Mortgage Rates Drop

This week in the mortgage market was another interesting one! Mortgage rates continue to improve and home prices are at a 2 to 3 year low. We saw the 30 year fixed rate drop to 6.25% today with 0 points. You do the math, this is the perfect time time to buy a home, and I mean any home! A new home, a vacation home, an investment property or even the condo for your kids while they are in school for a few years. More good news, no big banks went out of business today! Although, the day is not over yet.

The media loves to promote fear and we as consumers buy into every time. I have read more articles about how the sky is falling and the banking world is crumbling as we speak. Don't get me wrong, there is some unsettling news out there, but if we stick to basics as we once did, the mortgage world will be okay. If a rate sounds to good to be true, it is! Pre-payment penalties, Negative amortization, adjustable rate mortgages... these are all gimmicks to stretch your dollar. What happens when you stretch a dollar too much? It rips! I see too many buyers come in with the idea that they can grow into the payment after a few years?!?! Never thinking of the what ifs? Banks and Lenders have trimmed their product line, there is no more of the No document loans to 100%, jeez, I wonder why.... It will be harder for you to take cash out of your home up to 100% as well. And get this, we want to see that you have good credit. Remember, home ownership actually is a privilege and not a right. It is something we must all earn.

Here is the classic story you will see in the paper: A couple rents a house for $800 per month, all there bills are behind and they have no savings. They a buy a house and the mortgage payment is $2400 with taxes and insurance. I want you to think this through, if they can not afford there rent, how are they going to be able to afford this new mortgage payment? Not only do I blame the idiot loan officer for putting them in this position, but I have to blame the buyers as well. Imagine that dinner conversation: Honey, I know we can make it now, so why don't we just go for broke and really screw ourselves! Whatta Think?

We are always looking to point the fingers, it is never my fault! Stick to the basics! If you can not afford it, you can not afford it!

It is now more important than ever to have that proper pre-approval in hand. This is to be done before you look at homes! The last thing you need to do is to show up to the mortgage company with a signed offer in hand and you never checked your credit. Talk about stress! Now you are scrambling to find a mortgage product to fit your credit. Sometimes this can be a challenge.

If you have any questions about the mortgages or just the plain truth about what is going on in the market, give me a call any time or send me an email at bill@emersonlending.net

Check out our website at http://www.emersonlending.net/

As always, thank you for reading!

Bill Nickerson, President

Emerson Lending Company

179 Great Road

Acton MA 01720

978-264-4803