Seth Jacobs – Maine Mortgage Banker / Broker

Barney Frank Looks to Cause Even More Controversy within our Industry..

Employment in April was up across the band of specific jobs; retail jobs increased 57,100 the largest increase since April of 2000; manufacturing +29K, goods producing +44K, service-providing +224K, government jobs down 24K. Those unemployed fro more than 27 weeks declined to 5.839 mil frm 6.122 mil in March. The U-6 unemployment rate at 15.9%; U-6 measures total unemployment, plus all personnel marginally attached to labor force and total employed part time plus all persons marginally employed.

The threat of a government shutdown has been avoided–for now. However, expect the budget and the challenge of debt reduction to stay in the headlines. We may have funding for the next few months, but expect deficit spending to cause the US to hit the debt ceiling of $14.294 trillion by mid-May. At that time we can expect more “sabre-rattling” by Congress. CNN/Money reports that the government will need to borrow more than $700 billion in the period from April 1 to September 30, which is the end of the fiscal year. Thus, we are adding about 10% to this debt each year. The House Budget Chairman Paul Ryan has introduced his own debt reduction plan. President Obama has outlined his. Many others will come from members of Congress. Again, there will be a lot of “sabre-rattling.” Action needed to raise the debt ceiling is mandatory but members of Congress will use this opportunity to protest and highlight their opposition to the growing debt.

Turning the emotions aside, there are some important facts to consider. First, in the past decade since 9-11 we have seen the largest growth in sovereign debt known to mankind. There are certainly many causal factors, but fighting two wars, suffering the “Great Recession” and lower tax receipts are all part of the equation. Second, something must be done with regard to deficit reduction in order for the economy to continue to grow. Consumers have tightened up and now government must do so as well. However, government must do so in a way that the recession does not return. That is called a “balancing act.” Finally, focusing upon only discretionary spending, which accounts for just over one-tenth of the budget, makes for big headlines but it will not eliminate the deficit. To eliminate the deficit, all spending must be on the table plus tax receipts. Which brings up another question. Do we need to completely eliminate the deficit? That is what part of the debate will be all about. One thing for sure, a stronger economy will produce more tax receipts and make the job easier. The largest contributor to the run-up of debt has been the loss of tax receipts due to the recession. Finally we ask the most important question. With another election around the corner, will the politicians keep their eye on the ball long enough to take meaningful action? It will be interesting to see if they just rattle sabres or use the sabres to do the work that was intended of them. 

Is this the last opportunity to purchase or refinance at bargain home prices and rates which are at record lows?

For the past several months, rates have been rising from the historically low levels they reached during the second half of last year. These rates presented a great opportunity for homeowners to refinance their home loan. It was even a better opportunity for those who were interested in purchasing their first home, an investment property or trade up. With bargains available, purchasing made so much sense for those who see real estate as a long-term investment and more importantly a better life for their family.

Rising rates were not bad news for the state of our economy. The rates were rising because the economy is recovering and that is very good news. Evidence of a recovery is all around us. Just last week, CNN indicated that rents are about to rise precipitously and one must ask whether the recovery of the home purchase market will be next….

“Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years. “The demand for rental housing has already started to increase,” said Peggy Alford, president of Rent.com. “Young people are starting to get rid of their roommates and move out of their parent’s basements.” By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode. Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years…”

World events, especially the tragedy in Japan, have caused a short-term drop in home loan rates just as the economy is heating up. This means that you now can purchase or refinance a home at the lowest rates in months. According to the Freddie Mac Weekly Survey, rates have dropped over 0.25% in the past several weeks. Rates on 15-year fixed home loans are the lowest they have been since December. This lower rate equates to an approximately $500 in annual savings in interest on a $200,000 mortgage.

How long will rates stay low because of this crisis? No one can tell. But if you missed out on refinancing or purchasing last year, this could be your opportunity. Today, those who hesitate may be missing a very historic opportunity. Home affordability is the lowest it has been in our generation. Those who have a lot of money have been picking up bargains for the past year. Why? Those who are successful stay ahead of the trends. These lower rates mean that everyone can take advantage of this occasion to own the home of their dreams or reduce their payment on the home they already own. With gas prices up, wouldn’t the savings help?

Contact me quickly as we expect to be plenty busy this week with those who recognize the significance of the timing.

-Seth

Buying a vacation property or second home is something special you do for yourself and your loved ones-a way to share the good things in life. Now, to help you enjoy that experience even sooner, Reliant Mortgage Company has Vacation Home Loans available for Seasonal Maine Properties!

Seasonal Properties
• We will permit the financing of a “seasonal” property, not suitable for year round occupancy
• Second Home occupancy only
• The property must be located in an area where second homes are common, and are not commonly suitable for year round occupancy
• The appraiser must certify that the inability to use the subject property year round is not detrimental to marketability
• At least one sales comparable should be a seasonal property, not suitable for year round occupancy
• SFC “922” is required for loan delivery
• Found on page 13 of the Freddie Underwriting Guidelines dated 8-10-10

Same Freddie guidelines as traditional second homes but:

1. No heating system is required for the home.
2. No traditional well is required if there is an alternative water source that is common to similar homes….example is pipe to a lake.
3. No traditional septic system. Holding tanks or similar are acceptable if common.
4. Foundations which are piles or pillar and posts are acceptable.
5. The key is getting comps with similar features to prove that the property is not unique and is marketable.
6. Island properties are acceptable in very limited cases. They must have full time police, fire and medical services available.

Competition for this product is limited. Contact me today to be pre – approved for a Seasonal Second Home Mortgage.

Oftentimes borrowers don’t have any credit card debt or open lines of credit and this can hurt their scores. For these types of clients it’s recommended they open a secured credit card with a min balance of $300-$500. Problem is where can they get one of these? A simple and easy place for borrowers that need help badly is at capital one.

Here is another link with a list of cards for people with bad-fair credit if the capital one doesn’t work- just make sure it says they report every month to all 3 bureaus.

To apply for a First Time Home loan contact me today!

Seth

The more you use the Internet, the more you appreciate its convenience and access to services like banking and shopping. Unfortunately, the Internet also gets exploited for frauds that can sometimes look surprisingly genuine. Here are some of the tell tale signs of typical frauds, and some safety checks you can use to avoid them.

How it works: The most common fraud arrives by email, claiming to be from your bank, credit card company or some other service you use. It usually asks you to send your account details, and sometimes your PIN, either by return email or through a website. Various tricks are used to lower your guard, such as ‘security and maintenance upgrades’, ‘investigation of irregularities’ or ‘bills or charges due’.

Fraudsters can scan the Internet for email addresses or generate them at random. They don’t need an online service provider’s mailing lists. They may send just a few dozen emails or thousands. Even if only a few unsuspecting people bite, it can be worth the effort. These emails can look genuine by using the names of real people, logos and branding, links to pages from the real website, or “official looking fine print”.

Safety checks to avoid fraud

• Only use your PIN through the official login site offered by your provider.

• Check official websites for announcements.

• Use only secure sites for keying in financial or personal information.

• Take common sense privacy precautions, such as avoiding financial transactions at “internet cafés” and libraries.

• Act quickly if you think you’ve been conned. If you get a suspicious email tell the service provider. If you have sent any details through an email or website you’re a bit worried about, contact your bank, credit card company or service provider right away.

Please do not hesitate to contact me if I might be of any assistance to you at this time!

Mortgage interest is generally fully tax deductible. For example, being in the 28% federal tax bracket has the effect of lowering your borrowing costs by almost a third. In the early years of a loan, much of the monthly payment is interest, so these savings can really add up. Tax savings are real dollars, so don’t forget to take this benefit into consideration as you make decisions regarding your mortgage financing.

The Fed meeting this week will be the most important release.  While no rate change is expected the wording of the statement will be carefully scrutinized.

LOOKING AHEAD 11.01 to 11.05

Why Data is Important

One of the easiest and most important things to do when making a decision whether to float or lock a loan is knowing what data is going to be released.  Economic releases are important because they provide a snapshot of a portion of the economy.  Data is even more important in that it is often the cause of market volatility.  Upcoming data events are readily available and there is no excuse not knowing what data will be released in the week ahead.

While an in depth understanding of an economic event can help a person make informed decisions, it is more important to have a rudimentary understanding of when an important piece of data will be released and what basic effect that data can have on the market.    Understanding the nuances of a release does very little for a person if they are blindsided by not knowing when the release will occur.  Accurately predicting how each and every release will come in is impossible.

Floating into important economic data can be very risky and can expose a person to huge market swings.  Keep that in mind this week, as there is an abundance of significant data heading our way. The combo of a Fed meeting and the employment report in the same week is not common.

I recently sat down with Tom Brunette of MetLife Auto & Home and was suprised at how much I learned about insurance. MetLife Auto & Home has really low auto insurance rates and great features included with every policy.  One benefit to insuring with Met is their no-deductible glass replacement.  This covers ALL of the glass in your car.  They will replace or repair ANY of the glass in your vehicle that gets damaged or broken.  Sandy roads are right around the corner!  This might be just the kind of benefit you’re looking for to avoid paying for a chipped or cracked windsheild… You can call or email Tom Brunette any time for a free quote.  tbrunette@metlife.com or 207-232-3295.