Do you know someone who rents? Tell them about the $8,000 tax credit available to first time homebuyers* before it expires on November 30th! BB&T offers great programs and loans with little money down and no PMI for qualified borrowers. This is the best deal in town coming from the Best Bank in Town.
*The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Consult your tax advisor.
I haven't been sending my letter out lately but people were asking me for it so back by popular demand…
Its getting to be that time of year again when the summer is winding down, kids are shopping for school supplies, college students are moving into their dorms, and parents are ready for a nap. This is always an interesting time of year for a few reasons:
-We are moving out of summer and into fall meaning hurricane season, cooler weather, and less vacations.
-A "regular" schedule (whatever that means).
-FOOTBALL SEASON!!!
I can't speak for everyone, but at least two out of three reasons apply to most of you.
If you know anyone who wants to be added or removed from this letter please let me know.
Now onto the show…
Cash for Clunkers and Possible Paradigm Shift
The latest of the government's spending of the "bailout" money is the Cash for Clunkers program. Within the first six days of this program which started three weeks ago, the first one billion dollars was used. New legislation had to be passed for another two billion dollars to be spent. There are three ways of looking at this. The first way is the obvious… Why is the government spending OUR money for people to buy a new car? The second way is considering that this will help the environment by saving on gas mileage. The third way of thinking about it is that this could actually be the only program that has put money into the economy where people can actually see it making a difference on a personal level. "Main Street, not Wall Street."
Lets look deeper at all three ways of looking at this. First of all, yes, the government is spending about $4,500 of your money to help people buy cars. There is no way around that. Just like with everything else we have seen over the past year or so, this is part of the trillion dollar bail out package that was passed last year. Your money has already been spent. The second way of looking at this is helping the environment. While I agree to an extent that gas mileage could be better and that we need to get off of our foreign dependence on oil, this is not the way to do it. Sorry folks, two MPG isn’t going to save the polar bears either. Viewpoint number three is the most viable of the three that I listed in simplified terms. The car companies have sold more cars in the past three weeks than they sold in the previous three months. Why not if you can negotiate the price of the car, then when you are all finished STILL get another $4,500 off? There is no risk or assumed responsibility to the consumer (only to the dealership). We are lessening the supply of cars in the market, selling newer, safer, cleaner cars, and stimulating local economies.
With every good idea there is always going to be a negative to it. By default, if we are getting rid of these cars that are the "clunkers" then we are actually causing inflation in the auto industry. The cars that would have been traded will now not appear on car lots, therefore hurting those with lower incomes who would have under regular circumstances, purchased this inventory. Now they are forced to buy cars that were not part of the clunker program which, in reality, are going to be more expensive. Another negative effect that this will have is that future sales of cars are being diminished. This is just like back when the auto companies decided 0% financing was a good idea, and they sold lots of cars doing it. When they tried to raise interest rates, even to 1.9%, people rejected it expecting that the rate would eventually drop again, which it did. Demand goes down, supply goes up, prices are forced to drop again. That is basic economics and possible foreshadowing of a paradigm change not only in the auto industry but in other aspects of the economy as well. To add another factor, if people are driving newer cars we have to assume that they will last longer than older cars will meaning the car companies may not sell another car to that person for another year after they normally would have if the owner drove their old car to the end of the car's useful life. This program is a short term program showing short term results but it will take years to see the true long term value, if any.
Financial Update
In other news, Colonial Bank fell to the FDIC last week. The main benefactor of this collapse is BB&T. BB&T took Colonial over from the FDIC late Friday afternoon. This will go down as the largest bank failure of 2009 but at the same time, it will create an asset for BB&T making us the 9th largest financial institution in the country.
Over the past few weeks I have heard talk about the "recession being over" and the "bull market returning". While I am hopeful that we have seen the last of this economic disaster and financial crisis, I am not confident that we have seen the end of whatever it is that we are currently classified as. As the fed keeps printing more money we can assume that inflation will kick in. As that happens and jobs are still being lost, it is going to be a real issue creating stagflation. The federal reserve met last week and decided to keep interest rates at 0%-.25% but analysts say that they could start to rise again as early as January. Keep your eyes open for any drastic changes in the bond market. The stock market has been on an upswing lately hopefully signifying that we saw the bottom already. One important thing to watch is the fed said they would continue to purchase treasuries through October so that leaves a question as to what happens after that.
Mortgage rates are lower right now than they have been for a few weeks. They are nowhere near the fifty-year lows they were at six months ago yet still much lower than they were 12 months ago. If you are looking to refinance with a solid bank, BB&T Home Mortgage is the way to go. Even in this environment of tougher lending practices, money is readily available for qualified borrowers whether you are a first time homebuyer or retired and looking for a vacation home. Remember, I am not simply a loan officer at a big bank, I am a Mortgage Advisor looking out for the people who trust me to do so.
Please forward this message to people you know, maybe they want to be added to my mailing list. If you would like to be removed please let me know. You can also visit my blog at www.Jmassachi.Blogspot.com to see this and other letters and comment and discuss them.
Thank you for your attention!
Your waiting-for-football-season mortgage advisor
Jon's Mortgage Spotlight
Prequalification
Getting prequalified is the first step to purchasing a new home. Most people don't know how much house they can afford. Getting prequalified is the best way to do that so your realtor doesn't waste your time by showing you houses that you can't get. The process takes just a few minutes and can be done over the phone, in person, or by email. Ask me how!
Jon Massachi
Mortgage Advisor
Branch Banking and Trust
Office: 704-243-7590
Cell: 704-650-9568
Fax: 704-843-1863
JMassachi@BBandT.com
BBT.com/mlo/JMassachi
JMassachi.blogspot.com
