Feds Cut the Rates Again - What Does it Mean

Every time the Federal Reserve cuts the rates the phone calls I receive appear to be ten fold of a normal day. Every one is curious what it will do to their mortgage rate, does it make sense to refinance now? What almost every one doesn't know, is the when the Federal Reserve lowers the Fed funds rate it doesn't necessarily correspond to an equal drop in mortgage rates and often mortgage rates increase. Let's see if I can keep this simple...

When the Fed lowers the fund rates it has a direct effect on short term rates, (credit cards, lines of credit (HELOCs). So you can expect the interest you pay on your credit cards and home equity loans to decrease (unless if you have a Capital One card, they have been known to raise their rates when the Fed cuts rates). However, you will now earn less on money you have invested in CD's, money markets, and savings account.

Unlike short term rates, mortgage rates are determined by the market and adjust according to the market (some days it will adjust multiple times a day and others none at all). The Fed lowers the funds rate to try to stimulate the economy by enticing people to spend money and the stock market usually has a positive reaction to rate cuts, at least in the short term. When people are investing their money in the stock market there is less money to invest in bonds. The 10 year bond is a good indicator of where mortgage rates are heading. If the bond market is not doing well, mortgage rates increase.

There is obviously a lot more than this, but this at least will give you a good idea on how mortgage rates work. While, we saw an increase in mortgage rates today, I believe the optimism in the market will be short lived and we will see rates fall again, at least for a day or a few hours like it did last week. So if you are thinking of refinancing, stay tuned as this next week or two will be the best time to do it.

Prosperity Financial - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/ http://www.myprosperityfinancial.com/


Purchase - Refinance - Debt Consolidation - Cash-Out - Home Equity - Great Rates

We Can't Pay for Financial Literacy?

A bill has been introduced at the Capitol to bring financial literacy to Colorado Schools. The goal of the bill is to help teach our children about mortgages , personal finances, savings, budgeting and other financial lessons.

What a great idea!!! Let's provide our children with the information and knowledge they need so they don't make the same mistakes we did. We will show them why it's important to save and invest their money, and then HOW TO DO IT. We will teach them why it's not wise to spend your all you money on things you don't need, why it's no smart to max out your credit cards, and why you don't spend more money than you make.

One problem, WE don't want to PAY for it. This new bill would cost about $550,000 to implement in schools around the state. I don't understand how the State of Colorado can't pay for a bill that will save 100 times that in the years to come. Our state spends over $13 million dollars a year for education and recreation programs for PRISONERS in our state. I have an idea, let's spend $550,000 less on convicted felons and use that money for our children.

There was no vote taken on the bill yesterday and funding options will be discussed before a vote on Thursday (1/31/08). Hopefully, they do the right thing.


Prosperity Financial - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/ http://www.myprosperityfinancial.com/

Did You Miss Out?

In this crazy and volatile market there have been many opportunities for home owners to drastically reduce their interest rate and save hundreds of dollars a month. The problem is that the opportunities were short lived and only a very few were able to take advantage of lowest rates offered last week. On Tuesday, rates in the morning were at their lowest levels in over 3 years, however, 3 hours and 4 rate changes later they were up 0.375%-0.5% (still great rates).

By the time most home owners knew about the rates dropping, they already raised a 0.50% or more. It pays to work with a mortgage broker that will manage your mortgage and knows your target rate and payment to refinance. If you have a $250,000 mortgage a 0.50% in rate could save you about $80/month and over $28,000 over the life of your loan.

If you have not heard from your last mortgage broker/banker please feel free to give us a call and we can discuss and help you determine what your target refinance rate should be and ensure the next time rates drop you don't miss out.

Prosperity Financial, LLC - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/


Purchase - Refinance - Cash-Out - Home Equity - Debt Consolidation - Great Rates

What you Don't Hear About in the Tax Rebate Bill?

As always, politicians can't just try to help the masses. There is always a hidden clause that finds it's way in to bills even though it has nothing in common. Most of us have heard about the tax rebate that we may receive due the economic stimulus bill the house passed, however, I bet most of you don't know that there is a clause in there that will raise the conforming loan limit from $417,000 to a maximum of $729,750.

Nancy Pelosi, a California Representative was able to include a one year increase in Fannie Mae and Freddie Mac's loan limits in to the "Tax Rebate" bill. An idea that has been discussed over the last few months with regard to mortgage reform, but many experts believe it will help on a few and will most likely due more harm than good to the overall market. Pelosi, knowing she would not be successful in passing a bill that only raised the conforming the loan limits, is now trying to piggyback on a bill that will most likely pass (what politician won't vote for a tax rebate in an election year????).

Raising the conforming loan limits would force Fannie and Freddie to assume more risk, forcing them to raise rate to account for the risk. So while, raising the loan limits would help very people (mostly California home owners and the real wealthy), the rest of us will be stuck paying higher interest rates.

You have to love politicians? I still don't understand how they can screw up every thing they do.


Prosperity Financial, LLC - Your Mortgage Manager

Lafayette, Colorado

www.colomortgages.com www.3bed2bath.net


Purchase - Refinance - Cash-Out- Debt Consolidation - Home Equity - Great Rates

Fraud Alert

Have you ever wondered why you receive so many calls from mortgage brokers and lenders once you applied for a mortgage from a broker or lender? It's called trigger leads. Once you apply for a mortgage loan (purchase or refinance), the credit bureaus/repositories sale your information to mortgage lenders, brokers, and possibly con artists around the country.

Currently it's perfectly legal for the credit bureaus and repositories to sale YOUR personal information. Feel a little vulnerable, wait a second? Companies that sale these leads don't even check or verify if the company/person they are selling YOUR information to are licensed mortgage brokers or if they are on the fraud watch list. Now you have 5-10 people calling you that know a lot about you personally, financially, and your credit offering to beat the rate and closing costs of your current lender. Beware!

A few quick stories from people we have helped recently.

1. The first borrower we were helping refinance their house to lower their rate and they wanted a little cash out. A few days in the process they received a call from a well known national lender (they were just purchase by Bank of America), promising lower closing costs and a lot more cash out. Obviously, any one would be interested in a deal like that. It turned out the loan officer was not familiar with our local market and assumed the house was worth a lot more than it was. After three weeks and $500 later the borrower called us tired of hearing promise after promise but no substance.


2. Borrower two received a call 3 days before closing, again a lender promising to beat the rate we had provided. They provided the loan officer all of their personal information and waited for a response, but never heard back. We closed the loan for them after a slight delay, and every thing was great. Until 3 months later we received a call from the borrower, their identity had been stolen.


3. Borrower three was purchasing a house and received a call about a week after we pulled their credit, once again some one telling them they could beat our loan. They provided the borrower with a good faith estimate and all the disclosures and every thing appeared great. However, on the day of the closing they received a call from their broker telling them rates had jumped over a 0.50% and their closing costs had also increased.

How can you avoid your personal and credit information being sold? Call toll-free 1-888-5-OPTOUT (1-888-567-8688) or visit http://www.optoutprescreen.com/

Remember it's always good to shop when looking for a mortgage, however, make sure you know who you are doing business with, try to use a local broker/lender that is familiar with the market, and you ask for a lock confirmation as well as the other disclosures.

Please contact us if you have any questions or would like to look over your mortgage package another lender has provided.

Prosperity Financial, LLC - Your Mortgage Manager

Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/

Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

Good Signs for Northern Colorado

Weld and Larimer County both saw sizeable increases in wages for the the 2nd quarter in 2007. Weld County ranked 20th out of 329 of the largest counties in the nation, with a 6.8% increase in weekly wages. While Larimer County, had a 5% increase in weekly wages.

Good News in Colorado Real Estate?

Many experts believe that Colorado's real estate market troubles are in the past and 2008 should be a promising year. Experts site the strength of our local economy and the fact that we didn't not experience the "Boom" as much as other markets in the country.

Many people I still talk to believe the real estate market locally is still suffering and that we still lead the nation in foreclosures. While foreclosures levels are still high, we not even in top 10 markets for foreclosures. Experts believe the biggest obstacle for our local real estate market are people's beliefs. Almost every day there is a negative report on real estate, however, a majority of the reports are national reports, not local reports. Real estate markets are local and it appears that is a good thing for Colorado in 2008.


http://www.9news.com/money/article.aspx?storyid=84644

http://www.rockymountainnews.com/news/2008/jan/17/economist-sees-denver-housing-turnaround/

Fannie and Freddie Not Helping Many Colorado Cities

A few weeks ago Fannie Mae labeled most of the Denver Metro Area cities as declining markets, and it appears Freddie Mac will follow suit. What does this mean to you? Why do you care? How will it affect you?

To begin for those of you who don't know, Freddie and Fannie are the two largest suppliers of mortgage funds in the nation. The designation of a declining market by both companies will make it more difficult and impossible for some to purchase a house. Fannie and Freddie both determine declining markets based on your zip code.

If you are trying to purchase or refinance a house in a declining market both companies will reduce your borrowing power by 5%. The max you will be able to borrower is 95% of the value of the house, and in some cases lower.

This designation will make it extremely difficult for many real estate markets to improve, and it will surely have a negative impact on many markets. For example, let's take the Highlands neighborhood in Denver, this neighborhood has seen some of the highest appreciation in the state over the last 2 years. However, some how this neighborhood has found itself on the declining market list, which means any person trying to purchase a house using a conforming loan will have to put 5% down. They could try an FHA loan, but currently most of the houses in this neighborhood would not meet their guidelines. Due to this new guideline, there are will now be less qualified prospective buyers, lowering the demand for houses in this neighborhood, forcing sellers to lower the price of the house if they want to sale.

The declining market will also make it impossible for many A paper borrowers to refinance their house if they are currently in ARM, which may force people with great credit into foreclosure, reducing the value of the neighborhood further!!!

On the other hand, this may help cities/neighborhoods that avoided the list. For instance a majority of Broomfield is on the declining market list, while neighboring towns to the north (Erie and Lafayette) are not. Prospective buyers looking to purchase in the north part of Broomfield, are now likely to look at houses in Erie or Lafayette if they don't have 5% down or don't want to put 5% down. Good for Erie and Lafayette, not so much for Broomfield.

For more information on the declining markets in Colorado, or to see if you are in a declining market, please email or call me.


Prosperity Financial - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/


Purchase - Refinance - Cash-out - Debt Consolidation - Home Equity - Great Rates

Are we Falling in to Recession?

Some experts believe we may already be in a recession, the 1st time since late 2001. Check out this article about our current economic state.

http://money.cnn.com/2008/01/09/news/economy/recession/index.htm?postversion=2008010915

What do this mean for the mortgage rates? Typically, during recessions the Federal Reserve lowers rate in attempt to stimulate the market and help pull the economy out of it's declining state. Some experts the believe the Fed Reserve will lower rates to 2.5%, it currently sits at 4.25%. Which means you will definitely see a drop in your HELOC rates and payments and will see a decrease in first mortgage rates.

Prosperity Financial -Your Mortgage Manger

Lafayette, Colorado

http://www.colomortgages.com/ http://www.3bed2bath.net/

Buyer Beware - Lease Option Scam

The recent boom and bust in the real estate industry has created many opportunities for scam artists to make quick and easy money, while leaving their victims wondering what happened. Real estate fraud has been a problem for decades, however, it typically increases in markets that recently have experienced problems and people are desperately looking and hoping for solutions.

I recently heard of scam that appears to be gaining popularity in the real estate industry. The scam artist, will first prey on people that are having a tough time making their mortgage payment or facing foreclosure and promises to handle their problems if they quit claim the title of the house to them (the home owner relinquishes their ownership of the property). They tell their victims that they will refinance the house in their name or handle the sale of their house so they don't have to deal with the headache and can salvage their credit.

Once the scam artists takes over ownership of the property, they then advertise the property for rent, or even better for them, as a lease option to buy. Once they have tenant, they collect a deposit (on a lease option the deposit could be as much as $10,000) and rents, but never make a payment on the house or try to sale the property. By the time the original owner or tenants discover what has happened they scam artist has collected their money (up to $15,000 in some cases) and has disappeared. The original owner is now stuck with a mortgage that is in foreclosure and has no options to save their property and the tenants are out their deposit and are forced to find a new place to live.

How do you avoid falling victim to a similar scam? First you have to know the people that work these scams are good and very convincing. They will provide you will a deed to shown they own the house, and it's almost impossible for the common person to know who is on the note of the mortgage. However, there are few easy steps you can take to protect yourself.

First, always ask to contact their other tenants for a referral, any good landlord or business person will have no problem providing this information.

Next, check county records to determine how long they have owned the property and how they acquired the house. Almost every county has this information online through the assessor's office or property records. If they acquired the property through a quit claim deed, there is a good chance that they are not responsible for the mortgage and it should raise red flags.

Another good idea (especially for lease options), is to have the deposit held by a non-interested 3rd party, such as a title company. If some thing does happen you will be able to get your earnest money back from the title company.

If you are doing business with a stranger, remain skeptical throughout the process, make them earn your trust, and don't be a afraid to ask for help from some one with in the industry. Feel free to call us and we will take them time to review the transaction and provide any advice that might help.


Prosperity Financial, LLC - Your Mortgage Manager
Lafayette, Colorado

http://www.colomortgages.com/
http://www.myprosperityfinancial.com/

Purchase - Refinance - Cash-Out - Debt Consolidation - Home Equity - Great Rates

Are you Kidding Me?!?!?!

Let me begin by saying, I'm a huge sports fan and while baseball is not my favorite, I understand and follow the game. But, why in the world is our government wasting their time and efforts to probe in to the steroid/HGH debacle in baseball? Don't they have better things to do? Don't we have troops fighting overseas? Are we not in the middle of a foreclosure crisis that could force our county in to a recession? Immigration? Social Security reform? Health care reform? The bottom line is, there are more important issues for the government to focus their attention and our money on.

For those of you that don't know what I'm talking about, there will be a 2nd congressional hearing on the steroid problem in baseball later this month. The House Oversight Committee has invited a few players and others that were recently named/involved in the Mitchell Report (the investigation in to steroids and other performance enhancing drugs in baseball).

What I don't understand (besides the obvious question of why are they wasting their time on this issue), is what they expect to come out of this hearing? Are they going to fix the steroid problem in baseball? I understand that baseball players are role models for our youth, and some one needs to fix this problem. However, I don't think our government should be spending time on this problem. Is this why we voted for these people to represent us? I don't ever remember once in a debate a politician discussing their solutions to the steroid problem in baseball? Is this why we pay taxes? Where are their priorities?

Hopefully, they don't spend too much time on this issue and get back to work solving American's real problems.

Prosperity Financial, LLC - Your Mortgage Manager
Lafayette, CO

http://www.colomortgages.com/
http://www.myprosperityfinancial.com/


Purchase - Refinance - Cash-Out - Debt Consolidation - Homey Equity - Great Rates