Rates
Well the bomb has finally been dropped; the Federal Reserve has now become the slow unwinding of the QE 3, which was purchasing $85 Billion of bonds, thus keeping rates at an all-time low.
Let’s take a moment….and say good bye to 3.25%....and not to 4.25%....and come March 5.25%
WAIT….WHAT….Yep, repeat after me…. 6% is not a bad rate….again 6% is not a bad rate.
The Fed on Wednesday announced that they will reduce next month’s bond purchase by $10 billion down to $75 billion and it could, could continue each month as the economy improves.
So by August 2014, rates could be on their own again, right around the 6% Mark.
Did I mention 6% is not a bad rate.
So let’s look at some of the numbers from this week:
-Industrial production up 1.1% on an est. of 0.4%
-Homebuilder Sentiment at a 58 vs a 55 (anything over 50 is good), but this was before the Fed announced, I am sure the Homebuilders were all crying after the Fed’s Wednesday announcement.
-Housing starts 1.09M vs est of 950K
-Housing permits 1.007M vs est of 983K
-Existing home sales -4.3% vs est -1.5% (It is cold out and there is snow on the ground)
So all of this economic news was pretty good except for the existing home sales, which was a real bomb.
So what does this mean, LOCK you rate as soon as you can, there is pretty much no chance of seeing rates improve significantly unless we decide to invade Iran.
The trend lines are very ominous and although I don’t see as much volatility as we have had in the past with the uncertainty of the Fed. I do believe that as unemployment numbers come out each 1st Friday of the month, bond traders are going to sell and we will see further significant increases in rates.
Speaking of Rate Increases
G-FEE
The government is going to raise the Government Fee or “G-Fee” on all loans sold to Fannie and Freddie, i.e. so all loans.
The G-Fee is an artificial tax the government imposed on loans to help Fannie and Freddie be profitable, FYI the both made BILLIONS in profits last quarter.
So the G-Fee is going up a quarter of a point on March 1st. And this will then trickle down to rates borrower’s get. So anticipate a rate increase…errrr…tax of about .125 in interest rate to start taking affect in February.
Remember 6% is not a bad rate…..
HARP 3.0
Senate confirmed DeMarcco to head the Housing and Finance Association; this is the guy who is in charge of Fannie and Freddie.
He has indicated that he plans on expanding HARP or Home Affordable Refinance Program in 3 ways. By the way this program allowed people who were upside down to refinance with out an appraisal.
1-Take the date a person is eligible from 5/31/2009 to 5/31/2010 or later.
2-Take Non-Fannie/Freddie loans and make them eligible to refinance under this program.
3-Allow for principal reductions for people underwater.
Stay tuned!!!!
Mortgage Debt Relief Act of 2007
Looks like, as of today, Congress will NOT extend the Mortgage Debt Relief Act of 2007.
So this means any borrower who short sales or foreclosed on a home that closes in 2014, AND has a deficiency, may be hit with a HUGE tax bill.
They will need to consult a CPA ASAP!!!
Lead Generator
Ok, here is a VERY easy Lead Generator.
Go online and purchase 1000 pens with your name and logo on them, it will run you about $270.
Cheap pens, and make the logo catchy and make the pens BRIGHT.
Then leave them EVERYWHERE. As an example.
When Jimmy John’s delivery’s my sandwich to my office, they always have me sign for it. So if they had me a pen, I simply trade out that pen for one of mine.
Or if he doesn’t have a pen, I provide one with him, I am always carrying around 3-4 pens at any given time.