Sarasota Mortgage Rates | The Mortgage Skinny

Well, we all know the economy is going through some issues, and being in the mortgage business we’re always hoping things will change.  The key to staying successful in this business is keeping a positive attitude and making yourself an expert.  You want to be the GO TO person when someone has a question about financing, and the reason why I’m saying this is because you need to learn about Foreign National lending.

Foreign Nationals are buying real estate over here in the U.S. for two reasons.  For one, their currency has an exchange rate that almost doubles the U.S. Dollar.  Right now the Euro is worth just over $1.50 and in the Pound is currently worth just under $2.00.  So for an English investor to come over here and purchase a $200,000 home, it really translates into them buying a $100,000.  Why wouldn’t a European come over here and buy a beautiful second home they can visit at anytime?  Their money is worth double the amount… if they want to go to Disney world and spend $100 on tickets, it really means they’re only spending 50 pounds.

Another reason why Foreign Nationals are coming over to the U.S. and buying real estate is because it’s a buyers market.  Homes that were selling two years ago for $400,000 are now listed for $250,000 and will most likely go for less than that.  This is the type of market where the old saying “The poor get poorer and the rich get richer” except this translates into countries.  Right now the U.S. is in a lot of debt and the government is trying to fix this but it’s not something they can do over night.  In the mean time other countries are coming over and buying property, businesses, etc. at a discount price and in turn will cash them in when the time comes for a higher profit.  It’s all relative. 

 Here’s the way I look at Foreign Nationals and the Mortgage Market:  Yes, I know home values are going down, and yes I know a lot of home owners are losing a lot of money, but the only good thing coming out of this is First Time Home Buyers, Investors and Foreign Nationals.  As long as they are buying up the market, it’s going to create transactions that fill the pockets of Real Estate Agents, Mortgage Brokers, Banks, Title Companies and this in turn will create more spending which will boost the economy.  Every little bit helps!

If you’re in the Real Estate world and wondering why it’s important to look at the Foreign National world, just know they’re going to continue to buy, and you might as well be a part of the transaction.  Now is the time for them to buy and they’re not even hesitating to stroke a check.  This is their market!

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In today’s tough market many banks are closing doors and others are struggling to survive.  The banks that decided to offer “specialized” financing are now wishing they hadn’t and for the banks that stayed on the straight and narrow are glad they did. 

The real estate world is going through what many would call a “Tough Time.”  Most people in the Real Estate profession  have either retired or found new jobs because the last year and a half home sales have dropped more than 40% in some parts of the Nation.  What has the government done to try and fix this?  Well the fed has tried numerous times over the past six months to stabilize rates by lowering the fed funds rate and create a turn in the market to get things back on track.  So far none of those attempts have worked because we’re still dealing with declining home prices and banks are still having a hard time lending money.

Just recently, the Fed started allowing big firms to temporarily borrow money from the Fed for emergency financing that only large banks had access to previously.  These actions have caused many to protest and raise concern because many believe the Fed is putting tax payers hard earned money at risk by simply bailing out Wall Street.  The Bush administration and Fed Officials state this is an action they needed to take to prevent an economic meltdown.  Analysts believe the way the first three months of this year have gone, we’re heading towards what many would call a recession.

Despite all the negatives associated with today’s market, there are a number of positives that we’ve noticed take place during this time.  For the people losing homes to banks and dropping prices on their homes, there’s always new purchasers out there looking for a good deal.  Now is the time for First Time Homebuyers to start buying their dream homes.  Two years ago a home that was going for $250,000 is now going for $150,000.  Despite what people may think, there are still a number of programs out there for First Time Homebuyers.  There’s been a large increase in local and state grants that are strictly for First Time Homebuyers that gives them a chance to own a home and afford it.

Another positive that has been a result of today’s tough market is lowered interest rates.  The Fed has desperately tried to stabilize this market and it hasn’t had much affect on the market so far, but one thing it has done is helped out home owners who have a Home Equity Line of Credit.  Two years ago the prime interest rate was somewhere around 8.25% but over the past year the Fed has dropped that rate and is currently at 5.25%.  This has saved many home owners hundreds of dollars which has created a little relief. 

It’s a tough market but if you can get through the “Tough Times,” just think about how nice the good times are going to be.  Also just remember, you’re not the only one going through “Tough Times,” the whole Nation is.

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For those of you who are wondering what rates are doing each and everyday, we’ve added a Mortgage Rate Update text message alert company on our website.  I think this is a great tool for anyone who is in the Real Estate world because it updates you with the U.S. Average Rates each and everyday and will also update you with rate changes that take place during the day.  If you’re out on the golf course with clients and didn’t go into the office to check on rates, you will already have them texted to you each and every morning.  It’s a great way to stay on top of the market and be able to quote a rate when you need one.

 People who can benefit from this text message alert are:

 Consumers: If you’re in the market to purchase a home or refinance your home this text alert is for you.  If you’re looking to refinance your home and are waiting for that rate to drop below 5.5% this alert will be perfect for you.  When you wake up in the morning and want to know if today is the day to refinance, all you have to do is wait for the text message.  Or if you are purchasing a home and your not exactly sure on when to Lock in your Rate with your Mortgage consultant, all you have to do is wait for the text.  It is the perfect tool!

 Real Estate Professionals:  If you’re in the real estate world and work with clients on a daily basis,  it’s always good to have an understanding of what the market is doing.  Rates change daily, and you want to have an edge on your competitors by being a wealth of knowledge.  If a client asks you “What are today’s rates on a 30 year fixed?”  All you have to do is look down at your cell phone and quote the rate that was texted to you that morning.  It’s a great way to stay on top of today’s market and inform your clients about what’s going on.

 Mortgage Loan Officers:  Obviously your business is based around Mortgage Rates and getting clients approved and locked in.  This tool is extremely helpful for your business especially if you’re put on the spot and not exactly sure if rates went up or down.  The best feature about this text message blast is that it sends you an immediate text if there has been a price change during the day on mortgage rates.

 Overall, I recommend subscribing to the Mortgage Rate text message.  If you work in the real estate world or just curious about what today’s rates are, then I would reccomend you subscribe today.  It’s just an overall great way to stay on top of the market and be in the know.  Type in your number below to sign up for your Mortgage Rate Subscription or text ”MortgageRate” to 41411.

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If you’re having a tough time making your monthly mortgage payments then read the rest of this article and maybe you will be able to figure out how to make ends meet.  There are 6 different decisions you can make in order to make ends meet.  Some of them may be very difficult to make but in order for you to make the right decision you need to have no emotion.  I know it’s extremely tough to have no emotion when you’re deciding if you should keep your home or not but having no emotion will be better for you in the long run.  Below are the 6 decisions you may need to make:

1. Re-negotiate your monthly payment with the bank.  I’ve heard a number of people have tried to do this and have not succeeded, but more recenently banks are starting to open their ears.  I just heard a story about a CPA who was working out new monthly payments with his clients mortgage companies and coming up with great results.  Supposedly he helped lower his clients interest rate down to 2% which allowed his clients to keep their home. 

2. Refinance your loan.  If you are in a situation where you have a high monthly mortgage payment due to a high interest rate and you have enough equity left in your home to refinance, then I highly suggest this.  This may not be a choice for some homeowners because they are in a situation where they owe more on the home than it’s worth.

3. Sell and Cut your Losses.  A great way to get rid of your monthly payment is to sell your home and cut your losses.  If you have money in the bank to pay for these losses then this is an option.  If your home is worth more than what you owe on the home, then this is a great option as well.  This isn’t a great option if you owe more on the home than what it’s worth and you don’t have any money in the bank to pay for your losses.

4. Short Sale.  Short selling your home in today’s market is the best way to cut your losses if you can’t do any of the above.  A Short Sale consists of presenting your bank with a contract that is below market price and asking if they would be willing to accept the contract and close out your lien without putting a deficiency lien against you for the difference.  With the way the market is going, banks are more likely to accept a short sale.  A number of banks are dealing with a lot of foreclosures which consists of a lot of fees for a bank, so doing a short sale cuts out a lot of these fees.  More than likely if they don’t accept a short sale it will result in foreclosure which is extremely costly.

5. Foreclose.  Foreclosing on a property is probably the worst thing you can do.  But if you have no other option, then foreclosing is definitely a way out.  If you read my previous article about foreclosing than you know exactly why you shouldn’t.  Your credit score will go down, it costs the bank a lot of money, and the bank has 4 years to put a deficiency lien against you which may cause you to be in the same position years down the road. 

6. Bankruptcy.  Bankruptcy is not a bad decision if you have no other way out and there is no light at the end of the tunnel.  Filing a Chapter 7 Bankruptcy will wipe away all your debts and is basically be the end of the story.  In today’s world it’s tougher to qualify for bankruptcy, you either need to have an income below the median income or you need to be qualified as insolvent.  Either way, once you have qualified your creditors can no longer contact you and your assets will be divided between the creditors.  The creditors can not put any lien against you and you are officially working with a clean slate.  Only problem with this is your credit score drops dramatically and you’ll have a tougher time qualifying for credit cards, auto loans, and mortgages.

None of these decisions are something you want to make.  But depending on your situation it may be something you have to make.  As I’ve said before, I don’t reccomend you making a decision this big without first consulting an attorney or CPA. Every situation is different so contact someone who can review yours and help you make the right decision.

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I’m sure a number of you maybe visiting this website because you were wondering about Foreclosures and what the consequences may be.  I’m not an expert in Foreclosures but I have some information about some of the problems you may run into if you decide to foreclose.  Before you decide anything, please consult a lawyer or someone who specializes in foreclosures.  It is too big of a decision to make just by reading some blogs or some articles posted by authors who don’t know your situation.

The number one disclaimer I’ve heard from consumers and realtors I’ve been working with is do not foreclose.  It may sound great that you’re going to be getting rid of your debt and wiping yourself clean of the monthly payments of that investment home or primary home you once loved.  But it could end up costing you more in the end.  Banks are in a tough market right now especially with a number of their customers in default and with a large number of properties currently in foreclosure.  They’re doing whatever they can to prevent a customer from foreclosing.  It costs a bank quite a bit of money to foreclose.  Think about it…. obviously a bank is getting the home back because the customer couldn’t sell it in today’s market and couldn’t rent it out for a profit.  The bank then has to auction the property off, and a lot of times they don’t get what the customer owed.  So they’re taking a loss for that, and then they have to pay for all the lawyer fees.  It’s just a miserable situation, and the number one cause for these large banks to shut their doors.

 So as a consumer what is the big deal with letting the bank take the fall?  The big deal is that the bank then has four years to come back and hit you with a lien.  So for the first year or two you may think you’re smooth sailing, but in reality you have an addition two years to worry if you’re going to get hit with a deficiency lien.  In the long run you may be in the same situation as you were before, so make sure you think long and hard.  Like I said before, consult a lawyer who specializes in foreclosures because not all situations are the same.

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If you’re thinking of buying a home, now might be the right time! Interest rates have fallen below 6.00% to start the year in 2008 which is below 2007’s national average of 6.44%.  Mortgage rates have always been known to fluctuate but it seems as though 2008 is starting out strong.

The unexpected and steady decline in rates could help cushion the home sales for 2008 by making mortgage payments more affordable.  With the decline in home values, now is the time for first time homebuyers to purchase.  With an interest rate of 6.00% and a home valued at $150,000, a monthly mortgage payment would cost $899 for Principle and Interest.  Most renters can afford this and can now have the opportunity to own and not ever have to deal with landlords again.

With interest rates as low as they are today, it’s also giving current home owners a chance to refinance out of their current situations.  Many Americans are dealing with fluctuating ARMs (Adjustable Rate Mortgages) that are coming due and it’s causing their monthly payments to increase which then causes many to forclose.  Lower interest rates could not have come at a better time especially with the estimate of $1.2 trillion in ARM loans scheduled to reset to higher rates this year.

Lower interest rates help the economy, it gives first time homebuyers the opportunity to own, it gives current home owners the opportunity to refinance into better situations, and all of this causes more spending in the economy.   My advice would be to call your Mortgage Consultant and ask to get an annual mortgage check up.  If you’re not currently satisfied with your situation, then now is the time to make some changes and save! 

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