Jim's Soapbox
(Arizona Real Estate Newsletter - September 08)
GOOD NEWS - It looks like the real estate market has taken another big step in the right direction. The rates on conforming loans have dropped significantly since last week, and many people will be able to take advantage. This rate drop should continue to increase Purchase volume and begin a potential Refinance mini-boom.
The goal of my newsletter is to provide educational material mixed with Jim's unsolicited yet fascinating opinion on the Arizona housing market and real estate ownership in general. If you would like me to address a specific topic in the future, please email it to me and I will respond in the following newsletter.
Fannie & Freddie
In case you haven't heard yet, the Federal Government took control of Fannie Mae & Freddie Mac over this past weekend. This has added an immediate sense of stability because future changes to their loan programs will have to go through congress now. The potential long term effects of this Government intervention are still uncertain, however, the short term effects have been amazing. RATES ARE LOWER.
Conforming 30 & 15 year fixed rates have fallen about .5% in the last 72 Hours. Good borrowers can get a 30 year fixed rate at 5.875% without paying any points (buy down). Obviously this is good news for people currently entertaining purchases - but is even BETTER news for people looking to refinance. If you have been holding off on refinancing because rates were not attractive in the mid 6's, now is a great time to pull the trigger.
ARMs, FHA, VA, and Jumbo rates have also fallen a little bit, but not as much as the fixed products under a $417,000 loan amount.
These windows of opportunity have been short lived over the last 24 months. It is a good time to get aggressive.
Split Mortgage Insurance - the way to save $$$
When there is a single lien against a property of over 80% to the value of that property, there is typically Mortgage Insurance. This is an actual insurance policy that you pay for on a monthly basis as part of your mortgage payment. The funny part is that it is not cheap, it can last for the first 10 years of your loan, and you cannot even write it off your taxes. The real funny part is that this insurance is not for you - it is actually insurance for the bank. While this is a great position for the bank, it is a non-benefit situation for you.
I work with a bank that offers a product called Split Mortgage Insurance (SMI). You can "buy down" the rate of your Mortgage Insurance on either a refinance or a purchase. The savings on the SMI is usually $50 per month per $100,000 financed. So if you have Mortgage Insurance on a $300,000 loan you can save roughly $150/month through SMI. It is not very expensive to buy it down and you usually break even on the investment within 12 months.
In a purchase, you can use seller concessions to buy down the SMI & in a refinance you can have your lender pay for it. It is one of the well kept secrets to help keep you monthly payment lower. If you currently have regular Mortgage Insurance please give me a call.
*** If you know someone who would benefit from my educational newsletters, please forward their name and email address to me and I will add them to our educational circle.
All Best!!
Jim
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
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