June 1, 2007
Integrity Home Finance, Inc. announces a new home loan program, which allows consumers to refinance by consolidating their Adjustable Rate Mortgages (1st and 2nd) into one manageable loan with no pre-payment penalty or purchase a home with zero down. The One Simple Loan has exclusively been given to Integrity Home Finance, a mortgage banker, by a subsidiary of NHSA. With the release of One Simple Loan, Integrity Home Finance has saved their clients thousands of dollars by refinancing before the big increase arrives. ?The public?s response has been overwhelming regarding our One Simple Loan product.?
Since June of 2004, the Federal Reserve has systematically increased the federal funds rate, causing short-term interest rates to follow suit. As a result, consumers with Adjustable Rate Mortgages (ARMs) tied to volatile short-term rate indices, such as the LIBOR, are finding themselves at the mercy of the Federal Reserve?s war on inflation.
?Higher interest rates function as a tax on people who hold variable debt,? says Daniel Gross, reporter for The New York Times, a ?truism that is particularly apparent to homeowners holding Adjustable Rate Mortgages.? In his article, Gross cites Mark Zandi, chief economist at Moody?s Economy.com, who estimates that nearly $ 2 trillion in Adjustable Rate Mortgages are due to reset by the end of calendar year 2008. This could potentially increase the total interest payments of ARM holders by an estimated $ 50 billion in 2009, compared to today. For many of these borrowers, reset minimum monthly payments could increase upwards of 50% to even 100% of what they?re paying now ? if they haven?t already. And the worst may not even be over.
According to Ben Bernanke, the Federal Reserve?s chairman, the real estate market is experiencing a ?substantial correction?. This, economists say, is the result of the Fed?s attempt to engineer a ?soft landing? by systematically increasing interest rates to control inflation without fueling a recession. Fed officials believe that they are making strong progress towards this difficult goal. However, even moderate economic growth will give the Fed room to increase short-term rates further, according to David Leonhardt of The New York Times. This means more bad news for ARM holders with life-caps at 10% or more, and even worse news for the estimated 70% of Option ARM borrowers who chose the minimum or negative payment options of their mortgages and are now actually accruing (and compounding) a larger balance than what they originally borrowed.
There is still time to take advantage of alternative home loan programs, such as intermediate fixed-rate and tiered-rate loans, that can effectively limit one?s liability before rates increase again. These programs enable borrowers to stabilize their finances and know exactly what their monthly payments will be over the next few years while the Fed does its best to stifle inflation. Remember, the Fed has a habit of overcorrecting the market before changing policies, which means rates could still increase even after their goal of a soft landing has been reached.
Don?t be a casualty of the Fed?s war against inflation. Ask about intermediate fixed-rate or tiered-rate products to hold the home loan over until the Fed flips the script and rates finally begin to decrease.
An experienced and resourceful loan professional will have access to a variety of loan programs including 3, 5, or 7-year fixed-rate products as well as tiered-rate programs to counter fully-indexed Adjustable Rate Mortgages and Option ARMs. A 5-year fixed rate mortgage, for instance, converts to an adjustable at the end of that fixed tenure. Taking out such a loan, with no prepayment penalty, may make a lot of sense right now because it will provide some interest rate relief in today?s market, while buying the consumer time to refinance once rates begin to decrease.
Tiered-rate products, on the other hand, are essentially fixed-rate loans that act like adjustable rate loans but offer the security of a built-in cap. In fact, these loans actually favorably adjust, saving money in the first years of the home loan before reaching their final fixed rate. Various types of these tiered-rate products exist, and each offer different money-saving options.
There will be trillions of adjustable rates setting, however with the slow-down in the real estate market; there are many homeowners that can not refinance simply due to lack of equity. Many purchased a home with no money down on an interest only home loan. When that loan comes to adjust, it will be difficult to refinance because there is no equity. This is where Integrity Home Finance has been able to assist consumers to avoid a large increase in their mortgage payment. Integrity Home Finance has also assisted many homebuyers get into a home with no money down. The secret to One Simple Loan is that it is not credit score driven and requires only a $ 500 contribution out of pocket expense.
By sharing our uniquely designed home loan products and leading edge automated online underwriting with other mission driven lenders, we can provide an alternative to the marketing resources, products and processes of subprime and predatory lenders. Collaboration ensures that the communities we serve are strengthened and that lives are improved for the long term. Finally, confirm the mortgage professional will be keeping abreast of market conditions and will be ready to refinance the home once rates do decrease, saving even more.
Mike Berrios is affiliated with Integrity Home Finance, an Equal Housing Lender, California Department of Corporations. Free consultation and a 10-Year History of ARM Indexes are available by calling 800-680-3649.
Future Homebuyers or current home owners seeking to refinance by consolidating their Adjustable Rate Mortgages should contact Integrity Home Finance if interested in this exclusive home loan program at 800-680-3649.
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