Mortgage 101

NY Times reporter, David Leonhardt, shares some interesting insight on the connection (or disconnect) between Mortgage Rates and Home Prices.

Not really, David.

The market, for all it's recent folly, is a generally rational experience. And buyers, for all the talk of the "emotional purchase", make rational distinctions.  For instance: The price is how much I pay for a house. The interest rate is how much I pay for financing.

In today's REO (bank owned) driven market -- many buyers pay cash. Would a…

Spring is here.

I know it sounds silly coming to you on a rainy day in early February when it's 35 degrees outside and "wintery mix" is the weekend forecast, but the real estate market is on strange footing these days.

Here's A Fact:

Spring has sprung in the real estate market.

And the next 3 months are the best opportunity to get your home sold in over a year.

Why?

Several factors are creating a "perfect storm" for sellers in the current market.

I'll do my best to explain...

Wikipedia defines a "Perfect Storm" as an "expression that describes an event where a rare combination of circumstances will aggravate a situation drastically."

It's also a movie starring George Clooney as the captain of an ill-fated fishing boat.

But the perfect storm…

FHA announced this week it will seek to implement changes to current policies.  These changes are all restrictive and have a significant impact on the real estate buying public.  

You can read all about the changes here: FHA Announces Policy Changes to Address Risk and Strengthen Finances 

For those less inclined to sift through all the beauracracy ... here's a quick snapshot:

• The upfront mortgage insurance premium will increase by 0.5% from 1.75% to 2.25%
• The maximum seller concessions will decrease from 6% of the sales price to 3% of the sales price
• There are some credit score/LTV limitations that should not affect “A” paper lenders

When Do The Changes Go Into Effect?

FHA will issue a notice and have a comment period on most of the items…

If you've been following mortgage rates over the last month you've likely noticed a quick and steady climb.  In fact, since a low of 4.5% on November 27th, 2009 to around 5.25% today (December 30th, 2009) they've done nothing but go up. 

What's Going On?

Mortage rates are going up.  And this rise in mortgage rates is something I've been expecting for a few months now.  Mortgage rates are on their way up, likely to 6% or more over the next few months

Why Is This Happening?

Because that's what they were about a year ago (and where they would be today) before unprecedented intervention by the Federal Reserve.  It's not the result of the economy is recovering ... the economy isn't in recovery mode.   Last year the Federal Reserve starting their…

I was talking with one of my top investor clients a couple days ago and he mentioned he "walked away" (aka foreclosed) from two investment properties last month. The two properties - both Atlanta condos - had lost a combined $250,000 in value over the last 18 months.  Meanwhile, the bank holding the note refused to entertain 3 bonafied short sale offers, denied application to modify the adjustable rate mortgage and increased his monthly interest payment $600 a month. 

Foreclosing on Your Atlanta Home: A Strategic Approach

For a professional real estate investor who makes his living creating profit in the homes he buys and sells, it was a smart decision.  A strategic one, really.  Either continue to hemhorage massive amounts of money every month paying…

Ok. So we all have some idea how we got here, right? We've all heard the terms at least. Credit crisis. Subprime mortgages. Foreclosure. Securitized debt. Bernanke. AIG. Leyman Brothers. Wall Street. Main Street. Greenspan. Federal Reserve. Treasury. Under water. Credit Default Swaps. Meltdown. Crisis. National Debt. GDP. Recession. Depression.

But just how did we get here?

And how why exactly has the entire economy suffered so much at the hands of this Credit Crisis?

Check out the Video below where it's all explained in just shy of 11 minutes:

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Banks vs. Mortgage Brokers

If you're in the market to buy a home...likely, you're also in the market to find the right mortgage to finance that home.  It's important to know there are huge variations between mortgage brokers and bank loan officers.

Atlanta Bank Loan Officers

Loan officers at a credit union, bank or large lending houses (ie. Wells Fargo, Bank of America) are employed by those institutions and, hence, work to sell the loan and mortgage products offered by their employer.  Many of these institutions have a large selection of loan types to select from but it's important to note that all of those loans "originate" from one source.

Atlanta Mortgage Brokers

Much like real estate agents, mortgage brokers act a "freelance" agents who are…