Real Estate and Real Life in the Wine Country

Mr. Bernanke is a very busy man nowadays. Working weekends to make the J.P. Morgan Chase & Co/Bear Stearns Cos deal happen and a 1/4 point rate cut this Sunday is unprecedented. And then yesterday an other rate cut for the short-term interest rates with the 0.75 percent cut. This means that the federal funds rate, which banks charge each other for loans, has been lowered six straight times over six months, driving it down to 2.25 percent from 5.25 percent.

The Fed not only pushed its benchmark rate to the lowest point since late 2004, it also cut the discount rate by 0.75 percent to 2.5 percent. That’s the rate the Fed charges banks and brokers that borrow directly from it.

Some of us have worries about inflation and rightfully so. However, all and all for now, this is good news. And the reason to mention the news above is that some people who did sign an adjustable rate mortgage that will reset this year might be better of that they expect.

Should you be in that situation, take our your papers and look how the mortgage will change, based upon which index/rate. Especially if you house does not have the same market value as is had when you bought it and refinancing will be difficult. Look at what your mortgage will do, it might be not that bad…

Should you have difficulties finding the info in the note, don’t hesitate to call your Realtor or you lender and have him/her help you. They will be happy to do so. (I will…)

Have a great day, it might turn out better than you think!

Mirjam (mirjam@c21alliance.com)

On the bottom of this page (scroll down) you will find the announcement for the Smart Home Choices Workshop.  If you are interested in real estate and want to know more about the financial aspect, you are cordially invited to come. The program is going to be great! You can register online.
Somewhere I read the 70% of all the people that went into foreclosure never talked to their lender to see whether they could arrange a solution. It’s the fear, the shame, name it. Whatever it is, I think it’s also because of lack of knowledge. - The Smart Home Choices Seminar will be educational!  However, there is a company that is there to help home owners  to keep their homes. Lowering the interest rates is not the only solution.

This company is called HOPE, it stands for Homeownership Preservation. It’s good to know about companies like these. In our area, Redwood Credit Union will alway refer you to HOPE.

Foreclosure is not a good solution, it’s the last solution. There are many alternatives that should be tried first.

Of course, should you have any questions, don’t hesitate to contact Denise or me.

  Have a great day!

    Mirjam

So you got pre-approved for a loan a few months ago and are home shopping on your leisure. Inventory is high (this morning we had 3182 active listings in Sonoma County), you have reason to take your time. Just a warning: it might be good to talk to your lender again and find out whether the loan program you got pre-approved on is still available under the same terms. In talking to lenders (Denise is on a trip this week) I do hear over and over again that a lot of programs are not available anymore.

Banks are tightening lending standards for home buyers, even those with good credit, loan officers report the increase in stricter mortgage underwriting standards  due to economic uncertainty, reduced secondary market liquidity, and less of an appetite for risk, according to the survey.

Even for prime mortgages, the terms are tightened in the prior three months for people with the best credit records. That was up from about 15 percent in the previous survey in July. About 60 percent of banks said they tightened standards on home mortgages classified as “nontraditional,” up from 40 percent in the previous survey. Should you be in the market for a new home, make sure you do your homework. Stay in touch with your lender and even more, stay in touch with your Realtor. They are there to help you. 

But don’t worry, mortgage rates are still very reasonable and there are still plenty of programs available, just make sure you are educated about today’s market.

Have a great day!

   Mirjam

    As Realtors we might have the tendency to have our clients decide on the loan product they choose and rightfully so. However, for buyers it might be wise to discuss the loan product you choose with your Realtor, even if it’s only  for some feedback.

Today’s Realtor Magazine online mentions a survey conducted for the AFL-CIO labor union, it brought out that borrowers are unprepared for the burden of higher mortgage payments. One in five borrowers don’t know their current loan rate, and 25 percent don’t know when their lender will raise the rate.

With so many different loan products out there, besides educating oneself on the loan products, it might be wise to first of all, work with a reputable lender and second of all, talk to your Realtor for feedback on the loan product. He or she might have some good suggestion to consider, just to make sure. Also, something is wrong if you cannot explain your loan to your Realtor.

 Have a great day!

Mirjam