Rates Fall in December

Here's something few people expected: Despite a rising federal deficit, an expanding economy and a largely "jobless" recovery, mortgage interest rates fell in December -- from 6.02 percent plus .6 points on Dec. 4th to 5.81 percent plus .7 points on December 25th, according to Freddie Mac.

The drop is not quite as large as it seems -- a somewhat larger cost for points eats up some of the benefit from lower rates. Still, given economic expansion and big deficits higher rates would seem to have been in order.

For a $100,000 loan, a borrower would pay $600.84 per month for principal and interest over 30 years at 6.02 percent. In comparison, the same loan at seven percent -- a "low" rate not too long ago -- would cost $665.30.

By the measures of the past several decades 2003 was a wonderful year to be a borrower. What about rates in 2004? No one knows for sure, but for the latest rate information and property trends speak with your local broker. There may be more -- and good -- surprises in the marketplace.

Herb Brooks - My Thoughts

Inspired by the new movie "Miracle", which I have not yet seen, I thought I would dig a little deeper into the 1980 US Hockey Team. In 1980 I was only 8, and have no recollection of the game. This weekend, I bought an HBO sports documentary on DVD entitled, "Do You Believe in Miracles?", it's quite an interesting and moving piece.

Living in Minneapolis I saw the headlines in August of 2003 proclaiming that Herb Brooks had died in a minivan crash not far from my home. At the time, I felt a sadness, but had no direction to take it...it was just as though there was a "shift in the force", the man had gone above and beyond his calling and had impacted so many lives.

Watching this documentary and reacquainting myself with the dire geopolitical and economic realities of the late 70s, drove home how special the 1980s team really was, and how that event so affected the loves on everyday Americans.

Maybe it was more that as a child I played competitive sports and in those teams I developed such strong bonds with coaches and players. At the end of the season there was always such sadness as the team members went their separate ways, and what was special for a moment, faded and became something for memories only.

Friends are important, comraderie is important. Having a belief that the whole can be greater than the parts at times is important as well. My fear is that my generation and those after me are growing up as singular entities, our umblical cords attached to the ether of the Internet, robbing us of our desire to effectively communicate, share and build with others. We have difficulty not only undestanding the self, but also the collective, choosing instead to overwhelm ourselves with useless information and data which fills the void formerly filled with friendship and love.

There are no substitutes for experience and interaction. It's scary to reflect on my own communicatory inadequacies, the relative degeneration of my own self in recent months. It took the efforts and talents of a beautiful individual, my girlfriend, to help me realize that love does matter, that happiness is more virtue than vice, and that teamwork can yield wonderful new insights into the self. Ironic, but true.

So it was with great emotion that I reread an article about Hank's funeral, attended by so many, but yet unknown to so many more. I didn't weep his passing, but more his spirit, his passion, his drive to truly build a great team and a belief that all things were possible. These individuals are few and far between. They are the world changers.

Congress will consider new zero-down program

All first-time homebuyers take note!!!!!!

Zero-down mortgages may become standard

By Kenneth Harney
Jan. 21, 2004

What do you say to zero down on your first home purchase? And how about rolling your closing fees into the mortgage itself, giving you a home loan that costs you virtually nothing out of pocket upfront?

That intriguing offer could become a standard, government-backed option for an estimated 150,000 or more first-time home buyers if Congress approves a new "zero down" program to be proposed in President Bush’s forthcoming federal budget. Zero downpayment mortgages could go as high as $290,000 in high-cost markets on the East and West coasts.

If sanctioned by Congress, the program will be run by the Federal Housing Administration, the nation’s largest single source of mortgage money for first-time buyers.

FHA loans typically carry minimum downpayments of 3 percent. The new program would essentially remove the requirement for home buyers to come to the table with any cash whatsoever. That, in turn, is expected to open the door to a first home for thousands of families and singles who have sufficient incomes to pay monthly rents as high as mortgage payments, but who find it difficult to accumulate enough savings to handle a downpayment and closing fees. If approved by Congress, the program would become a permanent addition to the current FHA menu of mortgage options.

The new zero down FHA program is also aimed at first-time buyers whose credit profiles are nontraditional or contain a few bumps and bruises. FHA underwriting rules allow loan officers to approve applicants who have trouble qualifying on credit grounds elsewhere in the conventional mortgage marketplace.

Besides low — and now zero — downpayment options, FHA allows applicants to have higher household debt ratios: monthly housing payments can go to 29 percent of monthly household income, and total monthly debt can go to 41 percent of monthly household income. Both standards are more generous than many lenders in the private "prime" market allow.

FHA is not a mortgage lender in its own right. Rather, it is a government-owned mortgage insurance enterprise inside the Department of Housing and Urban Development. Borrowers are charged an upfront insurance premium charge that typically is rolled into the principal amount of the loan, plus they pay a small premium each month.

Though it was chartered by Congress to specialize in higher-risk, lower-income home buyers than conventional market lenders normally fund at close to prime interest rates, FHA’s insurance operations turn a substantial annual profit that flows back into the federal treasury. Last year the insurance agency funded an all-time record of $157 billion in home loans, and assisted 600,000 new home purchases. Eighty percent of all its purchasers were first-timers.

FHA officials say the zero downpayment feature adds an extra layer of risk of potential default to any loan, but the agency expects to manage that risk with slightly higher insurance premiums than charged on the standard FHA program. Instead of the current 1.5 percent premium upfront on a 3 percent down FHA mortgage, zero down borrowers will pay 2 1/4 percent. But the premium will be rolled into the principal balance and financed over the life of the mortgage.

The zero-down option will also require a slightly higher monthly premium payment than the traditional 3 percent down program — effectively adding a one-quarter of 1 percent "bump" onto the loan rate during the first five years of the mortgage. The zero down plan is expected to be open to all FHA applicants buying their first homes. It will not be available for refinancings.

In an interview, FHA Commissioner John C. Weicher said the agency is moving to zero downpayments "because we think we now have a better ability to distinguish at the higher-risk end (of the marketplace) who is a good risk and who is not." FHA’s underwriting methods, unlike the conventional market’s, require hands-on, case-by-case holistic evaluations of borrowers’ credit and risk profiles. FHA does not base funding decisions on FICO credit scores, unlike virtually the entire conventional mortgage marketplace.

Zero down loans will be capped at the FHA maximum of $160,000 in many smaller and moderate-cost housing markets around the country, but will go to $290,000 in large, high-cost markets.

Angelo Mozilo, chairman of Countrywide Financial Corp., said "any downpayment, even 3 percent, is a major, unnecessary obstacle for lower-income borrowers, and the wealth gap in America encumbers minorities at a disproportionate rate."

Countrywide has for years been one of the highest-volume FHA lenders and a participant in other low or no-downpayment programs targeted at minority and immigrant home buyers and backed by giant investors such as Fannie Mae.

More pictures of my new house!

I couldn't help it, had to post them! My Realtor sent me these pictures today! The water test passed, and now all that remains in the appraisal and a response from the sellers for all the requested repairs!

Getting closer!!! Click on this link for access to the pictures!

http://www.kleinheksel.com/house_photos.htm