than half of April's bank repossessions nationwide
• For the 40th month in a row, Nevada topped the nation's foreclosure rate
• Foreclosure rates dropped in both California and Arizona, 2 foreclosure hot-spots through 2009

The good news for housing doesn't stop there.  9 of the top 10 leading metropolitan areas for foreclosure-related activity showed a drop in annual activity.  Only Reno, Nevada showed an increase.

Buying distressed homes is big business, according to the National Association of Realtors®, accounting for 35 percent of all home resales with a typical discount ranging near 15 percent on value.

But with the discount comes some caution. You need to know how buying a foreclosed can be different from buying a non-foreclosed home.

For example, distressed properties are often sold as-is and may have defects that render them "un-lendable."  Secondly, "quick closings" aren't usually possible with bank-owned homes -- you're often at the bank's schedule and mercy.

And, lastly, not all foreclosed homes are searchable online.  You'll usually find more stock if you work with a real estate agent versus searching online.

The RealtyTrac foreclosure report is thorough and can help you gauge what's happening on a state-by-state level, and in the nation's largest metropolitan areas.  Once you've done your research, talk to local real estate agent about what to do next.  If you don't have a great Lake Geneva real estate agent call me & I'll intorduce you to one.

There's still good deals in the foreclosure market - you just have to know where to find them.

Travis Egan

Lake Geneva Real Estate, Lender

Each week, government-led Freddie Mac publishes a weekly mortgage rate survey based on data from 125 banks across the country (Walworth State Bank is not one of them).  According to this week's results, the relative rate of a 5-year ARM in Lake Geneva, Wisconsin is extremely low versus its 30-year fixed-rate cousin.

Consider this comparison:

• In April 2009, the two products ran neck-and-neck with respect to rates
• In April 2010, the two products are split by 0.99 percent

On a $200,000 home loan, that's a difference of $117 per month to a mortgage payment.

Adjustable-rate mortgages aren't suitable for everyone, but they can be a terrific fit given your individual circumstance.  For example, any one of the following scenarios could warrant a 5-year ARM:

1. Buying a home with an intent to sell within 5 years
2. Currently financed with a 30-year fixed mortgage with plans to sell within 5 years
3. Interested in low payments and comfortable with longer-term interest rate and payment uncertainty

Additionally, homeowners with existing ARMs may want to refinance into a brand-new ARM, if only to extend the initial change date on the current note.

Before opting an ARM or a fixed, speak with your loan officer about how adjustable-rate mortgages work, and what longer-term risks may exist.  The savings may be tempting, but there's more to consider than just the payment.

Travis Egan Asst Vice President   Walworth State Bank 1221 South Shore Drive Delavan, Wisconsin, 53115 US	Work: 262-728-6209 Mobile: 262-745-5055 tegan@walworthbank.com www.walworthbank.com
Lender, Lake Geneva Real Estate