Published by Allan 10 months, 2 weeks ago
in Real Estate and Mortgage.
They say when you ride the big waves, you sometimes get slammed into the beach. That seems to be the case for some of the big mega-builders / developers. Business Week is reporting that some of the big, publicly-traded builders / developers decided to get into the mortgage business at the height of the home building frenzy in an effort to “streamline” the sometimes lengthy process of getting buyers into their homes. There’s a reason why everyone isn’t in the mortgage business (or any other business, for that matter.) When you’re just dabbling in something as complex as the mortgage industry, you run a real risk of getting hurt.
I think the problem is magnified for these publicly traded companies. If you’re a small town builder (or even a big city builder, for that matter) and are not part of a publicly traded company, you make your business decisions based on what’s best for the business. Nobody knows if you are building 50 houses or 51 or 151. So you have no pressure to build “just one more” to “make the numbers for this quarter.” Publicly traded companies, on the other hand, are scrutinized each quarter. They have to do whatever they have to do to “make the numbers.” Therein lies part of the problem.
This is a good article that shows what at least part of the collateral damage from this whole situation will be. There is undoubtedly more to come. To read the whole story, click here.
Published by Allan 10 months, 2 weeks ago
in Real Estate and Mortgage.
Wow! That’s a big number. When the auto workers lay off 5,000 people, it’s a national crisis. I guess the Mortgage Workers of America ought to unite and have their union cry foul when they get laid off.
But seriously, this is big (and I don’t think we’ve even seen the tip of the iceberg yet. Yes, I believe this is a knee-jerk over-reaction. Yes, I believe it will get worse before it gets better. Yes, I also believe this will normalize itself over the coming months (maybe a year or two.) But even more important, I believe this will have significant negative impact on the real estate and mortgage industries. Those who were in it for the quick buck will shake out. Those who are in it for the long term will weather this storm, just like they have in the past.
In some ways, it’s like a forest fire. I recall a few years ago when almost all of Yellowstone National Park was burning. Many old-growth trees were lost along with the new growth. But fire releases pine tree seeds from pine cones. That’s the only way you get new trees. Yellowstone looked horrible for awhile, but it looks great now. That’s likely how it will be here. Things will look pretty black and charred for awhile, but before long new grass will sprout and things will green up again. The key is to hang on until it does.
If you would like to read the whole story about the 38,000 unfortunates, click here.
Published by Allan 10 months, 3 weeks ago
in Mortgage.
CNN Money has a great story about who will and won’t be able to get a mortgage in the coming months. To their view, about 90% of the people who apply for a mortgage will qualify, but with restrictions. They list five things you must have to get a loan these days;
1. A healthy credit score
2. A low debt to income ratio
3. A healthy down payment (at least 10%)
4. Verifiable income
5. Be looking for a loan less than $417,000
If that sounds like you, this whole mortgage thing might not be such a crisis for you after all. Now, if you want to get the best deals on mortgages, you’re going to want a bigger down payment and a higher credit score. While credit scores may not have mattered much six months ago, it makes a difference now.
This story is worth the read. Click here to get all the details.
Check Current Mortgage Rates at SaveOnRefinance.com
Published by Allan 11 months ago
in Mortgage.
Can you imagine paying 8% for your mortgage? If you’re over 30 you can. You’ve probably paid a lot more than that before. But we’ve become spoiled by rates in the fives and sixes. Eight percent sounds astronomical after what we’ve enjoyed for the last few years. But that’s what’s happening. Wells Fargo announced the rate hike today, and other lenders are expected to follow them.
Of course those rates are just for “jumbo” loans, or loans over $417,000. (Don’t ask me where they came up with $417. There must be something magic about that number — or maybe they wanted to say $425, but $417 looked more random — more like they actually gave it some thought.) So if your mortgage is over $417 K you’ll be paying a premium of about 1.5%. Now there has always been a premium for non-conforming loans, but it’s usually between half and three quarters of a point, so this is significant.
If you want to read the whole story about the rate hike, with the reasons, etc. Click here to go to CNN Money.
Published by Allan 11 months, 1 week ago
in Uncategorized, Mortgage and Finance.
The title of the article in MSN Money by Robert Walberg states, “No crisis for mortgage lenders.” He goes on to explain, in short, the following:
The U.S. mortgage market totals about $10 trillion, of which we may face losses of around $50 billion to $100 billion, according to Federal Reserve Chief Ben Bernanke. Those are big losses, but they represent no more than 1% of the overall total — hardly the definition of a crisis.
I agree with Walberg on this one. It’s easy to get caught up in things by only looking at one piece of a very complex puzzle, then think you know it all and start making important decisions. When you say, “Losses are expected to be $50 - $100 billion,” I say, “Wow! The sky is falling. When you say, “They’re going to experience a 1% loss.” I say, “Big deal. Retailers lose 10 - 15 times that much to shop lifters alone.”
It’s kind of like the perceived value of money. You wave a $100 bill in front of a 10 year old, it represents all the money in the world. You wave it in front of the executive that makes a seven-figure salary, it means nothing. It all comes down to how many zeros you’re accustomed to dealing with. This story is one you should read. It gives a very balanced feel for how things really are. Click here for the full story.
