Interest rates have dropped to their lowest levels in 40 years. Today’s 30 year fixed rate average is about 5.125% according to the FHLC. To many families this represents an almost 2% decrease in their current mortgage rate. Also, it offers people that have interest only loans and option arms the ability to convert these types of loans into fixed rate loans with little or no increase in payment.

Fannie Mae and Freddie Mac are beginning to tighten their guide lines on future lending. Minimum credit scores are increasing, thus giving further reasons why you should be considering refinancing your current mortgage now. It may take a few years before we see an increase in home values with many areas of New Jersey still declining in value. Jumbo loans, those in excess of $417,000.00 are feeling tremendous pressure in greater restrictions than ever before. Borrowers in this area should consider the benefits of today’s lower rates and ability to consolidate debt there by reducing their overall cash out lay on a month to month basis.

Last, but not least, home owners who owe more than the current market value of the home should be considering a “short pay off” with their current mortgage company. FHA loans can make this possible with 97.5% financing at extremely attractive interest rates. Retaining legal counsel to represent the home owner to negotiate a reduced pay off is the best way to accomplish this task. Many lenders are willing to accept reduced pay offs rather than facing loses from non-performing loans along with the possibility of filing for foreclosure. Aequor Funding Corp is taking a pro active role in this segment of the industry by our listing on the HELP FOR HOME OWNERS government web site. Call us to learn more about the various ways we can help you reduce your mortgage payments and remain in your home.

In addition to lowering the Discount Rate to unprecedented levels last week, there is an additional measure that the Fed will take to help in our economic recovery. This crucial step may end of being of more importance than the actual lowering of interest rates. They are considering expanding a recently announced program to buy up debt and Mortgage Backed Securities (MBS) from Fannie Mae and Freddie Mac. This is a move that can be felt all the way down to the borrowers applying for mortgages. The reason is that the banks issuing the loans now have more confidence in the fact that they will be able to sell them later down the road. It is the old risk vs. reward theory. If the banks know that they have a source to sell their paper, they will be more apt to lend. In addition they will be more apt to lend at aggressive interest rates. The Fed also announced that they were looking at the possibility of buying long term Treasury Bonds. Both of these announcements have helped to lower rates and return some stability to the markets. As usual, we will keep you posted every step of the way.

We would like to begin this month’s newsletter by wishing everyone a safe, prosperous and healthy Holiday season. We also wanted to take this time to let our clients, partners and colleagues know how great the current rate environment is. It is crucial that we convey to our clients how interest rates work and when to take advantage of them. In light of everything that has occurred over the last year or so, our government has remained steadfast in attempting to keep rates aggressive for both potential and current homeowners. We personally don’t feel that low interest rates alone will help on the recovery of our economy, but it is definitely essential to the healing process. For the individual looking to purchase a home, the scenario couldn’t be better. It is a buyers market, with a ton of great deals matched with very aggressive and affordable interest rates. For the current homeowner, who may have a rate that is scheduled to adjust, now is the time to lock in to a 30 year fixed program and have an opportunity to maintain roughly the same payment and in some cases lower it. None of us have a crystal ball, so we can’t predict how long these rates will be available, all we can say with confidence is while they are here, we will work with any client and any situation to try and capitalize on them. It may be a very long time before we have this opportunity again, and we want to ensure that everyone we work with gets a chance to take advantage of this market. Call us today and together let’s see what we can accomplish. In the meantime, enjoy this Holiday Season and all the best to you, your family and friends.

We look forward to working with you and for you!!!

The Federal Government is once more trying to breathe some new life into the mortgage market, but will the patient survive? It might not be easy, but the outlook is positive. The Federal Reserve said on Tuesday, they would spend $600 Billion in the coming months to buy the bonds and mortgage-backed securities issued or guaranteed by Freddie Mac and Fannie Mae. The main idea is to increase the availability of credit to consumers for the purchase of homes, which should support housing markets and improve the conditions of the financial markets in general.

How will this affect mortgages?

The larger part of the new program is geared toward ending the mortgage crisis, which was the original intent of the bank bailout plans proposed in September and signed into law in October. With the Fed buying such a large amount of mortgage assets directly, the hope is that this will narrow that gap and drive down mortgage rates. This will ease the credit crisis and will help stimulate the housing market.