Satori Alliance | Financial Counseling | Real Estate Investment Products | Financial Guidance Seminars

  If you are a gambler, today’s increase in 10 year treasury yields and the subsequent predictable increased interest rates may be just what the doctor ordered.  Because today’s increase is now the steepest ever since the last record set on August 13, 2003, gamblers are “in the zone” with heavy speculation about whether future interest rates will come back to their low levels we’ve enjoyed since December 10, 2008, or continue to rise.

If you are not a gambler and one of the many currently in or considering getting in a mortgage lending transaction, this is one of those times where market activity may change your plans.

In An Unfair Advantage I discuss several ways that mortgage lenders lock interest rates.  Discussing this today is a bit like closing the barn door after the horses have gotten out but never-the-less an effective conversation.  My strong recommendation is read this and call your lender to have them tell you if you are locked or not and if you are, do they have enough control to close your loan before your “better than market rate” will expire:

Locking in the rate

Not an exact science, there are a lot of ways you could lock in your loan interest rate.  Here are some useful guidelines:

Rates are locked for different periods of time.  The specific period of time has mostly to do with the time required to close the transaction - they could be 15, 30, 45, 60, 120 days or more.  Each of these periods carry additional costs as they increase.  When locked, over 90% of lenders will not allow any changes to the locked rates up or down, within the lock period.  If a transaction extends beyond the lock period, the borrower will likely be charged to extend the rate, 1 week at a time, regardless of who caused the delay.  Here is a list of some common practices among lenders for locking the rate:

• Upon loan application when the loan comes in to the lender
• At the request of the borrower any time during the process
• The lender or borrower may want to time the locking of their interest rate with market performance. While not advised, this is a practice that should be left to highly experienced professionals who even then will be correct 75% of the time instead of 50/50 like everyone else.
• At final loan approval since the closing at this point is guaranteed and the cost to lock is the lowest.

If you have not locked your rate at this point or you are preparing to enter a transaction, discuss the impact of today’s market activity on your file with your lender and if it changes your qualifications.  Even though this may not be an issue for you since rates will not likely rise more than .25 - .375%, it is still a good conversation to have for you and your lender.

  As a real estate investor you are different than the previous version recently retired with these improvements:

1. You have money
2. You are a keen observer of value, growth, and cash flow

For those of you looking for the ultimate value, it is not foreign to you to do what the herd is not yet doing because when they are, it’s too late.  John Bell, an entrepreneur from New Jersey, in his commitment to help reduce debt for his clients, has researched the West Florida area and gives us some compelling results.  Since there has been little in the news, good or bad, about Florida, this is worth your attention.  Thanks John!

Florida’s West Coast Looking better!
Last year the Cape Coral area of Florida had the highest foreclosure rate in the country but now Real Estate climate in the Cape Coral, Florida area and on the Gulf Coast of Florida are showing signs of improvement: First-time home-owners are suddenly entering bidding wars with real estate speculators from as far away as Spain and Germany. Sales in February outpaced those at the peak of the boom, with some houses getting more than 50 offers and selling above their asking price

Banks in these markets are dumping foreclosed properties, attracting cash-rich speculators who are looking for cut-rate bargains and first-time buyers are finally rushing in, lured not only by plunging prices but also government incentives like ultra low interest rates and hefty $8,000 tax credits.   

This doesn’t mean the national bust is over -  but prices have fallen so much in some areas that shoppers are getting interested again, improving the balance between buyers and sellers. It also does not mean prices will surge all too quickly but heavy buying should at least begin to put a floor under prices. “Are we at the bottom?” asks Christopher Thornberg, an economist with Beacon Economics. “We are getting close and just as Florida, and Las Vegas led the nation into the housing bust, those areas could provide the template for a national recovery. . .

Local Resources:
Sunbelt Realty, property listings: http://www.larryguinnc21.com/      
Cape Coral Florida’s Real Estate Guide: http://www.bestcapecoralrealty.com/
Cape Coral Chamber of Commerce: http://www.capecoralchamber.com/

To contact John Bell directly send email to jdbell@optonline.net for a dose of personalized care and concern.

I heard it said at a sales meeting last night that people are downsizing in a way that takes them “Back to their roots” of family, close social gatherings, & needs type purchases instead of wants.  Further, that this is becoming a trend and a new way of life.

On the NBC Today Show a couple of days ago, there was a piece on the values of real estate.  One of the claims was that according to NAR (National Association of Realtors) the average home size desired now has dropped to a taste over 2,000 square feet, several hundred square fees less than just 1.5 years ago.

As I look around, I certainly do see examples of all this but how wide spread is it?  I am now working to build a larger consensus.

I’m working with an Intern who’s major is finance at a local university who put a 6 questions survey together to help answer the questions above in more detail.

Please take 5 minutes and answer these few questions; you may even win a prize for doing it.  Then after you do it, have others take it, he thinks we can get 1,000 responses in a very short while.  Right on Daniel!

The Financial Preferences Survey =  Click Here

Lets discuss your views too

Cheers. . .Danno

I am noticing an increased amount of stress and hassle around the mortgage financing process, and it’s not all about the still present overwhelming volume of business the industry is trying to absorb.

Let’s look as some trends and then with your indulgence, I’ll make a radical conclusion about the direction the industry is headed:

• We have more sophisticated Underwriting engines that automate the process of approving or declining applications for financing.  The decisions themselves are no less complex, in fact may even be more so due to the increasing amount of regulations, guidelines to manage, and government intervention and now even government ownership to protect us from ourselves.
• Advanced 800 answering services that feature voicemail jail in ever more sophisticated technology like voice commands, intensely personal data entry requests, and long waits that need I say can end up in a scripted call with someone in another country.
• Keeping up with longer transactions and less clients that qualify is taking its toll on the mortgage professional, taking a lot more energy at 1/2 their previous income.
• Emerging government intervention and control of FNMA (Fannie Mae), FHLMC (Freddie Mac), and now even partial ownership of the banking system.
• Understanding how to navigate this landscape is a skill that only experienced professionals have and even they have little or no time to invest guiding their clients the way they used to.  In part, we can look to the volume of lending, but another perspective is their declining compensations.
• Power in transactions is shifting.  The most dramatic of these shifts is the new practice of randomly assigning appraisers to a transaction through a handful of national companies not connected to any lender, but whose process guarantees no appraiser will have a close working relationship with any lender.

This is the erosion of the most basic need of the consumer in a complex transaction and the desire of every professional, SERVICE!  While currently not pleasant, we are moving toward an automated system of obtaining financing in the future.  In fact the day is coming where you will likely carry a data card similar in size to a credit card in your purse or wallet that contains all information necessary to be qualified for and obtain a mortgage loan.  This will work for roughly 30% of the population who are the best qualified, who easily meet the criteria, and who don’t mind trading speed and convenience for cost.

However, for the rest of us, like trying to deal with credit bureaus; we will never completely understand how to navigate the criteria and guidelines that will control our ability to get mortgage financing.

We could turn to a loan representative in one of our favorite lending firms whose job it is to deal with all those who do not fit the automated standards.  Doing this, we would need to overlook the inherent conflict of interest working with someone who will be compensated for selling that company’s products.  Ask yourself, would they have your interest, or selling a loan first, on their list of objectives?

The independent mortgage consultant is emerging as a more practical, valuable, and viable solution to this increasing dilemna.  A consultant is compensated for working specifically for you and paid by you for what you want to accomplish.  This can be the most balanced relationship in business.