Sellers, Buyers, and Refinancers

OK, that last one isn’t a word, but you get the point. If you are going to do anything with a home mortgage during these challenging times, it is best to understand what drove the real estate market up over the last couple years and how you can make parts of it work for you.
By far, the biggest reason that we saw such a huge increase in property values in the last few years was the ease of financing that was available. The Federal Reserve told mortgage lenders to design home loans that would allow more people to achieve home ownership. The lenders complied, and that is when the 1% negative amortization loans, interest only mortgages, 100% financing and stated income/stated asset loans all made their appearances. Every one of these loans had the same basic assumption: that home values would always go up. When the first wrinkle started in the sub-prime mortgages with borrowers unable to refinance or sell, property values ceased their upward spiral and the whole house of cards began to collapse. In an attempt to save the lenders, and collaterally the homeowner, the Fed began to lower the rates that controlled the adjustable rate mortgage, but the move was too late for many of both.
FIXED MORTGAGE RATES ARE STILL LOW! They continue to hover in the high-5’s and low 6’s at 0 points for loans up to $417,000 and 2 points for loans up to $729,750. If you are a seller, offer to carry-back a 2nd mortgage for (not less than) 5 years to get your buyer’s loan down under one of these thresholds. Or offer to pay up to 3% of the homes sales price towards points, or a combination of both.
What you are trying to accomplish, as a seller, is to make your home affordable to the greatest number of buyers. If you are a buyer, and the seller doesn’t offer these options- ask for them! If you are a “refinancer”, give me a call and let’s see what we can structure for you to take advantage of these low rates.
Fixed Rates for Conforming Rates (under $417,000) as of 4/24/08 (a.m.) are:
(Add 2 points for loans up to $729,750 for purchases and 3 points for cash-out refinances)
30 year fixed: 6.125% (APR 6.195%) payments are $2,533.74/mo.
15 year Fixed: 5.75% (APR 5.87%) payments are $3,462.81/mo.