Delavan Real Estate & Mortgage Blog

I recently received a question that puzzled me.  I believe I’m a pretty good communicator and yet I hear this question.  Now this gentleman has been a client of mine for years and yet I failed to communicate this information to him.

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Wisconsin FHA mortgages and the first time home buyer.

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For all your Lake Geneva Real Estate needs, contact Walworth State Bank today @ 262.728.4203 or visit us on our website at www.walworthbank.com!  If you are in need of a Wisconsin FHA mortgage or any other lending questions visit us at www.TravisEgan.com.

I recently had the pleasure of being a part of a wonderful real estate transaction.  Unfortunately, it was all smooth sailing throughout.  There were many tears and moments of extreme anxiety, but with the gracious and diligent efforts of a great Realtor the clients shared the first official Valentine’s Day as a married couple in their new home.

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True professionalism on display in this Delavan real estate transaction.

I saw an article today on washingtonpost.com website that a person with some knowledge in the Treasury Department is suggesting that banks will lend mortgages at 4.5% for new home purchases.

It got me thinking.  Are interest rates really what’s keeping people from buying real estate in Lake Geneva, Delavan, Elkhorn, Williams Bay or anywhere in Wisconsin for that matter?  I mean rates have already fallen to the mid 5’s on many Wisconsin FHA mortgages. 

I believe the answer may simpler than the experts think.  Read about it here.

I find it alarming that so many so-called mortgage professionals and journalists have consistently and loudly proclaiming this as fact.  In reality, nothing could be further from the truth.  Those of us who have toiled for years advising, counseling, and preparing our clients for homeownership have known this program to be one of the finest loan programs available for first time homebuyers in this or any market.  We extol the virtues of this program because it is NOT  a means to avoid showing underwriters the truth, the whole truth, and nothing but the truth, but the opposite.  The reason FHA will NEVER become the “new” subprime is because everything is verified.

All aspects of FHA mortgages are meticulously verified.

• The borrower’s income is verified.
• The borrower’s assets are verified.
• The borrower’s credit is verified.
• The appraisal is verified and underwritten.
• Social Security numbers are verified.
• Dates of birth are verified.
• Borrower’s are checked against a list to ensure they have not defrauded the government or failed to live up to prior agreements with the government.

It is true that opportunities in the underwriting standards allow the consumer to explain blemishes or situations that do not fit into the norm.  These explanations must be reasonable and documented.  This is the first and most direct opposition to a comparison with “subprime” mortgages.  Most of those programs did not require such scrutiny of the borrower or their finances.  Many of the homeowner’s, who lost their homes, were not properly advised when they were placed into mortgages they could not reasonably afford.  FHA has checks and balances to avoid these indiscretions.

The broad blanket that many cast as a means of comparing FHA and “subprime” do the FHA loan program a horrible injustice.  FHA mortgages have helped many homeowners realize the dream of homeownership.  Will there be foreclosures that come from people who have FHA mortgages?  Unfortunately, yes.  There will always be circumstances that lenders, underwriters, and appraisers cannot anticipate.  Life has a nasty way of reminding this from time to time.  Many Americans will benefit from and because of FHA mortgages.  I am proud to serve those wish to take the next step on getting their piece of the American dream.  Wisconsin homebuyers, more specifically buyers in Walworth County, in places like Delavan, Lake Geneva, Elkhorn, Williams Bay, and Walworth should know there are many qualified lenders who can and will assist you both honestly and ethically.

I know its Halloween, but have some of you lost your minds?  Are you intentionally scaring your children about the doom of our economy? 

I read an article by Liz Pulliam Weston where she makes it clear some of us are doing just that.  It made me pause and ask myself if I’m in the same boat.  I know this; I will pay a lot better attention to it now. 

Take a look and tell me what you think.  Are you doing this? 

Wisconsin Rapids, Wisconsin — Sure, gas prices have come down lately.  But to 34.9 cents a gallon?

That’s what Kelly Joosten and dozens of other motorists paid at a Citgo station Monday.  The sign advertised $3.43 for a gallon of premium fuel, but the pump cost read $0.349 a gallon.

“That was amazing,” said Joosten, who normally spends about $100 to fill up her 1998 Ford Expedition.

Joosten proudly showed off her receipt for 25.36 gallons at $8.85.  She said she saw other motorists filling gas cans, too, at the discounted price.

Station owner JP Raval says the attendant on duty couldn’t figure out why the station was suddenly so busy.

Raval estimated 30 to 40 customers fueled up at the incorrect price — between 200 and 300 gallons worth — for about 90 minutes.

“People kept coming, so fast,” Raval said. “Everything was crowded; it was like a fairground.”

Local General Motors’ employees learned officially this morning that production of full-size sport utility vehicles will end in Janesville on Dec. 23.

The work stoppage will affect about 1,150 hourly and 130 salaried employees at GM, plus hundreds more at local companies that supply the auto plant.

GM announced in June that it would end SUV production in Janesville by the end of 2010 at the latest, but plummeting sales for the big trucks prompted the automaker to accelerate the closing of the Janesville plant.

I don’t know about you, but I’m a bit tired of our government bailing out all these investment banks.  What happened to letting the market “fix” itself.  If we are, as we profess to be, a free market society, then why in the hell is Uncle Sam constantly bailing out these failing companies?  I’ve heard the whole “if we fail to help them then there will be a run on banks and cause issues with the money supply,” argument.  But these aren’t depository banks.  These are investment banks.  Do our elected officials think we’re all a bunch of idiots?  They must.  We know the difference.  The greedy bastards that couldn’t wait to throw money at anyone with a pulse to buy a home, all in the name of better interest rate returns are now being forced to answer for their decisions.  They gambled and lost.  If I go to Las Vegas and lose at the Bellagio am I then able to call Ben Bernanke and ask for a bail out?  Actually, we’re all losing.  Isn’t AIG an insurance company?  I mean c’mon…  Am I the only one who’s had enough?  We wonder why our collective taxes keep rising.  We wonder why so many people look to the government to save their behinds.  All we have to do is look at the headlines.  Apparently, if you donate millions or billions of dollars to political parties than you move up to being “bail out” worthy.  Let the markets do their job.  Let the chips fall where they may.  Old venerable institutions like Lehman Brothers, Merrill Lynch, AIG, or any other company who chose to purchase sub-prime mortgages should reap what they sow.  You collateralize junk mortgages and never expect to pay for that then you suffer the consequences of watching the company you run vanish.  I try to teach my children that there are consequences for poor decisions.  Apparently, that’s only true if you’re not a multinational, company worth billions of dollars.  Otherwise big brother will ride in and save the day.

Travis Egan is Delavan, Wisconsin’s premier mortgage lender and looks forward to the opportunity to discuss your real estate and mortgage questions.  Please call him at (262) 740-7751. 

Originally posted: http://activerain.com/blogs/travisegan 

The Feds took over the mortgage giants, now what for homebuyers in Delavan, Lake Geneva, Elkhorn and all of Walworth County?

So the Federal government did sweep in Sunday, fired the two top people at Fannie Mae and Freddie Mac and took over control of the two. This will probably come as mixed blessings in the industry.

1)  This will shore-up the two insuring they will not implode, which is very good for the industry as a whole since it will guarantee the flow of money to banks and lenders to fund new loans.

2)  The take-over has renewed Wall Street’s awareness in mortgage bonds and because of this we’ve seen rates drop considerably over the last two days and the word on the street is they’ll drop further.  Low 5’s could be just around the corner.

3)  Shares of home improvement companies Lowes and Home Depot are up over 5% with the infusion of confidence in the real estate market.

Now the ugly news:

1)   For the short term it doesn’t look like there will be much of an adjustment in underwriting guidelines, but everyone expects them to get even more strict than they’ve become in the past few months.  This means that it may become even more difficult for some to qualify for a loan.  At a minimum it will mean that more documentation and conditions to be met before closing will be required.

2)   Shares of Fannie Mae (FNMA) and Freddie Mac (FHLMC) are down. Way, way, way down.  It’s clear investors are confident on Wall Street based on the last few days, just not with Fannie Mae and Freddie Mac.

Other than that, I think overall - if the Feds handled this correctly - this will be very good for the industry and may be what we need to get the market started again.  Lack of consumer confidence, fueled by sensationalist media, has been dealing a death blows to the industry for the past nine months.  As I’ve said before, now is as good a time to buy a home as there has been in some time.  It’s time to get off the fence and take part in the American dream.

During the last decade, Adjustable Rate Mortgages (ARMs) have increased in popularity among consumers.  These days, few homeowners (especially first-time buyers) remain in their homes for more than seven years.  In this case, it often makes sense to get an adjustable rate mortgage with a lower rate, especially one with a 5-year or 7-year fixed portion, since they won’t have the loan long enough to be concerned about rate fluctuation

Adjustable Rate Mortgages have three main features: Margin, Index, and Caps.  The Margin is the fixed portion of the adjustable rate.  It remains the same for the duration of the loan.  The Index is the variable portion.  This is what makes an ARM adjustable. Margin + Index = Interest Rate. It’s important to understand that there are many different indices: The 11th District Cost of Funds (COFI), the Monthly Treasury Average (MTA), The One Year Treasury Bill, the Six Month Libor, etc. Each index has its own strengths and weaknesses, some are slow moving, while others are more aggressive.

The third and final component of Adjustable Rate Mortgages is Caps.  Caps limit how much the rate can fluctuate over time.  Annual Caps limit changes to the annual rate, whereas Life Caps provide a worst case scenario over the life of the loan.

To see if an ARM loan is most appropriate you should contact, Travis Egan, Delavan, Wisconsin Mortgage Planner.  He will sit down with you and show which options are available for you so you may chose the option that best fits your long and short term financial objectives.