Government announcements dominated the financial news this week for the market. Updates on two major programs both were favorable for mortgage markets, and mortgage rates fell modestly during the week.

The most highly anticipated news concerned Tuesday’s speech from Treasury Secretary Geithner on the financial institution assistance plan. This “Financial Stability Plan” involves multiple programs to remove bad assets from banks’ books and to support new lending. It also contains funds to help prevent foreclosures. Investors were sorely disappointed by the lack of details about how the plans would work, however, and they responded to the uncertainty by purchasing relatively safer assets. The stock market plunged, while Treasury and mortgage-backed security markets rallied, pushing rates lower. Geithner suggested that more information about a plan to purchase troubled assets and a comprehensive housing program will be released in the next few weeks.

Later in the week, the House and the Senate agreed on a compromise $789 billion fiscal stimulus plan, which is expected to pass within days. The Obama administration estimates that the plan will create 3.5 million jobs. Both the House and the Senate had passed versions which were larger than the final compromise plan, and the reduction in scope helped mortgage markets. A smaller plan means that the government will have to issue less debt. Unfortunately, one of the spending cuts in the final plan was a provision for a $15,000 home buyer tax credit, which came with an estimated price tag of $35 billion. Instead, the government will leave in place an existing $7,500 tax credit, applicable to only first time home buyers. The primary change to the tax credit is that it will no longer need to be repaid. The estimated cost of this $7,500 tax break is less than $3 billion.

Inflation data will highlight a full Economic Calendar next week. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Thursday. Industrial Production, an important indicator of economic activity, and Housing Stats will be released on Wednesday. In addition, investors will continue to wait for details from the Treasury on the Financial Stability Plan. Mortgage markets will be closed on Monday in observance of Presidents Day.

Information provided by one of my highly trusted mortgage representative area advisers for Farmington Hills. Let me know if you would like to speak with him at greater length!

However, if you are prepared and can follow instructions, the mortgage process does not have to be so daunting. In the old days, the real estate agents qualified all of their buyers and proceeded to show and sell them their new homes.  However, today, things in Farmington Hills are very different.  Mortgages started to become more and more diverse and difficult, probably to keep the agents and others from being able to do the mortgage companies job within Farmington Hills. The mortgage companies/banks/representatives want to be able to qualify prospects and gain Farmington Hills clients for themselves in the mortgage process.

That is alright by me, as I have enough balls in the air with all the other responsibilities I have to keep my Farmington Hills clients more than satisfied with my services. Most Farmington Hills real estate agents do have relationships with a few lenders/mortgage reps that they know they can trust.  When they refer one of their Farmington Hills clients to a mortgage lender/rep, they know that they can trust what that lender/rep tells them about the client; and, when they get ready to close on the chosen Farmington Hills property, there won’t be any surprises waiting for them. That makes for smoother closings and happier clients all around Farmington Hills.

Obtaining a mortgage is a process in that you have to come up with tons of information for your lender; but, again, if you are prepared with W 2′s, tax returns, pay stubs, etc. (all things that you will be told that you need) the process won’t seem so insurmountable.  Let’s face it, the objective is to get that Farmington Hills property that you will be happy to come home from work to every night and glad to be living there every day.  If we didn’t have institutions that would lend us the money to buy our homes in Farmington Hills, most of us would still be renting.