January 17th Moorings

Hello and welcome to this week’s edition of Moorings. It has been said that “no news is good news” and while that can be true, lately many of the economic reports we have seen have been very good news, as they show signs that our economy continues to improve. Stocks have enjoyed their seventh straight weeks of gains, due to the positive economic reports that have been streaming in. While this is certainly cause for celebration for holders of stock, an important question we need to consider in my industry, is what does this mean for home loan rates in the long and short term?

On the one hand, improvement in the economy is good news on the housing front, as once people feel better about keeping their job or getting a new job, home purchasing activity will rise, and values will follow. But on the other side of the coin, as the labor market and economy improve, home loan rates will have to gradually rise as well. And remember, this all ties in with the Fed’s plan to inject the full $600 Billion into our economy as part of their latest round of Quantitative Easing, known as “QE2.”

Remember, the three part goal of QE2 is to create inflation, lower unemployment, and boost stock prices, and we are seeing evidence of these goals occurring. Not only have stock prices improved over the last seven weeks as we discussed above, but December’s Jobs Report posted the lowest unemployment rate since May of 2009. So what’s the bottom line if you have been thinking about purchasing or refinancing a home? Home loan rates are still very attractive right now, so contact your preferred mortgage banker to discuss your options.

With that being said, let’s take a look at where rates are for the week. A client with excellent credit, and adequate income, reserves and appraised value who is looking at refinancing their thirty year home loan, at or under $417,000, can expect to obtain a mortgage at approximately 4.75% with a one percent origination fee or 5% with no fee. If you are looking to purchase a home, those rates will generally be the same, assuming your qualifying factors are no different. If you are indeed thinking of obtaining a new mortgage, one thing you can do to help expedite the process is gather together some paperwork that will inevitably be requested no matter who you use as a mortgage provider. Things like your last two pay-stubs and W2’s, your last two years tax returns, and two months worth of statements for any bank or asset accounts, including retirement. Having these documents ready to submit to your lender will save time and help you to be pre-approved much faster. Of course realize that additional documents may and will likely be requested during the process as well, but each loan is different and these are the standards that everyone in our industry needs to begin the process. Well that’s it for this week, until next, Be Blessed and Numbers 6:24-26 be on you.