Are you contemplating a new home purchase or refinance in CA?

Is your interest rate on your current CA mortgage at or above 6.00%?  Well, take a minute to read this:

According to Freddie Mac, mortgage interest rates in CA, and nationwide for that matter, have recently dropped to near all-time lows in most areas and within a fraction of their all-time lows in others.  This is your chance to lock in that long-term CA mortgage rate you have been waiting for.  In our lifetime, we may never see rates at these levels again.

Miss this great opportunity and it may never come along again.  And you could miss out on your chance to save thousands of dollars over the life of a home purchase or refinance mortgage loan.

The reasons to act now are numerous.  Here are a couple glaring down upon us:

The Federal Reserve implemented a mortgage-backed securities buying program which has basically just artificially lowered mortgage interest rates and the program is nearing its end.  It’s scheduled conclusion was to be on December 31, 2009, though it has been extended through early next year.  Once the level of the Federal Reserves purchasing participation wanes, CA mortgage rates will inevitably be forced back up to levels seen before the program started, possibly back up to the area of the 6.500% range…and it will happen fairly quickly and without notice to the consumer.

Another major factor to take into account will be inflation.  Though it is currently being fairly well contained, it will likely show its ugly head as all the stimulus monies from Washington continue to poor into the financial systems to shore up the economy.  The end result will most likely cause increasing inflation pressure and fear across the board with the possible impact of rising mortgage rates in California and across the country.

With home prices down to attainable levels not seen in years, and as it is unlikely that CA mortgage interest rates will be at these at or near all-time low levels again, it’s time to take advantage of them today while you still can before they are long gone.

Look forward to my next posting!

Here are five smart new rules of money to live by now:

1. Save at least 15% of your net income for long-term goals
2. Do not invest more than 5% of your total portfolio in your company stock or any single stock
3. Keep your debt-to-income ratio at or under 30%
4. Only look at refinancing options (unless it’s an emergency) when rates are at least 3/4 to 1 point lower than your current rate
5. Try and keep discretionary spending (clothes, nights out, movie nights, dining out) under 20% of your take home (net) pay

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To your success in life!

One result of the credit crunch and the economic recession has been the freezing or reduction of home equity lines of credit (HELOC) by banks. A HELOC is a form of revolving credit in which the borrower’s home serves as collateral. And while this is not a surprising move by banks looking to be more conservative with their lending policies during tough times, many home owners counting on this credit will face some challenges if their HELOC is reduced or frozen.

To help you deal with these challenges, the US Treasury Department and the Federal Reserve each released some tips for homeowners in this situation. The following is a summary of these tips:

Read the small print

Read Everything to the Letter – Your HELOC lender must provide you with a written notice if it has frozen or reduced your HELOC no later than 3 business days after the freeze or reduction. Information about any other changes to your HELOC must be included as well, so read everything mailed to you from your lender.

Pick Up the Phone – Your lender has the right to freeze or reduce your HELOC, even if you have a good payment record. Some common reasons for the action are a decline in the value of your home, a negative change in your financial situation, or a negative change in your credit score. Contact your lender if you have questions or concerns about a freeze or reduction.

Communication is Key – The required notice to freeze or reduce your HELOC will likely contain specific reasons for the action. Find out the reason, and see if you can take any steps to reinstate your HELOC.  The bank might not know about home improvements you made that might affect the value of your home. It might not be aware that you or your spouse got a new job, took a second job, or made some substantial investments that affect your finances. If your credit took a hit, investigate ways to improve your credit and communicate your efforts to your bank.

Don’t Be Afraid to Ask – Your lender must reinstate your credit privileges when the conditions permitting the freeze or reduction no longer exist. You may need to request in writing to have your line of credit reinstated, so be sure to find out why your HELOC was frozen or reduced. Once your lender receives your written request, they must promptly investigate and determine whether your HELOC can be reinstated.

Be Prepared for Fees – There may be some fees involved to cover the costs for an appraisal and/or credit report when a bank considers your request for reinstating your HELOC. However, you cannot be charged a fee to reinstate your HELOC once the condition that caused the freeze or reduction no longer exists.

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