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It’s been an interesting ride with the Federal Reserve and our market place hasn’t it? Most people are asking me what the heck is happening and why aren’t the rates rolling down like we thought it would. In a nut shell, the Federal Funds Rate does NOT impact the 30 year interest rate. It only impacts HELOC’s (Home Equity Lines of Credit) and credit cards. Last week we had a 5% interest rate available to us on the 30 year fixed and, in a blink of an eye, it was gone. It’s crazy to say the least.

Economic notes, new jobs created numbers were up per the “speculated” numbers. As further numbers come in, the actual numbers may go down slightly. We are still doing good America!

Fourth quarter GDP report came in lower than expectations significantly. The GDP (Gross Domestic Products) grew only 2.2% during 2007, the slowest growth rate since the economy was coming out of a brief recession in 2002.

Now we know that the Fed lowered the fund rate by 50bp ( bp = basis points), what could happen next? Well remember when the Fed cuts the Fund rate, typically rates react the opposite. It creates fears of inflation. Remember fixed mortgage rates are directly affected by inflation, because a fixed rate mortgage provides the investor with a fixed rate of return for a long period of time. As inflation increases, the buying power of the fixed return is eroded and the dollar goes down.

Here is some history to react to, supplied by Barry Habib on his Mortgage Market Guide:

The last time the Fed had a long cutting cycle was back in 2001. The Fed cut eleven times in eleven months, and eight of those cuts were by 50bp, for a total of a 4.75% drop in the Fed Funds Rate. But mortgage rates were actually higher throughout this drastic cutting cycle, because inflation ticked higher. Let’s look at more recent history, and as we have pointed to previously: the Fed cut by 50bp on September 18, 2007, and after prices enjoyed a move higher that afternoon, Mortgage Bonds lost 94bp over the next two days. On October 31st, the Fed lowered by 25bp…and over the next five trading days, Mortgage Bonds lost 78bp. On December 11th, the Fed lowered by another 25bp, and over the next two days, Mortgage Bonds lost 64bp. Most recently - the surprise 75bp cut by the Fed cost us about 150bp on our rate sheets over the next two days.

What is the lesson learned by this? If you are sitting on the fence, you need to ask yourself why? What do you have to gain by sitting there? Interest rates are moving up at least again today. Could you be missing out on some great opportunities? Only you can answer that for you and your personal situation. I do think people need to start putting themselves in a position to take advantage of what is happening out there though.

Has anyone been paying attention to what the interest rate market has been doing lately?  The 30 year conventional loan which allows for amounts up as high as $417K has gone as low as 5.25% today!  We are almost at the all time low here?  This is some interesting times going on don’t you think?  If you aren’t ready to refinance or purchase your new home now, when will you be? 

Regardless of what is happening in the economy right now, you MUST take a look at your own finances and see if this is the time for you to take advantage of these incredible rates.  Do anything you can to consolidate your 2^nd mortgages or credit card obligations into these rates.  If you’ve got the equity to do so this is your time. 

Even jumbo rates have started to come down again.  Those are loan amounts over $417.  The scare of the summer when lenders were uncomfortable lending in those higher loan amounts are starting to calm their nerves and I’ve seen those rates as low 6.5% for the 30 year fixed loan.

I know it is scary out there with our questionable economy.  But don’t be afraid to make things better in your own finances.  As I said earlier this year, my goal is to give everyone positive information to make their lives better.  Here is one way it may work for you!  Call us to see if this is a possibility for you and your family!

Do you have little or no credit lines or limited credit period? If you have a friend or a relative with great credit, become an authorized user on their revolving credit cards. Become an authorized user on a spouse or parents account. The line will show the history of that account on your credit report.

How should you select which card will improve your FICO score the most? Here are the most important criteria:

• Revolving account
• At least 5 years old (the older, the better)
• High or significantly large available credit
• Low balance carried (preferably paid down to $0 every month)
• Perfect payment history.

Current Rates

30 Year Fixed: 5.625% (APR 5.752%) - Lower

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.363%) - Unchanged

40 Year Fixed: 6.50% (APR 6.615%) - Higher

5/1 ARM (2/2/6 caps): 5.50% (APR 6.530%) - Lower

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Unchanged

FHA/VA 30 Year Fixed: 6.00% (APR 6.467) - Lower

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.625% (APR 6.752%) - Lower

30 Year Fixed with 10 Year Interest Only Payment: 6.75% (APR 6.867%) - Lower

5/1 ARM: 6.750% (APR 6.878%) - Higher

5/1 ARM Interest Only: 6.875% (APR 6.915) - Higher

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, December 3, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs or questions about improving your credit score, please feel free to email me or give me a call on my direct line (425) 820-0601 or my mobile.

There is a short week a head with all the markets closed on Thursday and only a half day on Friday. Some economic notes to mention, Consumer Price Index (CPI) registered 0.3%and the Core CPI at 0.2%. With that said, the Federal Reserve will be leaving us minutes on Tuesday. I’m guessing the Fed WON’T cut rates for December at this point. The economy is still quite jittery regarding the housing pressure and retail sales short in October putting pressure on the market. Maybe a sprinkle of good news starting the holiday season, Wal-Mart released “way better” than expected earnings for the last quarter. Also nicely noted, the following BIG retailers showed good earnings:

• Nordstrom
• Barnes & Noble
• Target
• Whole Foods
• Gap
• GameStop
• Limited

Who knows, we may be in for a fun and filling week! Enjoy!

Current Rates

30 Year Fixed: 6% (APR 6.125%) - Unchanged

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.363%) - lower

40 Year Fixed: 6.25% (APR 6.356%) - Lower

5/1 ARM (2/2/6 caps): 5.625% (APR 6.578%) - Higher

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Unchanged

FHA/VA 30 Year Fixed: 6.375% (APR 6.813) - Unchanged

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.875% (APR 7.005%) - Higher

30 Year Fixed with 10 Year Interest Only Payments: 7.00% (APR 7.120%) - Higher

5/1 ARM: 6.625% (APR 6.741%) - Higher

5/1 ARM Interest Only: 6.750% (APR 6.867) - Higher

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, November 12, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

Are the turbulent storms of last week over yet? Wall Street took a 552 point fall for the Dow while Citigroup, Wachovia and GM took big hits in the financial sector. What’s next? Big Ben told congress that he expects the U.S. economy to slow “noticeably” and still feels there are strong possibilities of inflation.

However….the facts so far support some control: Q3 productivity rose 4.9% and unit labor costs dropped 0.2%, so inflation stays under control. In addition, Initial Jobless Claims came in at 317,000, way below expectations and the lowest reading in a month.

Here are some fun little facts I found:

1. OIL AND MILK - If the price of a gallon of milk is $3.89, then a barrel of milk would cost $163.38 (note that 1 barrel equals 42 gallons). The price of a barrel of oil closed last week at $96.32 (source: BTN Research).

2. WE’RE # 1 (AGAIN) - The 3 most competitive economies in the world according to a Switzerland-based think tank are 1) the USA , 2) Switzerland and 3) Denmark The US has been top-ranked for the last 3 years (source: World Economic Forum, Financial Times).

3. I’M A LITTLE SHORT THIS MONTH - 1 out of every 29 mortgages in the USA was delinquent with their required monthly payment at the end of the 3rd quarter 2007. At the end of calendar year 2005, the ratio was 1 out of every 48. (Source: Equifax, Wall Street Journal).

4. BIG BUCKS FOR THE FIFTH GRADER - The average cost for 1-year of college education at an in-state public college is $13,589 for the 2007-08 school-year (cost includes tuition, fees, room and board). The total 1-year cost has increased +6.5% per year over the last 30 years. If that same annual rate of inflation continues into the future, then a 5th grader today will ultimately pay $100,000 for his/her 4-years of public college education during the years 2015-19 (source: College Board).

Current Rates

30 Year Fixed: 6% (APR 6.125%) - Unchanged

30 Year Fixed with 10 Year Interest Only: 6.25% (APR 6.365%) - Lower

40 Year Fixed: 6.250% (APR 6.358%) - Lower

5/1 ARM (2/2/6 caps): 5.625% (APR 6.434%) - Higher

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) – Unchanged

FHA/VA 30 Year Fixed: 6.375% (APR 6.813) - Unchanged

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.750% (APR 6.881%) - Higher

30 Year Fixed with 10 Year Interest Only Payments: 6.875% (APR 6.995%) – Higher

5/1 ARM: 6.250% (APR 6.914%) - Unchanged

5/1 ARM Interest Only: 6.250% (APR 6.680) - Lower

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, November 12, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

Those look good don’t they! The 50^th consecutive month of jobs growth. 166,000 new jobs were created in October, twice the number than expected. That has to say something about our economy doesn’t it?

Do you want to hear about a few more economic stats? How about the Q3 GDP @ 3.9%, Personal Consumption up 1.8% and of course unemployment previously stated holding steady at 4.7%. Let’s continue to watch what happens out there. If these types of numbers continue to prevail, it COULD be a good time to buy. With people making more money and saving more, how can that be bad!

Current Rates

30 Year Fixed: 6% (APR 6.125%) - Unchanged

30 Year Fixed with 10 Year Interest Only: 6.375% (APR 6.491%) - Unchanged

40 Year Fixed: 6.375% (APR 6.484%) - Unchanged

5/1 ARM (2/2/6 caps): 5.50% (APR 6.753%) - Lower

5/1 ARM 10 Year Interest Only Payments: 5.625% (APR 6.834%) - Lower

FHA/VA 30 Year Fixed: 6.375% (APR 6.813) - Unchanged

JUMBO (Non-Conforming) Rates

30 Year Fixed: 6.500% (APR 6.629%) - Unchanged

30 Year Fixed with 10 Year Interest Only Payments: 6.625% (APR 6.713%) - Unchanged

5/1 ARM: 6.250% (APR 6.914%) - Unchanged

5/1 ARM Interest Only: 6.375% (APR 6.970) - Unchanged

Conforming loan limits are currently up to $417,000 and Jumbo loan limits are $417,001-$650,000. Quotes above are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

The programs above are only a sample of what is available. Rates were published Monday, November 5, 2007 @ 10am and are subject to change.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

I SEE ANOTHER FED RATE CUT, DON’T YOU?… Wake me up Wednesday at 2:15 in the afternoon, OK? That’s when we’ll have the Fed’s announcement on rates.

No question it’s a biggee.

But, seriously, I’ll be up early that day for Q3 GDP, Employment Cost Index and Chicago PMI, which are also key. No doubt the Fed themselves may have taken a peak at the very significant October employment reports (especially Non-farm Payrolls), but we’ll have to wait ’til Friday to see how it all fits together. Thanks to Mortgage Market Guide for the heads up.

Current Rates

30 Year Fixed: 6% (APR 6.125%)

30 Year Fixed with 10 Year Interest Only: 6.375% (APR 6.491%)

40 Year Fixed: 6.375% (APR 6.484%)

5/1 ARM (2/2/6 caps): 5.625% (APR 6.666%)

5/1 ARM 10 Year Interest Only Payments: 5.750% (APR 6.737%)

FHA/VA 30 Year Fixed: 6.375% (APR 6.813)

JUMBO (Non-Conforming) Rates. Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down)

30 Year Fixed: 6.500% (APR 6.596%)

30 Year Fixed with 10 Year Interest Only Payments: 6.625% (APR 6.713%)

5/1 ARM: 6.250% (APR 6.914%)

5/1 ARM Interest Only: 6.375% (APR 6.970)

Conforming loan limits are currently up to $417,000. Quotes below are based on 30 day pricing with a 1% loan fee and a credit score of 680 or better. Quotes are also based on full loan documentation files and a minimum of 5% down. If you are planning on putting less than 20% down you will need Private Mortgage Insurance or a second mortgage to cover the difference.

These programs are only a sample of the many products available. Rates published Monday October 29, 2007 @ 10am and are subject to change any time as well as programs may change without notice. This is not a guarantee nor is it a commitment of interest rate.

For further information on any of these programs or additional programs, please feel free to email me or give me a call on my direct line (425 820-0601) or my mobile.

Barb Paetzold - Mortgage Expert

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