9/23/09 - What the Fed Said

Some important information came out of today's Fed Meeting.

As expected, they left the Fed Funds Rate alone, keeping it at a low .25%. This is good news for those of us with Home Equity Loans tied to Prime. Eventually, this rate will have to come back up though. It is only a matter of time.

The real news today was that the Fed's purchases of Mortgage Backed Securities will continue and they still plan to spend the $1.25 Trillion allocated toward this program. HOWEVER they will decrease the frequency of their purchases and draw it out through the first quarter of 2010.

The good news is that they are going to finish what they started. There were rumors that they would discontinue the program early. The bad news is that we're very likely to see mortgage rates creep back up into the Sixes early next year.

What does that mean to Joe and Jane Homeowner? Well, if you were thinking of buying or refinancing you'd be wise to take a look at your options now while the rates are most attractive.

The next big question yet to be answered is if the First Time Homebuyer Tax Credit will be extended past November 30 and if they will extend this credit to ALL buyers or increase the amount of the credit.

Stay tuned as I'll be keeping a close eye on this.

Have you benefitted by the lower interest rates or tax credit recently? Do you have questions about the tax credit? Post your comments here or contact me directly at twiggins@affsmortgage.com or 615-627-4869.

Give Yourself Time

We are fast approaching the deadline of the First Time Homebuyer Tax Credit. In order for first time homebuyers to receive this credit of up to $8,000 they must close on their purchase no later than November 30. While you might think, "take it easy Todd, this is mid-September" please keep in mind that what lies ahead is a bottleneck of buyers trying to close by that deadline.

Also please consider that with mortgage interest rates back down yet again and with homes selling at attractive prices, our pipelines are already filling up. Most of our lenders are currently operating on five-day underwriting turn times. From application to closing it typically takes three to four weeks, where a one to two week process was more common. There is the potential that most lenders will need as long as five to seven weeks to close your loan as we near the deadline.

Contributing to these delays are some new guidelines that we are now subjected to, such as the Home Valuation Code of Conduct (HVCC) appraisal process and the new Truth in Lending (TIL) disclosure guidelines. While these were put in place for your protection, I assure you that they offer very little consumer protection and only add to the delays and confusion.

So, should you or someone you know consider purchasing a home this Fall, I recommend that you start that search now.

Follow these steps:

1. gather your income and asset documents (pay stubs, W-2s, tax returns and bank statements for starters)
2. consult with me for an analysis of your best mortgage options and to obtain pre-approval
3. give serious thought to what you are seeking in a new home and break it up into the "must have" and "would be nice" categories (location, # bedrooms and baths, garage, yard, etc.)
4. consult with a professional and qualified realtor to assist you in your home search and negotiations

Please note that there are efforts being made to extend the deadline for the First Time Homebuyer Tax Credit past November 30. It also being requested that the amount of the tax credit be increased and that the credit should be extended all buyers. At this time, however, we have no confirmation that Congress plans to do this.

So don't delay. That awesome feeling of buying your first home won't feel nearly as good on December 1.

For more information on the programs available or on the tax credit, please contact me at twiggins@affsmortgage.com or at 615.627.4869