Fed Cuts Interest Rate (Again)

    For the second time in eight days and as expected, the Federal Reserve Bank cut short term interest rates today. This will bring the benchmark Federal funds rate to 3 percent. The Federal Open Market Committee which decides interest rates left open the possibility of further rate cuts.

   Predictably, the stock market soared and one has to wonder if that has become the main driver of rate cuts since last weeks cuts have not yet had time to filter into the mortgage market.   While eventually these most recent rate cuts will have a positive impact on mortgage interest rates, it is important to  note that the real estate market does not swing in either direction the way the stock market is capable of doing.

   Meanwhile, The New York Times, in an article on the economy Thursday, quoted Richard DeKaser, chief economist at National City Corporation as saying he was skeptical of the economy actually entering a recession.  He cited the latest labor market data showing decreasing weekly unemployment claims and the fact that business borrowers are not facing a credit squeeze similar to that faced by the housing sector.

   So, interest rates are nearing record low levels, real estate prices are down and there is plenty of inventory to choose from.  What is your definition of a good time to buy a home?

Jim Cosgrove

Subprime Derivatives, part 2

   Yesterday we posted a video which we thought did a good job explaining the subprime mortgage market but this video really gets to the heart of the matter and so in an effort to keep our readers fully informed on current market conditions we present this video as part 2.

Thanks and a 'Tip of the Hat' to Allen Butler over at Bloodhound Blog.

Subprime Derivatives

From our friends at CNBC, this is a simplified explanation of what was going on in the mortgage industry the last few years.

Washington to the Rescue?

    Rest easy, America.  Washington has ridden to the rescue with a plan to "stimulate" the economy.  Not fix problems mind you such as a huge current accounts deficit, lack of an energy policy, looming Social Security shortfalls, out of control spending or anything that would have required heavy lifting.  Instead the Republican President and Democratic House Leadership have come up with a plan that has a little bit for everyone.

  As reported in the mainstream media, everyone who earns less than $150,000 will get up to $1,200 sometime next June, which it will be their patriotic duty to immediately spend.  Make part of one mortgage payment, send it to a credit card company, fill up at the gas station.  Since this goes to everyone, including those that don't pay taxes, it can be assumed that a goodly portion will wind up spent on lottery tickets thus also aiding the states.

   Businesses are being stimulated by getting a 50% write off on capital equipment purchased this year.  Supposedly a similar tax break in 2003 boosted employment by between 100,000 and 200,000.  In a country of 300 million.

   There is also something in there for real estate buyers.  So called jumbo mortgages guaranteed through Fannie Mae and Freddie Mac will see their top limit raised through the end of this year from $417,000 to $729,750.  Or 125% of a counties median sale price.  For Lincoln County the median sale price is $200,000.

   Miffed at being left out of the discussion, the Chair of the House Financial Services Committee, Barney Frank of Massachusetts, said his committee will get right to work on bills that will regulate mortgage products and preserve affordable housing.  Although first they need to get more involved in oversight of the World Bank and International Monetary Fund.  So they need to take a trip to Africa.  In March.  Then they'll get right on a bill.

  There you have it folks, Washington has everything under control. Nothing to worry about.  The economy has been stimulated, home prices are lower than they've been in years and mortgage rates are, too. Wouldn't this be a great time to buy?

Jim Cosgrove

Stock Prices Swing, Interest Rates Decline

    The Dow Jones Industrial Average dropped by more than 400 points this morning as trading resumed on the floor of the New York Stock Exchange after the long weekend.  Reacting to an international selloff of stocks the Federal Reserve cut its benchmark interest rate by three quarters of a percentage point.

   Meanwhile, here on the Pemaquid Peninsula on the coast of Maine real estate prices are at their lowest point in recent memory.  Local banks are very interested in talking with credit worthy customers.  Those home buyers in a position to pay cash for their purchase are finding even better bargains in Maine real estate.

   All the reasons people wanted to live here are still valid.  Beautiful scenery, clean enviroment, small town living with a chance to get to know your neighbors, low crime, good schools, uncrowded golf courses. It's only going to cost more to buy into this market in the future.  So, where do you want your money ?

Jim Cosgrove

The Patriots and Maine Real Estate

    Heresy!  The undefeated New England Patriots are playing the San Diego Chargers in the AFC Championship game this Sunday. And  America's Mortgage Broker, Brian Brady from San Diego has come up with a novel reason why folks should be rooting for the Patriots to lose. 

   It seems that when an AFC team wins the Super Bowl, the real estate market goes down.  When an NFC team wins, the real estate market goes up. Hence anyone interested in the real estate market should be hoping for an NFC victory in the big game.  Since this Sunday's game is not the Superbowl but the AFC title game, I guess what Brian is saying is that it would be OK for San Diego to win because then they would lose the Super Bowl? Hmm.  If I didn't know how hard Brian works I'd say he was spending a little to much time in the sun.

   It should be a good game though.  The Chargers have some great players on both sides of the ball and feature former UMaine standout Stephen Cooper in the middle of their defense.  But these are the Patriots were talking about, maybe the greatest football team to ever walk the planet.  Some people (me) even refer to them as the Newcastle Square Realty of football. In the end Tom Brady will be too much for the surfer dudes, Patriots 38-35.

Jim Cosgrove

Maine Realtors in Alabama

    The Maine Association of Realtors has sent a delegation to Mobile, Alabama to participate in the building of a new home for Habitat for Humanity.  Follow their progress on their own blog at http://merealtor.blogspot.com/.

   Hopefully those hardy souls aren't suffering too much in the southern heat.  Today here in Maine we are enjoying  a seasonably cool day in the upper 20's with a gentle snow falling and not expected to amount to more than a foot by nightfall.

Maine Real Estate Begins to Rebound

    Early signs point to a rebounding real estate market for 2008, at least here in the Damariscotta-Pemaquid region of Maine.

   A slow market in 2007 and a glut of inventory has combined to drive down prices at the same time that the Federal Reserve Bank has been steadily lowering interest rates.  Fed Chair Ben Bernanke, speaking at a housing and economic forum in Washington D.C. on Thursday said "We stand ready to take substantive  additional action as needed to support growth and to provide adequate insurance against downside risks."  Wall Street interpreted this to mean that the Fed will cut its key interest rate by 25 to 50 basis points at the boards next meeting on Jan. 29 and the stock market jumped more than 100 points before Bernanke finished his speech.

   Here on the ground in Mid Coast Maine we have seen significant activity in the real estate market compared to past January's as it appears that savvy Buyers who understand the concept of "Buy Low...Sell High" are coming into the market as well as some folks who may have been priced out of our market the last 2 or 3 years. We have seen activity at all price points including in-town condominiums, single family homes and luxury waterfront properties.  Local banks seem eager to lend to qualified customers.

   For a referral to a friendly small town banker with money to lend or to discuss some of the attractively priced properties on the market in our area, please call and ask to speak with one of our experienced brokers.  They may all be out on showings but someone will get back to you just as soon as we can.

Jim Cosgrove   

Reverse Mortgage

    When people ask me what I do as a Reverse Mortgage Specialist for Financial Freedom Senior Funding Corp. I explain to them our company's mission statement, which is "To Enhance the Lives of Seniors by Providing Financial Security and Independence."  That mission statement is simple and cuts right to the heart of why a person might want to consider a reverse mortgage on their home.

   For many seniors the "golden years" have turned out to be more difficult than they might have imagined during their working years.  Property taxes continue to soar, homeowners insurance has become more expensive, the cost of gasoline and heating oil has skyrocketed and health care costs take a bigger bite of the budget each year.  In a household where Social Security, a small company pension and personal savings are being stretched to the limit, a reverse mortgage can unlock a portion of the equity that people have in their homes and provide tax free income through a government insured reverse mortgage product.

   A reverse mortgage is a government insured loan product for seniors age 62 and older that provides loan proceeds to a borrower, which is not taxable income, doesn't require them to make a monthly payment of principal and interest and doesn't require repayment until the last borrower has permanently left their home.  The proceeds of the loan can be used for almost anything from paying current bills, to consolidating debt, to making necessary home repairs or improvements, to taking that long postponed vacation trip you've always wanted.  More importantly, the home owner will never be required to leave their home until they're ready.  The only caveats are that the home must remain the borrowers primary residence, they must continue to pay their property taxes and insurance and keep their home in good repair.

   If it sounds like a reverse mortgage could enhance the quality of your life I would enjoy having the opportunity to discuss them in more detail with you.

   Rick Newell is a Reverse Mortgage Specialist for Financial Freedom Senior Funding Corp.  Rick has been a banker in the mid coast region of Maine for almost 30 years.  In addition he has been the Pastor of the Newcastle-Alna Baptist Church for the past 17 years. Rick and his wife Debby have lived on the River Road in Newcastle for the past 30 years. You can call Rick at his home office at 207-563-5961 or his cell phone at 207-631-1196.  You can also reach him by email at rnewell@financialfreedom.com .

Thank You

    The Brokers and Staff of Newcastle Square Realty would like to thank the people of mid coast Maine who chose to use our services when they bought or sold real estate in 2007.  Once again Newcastle Square Realty brokered the sale of more real estate than any other company in Lincoln County.

    Not only that but, in a very difficult environment for real estate sales we set a company record for total sales with over $53 million in closed sales and 174 units.  In the Pemaquid peninsula towns of Damariscotta, Newcastle, Bristol, South Bristol and Bremen we were involved in over half of all transactions.

   We are humbled by your faith in us and we look forward to serving your real estate needs for a long time to come.

   Thank you.

The Associates of Newcastle Square Realty

This Never Happens in Maine

    We usually try to write nice posts about either our area or the real estate market but this is just too much and I had to put it up here.  We get a lot of ribbing around this parts from friends and neighbors who go south in the winter for a few weeks in the sun.  They love to call when they know we are in the middle of a major snowstorm or cold snap and tell us how they just got sunburned playing golf or tennis or how nice the water is in the pool.

   Well this just came across the news: Frozen Iguanas are falling from the tress in Florida .   

   That pretty much seals the deal right there for me.  You can keep Florida and sunburns and tennis and golf at unnatural times of year.  Yes sir, Mr. Man I'm staying right here in good old Maine where sure it might get a little chilly every now and then and yes, we do get some of the white stuff but we never, ever have to worry about getting hit on the head by a frozen prehistoric lizard.

   Good gravy, mother, it almost sounds biblical, like a plague decimating the population or a flock of locusts eating all the crops.  Frozen iguanas falling on people from trees.  If you're ready to get out of there and move to the best spot on earth, call our office right now and we'll be glad to help.  If the phone is busy, keep trying, everyone is trying to get out of Florida this afternoon.

Jim Cosgrove