If you are working on a loan for the purchase or refinance of a home, you need to have a SERIOUS  discussion with your lender about locking your interest rate ASAP.

As a former financial advisor with a major Wall Street firm, I have seen this type of market volatility before and I will tell you that when you get the gigantic drop that the stock market took today and the huge drop in interest rates that came with it, there is a better possibility that that stocks and interest rates will “bounce” off these lows very quickly, then there is of rates continuing to fall in a fashion that makes it worth the risk to “wait and see” what happens.

There are two events coming up that make it a good idea to consider locking your rate as soon as your loan officer is available to do this for you.

1. The monthly employment numbers will be released tomorrow. If the numbers are at all better than analysts are expecting, or even in line with expectations,  I anticipate that interest rates will tick up slightly. If, as some suspect, the number is worse than the overall consensus expectation you may see rates tick down on the news. But not by much (unless the number is some off the wall number like 10% unemployment).

2.  The weekend is here. In a volatile market like this, and with rates as low as they are now, waiting through the weekend may cost you. If there is any positive economic developments from the international markets over the weekend it most likely will cause some upward movement in rates before your feet even hit the floor Monday morning.

Obviously, there is no way to know exactly what rates are going to do in the coming days, and , as I am no longer a professional financial advisor, the above comments should not be considered financial advice. I want you to be sure and make your own decision about this based on your current financial situation in consultation with your personal finance management team.

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In an artice that just arrived in today’s communication from Inman News, I thought I was experiencing Deja Vu all over again. In fact, some of it sounded so familiar that I started to rack my brain as to where I had heard this kind of thing before. I looked high and low and still no hint. I looked inside and outside. I looked everywhere in the entire Lake Oroville real estate market area. But no luck remembering where I had heard it before.

So now my dear readers, I turn to you for help. Here, excerpted in part, (Click Here to see entire article) is what I read from the article written by Glen Roberts, Jr., entitled “ A slow-motion real estate recovery”. Maybe you  can help me remember:

Mark Dotzour, chief economist for the Texas A&M Real Estate Center, said government stimuli have delayed recovery.

“We’re not in a ‘double dip’ in my mind,” said Dotzour — referring to some economists’ talk of a second dive into downturn after some signs of an economic rebound — “we just never hit bottom in the first place.”

The market essentially “fell off a cliff,” and the government’s “lifeline” of programs it throttled at the recession, among them the homebuyer tax credit programs, “Cash for Clunkers” auto program, loan mod programs and Federal Reserve’s purchase of Treasury debt, did not have the intended benefits.

The market “would have started coming back up to a year ago or so if we hadn’t had the federal intervention in the first place.”

The federal homebuyer tax credit programs appear to have been largely ineffective, essentially “stealing” sales forward that would have occurred at a later time. “We believe pretty strongly that we paid back every bit of that stimulus,” he said, with the slumping sales that followed expiration of the tax credits.

Hmm…..now where in the world have a I heard these type ideas before?????  Wait……………..yes…………………..now I’m starting to remember………….Here is what I had read in the past.

August 31, 2009

“When the $8,000 first time home buyer tax credit was enacted, I advised that we not get too excited about any uptick in sales activity, as the uptick will be the result of the government paying people to buy homes creating an ‘artificial’ demand.”

“The housing sales numbers will continue their upward trend, and may even accelerate through the end of the year as last minute first time home buyers scramble to close escrow by November 30, 2009.  Should Congress choose not to extend the credit deadline we will probably begin to see a trailing off of  the sales pace toward the middle of spring 2010.”

“On the home values front, we are still facing a huge challenge. There are still plenty of foreclosures on the market and the word is the banks have plenty more inventory on their books that have yet to come to market. If this is true, home values will continue to stay depressed. If these reports turn out to be exaggerated it will be good news for home values going forward.”

September 30, 2009

“My big concern is that getting money from the government to buy a house or buy a car or to buy anything, is like giving the consumer economic cocaine. It only takes once or twice to get hooked on it and the fear of consumer withdrawl will cause the Congressional junkies to keep pushing more at us.”

“I say let the free market do it’s thing.”

October 23, 2009

“Remember that during the “dark days” of the market when it seemed that everyone was saying the collapse of the real estate market was leading us into the next Great Depression? At the same time I was advising you to take the predictions of gloom and doom with a grain of salt and keep your perspective on what was really going on.”

“I am advising the same thing now. While these are impressive numbers, they are numbers mostly driven by the federal first time home buyers tax credit, the Cash for Clunkers for the housing industry. To provide the perspective on this look what happened after the Cash for Clunkers program ended; auto sales dropped by up to 50% for some auto makers. There is still some heartburn to go through as we climb out of the hole created by the explosion of the bubble. Hopefully, while making the ascent we don’t find ourselves on a slippery slope that is sometimes created by government bailouts.”

June 23, 2010

“But, wait!! I thought the government’ s tax credit program was supposed to stabilize the market. If you listened to, and believed what,  the National Association of REALTORS® and the California Association of REALTORS® have had to say about the credits, you should be seeing a recovery by now. But, what we are beginning to see, on a National basis, (which is what most of us read and hear about) is a rapid move of the market toward the place it would have already gone, if  the people who should know better would have been honest about the ultimate impact of these credits they were supporting.”

“Instead these groups landed on the side of  getting a quick “fix” instead of thinking long term.  Now we have to look even longer term because the inevitable has been prolonged.”

 

So have you figured out who is responsible for this foresight?? Just click on any of the above date links and it will all become clear to you.

Today’s public service message is short and sweet to homebuyer’s everywhere:

LISTEN UP!!!

When your loan officer tells you not to buy anything using your credit card during the loan process…..Listen up!

When your loan officer tell you to be sure you have a paper trail for ANY funds you receive during the loan process….Listen up!

When your loan officer tells you that any gift funds that someone is willing to give you must not go directly into your bank accounts…Listen up!

When your loan officer tells you not to deposit those “stashed under the mattress” funds into your accounts….Listen up!

As a borrower you must understand that the loan qualification does not end when your lender pre-qualifies you for a loan.  Any changes to your financial position before your home purchase is COMPLETE will affect your ability to procure your loan. In most cases the effect is that you disqualify yourself for your loan.

Your lender will be monitoring your financial situation throughout the loan process and WILL be aware of changes to it. Be sure that you not only hear what your loan professional is telling you, but also be sure to LISTEN UP!!

If you do, you will find that the loan process is much simpler and less stressful.

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The one encouraging thing to take from the week’s meager numbers is the fact that the average Paradise home sale was over $250,000 and the average time that each of these two homes were on the market was only 24 days. From the seller’s side of the equation it is good to see higher prices homes selling quickly.  Hopefully we will have more substantial numbers to discuss next week.