I have a friend who’s a little—okay—A LOT nervous about the economy.  But this is really nothing new; I think she’s been nervous about the economy for about the last 20 years.  Good times and bad, market ups and downs, she’s worried about what’s going to happen next.   In her world, the sky is always falling.

Now, I’ve been in the financial industry for longer than I care to mention—certainly longer than my youthful appearance would suggest.  And admittedly, I get concerned about an occasional market downturn.  But I don’t let it send me into a spiraling world of worry, despair, and ulcers.  Here’s why:

Our market is relatively young.  Do you realize that it took more than 50 years–until 1982—before the Dow Jones crossed the 1000 mark?  It was only then that the market began to really skyrocket, taking only 5 years to hit the 2000 mark, another 8 to hit the 4000 mark, and less than 4 more to hit the 10,000 mark.  In short, between 1982 and 1999, the stock market gained 9000 points!

Unfortunately, the people who are currently investing in—and reporting on—the market (including the mortgage market) seem to forget its history.  If you were to turn on the television or read an online market analysis, you’d almost believe that the Dow began functioning in 2003 (the last time the market was at today’s levels) and that the explosive growth that peaked in late 2007/early 2008 was normal.  That’s just simply not the case.

So I’m telling you what I tell my friend when she begins running and clucking:  Markets rise and markets fall.  Interest rates go up and down.  Property values change—not always for the better in the short-term.  But when you take a long-term perspective, both on investments and homeownership, growth is not only likely, it’s highly probable.    And I also tell her that Warren Buffet and the market foxes like him didn’t make money by buying high and selling low; they invested when the market is down and take advantage of future growth.

And here’s a little something else to remember—especially when it comes to buying a home in today’s market.  Just 15 years ago, people were clamoring to buy when interest rates on a 30-year fixed rate loan were at 8.00%.  10 years before that, 17% percent was a screaming deal.  Today’s rates start at 4.75% for that same 30 year loan, and loan professionals—at least, those with whom I work—are making mortgage loan information a whole lot more transparent and reducing loan fees and costs.  Now, combine those rates and that level of disclosure with home prices at a 5-year low…and things don’t look quite so bad, do they?

Chicken or fox?  You choose.  As for me…I’ve never much cared for feathers.

Are you thinking of becoming a first-time homebuyer?   Then put on your running shoes and get moving!

Time is quickly ticking by for folks looking to enter the housing market before the $8,000 federal tax credit expires.  That deadline?  November 30, 2009.

Sure, you’re just winding down your summer vacations and getting the kids ready to head back for school.  It’s likely that the last thing on your mind is what will happen after Thanksgiving.  And that could be a mistake.

Why?  You see, because of recent changes in lending laws, mortgage companies are simply unable to close loans as quickly as they used to—even those who are committed to transparency in mortgage lending.    Underwriting that used to take a matter of days now takes weeks.  Appraisals are taking longer.  More homeowners are (wisely) getting home inspections done prior to the sale.  And some homeowners are buying properties under short-sale agreements, which only lengthens the process even more.  As such, it’s wise to count on about 6 weeks to 2 months to go from loan application to the closing table.

That means that RIGHT NOW is the time to be pre-qualifying for your loan and working with a real estate agent to find the right home.

If you’re not sure what the tax credit is, here is a great “fast facts” overview prepared by Chicago Tribune columnist Kathleen Lynn in an article earlier this month:

• The tax credit is equal to 10 percent of the home’s purchase price, up to a maximum of $8,000.
• Buyers can claim the credit on either their 2008 tax return or 2009 tax return. If the closing occurred after April 15, 2009, a buyer can claim the credit on a 2008 tax return by filing an amended return. For more information, go to www.irs.gov.
• The home sale must close by November 30, 2009.
• Full credit is available to buyers with modified adjusted gross incomes of $75,000 (single) or $150,000 (married).  A reduced credit amount is available for people with incomes of up to $95,000 (single) or $170,000 (married).
• Two programs — one state, one federal — offer bridge loans or “prefunds” so eligible buyers can use cash from the credit on their home purchase this year. For more information, go to www.fha.gov.
• Buyers do not need to repay the credit if they occupy the home for at least three years.

So if being in your new home for the holidays is on your wish list—and if you want to get the benefit of a fairly hefty tax credit—lace up your shoes, stretch our your hamstrings and begin the marathon that is buying your first home.

On your mark, get set….GO!

The RateWindow CEO, Mark Warner, will be speaking at Inman this year. His panel’s topic is “Blowing Up the Black Box: How to Make Radical Transparency Work.” We’ve been working on mortgage transparency for a couples years now so I’ve read a lot of news/blogs about how professionals are trying to be transparent. One thing that catches my eye in most, is that along with the buzz word transparency, I also see words like revolutionary, radical, innovative. Being a web developer for over 10 years, I do realize that keyword buzz is important for promotion, and in most cases that is all these words are trying to do, create buzz. In my opinion, transparency is not radical nor revolutionary, especially when it comes to mortgages.

When I think of radical transparency I think of knowing everything about the person I’m dealing with. Have they been arrested, what’s their political views, whats their religion, who are their other clients, etc… That IS Radical transparency. RateWindow is not that.

Scenario:

You just found a home you like and what to buy it. For the next 30 days you are going to be involved with a lot of people. You need to trust them, but they don’t need to be radically transparent. Another keyword you hear all the time in mortgage is “NO HIDDEN FEES”. While I agree that there are absolutely no hidden fees in any mortgage transaction, there are bait and switch. When you close a loan the last thing you do is sign off on the closing statement. The last thing you want to see is a fee that you might, or might not have been told about on that sheet, because if you don’t sign it, you don’t close and will possibly lose the home.

Therefore, business level transparency is what I call it. For these 30 days I want complete business transparency with the person I’m dealing with. Below is what I want to know before closing day.

1. Flat Service Fee. I want to know exactly how much I will pay the mortgage broker in fees to get me my loan. Whether this is a flat fee of $3,000, or a percentage of the cost of the loan (1% of 300,000). This does not mean I want a “Discount broker” Flat service fees should go hand in hand with the amount of service I’m provided. I have no problem paying a higher fee for better service. I’m a true believer in you get what you pay for.
2. I want to see every rate. I don’t care if its 12% and 10 points… I want to know that I’m being shown everything. My life is not like your life, I might buy a house and live there for 2 years, or I might live in it for 20 years. In each case I will want either a higher or lower rate based on the amount I will spend over the life of the loan.

That’s not that radical is it? with only these two bits of information I am now more empowered to talk to my loan officer about MY loan. This is all it takes to raise the trust level in this business trasaction so I can rest assured I’m getting the best loan for me and my family.