Lisa's Blog

I love a good "Top Ten" post... and I love underdogs.  So, what could be better than a Top Ten post about the Underdogs for the new year.  Wow, that even tosses in the "New Yew's Prediction Post". 

So, without further delay, here are my

Top Ten Underdogs for 2009

10.  General Motors.  They used to be the biggest corporation in the world... and now they are burning through BILLIONS of dollars a month with NO hope in sight for actually turning a profit again.  The have massive labor cost issues, an uphill battle with the economy, a dealer network that is about 5 times too large, and WAY too expensive.  They need a cheerleader... 

9.  Chrysler.  Ok, they aren't in as bad a shape as GM in the US... but they have almost no presence outside of the US.  They are owned by a company that might really want to NOT own them...  And they have the same challenges as GM... but fewer dealers.  The Challenger is seriously cool.  The plug-in Hybrid minivan won't be ready until probably 2010.  They need a cheerleader...

8.  Detroit.  Well, is it any shocker that the home of the American auto industry is in AT LEAST as much trouble as the hometown companies?  Of course it doesn't help when the Mayor gets his parole pulled...  It is a sad state of affairs when a house is over-priced by $20,000 when it is free.  Maybe Detroit would benefit from a reality TV show...

7.  The Mainstream Media.  How could they be an underdog when they control the story?  Well... they DON'T control the story, and whether we are talking about TV or newspapers, they are becoming less relevent as news organizations.  Look at the just completed Presidential Race.  How can anyone take their objectivity seriously when the vast majority of them were pulling for the same guy, and had to be dragged kicking and screaming to say anything negative about him.  They need some objective counsel...

6.  The Rich.  It is going to suck to be rich over the next few years.  Ok, it might not completely suck... but it may be less fun.  Taxes are going up, public acceptance will be going down.  Despite the fact that "the rich" are the ones that fuel jobs, Washington is looking to do a beatdown. They need a voice in DC... more of a voice than they get for their money now...

5.  Global Warming zealots.  Sure, you have Al Gore and Hollywood.  But, looking forward, there are bleak times coming.  Temps aren't doing what you said...  The hottest decade on record was the 1930s.  People keep finding mistakes in NASA's data... always showing that reality is actually cooler than NASA says.  When 2008 comes down as cooler than 2007... which was cooler than 2006, the pressure might kick up to show more than another computer model. Global Warming might get handed a "chill pill."

4.  Republicans.  Come on... admit it...  The GOP is hurting right now.  They lost complete control in DC... and I'm not talking about the election results.  They got their butts wiped there, too.  There are people that are saying out loud that there is NO way the Republican Party can come back from this.  Maybe...  Maybe not...  But they are certainly an underdog.  On the flip side, the last two office that were elected BOTH went to Republicans... there are a few voices in the punditry that think there might be some voter remorse after election day.  But the GOP is still a giant underdog.  And they need talk radio to cheer for them...

3.  Real Estate.  Could there be more of an underdog than the real estate market?  Why yes.. two actually.  But seriously, the vast majority of the country has had value deterioration over the last couple of years.  Agents are the favorite kicking post of the media and analysts... not to mention the bubble bloggers.  Our "representative" organization... the NAR... is a laughing stock and has about as much credibility as Milli Vanilli. Real estate is truly as much of an underdog as there is... almost.

2.  The Stock Market.  Ok, real estate went down... but the stock market TANKED.  And it isn't even doing much of a dead cat bounce.  Some people think it could go down MORE.  There simply isn't any confidence in the stock market... and no confidence means no money.  No money means prices pooping.  The stock market is also a leading indicator of the economy.  Usually the stock market is leading the economy by 6-9 months.  Right now, that doesn't bode well...  Can I get a booyah?

1.  Big Corporations.  It's hard to cheer for the big guys.  I mean REALLY hard.  They take OUR money (bailout) and don't want to even say how they are spending it.  (sidenote: Imagine walking into a bank and telling them you want a metric buttload of cash, and what you are going to do with it is NOE of their business..).  And as if the trillion friggin' dollars wasn't enough... there are some people in DC that think they need a couple more trillion friggin' dollars.  To top it off, the actions of many of these same companies have created an air of corporate mistrust... they were so bad that they can't even trust themselves anymore.  Talk about an underdog...  These are the guys that are seriously hard to love.

 

There has been some miss-information flowing around in Active Rain so I wanted to toss out a few bullet points to clear up any confusion.

Here are the Important Tid-Bits to remember:

• Base Conforming limit for most states remained $417,000
• Conforming Jumbo Limit dropped to $625,500
• There are still loans available above $625,500... Just not backed by Fannie or Freddie
• Rates Above $417,001 are higher than below.
• FHA limits remained mostly unchanged, but each county is different, so you need to check locally.
• FHA has the same Max "Jumbo" limit of $625,500 with the amount over $362k being at a higher rate (362k is the "high cost" area normal FHA limit)
• FHA has increased its Minimum Down Payment to 3.5% down
• FHA only requires 1 appraisal, UNLESS it is a Cash Out Refinance above 85% of the appraisal, at which point you can go up to 95% but need 2 appraisals.
• Fannie and Freddie both are continuing to adjust the "add-ons" for interest rate. Credit score, LTV, Property type, occupancy, loan amount, etc all factor into interest rates.
• PMI costs are UP (Private Mortgage Insurance)
• FHA changed the MIP (Mortgage Insurance Premium), but it is Much cheaper than most Conforming PMI.
• FHA does not have the interest rate add-ons, making it more affordable for many buyers than a conforming loan
• FHA is probably going to have a minimum credit score shortly, it is programed into some underwriting engines already... That minimum will probably be 580.
• Yes there is money to lend!  You just need a buyer with a job that qualifies.
• Stated income programs still exist for larger down payment buyers with Great credit.
• Freddie announced yesterday that we hit the lowest rates for a 30 year mortgage since they have been keeping records, 5.01% is the national average for a 30 year mortgage.

That is a few of the things I wanted to toss out to be sure every one was up to date.

Have a great weekend!

Rob

Robert Rauf

(732)223-1630 x102

Real Estate Mortgage Network

 

 

 

 NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey

 I keep looking at rates and thinking "WOW!"

I wasn't really sure if we would see rates this low, but I think it is officially the lowest I have ever seen in the past 20+ years. In 2003 we had rates at similar levels, about .25% or so higher, and we were calling them 40 year lows. So I think it is safe to say it is a 45 or 50 year low in rates.  (Records don't go back much farther than that, but my own personal experience in the industry goes back to 1987)

Here are some interesting numbers:

• The average rate for a 30 year mortgage over the past 20 years: 7.68% That is a rate that includes paying points.
• When I purchased my first house in 1989 my discounted "mortgage guy" rate was 11.25%.
• The first time I refinanced that house was to a 5 year balloon at 9.25%
• Second refi: another 5 year balloon 7.25% (both refi's were early 90's) I was only in this house for 5 years, and had 3 loans, saving quite a bit with each refi.

The real world examples of what I was actually able to do as a Mortgage Guy, jumping on a rate when it made sense.  We have it so good right now that it is hard for people to understand just how good we do have it.

Today: flirting around the 5% mark, and the occasional dip below 5, and well into the 4's if you pay a point or so. Of course this would be for a highly qualified buyer/borrower with great credit. But:You don't need a huge down payment or be perfect to take advantage.  FHA buyers get the same rate, and can get away with as little as 3.5% down and Good credit is expected, but it does not have to be stellar credit.

Why are they so low? partially because the economic data is weak, and bad news is good news for the credit markets... causing rates to go down. Rates go down to help spur the economy.  The next piece is that the Federal Reserve along with the Treasury have committed to buying $500 BILLION in Mortgage backed securities to help keep mortgage rates low, and to help stabilize and boost housing prices.

Interest rates have WAY more upside potential than down and we will not know where the bottom is until they start going up.  My feeling is that we will flirt around current levels for the next 90-120 days and then the economic stimulus plans should begin to kick in, spurring the economy.  Good news is bad news for interest rates, so the first sign of us coming out of this recession will lead to higher long term rates, and it will most likely be a quick jump up, not a slow and gradual one.

 We will probably look back at the last few months of 2008 and the first few months of this year and reminisce, "I could have purchased that house for $X00,000, and had a 5% interest rate, I wish I took advantage!"

We are in a great time to take advantage of House Prices AND interest rates all at the same time. If you plan on buying and keeping your home for the long run, I don't think you will ever regret taking advantage of today's market.  However, if you think you will move in a year or so... It may not be the best move. Real Estate is a long term investment, and history has proven that.

Have a great week!

Rob

Robert Rauf

(732)223-1630 x102

Real Estate Mortgage Network

 

 

 

 NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey