Buy a new Home for what you pay in Rent!

Ok, the holidays are just about over with and 2010 will be here very soon.  Right now, you are renting a townhome or an apartment and paying $1,000.00 a month.  You have just graduated from Radford or Tech and have started that coveted new job that appears to have you living in the area for a few years.  What's next?  Instead of going out and buying that new car that will zap you for $450.00 per month, why don't you consider buying a new home?

See, here is the thing.  Right now the Federal Government is "paying" you to buy a home.  Whether we like it or not......whether we think we should be doing this or not.......if you are a first time homebuyer and you fall within the parameters that make this tax credit available to you, then you should take advantage of it.

You may have heard that there are no 100% loan products out there anymore.  Well, while we don't have nearly the number as say 4 years ago, but there are still loans out there that offer 100% financing through USDA, VHDA, and Veterans Affairs loans.  Most have income restrictions so call me to discuss if these loans are a fit for you.

So, what to do.  Before you start looking at homes online or in the rags at the grocery, you should contact a lender and get pre-approved.  Don't let a lender write you a pre-qualification.  They are not worth the paper they are written on.  Make sure that the lender pulls a credit profile on you, looks at a paystub and bank statement, and asks you the right questions.  Those lenders that freely hand out a pre-qualification letters without reviewing your credit are not only doing you an injustice but are wasting the time of the sellers and REALTORS that are working with you to do your deal.

Next, ask your lender for suggestions as to the real estate agents he/she works with.   Think about it.  When you go to a used car lot, chances are you have your mechanic look at the car before you buy.  If the mechanic works at the car lot, your comfort level certainly is higher with the product than if you were buying a car without an inspection.  Same goes for REALTORS.  You need to interview them and ask the right questions.  A good lender who has a working relationship with specific agents typically can assist you with this process so don't be afraid to ask.  It is imperative that you work with an agent that best fits your needs and personality.

Now you have a pre-approval and a great agent.  Start the search.  The REALTOR will pull listings within your desired price range as well as discuss with you how to negotiate the contract.  Once all parties have agreed to sell and buy, the lender then takes over and works on getting your loan from a pre-approved state to an approved state for closing.  This involves appraisals, income and asset verifications from the borrowers, as well as employment and school transcripts and diploma verifications.

The final step is the day of closing.  You go to the settlement company and begin signing your loan documents.  This typically takes about 45 minutes or so and then you are done.  Your agent gives you the keys to your new home and off you go.  No more rent!  Now you have obtained the American Dream of home ownership.  Building equity and later income for the years to come.  Congratulations.

For more information about first time buyers and the fine art of obtaining home ownership, please give me a call.  Remember, the first step is to talk to a mortgage lender before you talk to a REALTOR.  Doing so will get you on the right path as to how much you can buy as well as assist you with finding an agent who will tend to your needs.

What can damage the coveted credit score the most.

From time to time, I get the question "I missed my credit card payment last month, how badly will my score take a hit?" Well, the answer is not quite that specific. The deal is, it depends on what your credit score is at the time of the miss.

According to MyFICO.com, if your credit score is a 680 and you have a 30 day late payment, you can reasonably expect a drop of between 60 and 80 points. If your middle score is a 780, expect a drop of between 90 and 110 points.

Got a maxed out credit card? Not good my friend, expect a drop of 10 to 30 points on a 680 middle score and 25 to 45 points on a 780 middle score.

With lending guidelines having greater restrictions pertaining to credit scores and the information that is used to determine a score, maintain as high a score as possible is imperative to receiving the best interest rates from lenders.

Whether you are buying a car, obtaining a credit card or buying a house, your credit profile is scrutinized far more intensely than it would have been 2 years ago. Do your part to maintain a favorable credit profile.

What factors actually determine your credit score.

In my searches on the MyFICO.com website, I also came across this wonderful piece of information. This specifically outlines what factors determine what percentage of a consumers credit score. As you can see, 35% of a score is determined merely by the payment history to a consumers existing debts. Further more, 30% of a consumers score is determined by how much a person owes on their credit lines. Balances that are greater than 50% of the available credit line, will typically cause a consumers score to be less than if that balance was below 50% of the line. Length of credit history, new credit lines and types of credit in use all round out the remaining 35% in the scoring model.

A good rule of thumb is if you have established credit in place, not to take on additional credit as this may lower a consumers score. Also, watch your line usage. If you are creeping above that 50% or your available line, you may want to put the brakes on as you may have a score that is in jeopardy of dropping as well.

For more information, please visit www.MyFICO.com.

Credit Reports, Inquiries, and will my Credit Score drop?

Many of us have seen or know of the movie "Back To The Future". Well, this is very much what we lenders are experiencing within our lending markets: a "Back To The Future" mentality with regard to lending. Option ARM's and no doc loans are a thing of the past. Credit scores below 600 will in all likelihood not be approved, regardless of the down payment, and homes in disrepair are looked at with a more watchful eye then in the past. Income, assets, tax returns are all scrutinized to determine authenticity. Today's mortgage lending is "Back To The Future".

With that, I wanted to introduce some information that I recently found on the website, MyFICO.com. The information goes into great detail regarding credit scores, the do's and don'ts associated with scores, and simply what does affect your scores. This is pretty important because there are mortgage originators that tell clients "NOT" to have your credit pulled multiple times, as it will adversely affect your score and reporting. While there is some truth to this tale, I think that you will see from the bureaus reporting agent, that there are some particulars that need to be adhered to with regard to that originators remarks.

See below. This is an excerpt from the MyFICO website, http://www.myfico.com/.

Credit inquiries

Will my FICO score drop if I apply for new credit?

If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

The Basics

What is an "inquiry"?

When you apply for credit, you authorize those lenders to ask or "inquire" for a copy of your credit report from a credit bureau. When you later check your credit report, you may notice that their credit inquiries are listed. You may also see listed there inquiries by businesses that you don't know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new credit.

Does applying for credit affect my FICO score?

Fair Isaac's research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO score can be lower as a result.

How much will credit inquiries affect my score?

The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one's FICO score. For most people, one additional credit inquiry will take less than five points off their FICO score. For perspective, the full range for FICO scores is 300-850®. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk.

Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.

Does the formula treat all credit inquiries the same?

No. Research has indicated that the FICO score is more predictive when it treats loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

What to know about "rate shopping."

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

Improving your FICO score.

If you need a loan, do your rate shopping within a focused period of time, such as 30 days. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.

Generally, people with high FICO scores consistently:

Pay bills on time.

Keep balances low on credit cards and other revolving credit products.

Apply for and open new credit accounts only as needed.

Also, here are some good credit management practices that can help to raise your FICO score over time.

Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time will raise your FICO score over the long term.

Check your own credit reports regularly, before applying for new credit, to be sure they are accurate and up-to-date. As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as myFICO, your own inquiries will not affect your FICO score.

AP Reports that 1 in 3 Mortgage Applications are Denied

I have attached a link from the Associated Press that reports one in three mortgage applications are denied due to credit or income restrictions. This is a huge number and is not a reflection of the successful loan approvals that I have through Prosperity Mortgage. If you are in the market for a new home, please call me today to see how much you qualify for.

http://news.yahoo.com/s/ap/20090930/ap_on_bi_ge/us_lending_discrimination

The First Time Homebuyer Tax Credit

Many, if not all of us, have heard about the first time homebuyer tax credit. This credit is set to expire on December 1, 2009. As of right now, there are discussions within the administration entertaining an extension of the credit, however, nothing has been ratified or confirmed. I have attached the press release from the Internal Revenue Service that offers the specific details regarding the credit and how individuals can work toward utilizing the credit before it expires.

WASHINGTON — As part of the Treasury Department’s consumer outreach effort and with the April 15 individual tax filing deadline approaching, the Internal Revenue Service today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases.

For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.

The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.

“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”

First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.

Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

The filing options to consider are:

File an extension. Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.

File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.

Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.

Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.

The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

IRS.gov provides more information, including guidance for people who bought their first homes in 2008. To learn more about the overall implementation of the Recovery Act, visit www.Recovery.gov.

As always, if I can be of assistance with the purchase of your new home, refinancing an existing home, or buying an investment or second home. If you are a first time homebuyer prospect, don't let this opportunity slip away.

Dave Shelor
Senior Loan Officer
Prosperity Mortgage Company
1-866-840-1703

Typical Mistakes made by First Time Homebuyers

With the real estate market in a definite time to buy mode, many times we can get caught up in the activity of having to buy right now, at this moment. All buyers, specifically first time home buyers, should take a deep breath and follow the advice noted below.

1st. Know how much house you can afford. Most first time home buyers and novice home buyers spend an enormous amount of time researching homes. However, they spend very little time researching financing options. Before you begin to search for a home, you should call a Prosperity Mortgage representative, and schedule an appointment to go over your income and credit loads. Some lenders do a pre-qualification and others do a pre-approval. I pre-approve clients rather than pre-qualifying them. A pre-approval is much stronger since it tells the seller that you have truly had a person analyze your income records, tax returns, bank statements and credit report.

2nd. Don't assume a foreclosure is a great deal. If a homeowner lost their home and paid $350,000.00 for it, that does not mean it is worth that amount today. Home values have declined, though not nearly as much as other parts of the country, and inventories here in the New River Valley are large. It is certainly a great time to buy. A foreclosure needs to be looked at very carefully. It is to your advantage to have a home inspector or contractor go with you and your REALTOR to preview a property that you have zeroed in on as a potential buy. Many foreclosed properties have sat vacant for many months, with the electricity and water turned off, so you want to insist that the property have its utilities turned on as a requirement of the contract. This is the only way to determine if you are buying a money pit, even at a great purchase deal. Unforeseen problems can push you at or above the initial purchase price, so do your homework on foreclosed properties.

3rd. Do not let your true feelings show. No matter how much you love the house, do not let the sellers agent catch wind of it. Doing so allows the sellers to gain the upper hand and removes your negotiation power.

4th. Find a fantastic buyers agent. Look for agents that make it a practice to work with first time home buyers. These people have a very good working knowledge of what to expect with their clients, and typically are familiar with lending institutions, like Dave Shelor with Prosperity Mortgage, who pride themselves in helping first time home buyers.

5th. Make sure when you talk with a mortgage lender that you leave their office with a very clear understanding of the costs of home ownership. You have to factor real estate taxes, home owners insurance as well as anticipated home maintenance and repairs. All of these things, and then some, are costs to owning a home.

6th. Do not assume that your first offer will be accepted. With large inventories, more and more people are in your position. Look for a deal, and write your offer accordingly. If your offer is unrealistic, even in today's market, it will not be accepted and sometimes, even reviewed. Trust your REALTOR and ask for their guidance in structuring an offer. They are the professionals and can help you write a strong offer.

7th. Don't skip the home inspection. It typically costs about $300.00 give or take, and is well worth the money. Other inspections geared toward radon and structural add a little more, but for a good general home inspection, ask your REALTOR for any referrals. It usually takes a few hours and is one of the most in depth reports that you will receive on your home.

If you are in the market and have not found a good real estate professional to help you find a home, give me a call. After we pre-approve you for purchase, I can help you find someone that will write that offer. I work with some of the best REALTORS in the New River Valley, and would enjoy helping you get into that new home quickly, easily and with great care. Call me today.

Opening bell this morning may lower rates

Mortgage bond prices opened higher Monday morning adding to the small gains seen Friday afternoon. Rates are finding support from weak stock futures, an indication the DOW Jones index will open lower.

This week promises to be action packed with the Treasury set to auction 101B in 2, 5 and 7-year notes. The new supply of debt competes for available investment dollars; therefore it would not uncommon to see rates come under pressure ahead of the auction as trading desks prepare for the new issue. If the auction is well received, rates typically improve somewhat and vice verse.

The results of the 2-year auction are expected around 1:30 pm ET today. As if a credit crisis, housing slump and massive unemployment around the globe is not enough; FEAR (capitalized for emphasis) of a pandemic from the swine flu is gripping the world.

Traders are dumping airline, hotel and travel relates sharers as more is learned about the spread of the flu. Students in Universities around the globe will be studying these times for generations to come.

Hang on, it will likely be a volatile day today.

Mortgage bond prices opened lower in volatile trade following the release of the jobs report.

In news released this morning, the unemployment rate stood at 8.5% and non-farm payrolls fell 663K. Analysts were expecting unemployment to stand at 8.5% and for the loss of 658,000 jobs. Following the ADP payroll report on Wednesday, which showed a job loss or almost 750,000, traders were braced for a much worse report. Bond traders don’t like to be surprised.

Traders will spend the morning mulling over the data as the wait for stocks to begin trade at 9:30 am ET.

Mortgage Data for April 2, 2009

Mortgage bond prices opened lower erasing the small gains seen yesterday afternoon and more.

Rates are under pressure from strong stock futures, an indication the DOW Jones index will open higher. Stocks and bonds compete for investors’ funds, when stocks are rising in value trades sell bonds (prices fall/rates rise) to buy stocks and vice verse.

In news released this morning, weekly jobless claims stood at 669,00 higher than expectations of 650,000. This data coupled with the ADP payroll report yesterday raises the bar for the jobs report tomorrow. Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of factory orders at 10:00 am ET.

This afternoon traders will begin preparing for the jobs report tomorrow. Following the ADP payroll report and jobless claims data, traders are looking for a horrible number. Current expectations are for the jobless rate to jump .4% to 8.5% and for the loss of 665,000 jobs.

Data for Tuesday, March 3, 2009

Mortgage bonds are higher mid-morning Tuesday erasing the losses seen yesterday afternoon. Trade is thin this morning.

In news released this morning, the Case Shiller home price index fell 18.97%, near expectations. Also, consumer confidence stood at 25. Analysts expected confidence to stand at 28. With no more news set for release, traders will watch stocks to help gauge interest rate direction.

Today is the last day of the first quarter and many bond desks are more interested in closing their books than trading. This can crate a thin trading environment, which exaggerates volatility. Be careful.

Tomorrow brings the ADP payroll report. While the report is widely know for large misses, it will get traders talking about the jobs report on Friday. The employment report on Friday is the #1 data release each month and has the ability to cause big moves in the MBS market.

Interest Rates Drop.....Again

Check out my website, www.DaveShelor.net and click on rates. 30 Year rates as low as 4.250%, 15 year rates as low as 4.125%. Rates are subject to change without notice.

Mortgage bond prices remain positive this morning adding to the small gains from yesterday after relatively bond friendly data. Personal income fell 0.2%, weaker than the expected 0.1% decrease. Outlays rose 0.2% as expected.

There is another Treasury auction this afternoon Debt supply concerns continue to pressure bonds as a whole as the most recent auction was rather poor.

The UK had a failed auction this week and if that ever happened to the US all bets are off. Expect more of the same with the Fed being the primary buyer of mortgage bonds.

Consumer sentiment data came in at 57.3 versus the expected 56.8 mark, not bond friendly.

Opening Market Data for March 26, 2009

Mortgage bond prices opened lower once again this morning as the data wasn't as bad as expected. The final revised Q4 GDP fell 6.3%, not as low as the expected 6.5% decline.

Weekly jobless claims were relatively as expected with an increase of 652,000.

There is another Treasury auction Friday. Debt supply concerns continue to pressure bonds as a whole as the most recent auction was rather poor. The UK had a failed auction this week and if that ever happened to the US all bets are off.

Expect more of the same with the Fed being the primary buyer of mortgage bonds. This doesn't mean we won't see rates go higher, as is evident over the past few days. But hopefully they will continue to shore up things and keep any major rate spikes from occurring.

Market is currently worse this morning by .125% of a discount point. This as of 9:50 AM.

March 25, 2009-New Homes Sales Data

New home sales rose 4.7%, the first increase since July 2008. Analysts were expecting a 2.9% decrease.

This increase further indicates that the economy appears to be in the beginning stages of a turnaround. Had a decrease occurred, we might have seen an improvement in our already historic low rates.

Watch for rate volatility today. The 5 year treasury note auction is this afternoon at 1:30. Stronger than expected demand may lead to lower rates.

March 25, 2009-Data is not rate friendly at the start of the morning

Mortgage bond prices opened lower following stronger than expected data this morning. Durable goods orders rose 3.4%, stronger than the expected 2.5% decline. This was the first increase in durable goods orders in 7 months.

This increase is not typically bond or rate friendly!

China remains concerned that the US Government continues to print money, devaluing their current holdings. China is the largest holder of US debt. While the current talk is some saber rattling during these times of uncertainty, the threat is being taken seriously by the financial markets.

The Fed will start buying Treasury bonds today, the New York Fed said yesterday afternoon. They indicated longer term Treasuries would be part of the buying which sent the 30Y up considerably. It will be interesting to see how the market reacts today to this.

New home sales, and a 5 year auction will take place later today.

Market Data for March 24, 2009

Mortgage bond prices remain weaker since pricing as stocks turn positive again this afternoon. The DOW was down over 70 points and now is in positive territory. In addition there are new calls from China to replace the US dollar as the international reserve currency.

China is concerned that the US Government continues to print money, devaluing their current holdings. China is the largest holder of US debt. While the current talk is some saber rattling during these times of uncertainty, the threat is being taken seriously by the financial markets. This week the Treasury will auction $98B in 2, 5 and 7-year notes. The additional supply will likely keep prices in check.

When discussing rates with borrowers, make sure they are aware of the auctions and the potential upward pressure on rates that may occur. The auctions begin this afternoon. The 2 year auction was relatively well bid but we can't get any traction off of it with positive stocks.

Existing home starts better than expectation

Existing home sales rose 5.1%, higher than the expected 0.8% decrease.

Stocks are rallying this morning (DOW up 150 points) as the US Government plans to unveil details of a new government entity to clear $1 trillion in securities and loans from bank balance sheets. Details will be released later today.

Data for March 23, 2009

Mortgage bond prices opened near unchanged failing to erase the losses from Friday afternoon. Existing home sales data will be released later this morning.

This week the Treasury will auction $98B in 2, 5 and 7-year notes. The additional supply will likely keep prices in check. When discussing rates with borrowers, make sure they are aware of the auctions and the potential upward pressure on rates that may occur.

The auctions begin on Tuesday. The Fed is going to pump another $750 billion in addition to the current $500 billion into purchasing mortgage backed securities. This buying pressure generally helps bond prices rise and rates fall over time. But remember that from a short-term perspective lower rates are not a given.

The Fed is not the only player in the game and buying/selling pressure can come from other fronts. The Fed has been the PRIMARY buyer here as of late and will continue in that role, but we could continue to see choppy trading as we did Friday afternoon as other traders make moves.

Dates for data to be released this week is as follows.

Monday Mar 23, 2009
Existing Home Sales-10:00 am

Tuesday Mar 24, 2009
2-Year Tres. Auction-1:00 pm

Wednesday Mar 25, 2009
Durable Goods Orders-8:30 am
New Home Sales-10:00 am
5 Year Tres. Note Auction-1:30 pm

Thursday Mar 26, 2009
Q4 GDP Final Revision-8:30 am

Friday Mar 27, 2009
7 Year Tres. Auction-1:30 am
Personal Income and Outlay-8:30 am
U of Mich. Consumer Sentiment-10:00 am

Rates will likely fluctuate tremendously through the week. It is best to have your applications in place with your lender and take advantage of low rates should they hit your target. Remember, try to hit the bottom 20% regarding rate, if you hold out to hit the very bottom, chances are you will end up higher than your target.

Have a great week.

What does 2009 look like?

As many of you know, I have been on the "Now Is A Great Time To Buy" bandwagon. Here are some more reasons why if you are currently in the market to buy, you should buy. If you are renting, and think you want to buy, then talk with a mortgage lender to determine if and when you can buy.

The decision to buy has may factors related to it. Let's take a look at 2005 versus now, 2008-into early 2009. In 2005 there was a shortage of inventory (homes). There were historic low interest rates (a great thing). It was extremely difficult to find what you would like to call your dream home and as a buyer, you had absolutely no negotiating power. All of this equalled a fantastic sellers market and a not so good buyers market. Sellers were able to command the price they wanted for their home and buyers bought.....they bought a lot. In 2005, the average interest rate for the year was a mind boggling 5.84%. Imagine that, 5.84%, and REALTORS could not keep inventory in stock.

Now, let's fast forward to 2008-2009. There is a very large and diverse supply of homes on the market today. Inventory is plentiful. Rates, well they are again and remain at historic lows. The average through 2008 was 6.03%. Currently, for 2009, the average is at 5.09%. Today, you are looking at 4.875% for a 30 year fixed loan. The dream home, not as hard to find. With rates lower today than in 2005, and inventory a plenty, well, trouble is settling on one dream home. You as a buyer, the pendulum has swung from no negotiation power in 2005 to practically all the negotiation power in 2009.

This is more evidence of why today is the day for you to entertain buying. With good credit, in line debt to income, and assets and reserves in the bank, you are truly in the best position to buy your dream home. Don't delay, call your loan officer today.

Here is an interesting take that Dave Stevens, COO of the Long and Foster Companies posted a few weeks ago. It outlines some remarks from folks you might know. Enjoy!

Data for this morning, March 18, 2009

Mortgage bond prices are near unchanged mid-morning holding mortgage rates steady from pricing yesterday. Rates opened under pressure from stronger than expected inflation data only to recover when stocks opened lower.

In news released this morning consumer prices rose 0.4% in February while the core rate, which excludes the volatile food and energy costs rose 0.2%. Analysts’ estimates were for CPI to increase 0.3% and 0.1% respectively. Both the PPI and CPI data released for February were higher than expected.

Traders across the globe are concerned the massive amount of debt being issued by central banks here and abroad will ultimately lead to runaway inflation. The Federal Reserve ends their two-day meeting today with an announcement set for 2:15 pm ET.

The governing body is out of conventional policy ammo, however traders around the globe will be looking for signs of how they will continue to battle the financial crisis that is griping the world. One method widely discussed is the Fed purchase of long-term Treasury debt, similar to the MBS purchase plan currently in place. In terms of mortgage rates, thank goodness for the Fed. They are a major player in the purchase of MBS debt and have helped to keep mortgage rates low.

The Fed has purchased nearly 217B in MBS's since the program began, nearing the half way mark. With no more data set for release, traders will watch stocks while they wait for the outcome of the Fed meeting this afternoon. We expect the market to be thinly traded today adding to the volatility. Stay alert.

Why buy a home in the New River Valley

Ok, we all watch the news and hear that our economy is not in the best of shape. Real Estate transactions are down, no one can credit to buy, the stock market is tanking blah, blah blah blah blah. Here is the thing, think about it like a sale. No one wants to buy something at full price. Of course, we would all like to buy things at the bare bottom price. But think about this. Rates are at 30 year lows. Today, a person can borrower money at 4.750% to buy a home. Home prices, while we in the New River Valley have been insulated to a degree, are at very attractive prices. Better than those prices per square foot that we were looking at three years ago. Yes, there is an expense to buy a house. Yes, you do pay alot of interest over the life of the loan. However, you OWN it. You also may receive a TAX DEDUCTION from your mortgage interest that you pay the bank. If you have private mortgage insurance as part of your loan, that to is Tax DEDUCTIBLE from your taxable income presently. Oh, and the biggy......you may qualify for a tax credit of up to $8,000.00 if you purchase before November 30, 2009. Can we say CHA-CHING?

Look folks, let's do a little basic math. Lets say you are a school teacher making $38,000.00 a year. You currently pay $1,000.00 a month in rent to the landlord who owns your house (and has a mortgage, and oh, by the way, is not paying the mortgage because YOU are). Anyway, that is another story. So, you have saved up $2,000.00 for a down payment on a new car. Your current car is ok, and only costing you $200.00 a month. You have another credit card that runs you around $50.00 a month. So, let's get to calculating.

USDA has a loan program that offers people 100% financing with no down payment and the seller can pay most if not all of the buyers closing costs. Hold off on buying that car for a moment.

You earn $38,000.00 a year. That equals around $3,166.66 per month. You have a car loan of $200.00 per month plus the credit card of $50.00 a month, and shoot, we'll throw in another incidental revolving debt around $100.00 per month. So, all told, your installment and revolving debts are about $350.00 a month.

We use up to 43% of your income to cover all of your debts, to include your new housing expense. Housing expense consists of principal repayment of the loan (P), interest payment on the loan (I), real estate taxes each month (T), and insurance collected each month (I)=PITI.

Your estimated new loan monthly payments on $150,000.00 would be around $782.47. This is the P and the I. Add taxes in the monthly amount of around $140.00 plus homeowners insurance in the amount of around $35.00 per month and you have a total housing expense of $957.47. Of course, this is based on a 30 year fixed rate loan with an interest rate of 4.750%/APR 5.148%.

You get the same payment and you own the house. You can paint the walls, mow the grass, add a room, whatever you want to do because it is yours. Oh, and the little discussed thing about making money. Here in the New River Valley, the appreciation of property over the past 5 years has been around 8.00%. The appreciation within the last 12 months has been around 2.00%. Not the declining market that you hear so much about in the media. If you plan on living in the area for 5 years or more, it absolutely makes sense to buy.

Why are you paying rent again?

Note: Dave Shelor is a Private Mortgage Banker with Prosperity Mortgage Company, a joint venture with Long and Foster Real Estate and Wells Fargo Home Mortgage, NA. There are multiple loan programs available for all types of situations. This program may not be the perfect fit for you, but another program may suit better. All representations made in this blog are for informational purposes only. You may or may not qualify for the loan scenario discussed here. To determine the loan program that you are best qualified for, please contact Dave directly. Prosperity Mortgage is an Equal Housing Lender.

Good Data turns Bad in a Heartbeat

Mortgage bond prices opened significantly lower this morning erasing the gains from yesterday afternoon and pushing rates higher. China's Premier expressed concerns about the US debt holdings they have. "We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

The bottom line is these remarks were not what we needed and are terribly timed. When the largest holder of US debt is publicly expressing worries there are major concerns about the performance of all US debt instruments including mortgage bonds.

The trade deficit came in at $36.03 billion, not as high as the expected $38 billion deficit. Consumer sentiment data will be released later this morning.

Today is going to be rough based on China's remarks. If you have loans out there that are floating, and the risk is yours, I would suggest locking.

Mortgage Rates Hold

Mortgage bond prices stayed positive yesterday afternoon following a positive 30 year auction and despite significant stock strength. The DOW closed up 240 points. The data yesterday morning was mixed. Positive MBS movement was mostly relief following the auction.

The 30-year auction bid to cover ratio was 2.40 stronger than the previous of only 2.02. Solid 46.2% indirect bid.

Retail sales fell 0.1%, not as weak as the expected 0.5% decrease. This didn't initially sit well with bonds.

Weekly jobless claims rose 654,000, higher than the expected 645,000 increase. Trade data and consumer sentiment data will be released this morning.

Free Credit Reports

I found the following information from the Federal Trade Commissions website. You can visit their site to read about more important information regarding your credit, identity protection and many other items at http://www.ftc.gov/

I hope this information is beneficial.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Here are the details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program.

Q: How do I order my free report?

A: The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

A Warning About “Imposter” Websites

Only one website is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com. Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.

Some “imposter” sites use terms like “free report” in their names; others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site. Some of these “imposter” sites direct you to other sites that try to sell you something or collect your personal information.

Annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. It’s probably a scam. Forward any such email to the FTC at spam@uce.gov.

Q: What information do I need to provide to get my free report?

A: You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Q: Why do I want a copy of my credit report?

A: Your credit report has information that affects whether you can get a loan — and how much you will have to pay to borrow money. You want a copy of your credit report to:

make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.

help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud.

Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

Q: How long does it take to get my report after I order it?

A: If you request your report online at annualcreditreport.com, you should be able to access it immediately. If you order your report by calling toll-free 1-877-322-8228, your report will be processed and mailed to you within 15 days. If you order your report by mail using the Annual Credit Report Request Form, your request will be processed and mailed to you within 15 days of receipt.

Whether you order your report online, by phone, or by mail, it may take longer to receive your report if the nationwide consumer reporting company needs more information to verify your identity.

There also may be times when the nationwide consumer reporting companies receive a high volume of requests for credit reports. If that happens, you may be asked to re-submit your request. Or, you may be told that your report will be mailed to you sometime after 15 days from your request. If either of these events occurs, the nationwide consumer reporting companies will let you know.

Q: Are there any other situations where I might be eligible for a free report?

A: Under federal law, you’re entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, a consumer reporting company may charge you up to $10.50 for another copy of your report within a 12-month period.

To buy a copy of your report, contact:
Equifax:1-800-685-1111; equifax.com
Experian: 1-888-397-3742; experian.com
TransUnion: 1-800-916-8800; transunion.com

Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.

Q: Should I order a report from each of the three nationwide consumer reporting companies?

A: It’s up to you. Because nationwide consumer reporting companies get their information from different sources, the information in your report from one company may not reflect all, or the same, information in your reports from the other two companies. That’s not to say that the information in any of your reports is necessarily inaccurate; it just may be different.

Q: Should I order my reports from all three of the nationwide consumer reporting companies at the same time?

A: You may order one, two, or all three reports at the same time, or you may stagger your requests. It’s your choice. Some financial advisors say staggering your requests during a 12-month period may be a good way to keep an eye on the accuracy and completeness of the information in your reports.

Q: What if I find errors — either inaccuracies or incomplete information — in my credit report?

A: Under the FCRA, both the consumer report­ing company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take full advantage of your rights under this law, contact the consumer reporting company and the information provider.

Tell the consumer reporting company, in writing, what information you think is inaccurate.
Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the written results and a free copy of your report if the dispute results in a change. (This free report does not count as your annual free report under the FACT Act.) If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

Tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.

Q: What can I do if the consumer reporting company or information provider won’t correct the information I dispute?

A: If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your state­ment to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

If you tell the information provider that you dispute an item, a notice of your dispute must be included any time the information provider reports the item to a consumer reporting company.

Q: How long can a consumer reporting company report negative information?

A: A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. There is no time limit on reporting information about crimi­nal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, which­ever is longer.

Q: Can anyone else can get a copy of my credit report?

A: The FCRA specifies who can access your credit report. Creditors, insurers, employers, and other businesses that use the information in your report to evaluate your applications for credit, insurance, em­ployment, or renting a home are among those that have a legal right to access your report.

Q: Can my employer get my credit report?

A: Your employer can get a copy of your credit report only if you agree. A consumer reporting company may not provide information about you to your employer, or to a prospective employer, without your written consent.

For More Information

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To learn more about credit issues and protecting your personal information, visit ftc.gov/credit.
To file a complaint or to get free information on other consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

News and Notes for the Close-March 7, 2009

Mortgage bond prices closed near unchanged since pricing in relatively quiet trading this afternoon. The DOW surged 379 points this afternoon in the strongest showing this year. Recent headlines have Citigroup's CEO stating the company is having the best quarter since 2007. Generally stocks and bonds trade inversely, though not always the case. With the Fed continuing to funnel money into mortgage bonds as we continue to note by the billions, mortgage bonds were able to stem any additional losses today. The official stats aren't released until well after the fact. February 26 through March 4 the Fed pumped in $5.8 billion. They continue to buy mortgage bonds which is helping keep rates in check. We aren't seeing lower rates but we also have yet to see the typical spikes higher when stocks rally like they did today. So in effect, in the short term, they have been able to generally sustain rates at these levels.

The 3 year note auction this afternoon was slightly weaker than average. $34B of 3YR notes were auctioned with a 2.26 bid-to-cover and an indirect bid @ 40.3%. The long end of the market continued to slide following the auction.

A 10 year auction will take place Wednesday afternoon. A 30-year auction will take place Thursday. The additional supply, especially on the long end of the yield curve may make it a difficult week for mortgage rates. Treasury debt competes with mortgage-backed securities for available funds. Globally governments are issuing record debt to raise cash for the bailouts. One concern among traders is the amount of debt may overwhelm available investment dollars causing rates to spike to attract buyers. The more debt that gets issued both here and abroad makes this more likely.

30 Year Historcial Average Chart

Hello folks,

Take a look at this chart. We have been saying for sometime that now is truly the time to buy. Today more than ever is it a great time to buy. In reviewing the attached chart from Freddie Mac, remember this is simply the average 30 year conventional fixed rate published by Freddie Mac.

The graph is better because it simply puts rates into a picture format. Lowest historical rates, prices in many markets creating opportunity, and tax credits for first time home buyers – there is a huge market to approach. I want to help you achieve the American Dream. Achieving this dream correctly, with affordability, responsibility, and accountability. Putting you into a loan program that places you into a risk of losing the home is not my business.

I don't do this kind of work to turn transactions, I do this to assist others in achieving the American Dream. Renting is not a great long term answer. It is a payment that can go up (like an adjustable rate) and gives no equity nor tax deduction. Timing the market is hard, but there is enormous opportunity for those truly thinking of buying. With rates today closing in the mid 4's, now is the time to buy.

Look at the data on the graph and think about where your parents.....your grandparents rates were when they bought. Imagine if you will, having that rate with a mortgage of today. Grab the American Dream the correct way, not with Alt A or sub prime loans, but with using good sense. That is my way. That is Prosperity's way.

For more information on achieving the American Dream, please visit me at http://www.daveshelor.net/. There you will find newsletters, calculators and other information to assist you with your interests. I can also help find you a REALTOR who believes in the same principals as I. We are here to serve you.

Hang On Tight, the Roller Coaster Ride is Back!

Mortgage bond prices are lower mid-morning erasing some of the gains seen yesterday afternoon. Rates are under pressure from positive stocks and worries about the upcoming Treasury auction next week.

In news released this morning, unemployment in February stood at 8.1% and non-farm payrolls fell 651,000. Analysts were expecting unemployment to stand at 7.9% and for the economy to have lost 650,000 jobs. Also, there were downward revisions to previous months data. The jobs market looks awful.

With no more data set for release today, traders will watch stocks to help determine interest rate direction. Be very careful this afternoon.

Next week the Treasury is set to auction 3, 10 and 30-year bonds. The additional supply, especially on the long end of the yield curve may make it a difficult week for mortgage rates. Treasury debt competes with mortgage-backed securities for available funds. Globally governments are issuing record debt to raise cash for the bailouts. One concern among traders is the amount of debt may overwhelm available investment dollars causing rates to spike to attract buyers. The more debt that gets issued both here and abroad makes this more likely. The auctions occur next Tuesday, Wednesday and Thursday.

Mortgage Rates are trending lower this morning

Mortgage rates appear to be trending lower this morning for purchases. If you have a credit score above 730, you can lock in a 30 year fixed rate for around 4.875%. Pay a discount point, and you are in the 4.625% range. 15 Year mortgages are trending in the 4.625% range and 4.375% with a discount point.

Below represents the rate swing for the last 30 days as it relates to 30 year fixed mortgages.


















You will notice that the high for the last 30 days has topped around 6.500%, and the low is currently where we are today.

Tha market swings tremendously through the days. If you are in the market, don't get caught trying to time the bottom. Rates are at historic lows....take advantage of them today.

Market better by .250% of a discount point

Currently, mortgage rates are better by .250% of a discount point. The stock market has opened down 99 points, and trading fears are in a sell off right now, running to the security of Treasuries. If this holds till pricing is set at 11:00 am, we could see a slight improvement in long term interest rates when interest rates are released at 11:00.

As in past days, the market can swing tremendously in a matter of minutes. Rates will fluctuate until the time a rate and program is locked in.

Market Data for Thursday, March 5, 2009

Mortgage bonds opened higher Thursday adding to the gains seen Wednesday afternoon. Rates are finding support from global weakness in the equity markets.

In news released this morning, Q4 productivity fell 0.4%, sharply lower than expectation for an increase 1.5%. Previously productivity rose 3.4%, leaving traders wondering how accurate the decline seen today really is. Also, unit labor costs spiked 5.7% vs. the expected 3.4% increase.

Traders are now waiting for stocks to begin trade at 9:30 am ET and for the release of factory orders data set for 10:00 am ET.

Next week the Treasury is set to auction 3, 10 and 30-year bonds. They will announce the size of the auctions today. The additional supply, especially on the long end of the yield curve may make it a difficult week for mortgage rates. Treasury debt competes with mortgage-backed securities for available funds. Globally governments are issuing record debt to raise cash for the bailouts. One concern among traders is the amount of debt may overwhelm available investment dollars causing rates to spike to attract buyers. The more debt that gets issued both here and abroad makes this more likely. The auctions occur next Tuesday, Wednesday and Thursday.

Tomorrow brings the monthly employment report. It is without a doubt the 800-pound gorilla of all economic data. Traders will begin prepare for the release later this afternoon which may cause some volatility. Current expectations are for the unemployment rate to stand at 7.9% and non-farm payrolls to shed 650,000 jobs.

Data at the opening bell, March 4, 2009

Mortgage bond prices are slightly lower mid-morning Wednesday erasing a small portion of the gains seen Tuesday afternoon. Rates are under pressure from positive stocks.

In news released this morning, the ADP payroll data indicated a non-farm payroll loss of 697,000 jobs. This number is near the BLS estimate for a job loss of 675,000 when the payroll report is released Friday.

Trades will spend the day watching stocks as they await the release of Fed Beige book data. The Fed Beige book details economic conditions in the Mid-Atlantic region and will be released at 2:00 pm ET.

Next week the Treasury is set to auction 3, 10 and 30-year bonds. They will announce the size of the auctions Thursday. The additional supply, especially on the long end of the yield curve may make it a difficult week for mortgage rates. Treasury debt competes with mortgage-backed securities for available funds. Globally governments are issuing record debt to raise cash for the bailouts. One concern among traders is the amount of debt may overwhelm available investment dollars causing rates to spike to attract buyers. The more debt that gets issued both here and abroad makes this more likely. The auctions occur next Tuesday, Wednesday and Thursday.

On the data front, Friday brings the monthly employment report. It is without a doubt the 800-pound gorilla of all economic data. Traders will begin to focus on the release today, which can cause some volatility. Current expectations are for the unemployment rate to stand at 8.00% and non-farm payrolls to shed 675,000 jobs.

To Buy or Not To Buy.....That is the Question

Seriously, if you are considering buying a home, and have been on the fence as to whether or not to deal, then you should have your head examined. Just kidding, forgo the head examination, but do give your REALTOR a call.

Here is the deal. If you have money, a good job, and have taken care of your credit profile and have a score better than say 680, now is a great time to buy. There are a plethora of properties for sale in our great New River Valley, and there are some really great deals to be had as well. Now I am not talking about refurb's, foreclosures or short sales, I am talking about good ole listings.

Real estate sales have sagged slightly over the last 18 months. Credit tightening has also frozen some abilities for buyers to purchase there home. The days of the 80/20's, no doc's, liars loans.....well, they are all gone. However, If you can buy real estate now, then this is truly a fantastic investment into your future. If you can buy a home that is undervalued, then really, how green can green get for ya?

Mortgage rates have dropped to near all time lows again. Actually, it has been a see saw of rate elevations and falls for the last 12 months. It used to be that you could set for a rate, watch, and typically get it within a four to six hour period. Those days are gone. With the volatility in the bond market today, instead of waiting for a specific rate, you need to give your person a range, say .250% range to lock you in at. Why you ask? I will use Thursday as an example. At 1:15, rates dipped to 4.500% for a 30 year purchase mortgage. It went to 5.00% in 40 minutes, and closed out the day at 5.125%. I used to call folks an let them know about the rates, have a lengthy discussion and then lock all those folks in at their desired rate. Now, you need to have everything in place with your mortgage lender ahead of time, give them a range, and then let them lock you in. While you may not get the bottom rate available, I can assure you that you will be in the range.

Let me tell you something. The market will turn around. As a buyer, if you act now rather than waiting, you will be taking advantage of the near bottom of this great buying opportunity. You will be poised to see some of the best returns that will be available in the future. When folks start buying, then the market begins to stimulate. When you stimulate, rest assured that 2 things are going to occur. Home values (and prices) will go up, and mortgage rates will go up as well. Don't get caught in the conundrum of pricing the bottom. By the times the news promotes the fact that all things known as the markets improve, it will be to late.

To view a 2 year history of sales in our area, please visit Marshall Anderson, Louise Baker, and Rhonda Melton at their blog, http://blog.nrvhomes.com/. Marshall has placed a comparables analysis for your review. Thank you Marshall for the information. Great Job.

Market Conditions for this Snowy Monday Morning

Due to the inclement weather, our offices in the New River Valley will be closed today. I am working from home so feel free to reach me via my mobile at 540-250-6002.

Mortgage bond prices remain higher mid-morning Monday erasing the losses seen Friday and more. Rates are finding support from weak stocks where the DOW Jones index opened in the 6,000 handle.

In news released this morning, personal income rose 0.4% and outlays rose 0.6%. Traders were expecting income to fall 0.3% and outlays to rise 0.3%. Also, the Institute for Supply Management (ISM), an indication of manufacturing strength stood at 35.8, near estimates.

With no more data set for release, traders will watch stocks and headline news to help gauge interest rate direction.

Below is the weeks trading event calendar from March 2nd to March 6th.


Event Calendar:

Monday, Mar 2, 2009
Personal Income and Outlays

Monday, Mar 2, 2009
Construction Spending

Monday, Mar 2, 2009
ISM Index

Wednesday, Mar 4, 2009
ADP Employment

Wednesday, Mar 4, 2009
Fed Beige Book

Thursday, Mar 5, 2009
Revised 4Q Productivity

Thursday, Mar 5, 2009
Factory Orders

Friday, Mar 6, 2009
Employment

Market conditions for Thursday February 26, 2009

Mortgage bond prices remain near unchanged this morning failing to erase the steep losses from yesterday afternoon. The data this morning was generally bond-friendly. Weekly jobless claims rose to 667,000, higher than the expected 620,000 mark. Durable goods orders fell 5.2%, weaker than the expected 2.5% decrease. New home sales fell 10.2% in January, weaker than the expected 0.6% decrease. Debt supply remains a focus with the final auction of the week this afternoon.

The 2 year auction 2 days ago was relatively lackluster along with the 5 year auction yesterday. There is concern the 7 year auction will follow suit. The weakness yesterday came mostly from a report of the Freddie Mac delinquency rate being accelerated in January. In severe times bankruptcies generally increase. This casts doubt over the performance of corporate and mortgage bonds(even with the quasi-backing of the Fed).

From an investment perspective it is simple, you typically don't pay premiums to buy something with an uncertain future value. To sell whatever it is, whether it be a bond, house, or widgets/etc..., the price generally has to fall. Unfortunately in bond terms, as prices fall, rates/yields rise, which is what we saw yesterday afternoon.

Volatile Market for Today-February 25, 2009

Goodness gracious. The Bond market has been all over the map today. Freddie Mac had an accelerated delinquency of three times that from this time last year. Bankruptcies are up, stock market is down.

In severe times bankruptcies generally increase. This casts doubt over the performance of corporate and mortgage bonds(even with the quasi-backing of the Fed). From an investment it is simple, you typically don't pay premiums to buy something with an uncertain future value. To sell whatever it is, whether it be a bond, house, or widgets/etc..., the price generally has to fall.

Unfortunately in bond terms, as prices fall, rates/yields rise, which is what we are seeing right now. Mortgage bond prices remain lower as reports of delinquencies fill the headlines. Freddie Mac delinquency rate accelerated in January. In severe times bankruptcies generally increase.

This casts doubt over the performance of corporate and mortgage bonds(even with the quasi-backing of the Fed). Existing home sales fell 5.3%, weaker than the expected 1.4% increase. Debt supply remains the focus this week. The 2 year auction yesterday was relatively lackluster despite recent efforts by the US Government to lobby China to purchase US debt. The 5 year auction this afternoon will likely result in some market movement.

Be alert here. We are still in a choppy trading environment. The bottom line is that the Fed is trying to keep rates low by purchasing mortgage bonds through open market operations. So far they have provided a much-needed influx of buying into MBSs. However, they are not the only entity buying and selling so lower rates are not a given.

So far their efforts have generally helped rates but we are still subject to large market swings despite the Fed's efforts. With that in mind, caution is the key. Take advantage of gains when they come.

For more information on the Freddie Mac news article, please visit the story directly at http://uk.reuters.com/article/marketsNewsUS/idUKN2546018520090225

The 2009 First Time Homebuyer Tax Credit

In 2008, Congress created a $7,500.00 first time homebuyers tax credit. It went into effect on April 8, 2008 and was set to expire on July 1, 2009. The big problem with this credit was that it needed to be re-paid over 15 years. People viewed this as a debt and not a real benefit.

In 2008, the real estate community began advocating removing the repayment feature of this credit. They also were pressing to extend the credit through December 2009 and make the credit available to every homebuyer rather than just first time homebuyers.

The new 2009 tax credit plan consists of the removal of the repayment, as well as an extension of the credit to on or before November 30, 2009. This credit can now be claimed by those who closed on homes on or after January 1, 2009. Keep in mind that the credit is repayable on purchases from 2008. Additionally, the credit has increased to $8,000.00; however, it is still only valid for first time homebuyers.

Some of the details pertaining to this credit involve an $8,000.00 refundable tax credit or up to 10% of the purchase price of the home. For example, if the property costs $75,000.00, then the buyer’s credit claim can only be $7,500.00. If the purchase price is $85,000.00, than the buyers can claim the entire $8,000.00. Refundable means that if your total tax liability in the given year is less than $8,000.00, the IRS will send a refund to for the balance.

Most taxpayers do not have a tax liability that exceeds $8,000.00. For example, according to the 2008 IRS tax tables, a single filer would need $46,000.00 in taxable income to have an $8,000.00 tax liability. A couple would need $58,000.00 in taxable income to have an $8,000.00 tax liability. Those with less tax liability will in most cases get a refund meaning they get the full value of the credit.

There are certain individuals who are ineligible to receive the credit. If you fall into any of the following criteria, you may not be able to receive the credit.
*Your income exceeds the phase-out range. This means joint filers with a Modified Adjusted *Gross Income (MAGI) of $170,000.00 and above and other taxpayers with a MAGI of *$95,000.00 and above
*You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
*You stop using your home as your main home.
*You sell your home before the end of three years.
*You are a non-resident alien.

First time homebuyers are defined as someone who owned another main home at any time during three years prior to the date of purchase. For example, if you bought a home on January 15, 2009, you cannot take the credit for that home if you owned, or had ownership interest in another home at any time from January 15, 2006 through January 15, 2009. So if the last time you owned a home was 2005, you are eligible for the credit even though it is really not your first home. For married joint filers, both must meet the 1st time homebuyer test to take the credit on a joint return.

In conclusion. This information is accurate based on information available as of February 21st, 2009. For more detailed information regarding this stimulus package, please visit http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home?lid=ronav0019 or consult your tax advisor with any questions regarding the use of this provision.

Veterans Administration (VA) Home Loan

If you are a military veteran, who has been on active duty, or a reservist with the applicable amount of active duty service and training, you may be eligible to utilize a military benefit to purchase a home. The VA Home Loan Guaranty Program offers home loans to those qualified Veterans who have the Certificate of Eligibility in place. VA loans offer no down payment and some of the most liberal qualifying requirements of any mortgage type available today. If you are a Veteran, than a VA loan is a viable choice for those who are eligible.

VA loans are available up to 100% of the purchase price of the home. That means no money down and no minimum out-of-pocket investment are needed by the eligible Veteran. Closing costs and most other loan fees can be gifted or paid for by the seller and even the lender.

VA guidelines allow up to 41.00% of a borrowers income to be used toward qualifying for the mortgage payment. Of course, we do have to include your current credit (installment, revolving and child care) debts in the mix when qualifying you to the 41.00% debt to income ratio. That is higher than a lot of conventional or FHA loans and expands a Veteran's ability to buy a home. And, best of all, VA loans are not a one-time benefit to Veterans. Eligible Veterans can use their VA financing to buy their first, second or third home, even if they have used their eligibility before. The Veteran simply must restore their eligibility and we can proceed with the new purchase.

If you think that this program, or any of the other loan programs that we offer may be something that you are interested in, please feel free to give me a call at 540-382-5270 or visit me on the web at http://www.daveshelor.com/. All first mortgage products are originated through Prosperity Mortgage.

Bond Market closed today for Presidents Day

Good Morning,

There should be very little change with interest rates today as the bond market is closed for Presidents Day. Interest rates should remain static from Friday's posting so in essence, we gain a couple of extra days if you lock today, getting the rates available from Friday's rate sheet.

This week holds several important data meetings that should the findings not meet expectations, may lower rates for the week. On Wednesday, we have New Housing Starts at 8:30 and Capacity Utilization at 9:15. On Thursday, we have the PPI @8:30 and Leading Economic Indicators at 10:00. In addition, we also have the Philadelphia Fed Survey at 10:00. On Friday, the Consumer Price Index comes off at 8:30.

Have a great week. For more information, please visit my website at http://www.daveshelor.com/. I can also be reached at 540-382-5270 extension 327.

FHA Loans are for Everyone

Federal Housing Administration (FHA) was established by the National Housing Act in order to implement FHA financing to make the American Dream of home ownership a reality for more Americans. Unlike local state bond subsidy programs, FHA loans have no maximum income restrictions. Whether a first time purchase or a move up to a bigger home, FHA mortgages require less money down and less income to qualify.

Family Help Appreciated (FHA). FHA guidelines allow home buyers to receive financing assistance from relatives. For example, the entire down payment and or loan fees (such as closing costs) can come from gifted funds in order to help home buyers who are short on cash assets. Relatives can also act as "co-mortgagors" in order to help home buyers who are stretching to qualify for the mortgage payments. To assist younger home buyers who have not established alot of credit, FHA requires only a minimal credit history. Couples who are planning to marry can establish a bridal registry savings account to help them accumulate the down payment assistance necessary for purchasing a home.

FHA loans come in a variety of options including long term fixed rate mortgages. FHA also offers short term adjustable rate mortgages. In addition to the wonderful features noted above, current homeowners may refinance their existing mortgage, regardless of type, into an FHA loan should it be necessary. You can refinance or pay off an FHA loan early or in full without the worry of pre-payment penalties. You can finance properties that fall into the 1-4 family owner occupied class, and credit worthy potential buyers can assume existing FHA mortgages with bank approval and save even more.

If you are interested in this type or loan, or any other loan program that might fit, please feel free to give me a call. You can also visit my website at http://www.daveshelor.com/ for more information.

All First Mortgage products are offered and provided by Prosperity Mortgage Company. Credit subject to loan approval. Prosperity Mortgage Company may not be available in your area. Information is accurate as of the date of publishing and is subject to change without notice. All Rights Reserved.

Protect Yourself from Predatory Lenders

One of the biggest financial decisions that a person makes in their lifetime is to buy a home. There are many lenders out there today that are available to assist you with making that happen. However, make sure that you understand the entire process to ensure that you are truly making an informed decision.

Every year, there are home buyers that fall victim to predatory lending. Historically, they are first time home buyers but other home buyers have fallen victim as well. Below are some tips that will hopefully assist you in protecting you against predatory lenders.

First-Attend a first time home buyer seminar. These seminars are free for those who would like to attend. If someone tries to charge you a fee for attending a seminar, back up and find another one. Usually, your lender can help you find a seminar to attend. You can also take these online through the Virginia Housing and Development Authority, or www.vhda.com, and receive a completion certificate at the end of the online training. Other classes are offered in Roanoke at the Total Action against Poverty or TAP office.

Second-Interview several real estate professionals or REALTORS. Ask for references. Think of this as a job interview. You want to find the best candidate to assist you in finding that perfect home, that is within your price point. I can assist you in finding that perfect agent. There are several professional, full time REALTORS within my sphere of influence that I can recommend to you when that time comes.

Third-Shop the neighborhood. You don't want to pay to much for a house if the comparable sales don't match up. This is where picking a top notch REALTOR can assist you. They have access to the MLS and can pull closed transactions within that neighborhood. This will help you when you tailor your initial offer to purchase.

Fourth-Don't let anyone convince you to borrower more money than you are comfortable with. That goes for REALTORS and Mortgage Originators. When I pre-approve someone for a mortgage, I will always give you two numbers. One is the maximum that you are eligible to purchase, based on the criteria that you have given me, and then, give you the figure that YOU are looking to be at.

Fifth-Know what you are signing. Never, Never, Never sign a blank document. If information is filled in after you have signed, you are likely on the hook for whatever it says. Insert "NA" of draw lines through blank pages to prevent verbiage from being added after the fact.

People are losing their homes due to predatory lending practices. Make sure that you are protected. Investigate the REALTOR, the loan officer, and even the title company or closing attorney. Make sure all fees are disclosed to you upfront and that you are truly comfortable with all parties involved.

Ask your loan officer if they are going to attend your closing. It is your money that they are lending, the least that they can do is show up and thank you at the closing table.

For more information or to have a top notch REALTOR referral, please feel free to contact me directly at www.DaveShelor.com, or via email at david.shelor@prosperitymortgage.com. I can also be reached by phone at 540-382-5270, ext 327.