St Louis Finance and Mortgage Refinancing News: Adjustable Rate Mortgages Are Back
St Louis Home Mortgage and Commercial Loans | Principal Loan Reduction | 877-334-0210 or 314-334-0210 | Floyd Tapia, Commercial Lending and Loan Modification Advocate

After accounting for nearly 70 percent of all mortgages issued during the boom, adjustable rate mortgages (ARMs) vanished during the bust, totaling just 3 percent of the market in 2009.

Now they make up 5 percent of all mortgages issued, and Freddie Mac predicts 10 percent by December according to St Louis lending experts.

Behind the comeback is a simple fact: ARMs are a great bargain right now.

The most common ARM loan currently has a rate of 3.5 percent compared to 5 percent for a 30-year fixed-rate mortgage.

“For anyone with a high likelihood of moving soon, the 5/1 is a great product,” said Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.

He continues: “It’s a well understood product too; there’s not a lot of danger with it.”

So why isn’t everyone grabbing an ARM?

Well, because fixed-rate mortgages are seen as safer because they carry the same rate over life of the loan. Borrowers always know what their payment will be.

But with ARMs, interest rates change over time.

For example, the 5/1 ARM which is the most common loan has the 3.5 percent introductory rate for the first five years. After that, the rate adjusts annually.

That sounds kind of dangerous, but one must look deeper.

On a $200,000 mortgage, the monthly ARM payment at 3.5 percnet would be $898 compared with $1,074 for a 30-year, fixed-rate loan at 5 percent.

That’s a $10,560 difference after five years, when the ARM would adjust. At that point the ARM rate could jump to a worst-case scenario 8.5 percent and the monthly payment to $1,538.

It would still take more than 22 months of the higher ARM payments to offset the first five years of savings.

Many buyers remember the so-called toxic or exploding ARMs and how their defaults triggered the mortgage meltdown, helped sink the housing market and usher in the Great Recession.

These loans failed for a couple of reasons.

First, many were issued to people who lacked the income to pay once the initial years of low fixed rates ended and the interest rate reset higher.

Second, the caliber of borrowers was very low.  The 5/1 is an entirely different animal, experts says.

Unlike the toxic ARMs, these products are issued to borrowers with high credit scores, making substantial down payments and with assets, debt and income carefully underwritten before approval.

Rosenbaum said he’s always featured the 5/1 ARM as the product of choice unless the clients tell him they’re planning to live in the home for 15 or 20 years.

For people planning to stay for less time, “it’s paying for insurance they don’t need,” he said.

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Business Owners and Medical Groups: You can now offer customer financing and consumer finance programs to your customers and patients. We are the lender and have approximately $2.7 Billion dollars to loan. Best of all, there is NO risk, NO recourse and NO new equipment to lease for your and your company or medical group. Once your customer is approved, your money is in your bank account within 48 to 72 hours. Turn your credit declines into cash by calling Floyd Tapia at (314) 627-5729.

In addition, if you need commercial financing or a merchant account company that will save you money, Floyd Tapia and his lending and new business resources team can focus on bringing you innovative private lending solutions and financial services to meet all types of financing needs. Let us turn your challenges into closings (or from being underwater equity wise) and help you get a St Louis commercial lending, mortgage or financing loan.

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St Louis Finance Lending and Loan Reduction News: Surprising Financial Turn as Federal Reserve’s Policy Helped Stocks And Not Economy
St Louis Mortgage and Commercial Loans | Principal Reduction Program | 877-334-0210 or 314-334-0210 | Floyd Tapia, Commercial Lending and Loan Modification Advocate

According to a CNBC Fed Survey in December, the Federal Reserve’s policy to purchase $600 billion of bonds in a program widely known as QE2 has been mostly ineffective at lowering interest rates and will do little to improve the unemployment rate.

The survey of 76 economists, bond and stock traders, and analysts, found about 62 percent saying the Fed’s program has been ineffective at lowering interest rates.

A similar percentage believes the program will not help lower the unemployment rate.

But respondents to the survey say the Federal Reserve’s program has played an important part in raising stock and commodity prices.

In fact, nearly three-quarters of the group say the Fed’s bond purchase program has helped raise stock prices, while 63 percent see it as a reason why commodity prices are higher.

The Federal Reserve has been the subject of strong criticism since launching its QE2 program in November.

Fed Chairman Ben Bernanke suggested it was a way to lower interest rates and unemployment.

Since November, however, yields on treasuries have risen by nearly a percentage point.

Asked the reason for the increase in yields, 62 percent of the survey respondents said the main reason was a stronger growth outlook.

Their next choice was a worsening outlook for the deficit, likely the result of the recent tax compromise in Washington, followed by a rise in the inflation forecast.

“The economy is strengthening and the extension of the Bush tax cuts for all taxpayers is playing a more important role in boosting growth expectations than QE2 is,” says RDQ  Economics chief economist John Ryding.

Overall, 71 percent believe the Fed will follow through and purchase the entire $600 billion of Treasuries announced in November.

Twenty-one percent believe the Fed will do less than that amount, and 8 percent think the Fed will do more.

As for QE3, 42 percent of market participants think there is a chance the Fed will continue to increase the size of its portfolio after June 2011.

On average, those who believe in QE3 look for the Fed to add an additional $340 billion in purchases.

But Mark Zandi, Chief Economist at Moody’s Analytics, disagrees, saying, “The passage of the tax cut deal significantly improves the economy’s prospects in 2011 and reduces the need for any additional QE.”

Add it all up, and 41 percent of survey participants give Fed Chairman Ben Bernanke a “B” grade and 27 percent give him an “A.”

We appreciate your visit… how about liking us on Facebook for this St Louis mortgage and customer finance article?

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Articles and Sponsors

Business Owners and Medical Groups: You can now offer customer financing and consumer finance programs to your customers and patients. We are the lender and have approximately $2.7 Billion dollars to loan. Best of all, there is NO risk, NO recourse and NO new equipment to lease for your and your company or medical group. Once your customer is approved, your money is in your bank account within 48 to 72 hours. Turn your credit declines into cash by calling Floyd Tapia at (314) 627-5729.

In addition, if you need commercial financing or a merchant account company that will save you money, Floyd Tapia and his lending and new business resources team can focus on bringing you innovative private lending solutions and financial services to meet all types of financing needs. Let us turn your challenges into closings (or from being underwater equity wise) and help you get a St Louis commercial lending, mortgage or financing loan.

Check back daily for more financial news.

============================================

St Louis Beauty Supply and Avon – Kristin Tapia

In-House Financing, Consumer Lending and Customer Financing

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News: No USDA Loans Is Bad News for Home Buyer Tax Credit Recipients - (News Hot Line: 877-334-0210)

Once upon a time, their existed a federal mortgage program from the United States Department of Agriculture that would guarantee low down payments, no down payments and low interest rates for rural home buyers.

However, with the stringent mortgage lending requirements facing would be homeowners today, tens of thousands of potential buyers have been ushered into this program with promises of a better life, a better home loan in a land not so far away.

And according to federal banking statistics, in 2006, the USDA program backed about 31,000 loans or $3 billion worth.  And then in 2009, that number had grown to 133,000 loans worth approximately $16.2 billion.

What about qualifications for this program?  The standards for qualifying for these home loans were rather tight and the default rates were far better than the FHA which was good news according to St Louis mortgage experts.

Now for the bad news:  This program was never meant to handle that many loans and due to this run on this stimulus package, they ran out of money.

To rectify this unfortunate situation, members of Congress are in the process of appropriating more funding for this successful program.  In fact, the House passed a bill sponsored by Congressman Paul Kanjorski of Pennsylvania.

The Senate also passed a bill out of the Appropriations Committee which was sponsored by Sen. Michael Bennet of Colorado.

But the frustrating thing seems to be that while all this is optimistic news, at present, one still cannot get a St Louis home loan from the USDA.

So, homeowners who have picked their new home and filled out all needed paperwork by said deadlines are anxiously awaiting news from Capitol Hill as to when more funding will be available.

Although these appropriation bills are expected to be signed and passed, it still remains uncertain when these monies will be available which now presents a big problem for the home buyer tax credit applicants.

Keep in mind, buyers have to close by June 30th.  And many of these home loan applicants are depending on these USDA loans.  They signed binding contracts by the end of April 30th, and now they are pretty much in limbo.

Remember, the promise of funding still does not make for a legal home loan contract.  And what makes matters worse, these larger banking institutions are not budging.  They feel it is necessary to wait and make certain that these new appropriations are in essence, a done deal.

This of course is not making the job for lenders, mortgage brokers and real estate agents any easier nor are they staying optimistic about this ordeal ending in a win-win situation for them or their clients.

But the one thing mortgage news analysts strongly agree on is that by the time Congress passes this new funding, there will be a massive backlog of borrowers who may never get their home mortgage by the June 30th closing.

This presents an unprecedented loss to these home buyers who will not just lose their new home of choice, but will also miss this tax credit all together not to mention losing these historically low interest rates that may not reappear for a very long time.

The true irony of this mortgage debacle is that a consumer can do all that is required of them to buy a home only to see the government missing the fiscal boat once again by holding up its own housing stimulus.  How disappointing.

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When applying for any type of St Louis mortgage, always discuss your options with a top St Louis mortgage broker. Call Liberty Lending Consultants, the recognized St Louis refinancing and home loan experts, at 877-334-0210 or 314-334-0210 and ask for Steve Swan or Doug Stahlschmidt.

Or call our known syndicated columnist Floyd Tapia at 314-698-4092 or 877-334-0210, host of the St. Louis “Mortgage Minute” and successful hedge fund originator assisting local and national business owners in getting private and public St Louis commercial lending with no upfront fees.

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Although the St. Louis mortgage and real estate market has drastically changed over the last 18 months, there are ways that consumers can avoid or at least minimize the home buying stress factor.

The following five simple yet ingenious tactics will help in making your St. Louis home loan and home buying experience a better one that will yield positive results.

1. Do not make the mistake by waiting to apply for your loan -

There have been reports that The Federal Reserve plans to stop buying mortgage-backed securities by the end of March. Many mortgage analysts feel that the added risk will precipitate higher interest rates which means that low rates will be a thing of the past. Don’t miss out on this huge potential savings.

2. Your credit report may no longer be the ideal factor concerning your loan -

Now would be the perfect time to look carefully into your credit files. If there are any errors located on your credit report, correct them now before your lender sees them. If you are looking to attain the best interest rates and lower fees, banks will expect a FICO score of 740 or higher. Anything less than 620 will definitely become a financial hurdle in getting your loan done.

3. What are you bringing to the table in regards to a down payment -

Due to more and more borrowing restrictions, most lenders require buyers to put at least 10 percent down. This will benefit you with lower interest rates when purchasing or doing a St. Louis refinance.

For consumers that don’t have ten percent down, an FHA-insured mortgage with a needed 3.5 percent down may be an option. For those who do not have a down payment, you can pursue a VA or U.S. Department of Agriculture’s Rural Housing Service loan. Although there are qualifications for both loans, neither requires a down payment.

4. Try this when refinancing your home -

Turn a common financial fumble into a refinancing game winning touchdown by not refinancing from the beginning. Instead of starting over with a new 30-year St. Louis mortgage, ask your lender to crunch the numbers with the remaining number of years left on your old loan. A lower rate may then take you further down that path of saving money.

However, if you need financial breathing room and a lower monthly payment would help, then refinancing into a new 30-year term may be the right loan for you. Make sure you discuss the possibilities with your St. Louis mortgage broker.

5. The extension of the tax credit may serve you well -

The extension of the home buyer’s tax credit would logically be a great reason to move forward with your impending home purchase decision. The savings are quite attractive.

Now having said this, be careful as to not rush into an unwise buying decision. This savings should be a “bonus” and not the deciding factor. Keep in mind that staying balanced in this matter is as equally important as not missing the tax savings and lower interest rates which may not happen again any time soon.

I would suggest sitting down and go over these five proven home buying tips before purchasing or refinancing that home of yours. If your credit score is 740 or higher and if you have some money put aside, then it only makes sense to move forward with purchasing while taking advantage of that tax credit and lower interest rates.

But, if your credit score is not where you want it to be and you are short on cash, seeking other options or perhaps waiting all together to apply until items are corrected may be the best way to go for now. Either way, I wish you the best in your financial endeavors.

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Looking to find the best deal on St Louis lending, then visit www.LibertyLendingConsultants.com to find the best advice on St Louis refinancing and mortgage news for you.

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News:   Tight Economy Means Americans Are Borrowing Less

In a not so surprising move, Americans borrowed less for a 10th consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades. 

A report issued by the Federal Reserve explained that borrowing dropped by $17.5 billion in November 2009 which was a much bigger decline than the $5 billion decrease economists had anticipated. 

In the same month, $17.5 billion drop in total credit was the biggest amount in dollars terms since records began in 1943.  This represents an 8.5 percent fall from the October borrowing level. That was the biggest percentage drop since total credit declined 9 percent in May 1980. 

The borrowing category that includes credit cards fell by $13.7 billion, an all-time record decline in dollar terms.  The drop was 18.5 percent from November, the biggest decline in percentage terms since a 29.6 percent plunge in December 1974. 

The central bank’s credit report excludes home loans and home equity mortgages, only covering borrowing that is not secured  by real estate and housing. 

The drop in overall credit for 10 straight months was a record in terms of consecutive declines, surpassing the old mark of seven straight declines set in 1943 and again in 1991. 

There are several reasons Americans are borrowing less.  Many remain fearful about their job prospects while others are trying to replenish lost investments.

But potential borrowers should also keep in mind that waiting could cost them money that could be saved by not taking advantage of historically low rates.  These interest rates won’t last forever.

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News: There May Not Be Much Time Left for Low Rates

St. Louis Refinancing Group news team has reported how mortgage rates may not stay low much longer.

This means that time is running out for existing homeowners to do a mortgage refinancing or those looking to buy a home who still want a low interest rate.

This is not a scare tactic.  Rates will be going up.  It’s inevitable.  But before you apply for a refinance loan, here are some tips to help improve your credit score.

It doesn’t take forever to raise your credit score. You can make a noticeable difference in as little as 30 to 45 days as Bankrate.com suggests.

Go to Quizzle.com and get a copy of your credit report. There is no charge for this and neither do they ask for your credit card!

Carefully go over every listed credit line to make sure all listed items are correct.  Removing mistakes can and will make a big difference in your credit score.

You accomplish this by disputing incorrect credit entries.   Start paying down your credit card balance and make sure your debt-to-credit ration is less than 20 percent.

And never, ever close any credit accounts before refinancing. This will drop your score since it also mean deleting all positive credit history.

On the flip side, it would be best for you to not open any new credit card accounts while applying for a new St. Louis mortgage loan.

This includes large purchases like a car which will throw your debt-to-income ratio out of whack.  Don’t forget, credit inquiries will also lower your score.

The last thing you want to do is surprise your loan officer and make their job harder to do.  A good client never does this and most professionals prefer to work with honest homeowners who only want to help the lending process.

And on the lighter side, we hope everyone enjoys Super Bowl XLIV between the Saints and the Colts!

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Here’s more information on the credit reports…

News: What About the Future of the Mortgage Purchase Program?

Corporate minutes released in early January of the Federal Reserve Board’s closed-door meeting in December announced policymakers have already begun debating whether the program should be extended, to ensure the already-fragile housing recovery maintains its course.

However, not all in attendance agreed with this change of venue.  The Federal Reserve has said it will cease and desist its purchases of mortgage-backed securities (MBS) from Fannie Mae, Freddie Mac, and Ginnie Mae on March 31.  This has created a division within the central bank boardroom.

Over the last twelve months, the U.S. central bank has purchased nearly 75 percent of the mortgages that Fannie, Freddie, and Ginnie have securitized.

Reports suggest that they currently hold approximately $900 billion of these MBS bonds, and says by the time the program ends it will have bought a total of $1.25 trillion.

In light of this, federal banking regulators, including the Federal Reserve, issued an advisory to the nation’s financial institutions, warning them to ensure procedures and practices are in place to minimize their risks from loans and an increase in financing costs when interest rates do rise.

Already feeling the heat from analysts and consumers, the government has already moved to reassure the housing market that the Fed’s withdrawal of support won’t have as big a negative impact as some originally feared.

This in essence has been a 180 degree about face as far as the banking industry is concerned.  In fact, last December, the Treasury pledged “unlimited support” to Fannie Mae and Freddie Mac.

They also lifted the mandate that the two companies begin selling off large chunks of the securities they presently hold.

But that may be all too optimistic.  Not fully convinced, Ronald Temple, portfolio manager at Lazard Asset Management, told the Wall Street Journal that ‘if the Fed stops buying mortgage bonds, we should expect mortgage rates to rise by at least a full percentage point.’

He says that combined with high unemployment and still large numbers of foreclosures could push home prices down as much as 20 percent.

Obviously not good news to an already failing housing market.

St. Louis Refinancing Group news team seriously advises consumers to take decisive action whether they are contemplating buying a house (home buyer tax credit) or wanting to refinance their current home before interest rates go up.

That’s why we recommend our lending associates over at LibertyLendingConsultants.com for all your St. Louis lending needs.  Give Steve Swan or Doug Stahlschmidt a call at 314-698-4092 today.

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Here’s more information on the Federal Reserve…