The Weather and Mortgage Rates

The kids are back in school and you are wondering what to do with yourself. It could be the perfect time to downsize if your kids are off to college or move into something bigger if your kids are just starting school. If you are thinking about refinancing or moving into a new home make sure you take advantage of $250 off closing costs by coming to me for your mortgage. This is the best deal in town coming from the Best Bank in Town.

Great Afternoon!
I want to open this email by answering a question that I have been getting about my emails. At least a dozen people have asked me who my mailing list consists of. Bankers, lawyers, doctors, realtors, builders, brokers, CPAs, CFPs, college students, investors, business owners, sales people, and my Mom. If I left you out, I apologize. If you know someone that wants to be added, just let me know. There are currently about 130 people on my list but my goal is to have at least 300 by the end of the year. I started posting my emails on a blog. Check it out at Jmassachi.blogspot.com. Start some discussion and let me know what you think. Feedback is appreciated.

I trust that everyone had a great 3 day (or more) weekend doing something fun. On Saturday I went to the ECU vs. Virginia Tech football game in Charlotte. That was exciting. Next week ECU plays West Virginia so I am not going to get too arrogant about my Pirates yet. I love this time of year! Now onto the show…

The Weather and Mortgage Rates
The big news over the past few days (politics aside) is Hurricane Gustav. It was downgraded this morning to a tropical storm before it did much damage to any major US cities. The news of the downgrade is causing oil prices to tumble and the stock market to jump. Lately when we see the stock market go up we see bonds go down which affects mortgage rates.

There is a common misconception in the mortgage market. At least once a day I get asked the question: Well Jon, the Federal Reserve dropped rates to 2% so why are mortgage rates so much higher? The assumption is that I am being greedy and taking a 4% spread. Wrong.

Mortgage rates are closely tied to the 10 year treasury bond. The average life of a mortgage is 10-12 years so even a 30 year mortgage will be tied closer to the 10 year note than the 30 year note. That brings up the next question: But Jon, the 10 year bond is trading around 3.8% so why do I have to pay 6% for a mortgage? Plain and simple, unless you have a printing press in your basement (which I am not suggesting), you are a higher risk than the federal government. So not that anyone cares how the weather affects your mortgage rates, but at least now you know.

Federal Legislation
As promised in my last email, I am going to talk about the new federal legislation passed governing mortgages and the economy also known as the Housing and Economic Recovery Act of 2008 (HERA). This legislation was enacted when signed by the President on July 30th. HERA is designed to help the housing market recover from the current nationwide downturn in housing prices by focusing on higher loan limits and tougher lending practices. The Federal Housing Administration (FHA) is increasing their limits, especially for people in trouble.

The new FHA program is called Hope for Homeowners and it adds $300 billion in FHA mortgage insurance authority. Under the program, principal and interest for eligible borrowers is reduced by refinancing into FHA insured loans. Another change to the FHA guidelines are that the borrower must have at least 3.5% of the purchase price/value in it themselves. This limits down payment assistance programs and gift funds. It used to be 3% so there is a .5% increase of required money down.

One of the main points in the HERA is tax incentives. There is a $7,500 tax credit for first time homebuyers available until April 1, 2009. It is retroactive so if you bought a home after April 1, 2008 you are eligible for that tax credit. Ask your tax advisor.
Much of the legislation talks about disclosing information to borrowers. Everyone should know what they are getting before they sign on the dotted line. I did not go into much detail but attached to this email is a document from the Mortgage Bankers Association that tells you everything you want to know about HERA.

Financial Update
In other news, no banks have fallen in the past week. Could this mean we have seen a bottom in the market? It depends what you consider the bottom. I think there will be plenty more small or local banks across the country that will be taken over or will fail before we realize that the bottom has come and gone. The dollar is starting to rise, commodities are dropping, and the stock market has been on an uptrend over the past few weeks. The housing market in the Charlotte area really has not even seen a significant drop in housing values, the least in the country infact. That is good news for us.

Mortgage rates are lower right now than they have been for months. If you are looking to refinance with a solid bank at a great rate and low closing costs BB&T Home Mortgage is the way to go. We have a program for every kind of buyer 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.

Thank you for your attention!

Your non-weather-predicting mortgage advisor
Jon Massachi

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