Advantages of Paying Points!

Many people think paying points to buy down the interest rate is a waste of money.  If you are going to stay in the home or keep the loan long time it may be in your best interst to pay points to obtain a lower interest rate.

Today points buy you a lower rate than int he past:

.50 point lowers the rate by nearly .20%Historically .50 point lowered the rate by .125%

• Points paid on a purchase transaction are a tax deduction in the year of the close of escrow
• Paying points can dramatically reduce the interest rate on the loan
• Lowering the rate lowers the payment, lowering the income needed to qualify
• A lower rate saves the buyer thousands of dollars over the life of the loan
• There’s never been a better time to buy down a rate

Foreclosures Could Become Rental Homes!

The White House is aiming to improve the housing market with a new initiative – turning foreclosed properties into rental homes. According to the Wall Street Journal, the Obama Administration is seeking input from investors on launching this potential new program.
                              
The video below explains the idea in detail. Do you think this program would help the housing market?

Tagged as: foreclosure, renting

Getting Married? Register for Your Down Payment!

Many newlywed couples face a daunting down payment soon after marriage. This has gotten only more difficult as larger down payments are required since the reemergence of conservative underwriting standards.

A recent article in the Scotsman Guide discussed a new trend at weddings that can ease the financial burden: down payment registries.

“Homebuyers hoping to avoid the typical barrage of plates, glasses and cutlery now have a choice,” explained the article. Couples can learn about down payment registries from their loan officers and using that money as a gift fund for their new home.

Websites allowing secure payments for wedding guests to contribute is the common method, as down payment registries online can allow guests to see the homes a couple likes and feel more involved in the process, as opposed to just sending cash.

For more information about these registries, read the full Scotsman Guide article here and talk to your mortgage professional about it.

7 Things You Should NOT Do When Applying for a Home Loan!

This is a list of things to steer clear of when you are seeking to obtain financing for a home. If you do any of these things, please contact your loan officer immediately.

Even if you have been pre-qualified, we can help you re-qualify.

1. Don’t buy or lease an auto!

Lenders look carefully at your debt-to-income ratio. A large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan.

2. Don’t move assets from one bank account to another!

These transfers show up as new deposits and complicate the application process, as you must then disclose and document the source of funds for each new account. The lender can verify each account as it currently exists. You can consolidate your accounts later if you need to.

3. Don’t change jobs!

A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.

4. Don’t buy new furniture or major appliances for your “new home”!
If the new purchases increase the amount of debt you are responsible for on a monthly basis, there is the possibility this may disqualify you from getting the loan, or cut down on the available funds you need to meet the closing costs.

5. Don’t run a credit report on yourself!
This will show as an inquiry on your lender’s credit report. Inquiries must be explained in writing.

6. Don’t attempt to consolidate bills before speaking with your lender!
The loan officer can advise you if this needs to be done.

7. Don’t pack or ship information needed for the loan application!
Important paperwork such as W-2 forms, divorce decrees, and tax returns should not be sent with your household goods. Duplicate copies take weeks to obtain, and could stall the closing date on your transaction.

Inexpensive Home Maintenance Tasks Can Prevent Big Expenses in the Future!

For a few hours’ time and a small investment, you can do a lot to protect your property. Even renters can ensure comfortable surroundings with some of these tips.

Get energy efficient. If you have not yet installed a programmable thermostat, now is the time to do it. You can reduce your cooling costs by 10 percent, according to the U.S. Department of Energy. Thermostats cost $40 to $70.

Seal around the tub and shower. Cracked or poorly sealed caulking around tubs, showers, and sinks can lead to water damage to floors, walls, and the ceilings below, say experts writing in Money magazine. When you see cracks or gaps, buy a $5 tube of caulking and reapply.

Prevent fires. Check your fire extinguisher to see if it’s still charged. If you need a new one, buy an extinguisher that works on both kitchen and electrical fires. The National Fire Protection Agency recommends one that is labeled ABC. Cost is about $40.

Test the sump pump. Before a heavy rain floods your basement, test your sump pump to see if it works. Pour water into the well around it. Raising the water level should make it go on.

Prevent shocks. Electrical outlets near water in the kitchen and bathroom should have ground fault circuit interrupters that protect from a shock They have “test” and “reset” buttons. If you need one, the GFCI costs about $10, but you should hire an electrician to install it.

Service the garage door. Spray penetrating oil such as WD-40 into the hinges and rollers so the door will open and close more easily. Test the safety reverse mechanism by placing an object in the door’s path to see if it stops. WD-40 costs about $7.

5 Things to Think About When Looking for Your Dream Home!

While on the hunt for a perfect home, it can be immensely helpful to create a wish list of sorts. This can help you and your real estate agent obtain a clear picture of what type of home would best suit you.

Some things to consider:

1. Move-in ready or fixer-upper?

Making a home “your own” can make fixer-uppers an attractive option, along with the lower cost. Making a mark on your new home via renovations. Take some time to think about what homeownership means to you, and whether you are interested in renovation.

2. Upgrades
Certain upgrades in a home, such as marble or granite counters, are often coveted by buyers. Consider what type of upgrades are important to you – energy-efficiency, professional grade appliances, luxury tiling? Make a list and show your Realtor.

3. The Yard
What type of backyard are you looking for, and how important is it to you? Think about low versus high maintenance yards, the amount of space you’d like, and what kind of yard would best suit your lifestyle.

4. Swimming Pools
For some homebuyers, having a swimming pool can be a dealbreaker. If this is something that you really desire in your dream home, make that clear to your real estate agent so that they can narrow the search for you.

5. Schools in the Area
Last but certainly not least, the quality of the schools in the area of a dream home should be an important thing to research. Ask your Realtor for information about schools in the area of your search, and comparisons between them. This information is easily obtained, and real estate agents will be more than happy to show you school scores and more. Also consider private schools, if that is an option for your family.

Fannie Mae Revision to Cash-out Waiting Period!

There is good news on the lending front for buyers who pay all cash for a property and then want to get a conventional conforming loan within six months of the purchase.

Until recently, Fannie Mae guidelines required all cash buyers to wait a minimum of six months before they could obtain a conventional loan for the property. This requirement conflicted with IRS code that allows mortgage interest deduction only on loans placed within 90 days of purchase.

We do have one source that will lend in less than 90 days on an exception basis!

Fannie Mae has revised their Selling Guide and will now allow a cash-out refinance within six months of an all cash purchase.

To take advantage of the Fannie Mae revision to the cash-out waiting period, all of the following parameters must be met:

• The new loan amount cannot be more than the documented amount the borrower paid for the property.
• The purchase was an arms-length transaction.
• The source of funds for the purchase can be documented (e.g., bank statements, personal loan documents, HELOC on another property).
• Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.
• All other cash-out refinance eligibility requirements are met and cash-out pricing is applied.

This revised Fannie Mae guideline lets buyers who pay all cash refinance with a conventional conforming loan within 90 days of the purchase and get the benefit of the IRS mortgage interest deduction.

Of course, it is still less expensive for the buyer to obtain the conventional financing during the initial purchase, but when that isn’t possible, this revised guideline is a good alternative.

Financial To Do List!

Check out these critical finacial tips by Suze Orman-CLICK ON THE LINK FOR THE ENTIRE ARTICLE!

 http://bit.ly/pJLdoU

STEP 1:  SPENDING-GET REAL!

Track Your Spending

Why it's important: You know the big-ticket expenses in your life, but all the smaller spending can also be a killer. Take a look at your monthly outflow, and I guarantee you will have a few "Yikes, I had no idea" moments.

Do this now: Gather up your bank and credit card statements. Then go to my website, SuzeOrman.com , and click on Suze's Expense Sheet. Input your average monthly expenses, and get honest about where your money is going.

Calculate Your Net Worth

Why it's important: We tend to focus on assets and forget about debts. Financial security requires facing up to the big picture: assets minus debts.

Do this now: Type "net worth calculator" into any search engine and you will find plenty of free online tools to help you take stock of your assets and debts.

Check Your Credit Profile

Why it's important: Your credit score affects the interest rates you're offered on credit cards and loans, can be used to vet your job application, and in some states may influence your insurance premiums. So your credit reports, which determine your FICO score, need to be up-to-date and correct (mistakes abound). A score of at least 720 (the range is 300 to 850) earns you a gold star.

Do this now: Go to AnnualCreditReport.com to get your free credit reports from the three credit bureaus: Equifax, Experian, and TransUnion. Every year, you are entitled to one free report from each. If a site asks for your credit card to receive a report, you're at the wrong place! Scour your reports for mistakes, and follow the directions for filing a dispute. Once corrections are made, go to MyFICO.com to buy your FICO credit score. You may receive offers for free credit scores. They are knockoffs of the real deal—your FICO score is what most lenders and businesses check. It costs $16 to see your FICO score; with so much on the line, that's a small price to pay.

Cut Spending by 10 Percent

Why it's important: The median pay raise for 2010 is expected to be around 3 percent (the lowest forecast in 25 years). So challenge your family to give your budget a 10 percent raise by cutting your spending 10 percent.

Do this now: Once you input your income and outflow into the Expense Sheet on my website, print it out and circle every expense that is a want (not a need), then figure out how to reduce or eliminate it.

STEP 2:  SAVINGS


Boost Your Emergency Fund to Cover Eight Months of Living Expenses

Why it's important: By now I am sure you have started saving. The next step is to keep at it until you have at least eight months' worth of living expenses.

Do this now: Go to MyFDICInsurance.gov for banks and NCUA.gov for credit unions to verify that your emergency fund is tucked away at an institution that is federally insured. Never invest your emergency savings in the stock market. Safe, not sorry, is all that matters.

Get the Maximum 401(k) Match at Your Current Job

Why it's important: If you left it to your company to auto-enroll you in the plan when you were hired, there's a good chance your contribution rate is too low to max out on the match.

Do this now: Call your human resources department or the company that runs your plan; boost your contribution so you qualify for the max match.

Roll Over 401(k)s from Former Employers into an IRA

Why it's important: Once you leave a job, you can move your 401(k) to a brokerage or fund firm. You can roll over 401(k)s from multiple jobs into one new IRA; that's a great bookkeeping assist. An IRA rollover also frees you up to invest in low-cost funds, exchange-traded funds (ETFs), stocks, and bonds.

Do this now: If you don't yet have an account at a discount brokerage or no-load mutual fund company, pick one and then ask for its IRA rollover kit.
Fund a Roth IRA

Why it's important: After you max out on the company match in your 401(k), turn your retirement investing attention to funding a Roth IRA. In 2010 the maximum is $5,000 ($6,000 if you're 50 or older) for individuals with modified adjusted gross income (MAGI) below $105,000 and married couples filing a joint return with MAGI below $167,000. Reduced contributions are phased out for individuals once MAGI hits $120,000; for married couples, eligibility disappears with MAGI above $177,000.

Do this now: Don't get thrown by high minimums. Ask if there is a program that lets you invest small monthly sums of $50 or so. Sign on for an auto-investment plan and you may get around the advertised "initial minimum investment."

Leave Your Retirement Funds Alone

Why it's important: Can't handle the mortgage? That's no reason to raid your retirement funds. When that money runs out, you'll still face foreclosure, but you'll have lost your retirement savings, too.

Do this now: Don't cash out your 401(k) when leaving a job. In addition to an early withdrawal penalty (if you're under age 55), your shortsightedness will cost you future gains. Go to MoneyChimp.com and click on the Calculator tab. Under "current principal," input the value of your 401(k). Leave "annual addition" blank. For "years to grow," enter the difference between your age and 65. For "interest rate," use a conservative 5 percent. Calculate the future value. The difference between that and the current value is what you'd give up by cashing out.

Convert to a Roth IRA

Why it's important: As of January 1, anyone can convert a traditional IRA to a Roth IRA (previously there was an income limit). The advantage is that money in a Roth can be withdrawn in retirement with no tax due. Withdrawals from traditional IRAs will be taxed at your ordinary income tax rate.

Do this now: Convert in 2010 and you can spread your tax bill over the next two years. If you have both deductible and nondeductible traditional IRAs, ask a CPA to determine your tax liability.
Shop for Insurance Deals

Why it's important: You're always looking for the best prices—why not on home and auto insurance, too? You're nuts if you don't comparison shop for auto insurance; you could save 10 percent or more. (But don't reduce your level of coverage. You want the right coverage for the best price.)

Do this now: Go to InsWeb.com and NetQuote.com to find premium quotes from a variety of home and auto insurers. (For auto quotes from Progressive and GEICO, go to their websites.)

Raise Your Insurance Deductibles

Why it's important: Low deductibles of $250 or so can entice you to make claims for small-ticket items. Do that too often and your insurer may boost your premium or boot you completely. And there's a nice payoff for a higher deductible: Raise your auto and home deductibles to $1,000 or more and your premium cost falls at least 10 percent.

Do this now: Call your current insurer and ask for a new quote based on a higher deductible. (But do this only if you have an emergency savings fund that can cover the cost of the deductible. Don't have that emergency fund set up? Grrr. See Build Security .)

Challenge Your Property-Tax Assessment

Why it's important: Your tax is typically a percentage of your home's assessed value. If that assessment doesn't reflect today's market—home values are down an average of 30 percent since the 2006 peak—you may be overpaying. The National Taxpayers Union reports that more than half of all assessments are too high.

Do this now: Contact your county tax assessor to learn how to challenge your assessment. The National Taxpayers Union also has a booklet on the topic ($7; NTU.org ).

STEP 3-BUILDING SECURITY

How to Get Finances Back on Track After Being Unemployed!

If you are back in the workforce after a layoff, you might be wondering how to address financial issues.

For many re-employed people, a new paycheck might not solve all money problems. According to a survey by CareerBuilder, among workers who were laid off in 2010 and found new jobs, 61 percent took pay cuts.

With money tight, pay attention to urgent expenses first.

Attend to maintenance on your home and car. If you put off medical care for yourself and your family, that should be attended to. Advisors for Money magazine say it’s important to get the basics back on track.

The next priority is paying off credit card debt you have accumulated, paying more on the card with the highest interest rate first. Big credit card debt can harm your credit rating.

Paying off a home-equity line of credit is less urgent. The interest is tax deductible. Since the debt is secured, it won’t affect your credit score very much.

Since you have probably used all or most of your cash reserves, it’s important to rebuild them at the same time. If you have $500 a month in discretionary money, advisors recommend that you put $300 toward debt and $200 toward savings.

Next comes your retirement fund. Even if you can only manage a very small amount, contribute to your new company’s 401k plan right away.

If you don’t have enough cash to save and pay down debt, plus put a small sum into your retirement plan, it might be wise to refinance your mortgage. Especially if you have significant home equity, it will be easier to do now that you are employed.

Once you have met these goals, you will have more money to put into living life instead of playing catch-up.

This Week’s Market Commentary!

This week brings us the release of four economic reports for the markets to digest, with three of them being considered important.

One of those three is one of the more important reports we see each month.

There is relevant data or events scheduled for each day except Thursday, so it will likely be another active week for mortgage rates.

May’s Personal Income and Outlays data will be posted early this morning. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up two-thirds of the U.S. economy.

Analysts are expecting to see an increase of 0.3% in income and a 0.1% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

June’s Consumer Confidence Index (CCI) is the second report of the week. It will be posted late Tuesday morning. It is important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial situations, they are likely more apt to make large purchases in the near future.

Current forecasts are calling for a reading of 60.3, down from last month’s 60.8 reading. The lower the reading, the better the news for bonds and mortgage rates.

Friday has two reports scheduled, with the first coming from the University of Michigan who will update their Index of Consumer Sentiment for May. This index gives us a measurement of consumer willingness to spend.
As with Tuesday’s CCI, if consumers are more comfortable with their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data has the potential to affect bond trading and mortgage rates.

The second report of the day and the last data of the week is the Institute of Supply Management’s (ISM) manufacturing index for June late Friday morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading above 50 means that more surveyed executives felt business improved during the month than those who felt it had worsened.

Analysts are expecting a reading of 51.1. That would indicate that manufacturers felt business worsened from the previous month, when we saw a 53.5 reading. Good news for bonds and mortgage rates would be a weaker than expected reading, particularly something below the recessionary threshold of 50.0.
Overall, tomorrow and Tuesday’s data should bring some volatility in trading and mortgage rates, but Friday’s ISM report is definitely the most important of the week.

Mid-Week Market Update!

This week’s FOMC meeting has adjourned with no major surprises.

The Fed again reminded us that the economic recovery slowed recently and lowered their forecasts for the economy, but they do expect it to regain momentum in the near future.

Accordingly, they left key short-term interest rates alone and kept the reference in the post-meeting statement that key rates will remain at or near current levels for an extended period of time. They also said that their second round of quantitative easing (QE2) will wrap up this month as planned.
In a bit of good news for mortgage rates, the Fed did say that they were delaying the shedding of their assets from their balance sheet. This was a point of concern in the mortgage market because when the Fed begins selling their mortgage-related holdings, we could see the additional supply make current securities less appealing and lead to higher mortgage rates. The fact that they have clarified they are not starting to sell them doesn’t alleviate the issue, but does push it down the road somewhere.

Overall, today’s events had little impact on the markets. The initial knee-jerk reaction drove stock prices a little lower, but they have since rebounded to positive ground. The Dow is currently up 8 points while the Nasdaq is up 2 points. The bond market has given back some of its pre-adjournment gains, currently standing up only 2/32. However, I don’t see this as enough of a change to cause lenders to revise mortgage rates higher this afternoon.

I am continuing to watch the yield on the benchmark 10-year Treasury Note, currently at 2.98%. I still suspect that the market is not comfortable with it below 3.00% and think that it will move higher in the immediate future. Since mortgage rates tend to follow bond direction of bond yields, this would be bad news for the bond market and mortgage rates.

Tomorrow has two economic reports scheduled for release, neither of which is considered to be highly important. The first is last week’s unemployment figures. The Labor Department is expected to say that 413,000 new claims for unemployment benefits were filed last week. This would be little change from the previous week, indicating no change in employment sector strength. The higher the number of new claims filed, the better the news for the bond market and mortgage rates.

May’s New Home Sales will be posted by the Commerce Department late tomorrow morning. This report is similar to Tuesday’s Existing Home Sales report, but tells us how well sales of newly constructed homes were last month. It is expected to show a decline in sales from April, but will likely not have much of an impact on mortgage rates because this data tracks only 15% of all home sales.

This Week’s Market Commentary

This will likely prove to be another active week in terms of mortgage rate movement due to the economic data and other events that are scheduled, but we may see less intra-day swings than we did the past two weeks. There are four economic reports scheduled for release in addition to another Federal Open Market Committee (FOMC) meeting.

There is no relevant economic news scheduled for release tomorrow. Tuesday brings us the first data with the release of May’s Existing Home Sales report. The National Association of Realtors will give us figures on home resales late Tuesday morning. This data helps us measure housing sector strength and mortgage credit demand, but it usually takes a large variance from forecasts for it to cause a noticeable change to mortgage rates. It is expected to show a decline in home sales from April to May.

Wednesday’s only event is the adjournment of the FOMC meeting that began Tuesday. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting. But, as we have seen so many times in the past, it is the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy or inflation, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and possibly mortgage pricing after the 12:30 PM ET adjournment.

Thursday’s only report is the release of May’s New Home Sales. It is similar to Tuesday’s Existing Home Sales report, but tells us how well sales of newly constructed homes were last month. It is also expected to show a decline in sales, but will likely not have much of an impact on mortgage rates because this data tracks only the 15% of home sales that Tuesday’s data does not.

There are two reports being released Friday morning. The first is the final reading to the 1st Quarter Gross Domestic Product (GDP). The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month’s release of this quarter’s GDP reading. Last month’s first revision showed a 1.8% rise in the GDP, which is what analysts are expecting to see again.

May’s Durable Goods Orders will also be posted early Friday morning, giving us an indication of manufacturing sector strength. It is known to be quite volatile from month to month and is expected to show an increase of 1.0% in new orders from April to May. A large decline would be the ideal scenario for the bond market and would likely lead to a decline in mortgage pricing because it would indicate manufacturing sector weakness.

Overall, today will likely be the quietest day of the week unless the stock markets stage a rally or sizable sell-off. The most active should be Wednesday with the FOMC meeting adjourning or Friday due to the Durable Goods report being posted that day. Tuesday’s news may also affect mortgage rates, but likely not as much as other days.

How to Decorate Using Feng Shui!

Feng shui is an ancient Chinese system of aesthetic arrangement believed to help improve life by receiving positive qi, sometimes spelled chi. In a new home, or when rearranging things in your current home, utilizing feng shui principles in decor is not very difficult.

The video below introduces concepts of arranging furniture using the principles of feng shui.

Watch the utube video below to learn more about how to arrange your furniture in a place that brings you wealth!

http://www.youtube.com/watch?v=ZmvsJcJForc&feature=player_embedded#t=156s

Loan limits are set to go down October 1, 2011!

The temporary loan limt for the temporary conforming loan limits is schedule to go down from $729,750 to $625,500 on October 1, 2011.  The higher limit is called agency jumbo or high balance conforming by most lenders.  The higher limit was increased to try to help stimulate the economy.  Santa Clara County and other high cost areas will definatly be affected by the reduced loan amount limits.

The change would put any loan over $625,500 in the jumbo category, which will require a down payment of 20% or more on any purchase transaction.  

A seller in the sales price range of $782,000 or more will need to find a buyer with 20% or more as a down payment as of October 1st.  Currently, a buyer can purhcase a home for $756,000 with a down payment of 3.5% obtaining a FHA loan. 

The amount of buyers who can come with 20% is very limited in today's economy. 

Now is the time to purchase a home!

This Week’s Market Commentary!

This week is very light in terms of scheduled economic reports that are relevant to mortgage pricing.

There are also two Treasury auctions taking place that may influence mortgage rates, but we may see the stock markets drive bond trading and changes to mortgage pricing a good portion of the week.

There is no relevant data scheduled for release today or Tuesday. Fed Chairman Bernanke will speak at the International Monetary Conference in Atlanta this afternoon, but I don’t believe we should consider this a highly important event.

There could be reference to the some of the current financial crises overseas. However, unless something said by Chairman Bernanke is highly surprising, I suspect that his speech will have a minimal or no impact on today’s afternoon rates.

The first economic report of the week comes Wednesday afternoon when the Federal Reserve will release its Beige Book. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve to determine monetary policy during their FOMC meetings.

If it shows surprisingly softer economic activity, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher Wednesday afternoon.

April’s Goods and Services Trade Balance report will be posted early Thursday morning. This data gives us the size of the U.S. trade deficit and will be released at 8:30 AM ET. It isn’t likely to cause much movement in the markets or mortgage rates, but nevertheless forecasters are expecting to see a $48.7 billion trade deficit. It will take a wide variance from this projection for the data to influence mortgage rates.
The two relevant Treasury auctions scheduled will be held the middle part of the week. The 10-year Treasury Note sale is scheduled for Wednesday while the 30-year Bond sale will take place Thursday. Results of both auctions will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. It is common to see some pressure in bonds right before these sales as investors prepare for them, but as long as the sales are not weak those pre-auction losses are usually recovered once they are completed.

Overall, it likely is going to be a moderately busy week for the mortgage market. The most action will likely come during the middle days, assuming that the stock markets don’t go into heavy selling or buying. In weeks like these where there is little factual economic data being posted to drive bond trading, the stock markets often take center stage.

Sizable stock gains should lead to bond weakness and higher mortgage rates, while stock weakness will likely allow improvements to mortgage pricing. I am considering Wednesday the best candidate for most active day in rates, but that is relying on the assumption the stock markets remain relatively calm this week

Apartments are Getting Scarce and Rents are Rising!

It’s no secret that many underwater homeowners are losing their homes. At that point, they are renting apartments.

How big is the demand? In the 1980s, about 28 million people in the United States were living in rented apartments. By the 2010s, that number had risen to about 42 million.

It’s good news for apartment owners, who are seeing the values of their properties rise. Apartment values are also rising because the market is healthy, which makes financing cheaper.

It isn’t good news for renters. Rents are rising and vacancies are falling in some areas. For example, studio apartment rents in Chicago are increasing from an average of $720 to $765 a month.

Mainly because of foreclosures, the nation’s home-ownership rate fell by 2 percent between 2004 and 2010, according to the Census Bureau. Each 1 percent represents one million households moving into rentals.

Consider a Vacation Home for Fun Times, Investment Returns!

Glorious summer days at the lake…the grandkids frolicking at the shore…or a warm fireplace as you wait for the perfect powder at your ski retreat. A vacation home builds memories and it can be a great investment.

In most vacation hot spots, second-home prices are at five-year lows. Some in California and Florida can be had for 47 percent below their 2006 price. Bargains are likely to be available within a couple of hundred miles from where you live.

* There’s more to a vacation place than fun and up-front bargains. In the future, the home will be an appreciating asset. Economists say prices are already rising and will continue to rise for at least the next five years.

* The home is a better deal if it’s rentable. The rental potential puts money in your pocket, but it also increases resale value.

* The typical vacation property rents out about 17 weeks a year, according to HomeAway.com. Ask a property management company how much comparable properties rent for by the week. While the rent won’t pay all your expenses, it will help with the mortgage, utilities, taxes and maintenance.

* You will meet and become friends with an entirely new group of people when you own a vacation home. Lifelong friends are made with neighbors and in the community.

* You’ll have tax benefits. Rent it out for less than two weeks, and you won’t have to report the income to the IRS.

* If you rent the home for two weeks or more, you can deduct operating costs, such as maintenance, cleaning, mortgage interest and property tax. You allocate the write-off between personal and rental use.

* As with any vacation home, distance is important. Less than 200 miles from your primary home is best.

Finance
* When the property is classified as a second home, you’ll get about the same interest rate and terms as on a owner occupied loan.

* If you need the rental property income to qualify for a mortgage, it will be classified as an investment property. The down payment will be higher and the interest rate will be about .5 to 1%  more.

Houses are More Affordable Now Than In The Last 35 Years!

Statistically speaking, this is the best time to buy a home since your parents took the plunge 35 years ago, according to the housing affordability index.

But maybe you’re tired of hearing about statistical matters and just want to know how this affects your pocketbook.

If your parents bought a home in 1963, it probably cost them 43 percent of your dad’s income to finance it. If they were buying that same home right now, it would take only about 22 percent of their monthly income to finance it.

The National Association of Realtors today recommends an average of 25 percent of an individual or family pretax income. That means no more than 25 percent can be spent on mortgage payments, taxes, insurance and utilities.

Because the affordability index is now 22 percent, a home buyer would be in a better position than the association recommends.

Still, people who need a home may be confused about whether this is a good time to buy. They wonder if it will cost even less to buy a home in the future.

That isn’t likely to happen, because interest rates and inflation have a big impact on the true cost of buying a home. And both are going up.

The chief economist at Moody’s Analytics says, “Based on incomes, this is as affordable as it gets. If you can get a loan, these are pretty good times to buy.”

For renters, that is especially true. Those who are renting a nice apartment or home for $1,000 a month, for example, will typically experience a 3 percent rise in their rent per year.

At that rate, over the next 10 years, they would pay a total of $137,567 in rents.

Six Unobvious Reasons to Recycle!

1. Protect your home from hazardous waste. The average American home accumulates up to 20 pounds of hazardous waste each year. Even more frightening, usually 100 pounds of waste is stored in cabinets, the garage, closets, basements, and other storage spaces in the average home.

2. Help the community and local job options by donating to the Goodwill, which collects electronics as well as most other things, to recycle or sell. They use the profits to help fund job training and employment opportunties in the local community.

3. You can hold a recycling event as a fundraiser for one of your favorite causes (a local school, sports league, church, etc.) with the help of http://www.recyclingforcharities.com/

4. According to the Environmental Protection Agency, American households own an average of 24 electronic products that could be potentially donated or recycled. 85% of them end up in landfills instead.

5. Recycling is less expensive than sending trash to a landfill. According to http://www.ecocycle.org/, recycling instead of landfilling saves $55 per ton, saving you money, along with the environmental benefits.

6. Stimulate the economy by creating jobs. Eco-Cycle states that “or every one job at a landfill, there are ten jobs in recycling processing and 25 jobs in recycling-based manufacturers. The recycling industry employees more workers than the auto industry.”

Remember Memorial Day!

  

REMEMBERING ALL WHO ARE SERVING OR HAVE SERVED OUR COUNTRY!

Federal Retreat on Bigger Loans Rattles Housing!

 Check out this article on how the lowere loan limits can affect the housing market by:

By DAVID STREITFELD

Published: May 10, 2011 in the NY Times

 http://nyti.ms/jkX3ui

David states:  "For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree."

He also adds:

"But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.
Michael S. Barr, a former assistant Treasury secretary, said the federal government’s retrenchment would be painful for many communities. “There’s always going to be a line, and for the person just over it it’s always going to be an arbitrary line,” said Mr. Barr, who teaches at the University of Michigan Law School. “But there is no entitlement to living in a home that costs $750,000.”

There is more information in this article that may interest you! 

5 Things to Think About When Looking for Your Dream Home!

While on the hunt for a perfect home, it can be immensely helpful to create a wish list of sorts. This can help you and your real estate agent obtain a clear picture of what type of home would best suit you.

Some things to consider:

1. Move-in ready or fixer-upper?

Making a home “your own” can make fixer-uppers an attractive option, along with the lower cost. Making a mark on your new home via renovations. Take some time to think about what homeownership means to you, and whether you are interested in renovation.

2. Upgrades
Certain upgrades in a home, such as marble or granite counters, are often coveted by buyers. Consider what type of upgrades are important to you – energy-efficiency, professional grade appliances, luxury tiling? Make a list and show your Realtor.

3. The Yard
What type of backyard are you looking for, and how important is it to you? Think about low versus high maintenance yards, the amount of space you’d like, and what kind of yard would best suit your lifestyle.

4. Swimming Pools
For some homebuyers, having a swimming pool can be a dealbreaker. If this is something that you really desire in your dream home, make that clear to your real estate agent so that they can narrow the search for you.

5. Schools in the Area
Last but certainly not least, the quality of the schools in the area of a dream home should be an important thing to research. Ask your Realtor for information about schools in the area of your search, and comparisons between them. This information is easily obtained, and real estate agents will be more than happy to show you school scores and more. Also consider private schools, if that is an option for your family.

Spring Cleaning 101!

It’s that time of year again – time to get rid of the clutter and clean up your home. In this video from CBS, O Magazine’s Creative Director Adam Glassman shares some tips on identifying and clearing clutter and older things you no longer need.

Tagged as: cleaning, home care, resources, spring

The Power of Bona Fide Pre-Approval!

While most mortgage lenders offer a form of “pre-approval” for a loan, Princeton Capital is one of the few lenders anywhere that can do an actual fully underwritten loan pre-approval. With our banker and broker business model, pre-approvals for loans are not conditional on multiple minutiae of a transaction.

It is difficult to overestimate the power of a real loan pre-approval and its role in a successful real estate transaction. Pre-approvals make the seller of a house more comfortable about the offer, and in a competitive market, this can make all the difference.

According to Bay Area Realtor Larry Miller of Coldwell Banker, standard practice in the area is that a loan pre-approval accompanies any offer on a home. When the pre-approval comes from Princeton Capital, he is able to give the seller complete confidence that buyer is, in fact, qualified and the transaction will be able to close.  Not so with many other pre-approvals, which are not fully underwritten and thus are only worth the paper they’re printed on.

“If a seller is looking at two different offers, they can feel much more confident with the Princeton Capital one,” said Miller.

The difference between the loan pre-approvals the real estate agent sees from other loan companies and from Princeton Capital is the reliable commitment of the latter that the buyer does indeed qualify.
Looking over pre-approval letters from three diffferent companies, one of which being Princeton Capital, Miller pointed out the extensive conditions on the other letters – one of which included more than eight conditions under which the”pre-approval” was not guaranteed.

“How much confidence can this give you?” asked Miller, in reference to the extensive conditions and lack of guarantees on one pre-approval letter.

A true pre-approval from Princeton Capital gives homebuyers a huge competitive advantage when making an offer on a home, because sellers can be completely confident that the buyer is indeed able to purchase the home, speeding up the transaction and ensuring its success.

This Week’s Market Commentary!

There are only four relevant economic reports scheduled for release this week, but two of them are considered to be highly important to the financial and mortgage markets. Unlike many Mondays, the week kicks off with important data being posted today. The Institute for Supply Management (ISM) will post their manufacturing index for April late this morning.

This is one of the first important economic reports released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. Analysts are expecting to see a reading of 59.7, which would be a decline from March’s level of sentiment. The lower the reading, the better the news for bonds and mortgage rates.

March’s Factory Orders data is Tuesday’s only relatively important data. It will be released at 10:00AM, giving us a measure of manufacturing sector strength. It is similar to last week’s Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a noticeably smaller increase than the 1.9% that is expected could push mortgage rates slightly lower. But, a much larger increase in new orders could lead to slightly higher mortgage pricing Tuesday.

There are no relevant government reports or events scheduled for Wednesday, meaning non-economic factors such as stock prices will probably have the biggest influence on bond trading and mortgage rates that day. Generally speaking, a stock rally pulls funds from bonds, leading to bond selling and higher mortgage rates. However, stock selling makes bonds more appealing to investors. When the funds are shifted into bonds to escape the volatility in stocks, we often see mortgage rates move lower. If the major stock indexes remain calm Wednesday, mortgage rates should follow suit.

The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a decrease could cause bond prices to drop and mortgage rates to rise Thursday morning. It is expected to show a 1.0% increase in productivity.

Friday brings us the release of the almighty monthly Employment report, giving us April’s employment statistics. This is where we may see a huge rally or major sell-off in the bond market and potentially large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be an increase in the unemployment rate and a much smaller number of payrolls added to the economy during the month than was expected.

Just how much of an improvement or worsening in rates depends on how much variance there is between forecasts and actual readings. This could turn out to be a wonderful day in the mortgage market, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for the unemployment rate to remain at 8.8% and that approximately 183,000 jobs were added during the month.

Overall, I believe Friday will be the most important day of the week with the employment data being posted. It can easily erase the week’s accumulated gains or losses in mortgage rates if it shows any surprises. We may actually see a noticeable change in rates tomorrow also if the ISM index shows favorable or unfavorable results. The middle part of the week will likely be the calmest, but I still suggest proceeding cautiously if still floating an interest rate. This would be a good week to maintain contact with your mortgage professional if you have not locked a rate yet.

Real Estate Apps on Your Smartphone!

With smartphones and apps in abundance, it is no surprise that there is an app for just about everything. Homebuyers searching for the perfect home can now utilize their phones or tablets to find nearby houses in their price range.

Take a look at this Wall Street Journal video about real estate apps:

Home buyers try to beat "jumbo" loans squeeze

On October 11, it is expected that Fannie Mae and Freddie Mac will not extend the current temporary $729,750 conforming loan limit in high cost areas, and that th limit will be reduced to the permanent limit of $625,500.  In an article published by Reuters http://reut.rs/eWVJtk, Linda Stern discusses the change, what it will mean to potential buyers and sellers in this market, and comes up with some pretty positive conclusions.  Please check it out.

It’s Spring! The Home Market is Heating Up!

The big day was March 20, the first day of spring. As almost everyone knows, it begins one of the most active seasons for home searches.

For good reason: If you can dodge the April showers, the weather will be nice. Flowers coming out everywhere will tempt you to drive about and see what appeals to you. Even if you haven’t decided to take the plunge, you could find that today’s bargains are hard to resist.

Home sellers will be out there with bells on. They know that buyers, dreamers and lookers will be out in force. Whichever category you fall into, they and their real estate agents will be pleased to see you.

Agents know that the lookers and dreamers of today could be buyers in the future. The agents are available in their offices or at open houses to tell you about the finer points of buying and selling. When your time comes, you will be prepared and knowledgeable.

Visiting open houses can be more than an enjoyable Sunday afternoon activity. Visitors get an idea of what features and home designs would best suit their needs, as well as what features should be added to their list of wants. Often, they can pick up a sheet of detailed information on a home, which can be referred to later on.

In spring, there are more homes on the market than at any other time of the year. You’ll find good bargains on some foreclosures that banks are willing to sell at a reduced price. But whether or not a home that interests you is in foreclosure, the price will be less than it would have sold for a few years ago.
That doesn’t mean that sellers aren’t willing to negotiate. Many have significant reasons to sell. Some sellers have to move to another city because of their work. They want to make a move well before school begins in fall.

Other properties might be part of an estate and heirs want to make a deal. Some sellers are retired and want to move to a smaller place.

There are many reasons sellers and their agents would like to see you!

A House Remains a Great Shelter from the Storm!!

Knight Kiplinger, editor-in-chief of Kiplinger’s Personal Finance, reminds homeowners and home buyers that an investment in a home not only a sanctuary for you and your family, it also remains a great tax shelter.

The ability to deduct property taxes is “the last great tax shelter” and you get a tax break on a large part of the profits if you decide to sell in the future, Kiplinger says.

Kiplinger speculates that for some years to come, home values will not rise much more than the national level of inflation. Values will still rise but they won’t skyrocket, he says. That means that, unlike in the bubble years, when you buy a house now, you can’t expect to make a huge profit if you sell the house in a year or two.

But speculating in real estate is not the most important thing homebuyers are looking for. Rather, they visualize the place they want and search for more comfort, convenience and enough space, a home where they can relax and raise their families.
Some look forward to living in the same home for many years. They dream of holiday gatherings in the homestead with their children and grandchildren.
A home is the largest investment most people will ever make and it is the most desired investment. Fortunately, thanks to the modern mortgage system, people don’t have to save for decades to afford a house.
Low mortgage interest rates give the practical-minded another reason to move forward with housing plans. While the average 30-year mortgage interest rate is about 4.17 percent, some mortgage companies are offering even lower rates. While rents rise every year, fixed mortgage payments stay the same.
Some retirees want to age in place, that is, keep their home for years after they retire. Others want to downsize. If less space is what they want, that problem is easy to solve.

Real Estate Bust Hasn’t Dimmed Americans’ Faith in Real Estate!

Check out this article from the Wall Street Journal!http://on.wsj.com/fqYvAl

By Conor Dougherty

Despite an extended slump in real-estate prices, most Americans still believe homes are the best investment, according to a survey released today by the Pew Research Center.



According to the results of a telephone survey conducted in March, Pew found eight-in-ten adults believed a home was the best long-term investment a person could make.

This Week’s Market Commentary!

This week brings us the release of seven relevant economic reports for the bond market to digest. We are also heading into corporate earnings season, which could lead to fluctuations in the stock markets.

If earnings come in lighter than estimates, the stock markets may fall, leading to an influx of funds into bonds. But if earnings and forecasts are strong, the major stock indexes may rally, pulling funds from bonds and leading to higher mortgage rates.

There is no relevant economic news scheduled for release tomorrow. The first report of the week comes Tuesday morning but it is the least important one. February’s Goods and Service Trade Balance will be posted early Tuesday morning. This data gives us the size of the U.S. trade deficit, but unless it varies greatly from forecasts, it likely will not cause much movement in mortgage rates. Current forecasts show a $45.7 billion trade deficit.

The first important report will be posted early Wednesday morning when the Commerce Department will release March’s Retail Sales data. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Forecasts are calling for a 0.5% increase in sales last month. If we see a larger increase in spending, the bond market will likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Wednesday.

The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be considered favorable for bonds and mortgage pricing.

The two Treasury auctions are scheduled for Wednesday and Thursday. There is a 10-year Treasury Note sale Wednesday and a 30-year Bond sale Thursday. We could see some weakness in bonds ahead of the sales as investing firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing Wednesday and/or Thursday afternoon.

Thursday’s important data comes when the Labor Department will post March’s Producer Price Index (PPI) at 8:30 AM ET. It will give us an important measurement of inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices since it erodes the value of a bond’s future fixed interest payments, leading to higher mortgage rates. A slight increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates. Current forecasts are calling for a 1.0% increase in the overall reading and a 0.2% rise in the core data.

The remaining three economic reports will all be posted Friday morning. This first will be March’s Consumer Price Index (CPI). This index is one of the most important pieces of data we see each month. It is similar to Thursday’s PPI but measures inflationary pressures at the consumer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors, leading to bond selling and higher mortgage rates. As with the PPI, there are two readings in the index that traders watch. Analysts are expecting to see a 0.5% increase in the overall readings and a 0.2% rise in the core reading. If we see larger increases, we could get higher mortgage rates Friday.

March’s Industrial Production data will be posted at 9:15 AM ET Friday. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for an increase in production of 0.6%. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing.

The final release of the week is the University of Michigan’s Index of Consumer Sentiment at 9:55 AM ET Friday. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a sizable decline from March’s 67.5 reading. Current forecasts are calling for a reading of approximately 66.0.

Overall, look for the most movement in rates the middle part of the week. The Retail Sales and CPI reports are the biggest names on the agenda. Either of them can cause significant movement in the markets and mortgage rates, so either Wednesday or Friday will probably be the most active day of the week. Look for the stock markets to influence bond trading and mortgage rates the first part of the week, but we can expect to see the most movement in rates the latter part.