My New Blog

All I can say is Wow!!!!

It has been sometime since my last post to the blog and I am definitely going to start blogging some more, but holy crap batman it has been a wild ride.

We could have predicted that this market would deteriorate and that the mortgage market would change but no-one knew to what extent.  100% financing is virtually gone unless you meet a very select group of first time buyers, stated income, no income verification and no doc loans have basically been eliminated, Fannie Mae and Freddie Mac have become much stricter on credit scores and will penalize you in your interest rate unless you are the cream of the crop - 720 or higher and FHA is the most popular product on the planet.  Two years ago, I couldn't get buyers to talk to me about FHA and now they are flocking in.

So what does this mean to you?  Its tougher to get a loan and you need a professional mortgage planner/consultant more in this market than ever.  Credit is King and if you have bad credit and lots of lates on your credit report - you are not getting a loan.  There is no subprime market to speak of anymore.  You also will typically need at least a 3% down payment or a grant of some sort for down payment.

The good news - housing prices have dropped and we are experts in government financing.  I cut my teeth in the mortgage business on FHA and VA loans and still know the product inside and out.  Mortgage Brokers are trying to do FHA but because so many lenders have had record losses the lenders are minimally staffed and it is taking weeks if not a month to get many FHA Loans turned by mortgage brokers.  We have had 5 FHA loans that we closed in the last 30 days in 10 days or less.

In addition to all of the info I have provided interest rates have steadily climbed since the fed started cutting interest rates in late January.   You said what?  Yes I'll repeat this.  Interest rates have steadily risen since the fed started cutting interest rates.  So if you were listening to the financial geniuses on the today show you have learned a painful lesson.  They are financial generalists and quite frankly do not and typically won't understand the way that these markets work.

Mortgage Backed Securities (MBS) - are the instruments to which mortgage interest rates are tied.  They are similar to bonds with respect to price and yield.  If a bonds price goes up yields get lower, if a bond's price goes down then yields get higher.  Many unknowing and nonprofessional loan originators will tell you that mortgage interest rates are tied to the 10 Year Treasury.  If you hear this information from them, run the other way and find someone that knows what they are talking about.  Mortgage rates are tied to MBS.  When the fed started cutting it raised fears of inflation - yes they were lowering short term interest rates which will effect the rate on a home equity line of credit, or a variable rate credit card but it has nothing to do with Mortgage Interest Rates.  The Fear factor regarding inflation is what has really driven the interest rate market for mortgages and will continue to do so.  Inflation has been a little bit hot over the past few months but the bigger factor is food and energy prices.  These numbers don't get factored into CPI but obviously are factored into what happens in our wallets and pocketbooks.

So if you are currently in the market to purchase - it is a great time provided you are prepared for the process.  House prices are at a minimum of a 5 year affordability factor and interest rates although up from the lows are still in the 6's and are extremely affordable.  Before blasting off and trying to go purchase something contact a mortgage expert who is willing to take the time to educate you to the current market conditions and the things you can do to get you the best financing options available today.

Best Regards:

Chris

Hello and welcome to my Blog.  I want to start by answering the question why do I have a blog?  Well it's easy.  I am very passionate about my industry and believe that I have knowledge and expertise in certain areas of the mortgage industry that I believe few people in the mortgage industry possess.  I want to try to give you the insights into the way that I think, so that you can make decisions that are right for you.  I believe that in the information age - we live in a misinformation age.  Much of what we read about mortgages, the current credit crisis and many financial topics is written by business generalists and not specialists.  I believe that people are giving advice about topics that they have surface knowledge on and lack the true depth of knowledge that consumers need.  Consumers need the whole story not a piece of it.  Anybody can polish up an old car and make it look good, but what happens under the hood, in the wheel wells and in the undercarriage is what makes it run smooth.  If it runs great they we can add the paint and polish to turn it into a classic.

I believe what consumers need today are facts, expertise and advice.  I believe that the Mortgage Planner's job is to educate, show options, expose the risks and rewards of different products and plans and offer advice when asked.

I believe that a big contributing factor in the Mortgage Market Meltdown and credit crisis that exists in 2007 is due to the commoditization of the mortgage industry.  Mortgages have been treated like color printers - low level decisions at a perceived low price.  This has created an environment where no one was concerned about anything but price.  So when people heard they could get a 1.95% interest rate they "bought in" and took it because they wanted to believe this was true.  Instead they got a sophisticated loan program that 80% of the people originating these loans didn't understand.  The result disaster.  What consumers don't need are slick sales people with slick sales pitches.  They need true professionals that get it and get them.  Consumers need an expert to guide them through the complex mortgage products that exist today so that they can get the right mortgage that compliments their overall financial situation.  Having originated over 2,000 loans in my 15 year lending career, I believe that I can provide that advice and help people understand the truths about today's mortgage and financial markets.

I will share my thoughts on current market conditions and what is going on in the markets to help you navigate the waters.  I am certainly open to criticism and differing viewpoints and encourage your contributions to this blog.  Agree or disagree, hopefully we can all gain greater understanding through this collaboration.

Thanks and Good Luck:

Chris Foote

Certified Mortgage Planner