Fannie Mae/Freddie Mac Government Bailout

As I am sure we all heard over the weekend the United States Government is stepping in and bailing out Fannie Mae and Freddie Mac with an expected 200 billion dollars.

So… what does this mean and why is it important to you? Over the past few months the strength of these mortgage giants has plummeted along with their stock prices and insurance ratings. As the stock prices of Fannie Mae and Freddie Mac decreased, so did the appetite of their investment pool. In order to satisfy the appetite of these investors, lending institutions needed to charge higher interest rates so they could offer their investors a better return on a “riskier” investment. By the government shoring up these mortgage giants, it screams less risk and increased investment in the U.S. housing market. We have already seen the sudden effects of this today as the bond market rallied this morning and mortgage interest rates dropped significantly. I just reviewed rates for a 30 year fixed rate FHA mortgage and currently they are between 5.625% and 5.75%! Keep in mind you can always expect a market correction when any kind of sudden reaction is made in our economy. Rates are currently heading south, but you can expect a slight rise in interest rates in the coming days as the bond market experiences a small correction. As the dust settles from this recent news you can expect rates to be continually favorable in the coming weeks.

Another reason this is important to the real estate industry is the amount of money being injected into Fannie Mae and Freddie Mac will increase the amount of money available in the lending market. In early August Fannie Mae and Freddie Mac both announced they would be pulling back the amount of capital they were willing to spend in the mortgage market. We can expect them to reverse this decision as they will continue to purchase mortgage securities due to this influx of capital.

One important note we all need to keep in mind. Even though the government has stepped in and stabilized Fannie and Freddie, we can still expect lending guidelines to tighten in the coming months. Specifically on the conventional lending platform, tougher guidelines will make qualifying for a conventional mortgage more difficult with increases in interest rates in direct correlation with a borrower’s credit score and employment history. The solution for this dilemma is FHA! Currently FHA mortgages have the strongest interest rates and the most flexible lending guidelines. Always make sure you evaluate all your financing options and I suggest asking for a direct comparison of what a conventional loan scenario looks like when compared to an FHA scenario. Once you have all the necessary information you will be in a position to make the most educated decision.

Ever Forget Your Business Cards? No Worries…

Have you ever been at a meeting and realized you forgot your business cards? Ever met someone during a random act throughout the day and wished you had a business card to share with them? After sheer panic races over you for fear of making a terrible and more importantly unprofessional first impression, take a deep breath and relax. Now, you have a service called Dropcard!

Dropcard is a service that will let you digitally send all your contact information to anyone with an E-mail address. Not only can you send your vital contact information, you can also include different avenues of social media such as your blog address, LinkedIn profile, Twitter ID, website, or any other information you desire. This is a free service and is used by simply texting your new contact a virtual business card directly to their E-mail address. Now you can be assured all your important information is safely secured with any new contacts for future reference. To find out more information about this great service just visit http://www.mydropcard.com/.

Now there is no reason to worry about not having your business cards at anytime. You can make yourself standout by “dropping” them a Dropcard instead!

Step Away from the Fire

With all the uncertainty in the economy, rising interest rates and what feels like a constant barrage on the dollar it is easy to continuously feel anxious and overwhelmed. With all of this on my mind, it was essential for me to head to the mountains for a much needed camping trip. Isn’t it funny how you can stare into a camp fire surrounded by silence and let your mind relax?

After a few days in the woods without any cell phones or electricity, I was able to step away from the onslaught of negativity throughout the media. I took some time to truly reflect on what is happening in our housing market in comparison to what we see and hear while glued to the tube. It is no secret we are in the middle of the worst housing market in U.S. history; to try and imply anything different would be irresponsible. It is also not a secret that the media will continuously hype negative information, knowing that installing fear into its audience will keep them motivated to tune in and see what happens next. Funny that we never see stories about the FHA stepping in to help a family who’s going through a crisis purchase a home, or the unbelievable opportunities currently available for first-time home buyers.

Step away from the fire the media is constantly burning and turn off the television. Reflect on your current situation and ask yourself if you are in a place where this economic cycle can afford you opportunities; or do you fear your past decisions may have put you in a place where you need some help? Our culture is one that is constantly solving problems and creating ways to help people both in prosperity and despair. Regardless of how you answered my previous question, it is imperative you educate yourself about your financial decisions. Don’t let the negative media attention distract you from chasing your dreams. Take time to find out about the loan programs and financial tools that are available for your benefit. I promise a plan or a solution is out there -- all you need to do is take the time to find it.