For rate quotes, call or email me directly.

The group's 30-day prediction for mortgage rates:

• 31% predict mortgage rates will increase
• 31% predict mortgage rates will decrease
• 36% predict mortgage rates will remain unchanged

I am predicting that rates will decrease over the next 30 days. My prediction may not be appropriate for your individual situation and it may be wrong, too.

Here's what I told Bankrate.com:

"The U.S. has established itself as the best of the world's worst economies. The dollar gains, mortgage rates fall."

The U.S. Dollar plays a large role in setting mortgage rates for Americans. It's not an obvious connection because most people don't know what sets mortgage rates in the first place.  In one sentence, mortgage rates are "made" from the price of mortgage bonds using a mathematical formula.

The way that a mortgage bond works is that an investor buys the security and the receives interest payments at a regular rate over a period of time. Those payments are made in U.S. Dollars.  And this is why mortgage rates are closely tied to the fate of the dollar.

If the U.S. Dollar loses value versus the world's currencies, the dollar-denominated mortgage bond interest payments lose value, too, in relative terms. As a result, investors sell their holdings which increases the open market supply, and causes bond prices to fall.

In Bond World, prices and rates move in opposite directions. As bond prices fall, mortgage rates rise.

The reverse is true, too.  When the U.S. Dollar gains in value, the lure of mortgage bonds grows, helping mortgage rates to fall. 

The dollar is not the only reason why mortgage rates move each day, of course -- there are literally hundreds reasons why -- but its influence can be quite strong when the greenback goes on a run.

Now may be one of those times.

As tales of economic despair emerge from nearly every country on Earth, investors are seeking safer places for their money.  Versus the 2005-2006 plan of stashing cash in high-risk, high-return countries, investors now direct funds to relatively large and stable economies, including the United States.

It's not to say that the U.S. economy is healthy, but versus everyone else, we're golden.  Remember: The government now owns Fannie Mae and Freddie Mac and it can print as much money as needed to pay interest to mortgage bond holders.

For now, this is awesome for rates.  Investors are buying up bonds and rates are hovering near 5 percent when all the economic data says we should be near six instead.  It won't last forever, though. Someday, monetary supply inflation will set it.  When it does, the dollar's value will plummet and mortgage rates will soar. 

It could happen in the next 12 months, the next 12 weeks, or the next 12 days.

So, if you're wondering whether or not "now" is a good to refinance to refinance, consider that the U.S. dollar is holding rate down right now and that's lucky for rate shoppers. However, rates really can't fall all that much further from where they are right now, and they do have the potential to rise by a lot in the near-term.

Please Call Often, as Rates change daily.  (314) 993-6690.

Thank you!!

This clip is from a local Sunday paper's business section.  It illustrates why researching mortgages can be confusing (and annoying).  We look to our newspapers to tell us the truth; to provide indisputable facts. In this case, MSM=FAIL.

Aside from the spelling mistake in the headline, it looks like the local editors pulled irrelevant, stock copy written several years ago.  As we've shown here, here, and -- my favorite example! -- here, the 10-year treasury note does not directly correlate to the mortgage market.  Nor does the 10-year treasury note dictate when mortgage rates will move.

There's a reason why Americans -- from first-time home buyers to bona fide investors -- hate the mortgage process.  The trusted media is telling them one thing, and loan officers on the street are telling them something else.

Think about your own line of work.  What does the press say about it?  How are the nuances of your job reported on TV and in the papers?  You know this -- it's nearly impossible for a beat writer to truly "get" your business to report your world as it really is. 

The same thing applies to the world of mortgages.

See, mortgage rates and mortgage lending guidelines are too fluid for most loan officers to keep up.  There's absolutely no way, therefore, that a reporter on deadline possibly could.  It's why you need to question what you're reading -- especially when the word "mortgage" is misspelled in the headline.

Rates are still low!! Give us a call (314) 993-6690.

As part of the American Recovery and Reinvestment Act of 2009, Congress authorized a first-time homebuyer tax credit of up to $8,000.  The $8,000 credit replaces the $7,500 tax rebate program that was included in last year's stimulus.

The $8,000 tax credit is a boon to first-time home buyers in places like Cincinnati or Chicago because, unlike its 2008 counterpart, the government doesn't require the 2009 version of its tax relief to be paid back over time. Buyers closing on their home in 2009 can take the credit and never look back.

Calculating your eligibility is pretty simple, too.

See the snippet from IRS Form 5405 above.  It's the worksheet portion of the First-Time Homebuyer Credit.  There are 10 fields of entry.  Just fill in the 10 fields and -- voilà -- you've figured out your tax credit (or lack of tax credit, as the case may be).  What's nice about the 5405 form, though, is that on the IRS website, the form comes standard with 3 pages of instructions about how the First-Time Homebuyer Credit works and details about who is (and who is not) eligible.

The IRS definition of "first-time homebuyer" may be different from what you expect. 

According to the IRS, a first-time homebuyer is anyone who has not owned a "main home" in the last 3 years. It defines "main home" as a home in which a person has lived for most of the time. It can include traditional homes, houseboats, trailers and other residence types.

The IRS defines what it means to be a first-time homebuyer with respect to couples.  Based on its definition, there's no clean way for spouses or soon-to-be-married types to "cheat the system". Because both owners must be considered first-time homebuyers in order to claim the $8,000 credit, the IRS stymies tax filers that try to get crafty to take a tax credit when a tax credit may not be due.

Furthermore, the IRS instructions show that not every homebuyer will be eligible to claim an $8,000 credit.  Some notable, exclusionary cases include first-time homebuyers who:

• File taxes separately and whose adjusted gross income exceeds $95,000
• File taxes jointly and whose adjusted gross income exeeeds $170,000
• Acquire property from a family member
• Acquire property from a corporation/partnership in which they're a majority owner
• Acquire the home by gift or inheritance

And for some buyers, the available credit may not even reach the full $8,000 limit.

The first reason why the full $8,000 may be out of reach is because the rules of the First-Time Homebuyer Tax Credit limit the credit to 10 percent of the purchase price.  A home purchase price of $65,000, therefore, gets capped at $6,500. The second reason is because the amount of the First-Time Homebuyer Tax Credit starts to phase out as homebuyer income levels rise.

Tax credit phase-outs start at $75,000 for homebuyers filing separately and $150,000 on joint returns.

If you're lucky enough to get the First-Time Homebuyer Tax Credit, though, don't start singing "Let's Go To The Mall". keep in mind that the IRS will make you repay that credit in full if the home you bought ceases to be your main home within 36 months of purchase.  This is, again, to prevent people from gaming the system.

There are a few notable exceptions to the repayment rules, however.  For one, provided that you sell your home to a non-relative, the tax credit repayment is limited to the amount you gain on the sale.  An accountant can help you with the math on that.

In the weeks leading up to the passage of the stimulus plan, there were a lot of first-time home buyer tax credit ideas floating before Congress and most of them picked up, then subsequently twisted, by newspapers and bloggers.  And, unfortunately, Google's job is to store information -- not determine whether or not it's accurate.  If you're still seeing stories about a $15,000 tax credit, you know exactly what I mean.

In the end, Congress could only pass one "official" program and it's the one detailed herein. There's a lot of misinformation out there on the Internet so, if nothing else, let Form 5405 can be your "official documentation".

Also, don't just take my word for it on tax issues. I am a loan officer and not an accountant. I can offer opinion and guidance, but paying a professional for expert advice is often the right way to go. If you don't have an accountant you trust , call or email me for a recommendation.

Gary Bussard: (314) 993-6690 or gbussard@envoymtg.com

Thank you!

At least 3 days per week, data from January and February 2009 shows, mortgage rates changed at least twice daily. 

Lest you think that's a rapid rate of change, scroll down the list and you'll recognize that last month came courtesy of the The Slowskys. There's been a marked reduction in mortgage rate volatility lately.

In January, mortgage rates changed every 3 hours 28 minutes, on average. In February, it jumped to 5 hours, 15 minutes.  If you ask me, it's a little fishy.

Here's why.

Mortgage rates are based on the price of mortgage-backed bonds and bond trades -- like stock trades-- are based in a fundamental and technical analysis of the economy. This can include tangible evidence like data or government policy, but very often includes intangible factors, too, such as a trader's emotional response to market conditions.

We can't ignore the impact of these impossible-to-measure market influences which we often refer to as "gut feel" or "greed".  And traders know it.  It's the reason there's such a thing called the VIX Index, a living, breathing measurement of market volatility.  The VIX is set up in such a way that it's an actual numerical representation of the market uncertainty.

Therefore, we would expect that if mortgage rates are calming, the VIX would be calming, too.  This chart says otherwise.  The "Fear Index" is no lower today than it was in October and, back then, mortgage rates were far more volatile.

So, if mortgage rates aren't changing as quickly as the VIX Index would indicate, it may mean that lenders have already priced their rate sheets up and out of the market. They may do this for profit reasons, but at least one lender went on record as saying that it's raised interest rates to slow the flow of new business.

Ed: I wish I could find that story at http://www.housingwire.com. If you have the link, send it on.

In other words, mortgage rates appear to be padded right now because lenders are understaffed.  If you're shopping for a mortgage, that extra cushion serves as a tax on you and it's nearly universal from lender-to-lender.  The good news, though, is that because the padding exists, mortgage rates stay within a tight range

Regardless, there's still good reason to get your rate locked in.  9 of them, really. 

If you're shopping for a mortgage right now, considering how many hundreds of thousands of people are losing their jobs without notice and how quickly some homes are losing value.  You're likely best-served by locking in the first fiscally-appropriate, low-rate mortgage that comes your way. Sure, rates may improve if you wait, but there's a lot of things that can go wrong while you're standing by.

Remember, you can always refinance again later if conditions warrant it.

As quickly as markets change, you can't possibly keep up on your own. Of course, anytime you want a rate quote, just call or email me.  Call now: (314) 993-6690.  Gary Bussard.

gbussard@envoymtg.com