Delavan Real Estate & Mortgage Blog

I saw an article today on washingtonpost.com website that a person with some knowledge in the Treasury Department is suggesting that banks will lend mortgages at 4.5% for new home purchases.

It got me thinking.  Are interest rates really what’s keeping people from buying real estate in Lake Geneva, Delavan, Elkhorn, Williams Bay or anywhere in Wisconsin for that matter?  I mean rates have already fallen to the mid 5’s on many Wisconsin FHA mortgages. 

I believe the answer may simpler than the experts think.  Read about it here.

I find it alarming that so many so-called mortgage professionals and journalists have consistently and loudly proclaiming this as fact.  In reality, nothing could be further from the truth.  Those of us who have toiled for years advising, counseling, and preparing our clients for homeownership have known this program to be one of the finest loan programs available for first time homebuyers in this or any market.  We extol the virtues of this program because it is NOT  a means to avoid showing underwriters the truth, the whole truth, and nothing but the truth, but the opposite.  The reason FHA will NEVER become the “new” subprime is because everything is verified.

All aspects of FHA mortgages are meticulously verified.

• The borrower’s income is verified.
• The borrower’s assets are verified.
• The borrower’s credit is verified.
• The appraisal is verified and underwritten.
• Social Security numbers are verified.
• Dates of birth are verified.
• Borrower’s are checked against a list to ensure they have not defrauded the government or failed to live up to prior agreements with the government.

It is true that opportunities in the underwriting standards allow the consumer to explain blemishes or situations that do not fit into the norm.  These explanations must be reasonable and documented.  This is the first and most direct opposition to a comparison with “subprime” mortgages.  Most of those programs did not require such scrutiny of the borrower or their finances.  Many of the homeowner’s, who lost their homes, were not properly advised when they were placed into mortgages they could not reasonably afford.  FHA has checks and balances to avoid these indiscretions.

The broad blanket that many cast as a means of comparing FHA and “subprime” do the FHA loan program a horrible injustice.  FHA mortgages have helped many homeowners realize the dream of homeownership.  Will there be foreclosures that come from people who have FHA mortgages?  Unfortunately, yes.  There will always be circumstances that lenders, underwriters, and appraisers cannot anticipate.  Life has a nasty way of reminding this from time to time.  Many Americans will benefit from and because of FHA mortgages.  I am proud to serve those wish to take the next step on getting their piece of the American dream.  Wisconsin homebuyers, more specifically buyers in Walworth County, in places like Delavan, Lake Geneva, Elkhorn, Williams Bay, and Walworth should know there are many qualified lenders who can and will assist you both honestly and ethically.

I know its Halloween, but have some of you lost your minds?  Are you intentionally scaring your children about the doom of our economy? 

I read an article by Liz Pulliam Weston where she makes it clear some of us are doing just that.  It made me pause and ask myself if I’m in the same boat.  I know this; I will pay a lot better attention to it now. 

Take a look and tell me what you think.  Are you doing this? 

Wisconsin Rapids, Wisconsin — Sure, gas prices have come down lately.  But to 34.9 cents a gallon?

That’s what Kelly Joosten and dozens of other motorists paid at a Citgo station Monday.  The sign advertised $3.43 for a gallon of premium fuel, but the pump cost read $0.349 a gallon.

“That was amazing,” said Joosten, who normally spends about $100 to fill up her 1998 Ford Expedition.

Joosten proudly showed off her receipt for 25.36 gallons at $8.85.  She said she saw other motorists filling gas cans, too, at the discounted price.

Station owner JP Raval says the attendant on duty couldn’t figure out why the station was suddenly so busy.

Raval estimated 30 to 40 customers fueled up at the incorrect price — between 200 and 300 gallons worth — for about 90 minutes.

“People kept coming, so fast,” Raval said. “Everything was crowded; it was like a fairground.”

Local General Motors’ employees learned officially this morning that production of full-size sport utility vehicles will end in Janesville on Dec. 23.

The work stoppage will affect about 1,150 hourly and 130 salaried employees at GM, plus hundreds more at local companies that supply the auto plant.

GM announced in June that it would end SUV production in Janesville by the end of 2010 at the latest, but plummeting sales for the big trucks prompted the automaker to accelerate the closing of the Janesville plant.

I don’t know about you, but I’m a bit tired of our government bailing out all these investment banks.  What happened to letting the market “fix” itself.  If we are, as we profess to be, a free market society, then why in the hell is Uncle Sam constantly bailing out these failing companies?  I’ve heard the whole “if we fail to help them then there will be a run on banks and cause issues with the money supply,” argument.  But these aren’t depository banks.  These are investment banks.  Do our elected officials think we’re all a bunch of idiots?  They must.  We know the difference.  The greedy bastards that couldn’t wait to throw money at anyone with a pulse to buy a home, all in the name of better interest rate returns are now being forced to answer for their decisions.  They gambled and lost.  If I go to Las Vegas and lose at the Bellagio am I then able to call Ben Bernanke and ask for a bail out?  Actually, we’re all losing.  Isn’t AIG an insurance company?  I mean c’mon…  Am I the only one who’s had enough?  We wonder why our collective taxes keep rising.  We wonder why so many people look to the government to save their behinds.  All we have to do is look at the headlines.  Apparently, if you donate millions or billions of dollars to political parties than you move up to being “bail out” worthy.  Let the markets do their job.  Let the chips fall where they may.  Old venerable institutions like Lehman Brothers, Merrill Lynch, AIG, or any other company who chose to purchase sub-prime mortgages should reap what they sow.  You collateralize junk mortgages and never expect to pay for that then you suffer the consequences of watching the company you run vanish.  I try to teach my children that there are consequences for poor decisions.  Apparently, that’s only true if you’re not a multinational, company worth billions of dollars.  Otherwise big brother will ride in and save the day.

Travis Egan is Delavan, Wisconsin’s premier mortgage lender and looks forward to the opportunity to discuss your real estate and mortgage questions.  Please call him at (262) 740-7751. 

Originally posted: http://activerain.com/blogs/travisegan 

The Feds took over the mortgage giants, now what for homebuyers in Delavan, Lake Geneva, Elkhorn and all of Walworth County?

So the Federal government did sweep in Sunday, fired the two top people at Fannie Mae and Freddie Mac and took over control of the two. This will probably come as mixed blessings in the industry.

1)  This will shore-up the two insuring they will not implode, which is very good for the industry as a whole since it will guarantee the flow of money to banks and lenders to fund new loans.

2)  The take-over has renewed Wall Street’s awareness in mortgage bonds and because of this we’ve seen rates drop considerably over the last two days and the word on the street is they’ll drop further.  Low 5’s could be just around the corner.

3)  Shares of home improvement companies Lowes and Home Depot are up over 5% with the infusion of confidence in the real estate market.

Now the ugly news:

1)   For the short term it doesn’t look like there will be much of an adjustment in underwriting guidelines, but everyone expects them to get even more strict than they’ve become in the past few months.  This means that it may become even more difficult for some to qualify for a loan.  At a minimum it will mean that more documentation and conditions to be met before closing will be required.

2)   Shares of Fannie Mae (FNMA) and Freddie Mac (FHLMC) are down. Way, way, way down.  It’s clear investors are confident on Wall Street based on the last few days, just not with Fannie Mae and Freddie Mac.

Other than that, I think overall - if the Feds handled this correctly - this will be very good for the industry and may be what we need to get the market started again.  Lack of consumer confidence, fueled by sensationalist media, has been dealing a death blows to the industry for the past nine months.  As I’ve said before, now is as good a time to buy a home as there has been in some time.  It’s time to get off the fence and take part in the American dream.

During the last decade, Adjustable Rate Mortgages (ARMs) have increased in popularity among consumers.  These days, few homeowners (especially first-time buyers) remain in their homes for more than seven years.  In this case, it often makes sense to get an adjustable rate mortgage with a lower rate, especially one with a 5-year or 7-year fixed portion, since they won’t have the loan long enough to be concerned about rate fluctuation

Adjustable Rate Mortgages have three main features: Margin, Index, and Caps.  The Margin is the fixed portion of the adjustable rate.  It remains the same for the duration of the loan.  The Index is the variable portion.  This is what makes an ARM adjustable. Margin + Index = Interest Rate. It’s important to understand that there are many different indices: The 11th District Cost of Funds (COFI), the Monthly Treasury Average (MTA), The One Year Treasury Bill, the Six Month Libor, etc. Each index has its own strengths and weaknesses, some are slow moving, while others are more aggressive.

The third and final component of Adjustable Rate Mortgages is Caps.  Caps limit how much the rate can fluctuate over time.  Annual Caps limit changes to the annual rate, whereas Life Caps provide a worst case scenario over the life of the loan.

To see if an ARM loan is most appropriate you should contact, Travis Egan, Delavan, Wisconsin Mortgage Planner.  He will sit down with you and show which options are available for you so you may chose the option that best fits your long and short term financial objectives. 

Delavan, Wisconsin — Here’s a sonic boom to prospective homebuyers: The lingering decline in the prices of homes has made many houses more affordable than they’ve been in years.

You know what this means?  Housing could shift from a buyer’s market, which it presently is in Delavan, Elkhorn, Lake Geneva, and all of Walworth County to a seller’s market before you know it.

Please don’t misinterpret me.  I am not saying that all is well when it comes to housing.

I would agree with my peers who suggest that it may be at least a couple of months before the demand for housing matches or surpasses the current inventory.

Nor am I expecting another housing bubble to form in the immediate future.

All I would like to point out is that, in broad terms, the average house is no longer as overpriced as it once was here in Walworth County.  That being the case, it is no longer wise to assume that home prices have to fall a lot more before they stabilize.  I would suggest that may have already happened.

For now, however, this is what most buyers believe, at least the ones I’m talking to.  Knowing full well that there are a lot of unsold homes out there, most would-be buyers are waiting for a sign that prices have stopped falling and thus stabilized before making an offer to purchase.

They are waiting because history and the mass media have conditioned them to do so.

Until recently, home prices used to go in only one direction, up, the only question being how rapidly.  As a result, a house became just about the only item — large or small — that people would buy expecting its price to appreciate.

Fortunately, for owners in Wisconsin or the Midwest we didn’t see the exponential appreciation in home values the folks on the coasts and Florida did.  So we haven’t seen the precipitous decline in value they have seen as well.  What we have seen is a much smaller rate of appreciation but few markets have seen an actual decline in value.

Remember, incomes are still rising, so home prices don’t have to fall as much as you think before buyers decide that they can once more afford the home of their dreams.  Sooner or later, the fact that housing is more affordable will sink in.  That’s when the market will turn and that’s when those who have chosen to sit on the sidelines may wish they had acted sooner.

Where should you go if you find your credit is inaccurate?  How can you get your credit corrected and not worry about being taken by some fly by night company? 

The Federal Trade Commission regulates credit repair services, and they provide free information to help consumers spot, stop, and or avoid businesses with fraudulent, deceptive, or unfair practices.

Be familiar with the Credit Repair Organizations Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research the background and make sure the company will live up to its credentials.

I have a company that I use for this purpose, and they have a proven track record of keeping in touch with my clients and me on a regular basis, while my clients are going through the remediation process.  Their work is 100% guaranteed, which means that if they are not able to meet the commitments outlined at the commencement of the process, then there is no charge to the consumer.

I have also developed marketing literature on the topic of credit repair, which I pass out to my clients to help them understand credit scoring.  This provides them with information about what they can do to immediately help improve their credit score.  Subsequently, in many cases, they are able to obtain the financing for the home they wish to purchase.

From there, I continually keep an eye out for new options as their credit standing improves, and seek to place them in a lower interest loan as time progresses.  I feel it is my responsibility to do more than simply quote rates and provide a loan, but rather to help them manage their debt on an ongoing basis to meet their long-term goals.  That’s why so many of your friends, relatives, and neighbors come to see Travis Egan, Delavan Mortgage Planner, when they need assistance with their home mortgage, equity loans, or developing a mortgage plan that fits their long and short term financial objectives.

Let me know when you would like to set an appointment and talk about what I can do to assist your clients who are in need of credit remediation services.  I look forward to assisting you in this area.