With that in mind, the following are some opportunities that should be explored for the appropriate family:

"The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate,” the Federal Open Market Committee said today in a statement in Washington. The Fed reiterated that it would keep the benchmark lending rate in a range of zero to 0.25 percent “for an extended period."

Policy makers said the pace of recovery and job growth have “slowed in recent months.” The committee also said inflation is “currently at levels somewhat below” what officials judge to be consistent with price stability.

The FOMC retained its stance from last month of keeping its portfolio stable at around $2 trillion to keep money from draining out of the financial system.

“Inflation is likely to remain subdued for some time before rising to levels the committee considers consistent with its mandate,” the statement said.

Kansas City Federal Reserve Bank President Thomas Hoenig dissented against the decision for a sixth straight meeting, tying a record for most consecutive dissents at regular FOMC meetings since 1955 because he “believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.”

U.S. central bankers are on guard against an economy that may be stuck at a pace of growth that won’t generate higher levels of employment for years to come. Fed officials in June forecast the unemployment rate would be in a range of 6.8 percent to 7.9 percent by 2012.

The National Bureau of Economic Research yesterday said the worst recession since the 1930s ended in June 2009. Unemployment in the U.S. may stay above pre-recession levels until at least 2013, the Organization for Economic Cooperation and Development said in a report the same day.

Gross domestic product expanded at a 1.6 percent annual rate in the second quarter, and St. Louis forecasting firm Macroeconomic Advisers estimates growth is tracking at a 1.4 percent annual rate for the third quarter.

“The economy should continue to grow, albeit anemically,” Dan Greenhaus, chief economic strategist at Miller Tabak & Co. in New York, said before the announcement. “The question for Fed members is, to what degree can monetary policy help the economy grow from here?”

Bernanke told central bankers gathered in Jackson Hole, Wyoming, on Aug. 27 that “preconditions for a pickup in growth in 2011” appear to be in place. Even so, policy makers are “prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.”

Bernanke said the benefits of a resumption of large-scale asset purchases must be weighed against risks that include an erosion of public confidence that the Fed will be able to reduce its balance sheet and prevent a surge in inflation.

Since Bernanke’s Jackson Hole speech, reports on retail sales, manufacturing and employment have tempered investor concerns that the economy is at risk of sliding back into a recession.

Retail sales rose in August for the second consecutive month, and the Institute for Supply Management’s factory index rose to a three-month high. Companies in the U.S. added 67,000 jobs last month, more than forecast by economists.

The Standard & Poor’s 500 Index has rallied 7 percent since Bernanke’s Aug. 27 speech and is up more than 2 percent this year. The yield on the 10-year Treasury note has fallen 1.17 percentage point to 2.66 percent since Jan. 1.

Even so, the pace of payroll growth is too slow to make up for the loss of more than 8 million jobs caused by the recession or spur the consumer spending that makes up more than 70 percent of the economy.

Memphis-based FedEx Corp., the second-largest U.S. package-shipping company, said last week it will eliminate 1,700 jobs as it forecast earnings for the current quarter that fell short of analysts’ estimates.

“If you are outside the workforce right now, the door is barely cracked open,” John Challenger, chief executive officer of Challenger, Gray & Christmas, a Chicago-based outplacement firm that helps 5,000 to 10,000 workers a year find new jobs, said before the announcement.

Consumer confidence fell in September to a one-year low, according to an index compiled by Thomson Reuters and the University of Michigan.

Companies have little pricing power after the recession ravaged incomes and household finances. The consumer price index, minus food and energy, rose 0.9 percent for the 12 months ending August.

To attract shoppers, companies such as Bentonville, Arkansas-based Wal-Mart Stores Inc. and Cincinnati-based Kroger Co. are discounting merchandise.

“Our customer remains challenged,” William Simon, president and chief operating officer of Wal-Mart’s U.S. operations, said at an analyst presentation Sept. 15. “We need to figure out how to operate in this environment.”

Household wealth in the U.S. fell 2.8 percent in the second quarter as share prices were depressed by the European debt crisis, according to the Fed’s Flow of Funds report on Sept. 17. The Census Bureau said last week that the number of Americans living in poverty rose to 43.6 million, the most in 51 years.

Gross domestic product will expand at an average annual pace of 2.5 percent next year, according to the median estimate in a Bloomberg survey of economists this month, down from a forecast of 2.8 percent in early August.

“The longer you have weak growth the longer you have no underlying healing in your economy,” Ethan Harris, head of North American Economics at Bank of America-Merrill Lynch, said before the announcement. “You don’t heal the housing market, you don’t heal the household balance sheet. By allowing growth to sit below trend, you create a huge window of vulnerability to a shock.”

This past week brought us another nominal rise for the home rate continuum. If it is any consolation, the delivery rate, the basis for most fixed rate loans, has remained below the 4.00% level every day for the past two month. It is quite remarkable considering the Federal Reserve terminated their market intervention in the mortgage markets at the end of March. Most economists thought rates would rise as soon as the Fed ended their buying of mortgages from Fannie and Freddie and the exact opposite happening.

This past week gave us a better view of what is happening within the economy and it also gave stock market investors indigestion. The indigestion came from the renewed concerns for the European sovereign debt problems. There is renewed speculation that Ireland will default on their bonds and that sent a chill through the global stock market. Why? The European banking sector is the largest holder of those sovereign debt instruments and a default by Ireland could have serious financial consequences for the banking sector there.

Early in the week the Dallas Fed Bank issued a paper stating inflation will remain contained for the foreseeable future. This forecast was reinforced by two inflation releases. The core rate of increase for the producer price index in August was up 1/ 10%. A few days later we heard that consumer level inflation (CPI) also had a core rate of increase of 1/10%. The core rate excludes the volatile food and fuel components. The year-over-year rate of increase for the CPI is only 1.1%, and that is great news for rates. When inflation levels start to rise, so will interest rates.

The econonews week opened with the retail sales for August rose by more than expected. The other good econonews release was initial claims for job-less benefit fell by more than expected. However, the job creation figures remain depressed. On the other side of the coin we heard consumer sentiment fell; industrial production and factory capacity utilization rates falling and the Philly Fed manufacturing index fell.

Looking ahead to the upcoming week we will see some key housing data and leading economic indicators releases. We think they should help home loan rates back away from the 4.00% level but, Stay tuned.

Ironically, even though many homebuyers are attracted to no-point loans by the prospect of saving money, the vast majority are making poor economic decisions. Points, pre-paid interest collected upfront by lenders, are usually paid at closing. In exchange for points up front, lenders offer a lower interest rate on the loan.

Fixed-Rate Loans/ ARM's

One point equals one percent of the total loan amount, so on a mortgage of $800,000, one point translates to $8,000. On a 30-year fixed loan, the most common mortgage product, each point ordinarily results in a rate reduction of 0.25 percent. So, for example, a loan of five percent at no points will usually be lowered to 4.75 percent with one point paid or 4.5 percent with two points paid. Depending on the product a customer who selects an ARM (adjustable rate mortgage) can also benefit from paying points.

Loans with this kind of traditional "buy-down" break even after about five years. In other words, consumers who plan to stay in their property longer than five years will almost always benefit by paying points. To add to that fact, often times if a customer elects to pay points on a ARM the difference can equate to more than .25% decrease in rate, which will decrease the time frame from 5 years to 3. For example if a customer chooses a 5 Year Arm at 4.0 percent, they can lower their interest rate to 3.625 percent with 1 point paid. In addition, the lower interest rate causes the loan to amortize more quickly; thus, the proportion of each month‚s payment allocated to principal reduction is increased, resulting in even greater savings.

And on top of that, points can typically be deducted in the year they are paid on a purchase transaction, reducing the break-even point even more. When all these savings are factored in, it rarely takes more than three years to start benefiting from the lower payments derived by paying points.

Other Considerations

Despite these mathematical realities, no-points mortgages have stayed popular since they were introduced almost 20 years ago, and most borrowers perceive no-point mortgages as less expensive. Borrowers are often lured by the appeal of avoiding upfront charges and, in many cases, complicated advertising can obscure the actual cost of the no-point mortgage. The APR (annual percentage rate), legally required in advertisements to help borrowers compare loans, can fail to clarify the break-even point or the role rates play in the overall cost of the loan.

Borrowers should also consider the likelihood of refinancing in the next five years. In that case, they may be unable to recoup the points in time, but today, with so many people locking in loans at the lowest rates ever, the opportunities for refinancing will probably remain low, and the benefits of paying points can result in a financial windfall.

Conclusion

While no-point mortgages can help people with cash-flow hurdles, customers should ask themselves how long they plan to live in their new home. If the purchase encompasses a long-term commitment, they would likely save a substantial amount of money by paying points.

Please feel free to contact me with any questions or concerns. I welcome the opportunity to work with your customers!