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Thanks for joining us for our second issue. There has been lots of economic news recently that has had an impact on the stock and bond market. Good economic news from China and speculation that the European Central Bank would consider more Quantitative Easing (QE) of their own to aid their troubled member countries as well as the U.S. unemployment rate ticking up to 9.8% have all contributed to huge swings in stock and bond prices. And now there is chatter in the trading pits that QE3 will be forthcoming. Remember, that the goal of QE2 is to create inflammation, pump up Stock prices and lower the unemployment rate. Better hold on for the ride!
Your friends at Ann Arbor Mortgage Company |
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Mortgage Rate Update
Rates have continued to tick upward over the past week. The average 30 year fixed rate has risen into the mid and upper 4's while the 15 year fixed rate has risen into the low to mid 4's.
It's always important to remember that interest rates change daily. Certain economic indicators such as unemployment data, consumer price indices, retail sales data, and consumer confidence figures all have an affect on mortgage interest rates.
When the economy is slow and the stock market is "bearish", many investors move money out of stocks and into bonds and mortgage-backed securities. This causes mortgage interest rates to go down. When the economy is doing well, the stock market rallies and is considered "bullish". Investors then have a tendency to move their money out of the safe haven of bonds and mortgage-backed securities and back into stocks. As a result, mortgage interest rates go up.
In times like we have been experiencing these past few weeks with much market volatility, rates can sometimes change up to 3 or 4 times a day.
Due to the recent rise in rates, it might be a good idea to have any borrowers who have been preapproved check with their current lender to make sure they still qualify for their mortgage. |
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Credit Corner
What goes into your FICO Score?
Source: MyFico.com and Bankrate.com
A credit score number is often called a FICO score, for Fair Isaac Corp., the company that developed the system upon which it is based.
The score is supposed to distill all the information in your credit report, using a formula to calculate a single number that indicates your credit worthiness. It is designed to give lenders a fast, accurate prediction of the risk involved in giving you a loan. Lenders have attested to the score's value in streamlining the underwriting process and creating more opportunities for consumers to get a mortgage. Scores range from the 300s to about 900, with the vast majority of folks falling in the 600s and 700s. The higher the score, the better.
Your FICO scores are calculated from a lot of different credit data on your credit report and are grouped into the five categories as outlined below.
35% Payment history
30% Amounts owed
15% Length of credit history
10% Types of credit used
10% New credit
These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.
Next issue we will focus on the payment history category and provide more details.
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6 Tips to Avoid Identity Theft
Source: Loan Tool Box
According to the U.S. Department of Justice, about 1.6 million households have experienced some form of theft when it comes to their financial accounts. Here are some important tips for keeping your information safe and sound:
- Just the Facts. Don't give unnecessary information like your date of birth and income level when you're filling out things like warranty cards or supermarket club cards. Share only what's really necessary in every situation.
- Navigating the Net. Never post your address or your full date of birth on any social networking sites because both are pieces of information needed to steal your identity.
- Searching for a Job? Never give a potential employer your Social Security number on an Internet job site. Also, thoroughly read the privacy policies of any online job boards to make sure they won't sell your information.
- Safe Keeping. Never keep your Social Security number in your wallet, glove compartment or any other easy-to-access place. Also, never have it printed on your checks or use it as your password.
- Shred 'Em. Remember, when you're ready to get rid of old documents that contain important information, shred them with a cross cut shredder.
- Protect Your Mail. If you have to mail something that contains sensitive information, use a secure mailbox, not the one at the end of your driveway.
The bottom line: When it comes to your personal information, share it on a need-to-know basis only!
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NAR: Credit Too Tight
Trade group pushes for looser lending
Source: Inman News
The National Association of Realtors is pushing lenders, including mortgage financiers Fannie Mae and Freddie Mac, to loosen underwriting standards so qualified buyers aren't locked our of the housing marketing, the group says.
The group is simultaneously waging a public relations and lobbying campaign to protect subsides for homeowners, such as the mortgage interested deduction, that NAR officials worry are threatened by political pressure to rein in the federal deficit.
The mortgage interest deduction alone cost $86 billion in lost revenue in fiscal year 2009, the group said, and is projected to cost $135 billion by 2013.
Rather than boosting homeownership, the deduction primarily benefits the wealthy, the group claims. The National Low Income Housing Coalition and other critics say the deduction should be charged to a tax credit, with limits on the size of eligible mortgages. |
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Ann Arbor Mortgage Company
2200 Green Road, Suite E
Ann Arbor, MI 48105
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Board Notes
6 months or less
Source: Ann Arbor Area Board of Realtors
Through October 2010 there was a 6 months supply of available homes in the Ann Arbor market. Four of 11 areas within the county reported by the Board had 6 or less months supply (Areas 81-88). The average for the Washtenaw County is 10.26 months. Six months or less is considered a normal healthy supply of available homes. |
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Numbers Don't Lie
- Optimistic - Nearly half of Americans (47%) that were surveyed in October 2010 anticipate that they will be better off financially in 2011 than they were in 2010. (Source: Money)
- Ten Straight - Employers in the private sector nationwide have added new employees for 10 consecutive months (January 2010 - October 2010). The last time the private sector saw a decline in the number of employees on a month-over-month basis was in December 2009. (Source: Department of Labor)
- Not Where They Live - An estimated 35% of the 816,251 homes that have been seized by lenders as a result of foreclosures through the first 9 months of 2010 were not the primary residents of homeowners but were owned by investors and used as rentals or were vacation properties. (Source: RealtyTrac)
- Use Cash, Not Credit - Revolving credit, which includes credit card debt, fell in September 2010, its 25th consecutive monthly decline. This total peaked in August 2008 and has fallen every month since then. The nationwide total of revolving credit has fallen 16% from its 2008 peak. (Source: Federal Reserve)
- Two, Three, Four - To rank in the top 2% of taxpayers, based upon 2008 tax data, required an adjusted gross income (AGI) level of $253,000. To rank in the top 3% of taxpayers required an AGI of $204,000. To rank in the top 4% of taxpayers required an AGI of $177,000. (Source: Internal Revenue Service)
- 10/90 Split - The top 10% of taxpayers in the US report 46% of the nation's adjusted gross income (AGI) based upon 2008 tax data. The remaining 90% of taxpayers report the other 54% of AGI. (Source: IRS)
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Our goal is that each customer and client becomes a RAVING FAN, someone who is so pleased with the experience they have had with Ann Arbor Mortgage Company, that they naturally and enthusiastically refer family, friends, and associates to us anytime the topic of home financing arises.
We would like to take this opportunity to let you know how much we enjoyed working with Senior Loan Officer, Mike Petchell.
He was available to us anytime we had questions about the process of buying a new home. He answered our requests for approval letters in a very timely manner, and there were many of them. We felt that we could trust him from the first phone call made to him by my husband. We were told what we needed to have to make the process go as smoothly as possible and it did.
We will be letting anyone we know who is in the market for a mortgage to call on Mike.
Thank you for all your hard work and attention to detail. We really appreciate the chance to have worked with you.
Sincerely,
David and Susan C.
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Dear Mary Adams,
Sorry it has taken us awhile to get back to you with some feedback. We're pretty swamped with beginning to get ready to move.
We would like to thank you for the professionalism and good humor with which you guided us through the mortgage application process to its successful conclusion. You worked proactively to help speed things along and you were always available to answer our questions and ease our anxieties. We were impressed with your command of all the intricacies of this "paper war," as the Germans call it. We appreciate that you worked to make the closing happen on time, as the sellers wanted. We would definitely recommend Ann Arbor Mortgage to friends who are looking for a mortgage.
Best wishes,
Becky H. and Hermann W.
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