Hello, your Red Headed Mortgage Guy, Dave offering some interesting information.
Can you believe we are about to look back at the first month of 2009? 2009 without a doubt is going to be an interesting year in the real estate/mortgage industry.
There have been a lot of discussions about the changes that are here or on their way, especially in my area, mortgages. We've seen interest rates drop in the past month to the mid-4% area, only to retreat back near 5%. I've read articles that say we should be seeing 3.5% interest rates if banks were lending at the same margins they were a few years ago. REMEMBER, that was a few years ago, BEFORE the financial crisis. Banks are holding onto a little more money than they used to on loans to help them recover and cover any future losses. Even though we are in the midst of some of the lowest rates seen in the past 50 years, what effect will it have on buyers or refinances? Unlike last year, my phone is ringing again. I sit in a real estate office and agents have returned. There is a sense of activity and optimism in the air.
Let's grab hold of that optimism and run with it. Buyers will come out to see homes, and hopefully purchase them, IF we continue to fight the negativity that is being betrayed in the media.
We've got low rates and we will continue to see them for awhile. Home values have dropped, allowing first-time home buyers an opportunity to buy a home with a FIRST-TIME HOME BUYERS CREDIT . There are unforeseen things coming to help stimulate our economy.
Below is the proposal for the NEW 1st time home buyers credit in the stimulus package before Congress. The bill is supposed to be before the House today for a vote. Then it will go to the Senate later today or this weekend for vote.
The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit's expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009. The full credit is available to those making $75,000 or less ($150,000 for joint filers).
As you can see, increased by $500 and would NOT have to be repaid if they stay in home for more than three years. Here's the incentive for NEW buyers.
No word as to any other changes or as to the definition of a "NEW" buyer. Old definition was that the buyer could not have bought a home in the past three years.
There is also news that another package directed strictly towards housing issues is to follow in the near future. This might be part of Geithner's financial rescue plan. News updates to follow as they present themselves...
Agents this is an opportunity to call your former clients, ESPECIALLY if they bought a home from you in the past few years. Tell them there's a chance YOU can save them money, by having them call your local mortgage expert about refinancing. Just think what someone would say if you lead them TO a savings of a couple of hundred dollars a month by refinancin. Think about your client, taking care of them AFTER the sale, may bring you a referral down the road.
Some changes we have already seen in 2009:
- Someone buying a condo with less than a 25% down will have to pay a higher interest rate, because lenders are charging another .75 of a point on fees.
- Large banks are cutting wholesale lending - Chase & First Federal of California - just to name a few in January that have cutback. I work for a mortgage banker, so this does not affect us.
- Mortgage lenders will have to use a third party to order an appraisal. Putting a little bit of distance between the relationships that may have been developed. In other words, no more dodgy appraisals.
I think I'll stop there, writers cramps, and not to overkill, you the reader.
I'll be back next week with "What's happening in February 2009". Take care and HAPPY SELLING.
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