Article excerpt:

Senator Isakson believes lawmakers will eventually move to extend the credit in one form or another. “I don’t believe either this administration or the current leadership would look November 30 in the eye and let this thing die,” he says. White House spokesman Robert Gibbs said this week that the administration is evaluating the credit’s impact and will make a recommendation to the president, the Associated Press reported. The outlook for an extension appears to have brightened. Scott Talbott, a top lobbyist at the Financial Services Roundtable, put the odds of its extension at 50-50 earlier this week, but he said that the chances improved to 75-25 after Reid endorsed the six-month extension.

-Read the entire article here-

My two cents:

I am among what I hope is a growing number of people involved in the Real Estate Industry who are NOT in favor of the credit and “free money for some.”  The reality is that $8000 given to a relative few will cost all of us much more than the estimated $100 billion it will end up having cost the US Government when this is all said and done.

Thinking logically:

1.  The free market sets prices of homes.

2.  The government gives $8000 to some people who buy some homes.

3.  This has increased sales demand.

4.  Any increase in demand, while it exists, will always increase prices (or slow price declines).

5.  Next, the goverment does one of two things:

a)  Ends the credit at some point.  This will cause all housing values to drop by around $8000 more than they already are (even for those who just paid $8000 more for their home to get the credit). Or,

b)  Continues to give credits to some people who buy homes – forever.  This would be the only way to make sure that prices don’t adjust back to their former price; but then it would soon become “normal” and would no longer stimulate future home sales.

I think that (a.) will be their choice (at some point).

When the article says that they will be “evaluating the credit’s impact” they must be ignoring the greater impact of the total cost of the credit in their evaluation.  The cost is greater than just paying back the money.  The higher cost is the cost of entitling people.

Entitlement is something we’ve all felt already with respect to the credit already. After all, we think to ourselves:  “they can’t take that away now?!”.

The cost of entitlement is devastating and should be avoided at every turn.  Lets get it out of our thinking, out of our politicking, and out of our conversations with each other.  It will kill our ability to think clearly.

The Facts are these:

1.  Mid-Michigan is a great place to live and work.

2.  Home prices around here are making it very easy and attractive to own a home.

3.  There is a lot of expansion in the business, insurance, technology and education sectors that says we will be a growing region.

Whether or not the credit is extended, buying a home in Lansing right now is a very good idea for most people who are thinking about doing it.

Let’s look over these latest stats and just breathe deep for a minute…

• Single-family starts and permits up. The most depressed segment of the real-estate industry over the past two years, homebuilders, are pulling permits again. Single-family starts are up almost 2% and at the highest levels since last October. Permits for single-family construction are up 6%. That’s 6 of 7 monthly increases for 2009 (March showed a slight downturn).

• Mortgage apps jumped 4% for a 3^rd straight week of increases. The recent drop in rates should see this statistic holding.

• Pending home sales index shows an increase for the fifth consecutive month, the first such streak in six years. A still-glutted inventory will feed this trend for a while.

• NAR’s Housing Affordability Index has the Midwest at a whopping 188, down from an incredible 206 for last month. (The HAI is set against a value of 100, which means that a median-income family can exactly qualify for a mortgage on a median-priced, single-family home. A value of 200 means the same family could “afford” twice as much home.) We need to be careful with this one: affordability is being driven—the larger part of it, at least—by the record number of short sales and foreclosures. So it’s great for buyers, but not a great sign of overall economic health. Look for this one to slip back as the next indicator, home prices, improves…

• Home prices nationwide are on the rise. This is one economic indicator that everyone wants to see rebound as it’s our best sign that the market as a whole is on the mend. Great housing affordability is fine, but no business thrives by holding an indefinite fire sale.

So the encouraging news is beginning to show some consistency to it. And though we’re still being warned that we may bounce along at these levels for some time, still, there’s a sense that we can, at last, stop holding our breath.


home mortgage Lansing

If you’re buying a home or refinancing after July 30 of this year, things just got a little more complicated. But don’t worry—it’s all intended for your good. Broadly speaking, the Federal Reserve Board is trying to help you be better informed. Specifically, it hopes to:

• Improve the disclosure of your loan’s APR to better capture fees and settlement costs
• Require lenders to show how your APR compares to the average rate for borrowers with excellent credit
• Require lenders to provide final Truth in Lending Act disclosures so that you receive them at least three business days before loan closing
• Require lenders to show how much your monthly payments might increase for adjustable-rate mortgages
• Prohibit payments to a mortgage broker or a loan officer that are based on your loan’s interest rate or other terms
• Prohibit a mortgage broker or loan officer from “steering” you toward transactions that are not in your best interest in order to increase compensation

For you, the consumer, these are good protections. But keep that in mind when these protections come to you (primarily) in the form of processing-time requirements, some of which may try your patience…

1. Lenders must provide estimates of mortgage loan costs within 3 business days of the application. This is called early disclosure. No fees (except a reasonable fee for a credit report) may be collected before disclosure.
2. A 5-day period after application must elapse before appraisal costs can be collected.
3. A 7-day waiting period is required between early disclosure and closing.
4. An additional 3-day period must be added before closing if APR changes by more than an eighth of a percent.
5. A 4-day period is required between the day the appraisal is given to the borrower and closing.

It may look to you more inconvenient than it actually is. Many of these requirements overlap each other, so the process isn’t lengthened all that much. But if looks complicated, you’re right—it is. But your loan officer should know these ins and outs well (it’s in my best interest since I’m the one on the hook if I screw up).

Either way, it’s helpful to the whole process if you’re better informed on how the Feds are keeping you better informed.

• Nationwide, July’s pending home sales saw a 3.6% increase, the fifth consecutive monthly increase. And if you’re keeping track, that’s the longest string of increases since 2003. Why this good news now? A few reasons: 1. We’re gaining lost ground, and we’ve lost a lot of ground in the last two years; 2. Affordability—low prices and continued low mortgage rates work great together; 3 Timing—in addition to low prices, there’s also a sense that the bottoming out of the market has passed, so prices aren’t getting any lower. Now if we can just get the rest of the economy’s numbers (GDP, unemployment rates) to turn…

• Actually, there’s some hopeful news there too. The latest quarterly drop in GDP, about 1%, is much better than the previous quarter’s drop of 6%. Yes, it’s still a drop, but economists are optimistic that this is a slowing trend, an early sign of recovery. And if GDP recovers and moves into positive growth, employment will follow.

• Consumer confidence is still shaky, but this is an indicator that relies heavily on other indicators, particularly unemployment numbers. The more good news we hear about jobs and business, the more confident we are as consumers. So we should expect that this should be trailing the rest. So even this bad news is actually good news.

Is a full economic recovery a certainty? Of course not. But it’s never been a certainty; there’s always been risk—fundamental and necessary risk!—even in boom times. In fact, it was our losing sight of risk that contributed much of these recent woes.

So be optimistic—not foolhardy, just optimistic—and expect good news. And when you hear it, share it. Our economy thrives on transactions like that.

mortgage broker Lansing