GREAT NEWS HOMEBUYERS! The other day, President Bush signed the economic stimulus package. What does this mean to you besides receiving rebate checks? (If you file your 2007 taxes) Currently if you apply for a loan that is over $417,000 (a jumbo loan) the cost is 1-2% higher than if you apply for a loan under $417,000 (a conforming loan). The stimulus package increases the loan limits of a conforming loan to the area median price to a max of approximately $730,000, helping to keep the monthly payments down for buyers who need to borrow larger amounts. Keep in mind that this will only be for the rest of 2007.
I checked with a couple of my lenders today, and they told me that it could easily be a month or two before they have these changes figured out and implemented.
Another interesting, yet partially unrelated observation, is that in spite of the unprecedented aggressive Fed rate cuts made recently, borrower costs are actually increasing as mortgage rates slowly continue to creep up. This further illustrates the point that mortgage interest rates are not controlled by the Fed's market manipulation, and that rates are market driven. A very reliable way to keep an eye on 30 year fixed mortgage rate trends is to watch the 10-year bond yield. When the yield is going up, so are mortgage rates and vice-versa.
WHERE DO I START?
"What is the first thing I should do to get started in this house buying process?" a first time homebuyer asked me last week. "Good question", I said. "If you start looking before you know what you qualify for, odds are you will fall in love with a home that is out of your price range and you will compare everything to that home and nothing will look as good to you". She said that made sense, however, she had a concern about getting a loan because she did not know whom to trust. "You need to get a referral from someone you know and trust, if you cannot find one I would be happy to give you some references”, I told her. I then realized how difficult it must be for especially the first time homebuyer to trust someone with his or her financial information and with finding a loan that was not loaded with hidden costs. Therefore, next week, I will interview some of the informative loan agents I work with and ask them to give me the inside scoop into the loan industry, I will also find out for you what are the biggest rip-offs that you need to look out for.
