Delavan Real Estate & Mortgage Blog

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. 

Delavan, Wisconsin — Here’s a sonic boom to prospective homebuyers: The lingering decline in the prices of homes has made many houses more affordable than they’ve been in years.

You know what this means?  Housing could shift from a buyer’s market, which it presently is in Delavan, Elkhorn, Lake Geneva, and all of Walworth County to a seller’s market before you know it.

Please don’t misinterpret me.  I am not saying that all is well when it comes to housing.

I would agree with my peers who suggest that it may be at least a couple of months before the demand for housing matches or surpasses the current inventory.

Nor am I expecting another housing bubble to form in the immediate future.

All I would like to point out is that, in broad terms, the average house is no longer as overpriced as it once was here in Walworth County.  That being the case, it is no longer wise to assume that home prices have to fall a lot more before they stabilize.  I would suggest that may have already happened.

For now, however, this is what most buyers believe, at least the ones I’m talking to.  Knowing full well that there are a lot of unsold homes out there, most would-be buyers are waiting for a sign that prices have stopped falling and thus stabilized before making an offer to purchase.

They are waiting because history and the mass media have conditioned them to do so.

Until recently, home prices used to go in only one direction, up, the only question being how rapidly.  As a result, a house became just about the only item — large or small — that people would buy expecting its price to appreciate.

Fortunately, for owners in Wisconsin or the Midwest we didn’t see the exponential appreciation in home values the folks on the coasts and Florida did.  So we haven’t seen the precipitous decline in value they have seen as well.  What we have seen is a much smaller rate of appreciation but few markets have seen an actual decline in value.

Remember, incomes are still rising, so home prices don’t have to fall as much as you think before buyers decide that they can once more afford the home of their dreams.  Sooner or later, the fact that housing is more affordable will sink in.  That’s when the market will turn and that’s when those who have chosen to sit on the sidelines may wish they had acted sooner.

Where should you go if you find your credit is inaccurate?  How can you get your credit corrected and not worry about being taken by some fly by night company? 

The Federal Trade Commission regulates credit repair services, and they provide free information to help consumers spot, stop, and or avoid businesses with fraudulent, deceptive, or unfair practices.

Be familiar with the Credit Repair Organizations Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research the background and make sure the company will live up to its credentials.

I have a company that I use for this purpose, and they have a proven track record of keeping in touch with my clients and me on a regular basis, while my clients are going through the remediation process.  Their work is 100% guaranteed, which means that if they are not able to meet the commitments outlined at the commencement of the process, then there is no charge to the consumer.

I have also developed marketing literature on the topic of credit repair, which I pass out to my clients to help them understand credit scoring.  This provides them with information about what they can do to immediately help improve their credit score.  Subsequently, in many cases, they are able to obtain the financing for the home they wish to purchase.

From there, I continually keep an eye out for new options as their credit standing improves, and seek to place them in a lower interest loan as time progresses.  I feel it is my responsibility to do more than simply quote rates and provide a loan, but rather to help them manage their debt on an ongoing basis to meet their long-term goals.  That’s why so many of your friends, relatives, and neighbors come to see Travis Egan, Delavan Mortgage Planner, when they need assistance with their home mortgage, equity loans, or developing a mortgage plan that fits their long and short term financial objectives.

Let me know when you would like to set an appointment and talk about what I can do to assist your clients who are in need of credit remediation services.  I look forward to assisting you in this area.