How does this financial crisis affect the Tampa Real Estate Market

With all the gloom and doom we hear on TV it is really hard to figure out what the truth is and what is really happening in the world of Real Estate and Mortgage Lending today. I asked my trusted advisors from the Mortgage Industry and this is what they had to say:

• With all the confusion and uncertainty in the marketplace regarding the health of our credit markets, lenders are open for business and have money to lend. I am sure you have heard about Washington Mutual failing and Wachovia being over by Citigroup. Please understand that these banks along with Countrywide (who had their money problems last September) were the ones who were big players in the “pick-a-pay” option-arm loans that had negative amortization. These were high-risk loans that borrowers could get without providing much, if any, documentation (also known as subprime). These higher risk loans are dragging these banks under.
• There are many banks out there who were more conservative in their lending practices that are still here and ready to lend money. Also, now that Fannie Mae and Freddie Mac have settled down, they are performing as they were originally chartered to do, by providing money for banks to lend to consumers. We should expect a little more tightening in guidelines going forward as all of this plays out, but if you have a job, can prove your income, have some money for a down payment (as little as 3%), and fair credit, you can still get a loan.

So what does this mean for you and your neighbors.........pricing has dropped significantly and this is a great time to buy!! Interest rates, believe it or not, are still great. If you do not have a conventional fixed rate mortgage this may just be the time to refinance. If you are thinking of purchasing an investment property or second home, this is a great time to do so. First time homebuyers, college age kids needing a temporary home, want that beach front condo that used to be too expensive to save for retirement......now is the time to really consider making these purchases. There are great deals to be had. Remember we never know when the bottom has really been hit until we are on the other side going back up!

Seize the Day!

Patty

Understanding Interest Rates

We keep hearing about changing interest rates and the government lowering the prime rate but what does that really mean for the buyer. Well according to my friend and Mortgage Broker Extraordinaire Brian Forrester with TriCounty Mortgage this is how it all really works.

When the FED lowers the FED funds rate, it lowers short term rates like the prime rate, which is used for:
· Car loans
· Boat loans
· Home equity lines of credit.

Long term rates move up or down in conjunction with bonds (also known as mortgage backed securities). One of the main reasons bond interest rates move up or down is related to fears of inflation. If the FED says inflation is coming, rates will rise to compensate. When the FED lowers their interest rates, this is seen as an inflationary move. This is because a rate decrease is supposed to spur more spending because of the cheaper costs of money.

So what does this really all mean to those Buyers out there that are waiting for prices to drop further to buy their dream home................while home prices may drop a little bit further, it is likely that these decreased prices will be accompanied by increased financing costs due to rate cuts by the Fed. This means that any money saved on paying less for a house in a few months time will be offset by Buyrs having to pay off their mortgage at a higher interest rate making “playing the waiting game” a waste of time (and very little fun).

This rate increase isn’t just speculation. Just a couple of weeks ago, in early February, the fixed mortgage rate jumped a full half-percent, making it the fastest rate increase in 20 years.

So what we are saying here Buyers is it is time to get off the fence as we like to say. Now is the time to buy if your are obviously in the position to do so. Prices are significantly down, competition in what is selling is fierce, and interest rates are still good. Now is the time to Buy!

And for all you sellers out there, remember price your home properly, get it in great condition, keep it neat and clean, wash off those smudge marks, (ever try a Magic Eraser on walls??? but I digress!)..............and be ready for those really smart Buyers who have done their homework and are ready to go!

Win the Day!
Patty