$7,500 to buy a home may be yours!

If your a First Time Home buyer you may qualify for up to $7,500 from the State of Michigan to be used toward your down payment and closing cost on a new home. Program eligibility is driven by your income and the price of the home you are buying. The requirements can vary from location to location depending on where the property is located.

Best of all, the down payment assistance is offered in conjunction with the State of Michigan's MSHDA home loan program. MSHDA loans compare favorably to a traditional conventional loan, in many cases they can be from .375% to .500% better than a traditional conventional mortgage. Best of all, you may be eligible for up to $7,500 from the State to purchase your new home.

So why doesn't every lender offer this program? The answer is two fold:

• The program requires extra paperwork and the lender has to be willing to do the extra paperwork and understand exactly what needs to be done to insure you receive the maximum down payment assistance possible.
• The MSHDA program often pays a decreased commission and generates less revenue for the lender then a similar conventional type of mortgage

The approach of our team has always been the same. We will always offer the best mortgage solution available in the market place. Irregardless of the compensation to be derived from the transaction. You can count on us to give you honest, straight forward recommendations.

If you or someone you know is getting ready to buy a home. Make sure they call us to see if they are eligible for this exciting down payment assistance program.

Fed Rate Cut - Good or Bad?

As many of you are aware, just last week the Federal Reserve bank cut the rate on Federal Reserve window borrowing by .50%. This rate is the rate in which banks lend money to each other and is not the same as when the Fed cuts the discount rate.

When the Fed cuts the discount rate this translates into banks lowering their prime rate which in turn leads to lower borrowing cost on loans which are tied to the prime rate (generally home equity lines of credit).

Mortgage rates will generally drift down in anticipation of a Federal Reserve rate cut. In other words, if the Fed was to cut rates tomorrow, you generally would not see an immediate decrease in interest rates. This is because mortgage rates would have dropped in advance of the Fed cutting the discount rate. Mortgage rates react to the market and what it thinks the Fed will do.

If the market thinks the Fed is going to cut, rate's will decrease in anticipation of the rate cut (even before they actually make the cut). The same is true going the opposite direction. Rates will increase before the fed increases rates as the market will price in any potential increase in rates before they actually happen.

So what does all of this mean today? Based on the market, most traders are anticipating a cut of up to .50% within the next 30 to 90 days. That means that rates in the near future could look better. Please note the word "could". In today's global economy coupled with the mortgage and credit liquidity crisis, there is still significant volatility in the market.

As always, we will use all tools available to insure you receive the best possible pricing on your loan with the least amount of risk. As a Mortgage Professional, I subscribe to live mortgage pricing direct from Wall Street. This real time information insures that we are on top of any move in the market place.

You can trust me and my team for honest straight forward recommendations. In the end, a Federal Reserve cut of the discount rate will lead to cheaper money (at least for now).

Credit and Liquidity Crisis Has Local Victim

Just this past week, Charter Funding was another victim of the ongoing credit and liquidity crisis. Charter Funding was part of the larger First Magnus mortgage lending operation. While the local offices are well run companies (I know many people at Charter Funding), the larger company as a whole was experiencing the same problems that many other lenders have.

In today's market it is becoming increasingly difficult for mortgage brokers to find sources of funds for their clients. Lenders continue to leave the market leaving brokers and their clients high and dry with no funds for their mortgage. This is especially painful for homeowners who are set to close on their new home only to find out that their source of money has dried up.

This past week Countrywide Home Loans drew $11.5 billion dollars on a line of credit to continue to fund their operations. Countrywide is the nations largest lender and one of the biggest buyers of home loans from brokers. Countrywide has consistently changed guidelines and rates over the last several months. This may signal trouble for homeowners/buyers who will be receiving mortgage financing from Countrywide. Keep in mind almost every broker has some type of relationship with Countrywide.

At First Place Bank, we are a full service bank with over $3+ billion in assets. We depend on the bank to fund our loans and not Countrywide or any other 3rd party company. At First Place you can bank on your money being there for your closing.

To be continued...........

Credit and Liquidity Crisis - Why it Matters

There has been a lot of news lately about the credit and liquidity crisis that is now taking place in the mortgage market. I thought it would be nice to comment on what all of this means to those of us who don't live on Wall Street.

At the end of the day, the credit and liquidity crisis that we are currently experiencing is nothing more than the lack of funds being made available to lenders and homeowners. While this is an extremely generic explanation, it covers the harsh reality of what the market is currently experiencing.

Most home loans are ultimately sold to investors. Those investors are typically Fannie Mae/Freddie Mac or a host of other private investors. Generally speaking, loans that are purchased by Fannie Mae or Freddie Mac are those loans that are classified as "A" paper loans (loans to borrowers who can fully document their income who have good credit histories). Loans that meet the guidelines of Fannie Mae and Freddie Mac are still widely available in today's market place and account for the majority of the home loans that we have done traditionally.

Loans where the characteristics don't meet the criteria of what is purchased by Fannie Mae or Freddie Mac are known generally as non-conforming loans. They are often referred to as non-conforming, Alt A or subprime mortgages depending on the characteristics of the loan. The market for these loans has essentially disappeared. These types of loans have lost favor with investors world wide. While variations of some of these loans still exist, the terms and conditions in which they are still available are substantially worse then what they were all of even six months ago.

Check back soon as I will continue writing about the current Credit and Liquidity crisis. I wanted to give you some background information to get started.

First Place Bank is a $3+ billion dollar bank. Unlike lenders who are experiencing problems in the market today, we have our own money and resources to continue to fund loans while many lenders are struggling.

To be continued.............