Q & A

We apologize that we have not been more diligent about keeping you up to date on recent changes in our market.  Fact of the matter is . . . things have been changing so quickly that it is hard to keep up.  It seems that we could literally write a market conditions summary one morning only to have to change it the same afternoon.  In addition, we have been flooded with potential refinances and new purchases due to historically low interest rates!  It’s safe to say that the constant changes that have been occurring in our marketplace are going to continue.  It does seem as if it has moderated a little recently though . . . enough to give us a chance to update you on what’s happening now.

First and foremost as we are sure that you have heard for several months now, RATES ARE REALLY LOW!  That is absolutely true!  There was a point in late December/early January and then again in March where it was reasonable to assume that you could get a rate of 4.375% to 4.5% on a 30 year fixed rate with a 1% origination fee.  This rate took into account a 10%+ equity position in your home and a credit score at 740+.  This didn’t last much more than a couple of days at a time.  The market couldn’t support these levels and deteriorated a little to bring us to a level of consistency around 4.75%-5%.  That level held from about the end of February through the middle/end of May.  We then saw further deterioration in the market due to a rally in the stock markets as well as what seemed to be “positive economic news”.  Since that time we have seen rates take a wild ride running as high as almost 6% and as low as 5%.  Needless to say that after getting used to a few months of consistency in the market when we could actually quote someone a rate one day and have it remain the same the following, it is once again increasingly difficult to predict the market from one day to the next.  Many indicators show that rates should remain at or near their current levels throughout the end of 2009 and possibly into the early part of 2010.  Sooooooo . . .  what does this mean for you?  BUY NOW!!!!!!!!

Ok, so besides low interest rates, what other reasons do you have to move quickly and take advantage of this buyer’s market?  Well, it is a BUYER”S MARKET!!  A buyer’s market results from an oversupply of housing inventory on the market.  This oversupply increases your bargaining power as a consumer and results in your ability to get a better deal.  So the rates are low, my bargaining power is good, what else?  If you are a first time homebuyer or you have not owned a home in the last 3 years, you could potentially qualify for the $8000 first time homebuyer tax credit.  What could be better than getting a great deal on a home at a low rate of interest and pocketing $8000 as well?  This $8000 credit differs from the previous $7500 credit in the way that it does NOT have to be repaid unless you sell the home within the 3 years after you purchase it!  Besides the home ownership stipulation, the only other major condition is that you don’t make too much money.  This income limit is set at $75,000 for a single individual or $150,000 for a couple filing jointly.    As long as you meet the stipulations and close on a home before December 1^st of 2009, you should qualify!  This money can be collected this year if you wish to file an amended 2008 tax return or you can wait until you file your 2009 tax returns.  Feel free to shoot us an email and we will be happy to send you more information on this tax credit or you can visit the IRS website.  You can easily see all of the financial benefits that are currently in place when you buy a home.  Here are a couple more reasons why you should buy now.  You’ve heard us say several times before that your credit is more important than ever.  Now is NO exception!!  That continues to be the case.  We have seen credit guidelines continue to tighten and minimum credit score requirements have increased as well across the board for most all loan programs.  There are also now increases in “risk based pricing hits” for credit scores below 660.  This simply means that the lower that your credit score is, the higher the rate of interest that you will pay and vice-versa.  We feel that this will definitely continue in the same direction that it has been and may even get worse.  Some borrower’s who may qualify today, may not qualify a month from now or maybe even next week!  Finally, we live in an area that is highly desirable.  Wilmington was recently ranked in the top 15 places nationwide of where to buy property right now.  We heard a stat recently that North Carolina is one of the top most visited states in our nation and for every 80 people that move out, around 180 move in.  Don’t quote us on the exact numbers here, but we are close!!  Our market WILL turn around and it should be much sooner than a lot of other markets across the country.  When it does turn around you will quickly see the consumer’s bargaining power diminish as the inventory does the same.  Don’t miss this boat!  BUY NOW!!!!

To recap some other significant changes in our market in the last several months:

• The USDA loan program offering 100% financing,  raises its maximum household income limits significantly so that more people may utilize this loan program
• FHA reduces the maximum loan limits in many of the counties that it had increased loan limits for in 2008
• FHA increases down payment requirement from 3% to 3.5%
• The Federal Reserve vows to spend billions of dollars on mortgage backed securities and treasuries in an effort to keep interest rates as low as possible for an extended period of time (only problem is . . . they are one of the only ones investing money into mortgage bonds and treasury notes).  This is why we feel that eventually as the money continues to run out and other investors stand on the sidelines, rates will go back up and it will probably happen very quickly.  The equities markets (stock markets) will at some point mount a rally and money will flow out of the bond market into stocks continuing to fuel interest rate increases.  Lastly, we will more than likely begin to see the evidence of inflation at some point due to all of the money that has been injected into the system over the last year.  The bond market does not like inflation and evidence of it in the economy will also contribute to the increase in rates.  It’s the rate raising tri-fecta!!

Again, we want to apologize for the gap in time since our last update.  We are going to put more effort into keeping our site more up to date with the current market conditions and also make the effort to be more informative so that we may be of assistance to you whether it involves your mortgage transaction or any other financial decisions that may come your way.  As always, please feel free to contact us via email or phone and we will always be more than happy to answer any questions that you may have, give our insights and opinions or analyze your current mortgage situation and see if we may be able to put you in a better one.  We thank you for the continued opportunity to be of service to you!!!