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Existing Home Sales Rebound In August, Give Hope For Autumn

2010-09-24T06:01:00.003-07:00

Sales of existing homes in recovered in August, perhaps the result of a post-tax credit normalization.

As compared to July, Existing Home Sales rose 8 percent in August, buoyed by falling interest rates and slow-to-rise home prices. There's lot of "good deals" out there and home buyers are taking advantage.

The housing gains are relative, however. August's total units sold barely crossed 4 million and still trails the average figures of the last few years by close to 1 million units.

Despite that, the August Existing Home Sales report can be considered a strong one. This is for several reasons:

Sales volume increased in August without tax credit or government intervention
Sales growth is not limited by geography. All 4 regions -- Northeast, Southeast, Midwest, and West -- showed improvement last month.
Repeat buyers are driving the market, representing 48 percent of sales, up from forty-three percent in July.

And, perhaps most important to the housing market market, the number of available home resales dropped by almost one full month last month. At the current sales pace, the national inventory would be depleted in 11.6 months.

For home buyers, the data presents an interesting opportunity. With average mortgage rates rising from their best levels ever and home affordability cresting , this autumn may represent the turn-around point for the housing market nationwide.

If you're planning to move in early-2011, consider moving up your time frame.

Existing Home Sales Rebound In August, Give Hope For Autumn

2010-09-24T06:01:00.001-07:00

Sales of existing homes in recovered in August, perhaps the result of a post-tax credit normalization.

The housing gains are relative, however. August's total units sold barely crossed 4 million and still trails the average figures of the last few years by close to 1 million units.

Despite that, the August Existing Home Sales report can be considered a strong one. This is for several reasons:

Sales volume increased in August without tax credit or government intervention
Sales growth is not limited by geography. All 4 regions -- Northeast, Southeast, Midwest, and West -- showed improvement last month.
Repeat buyers are driving the market, representing 48 percent of sales, up from forty-three percent in July.

If you're planning to move in early-2011, consider moving up your time frame.

Housing Starts Rise In August, But By Less Than The Headlines Report

2010-09-23T06:04:00.003-07:00

The number of single-family Housing Starts rebounded in August, climbing 4 percent from July's 14-month low.

A "Housing Start" is defined as a home on which construction has started and the August increase represents 18,000 single-family units nationwide.

If you only read the headlines, however, you would think the data was stronger. This is because the Housing Starts data is actually a composite of 3 types of homes -- single-family, multi-family, and apartments -- but the press tends to lump them all three together.

As a sampling, here are a some headlines on the story:

US Stock Futures Rise After Housing Starts Surge (WSJ)
Housing Starts At 4-Month High, Hint At Stability (Fox)
Housing Starts Jump 10.5% In August (Marketwatch)

Now, it's not that the news is wrong, per se, it's just not necessarily relevant. Few home buyers are buying multi-family homes or entire apartment complexes. Most buy single-family and, for the first time since April, single-family starts are on the rise -- just not by as much as you'd believe from the papers.

Even still, we can't be entirely sure that the August Housing Starts data is accurate anyway.

A footnote in the Department of Commerce report shows that, although single-family starts are said to have increased 4 percent, the data's margin of error exceeds its actual measurement, meaning the data has "zero confidence".

In other words, starts may have dropped in August, but it's something we won't know for sure until revisions are made later this year.

Housing Starts Rise In August, But By Less Than The Headlines Report

2010-09-23T06:04:00.001-07:00

The number of single-family Housing Starts rebounded in August, climbing 4 percent from July's 14-month low.

A "Housing Start" is defined as a home on which construction has started and the August increase represents 18,000 single-family units nationwide.

As a sampling, here are a some headlines on the story:

US Stock Futures Rise After Housing Starts Surge (WSJ)
Housing Starts At 4-Month High, Hint At Stability (Fox)
Housing Starts Jump 10.5% In August (Marketwatch)

Even still, we can't be entirely sure that the August Housing Starts data is accurate anyway.

In other words, starts may have dropped in August, but it's something we won't know for sure until revisions are made later this year.

A Simple Explanation Of The Federal Reserve Statement (September 21, 2010 Edition)

2010-09-21T11:45:00.003-07:00

Today, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Funds Rate remains at a historical low, within a Fed's target range of 0.000-0.250 percent.

In its press release, the FOMC said that the pace of economic recovery "has slowed" in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.

For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year's worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be "modest in the near-term".

This outlook is consistent with recent research showing that the recession is over, and that growth has resumed -- albeit at a slower pace than what was originally expected.

The Fed also highlighted strengths in the economy:

Growth is ongoing on a national level
Inflation levels remain exceedingly low
Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period".

There were no surprises in the Fed’s statement so, as a result, the mortgage market's reaction to the release has been neutral. Mortgage rates are thus far unchanged this afternoon.

The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.

A Simple Explanation Of The Federal Reserve Statement (September 21, 2010 Edition)

2010-09-21T11:45:00.001-07:00

Today, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Funds Rate remains at a historical low, within a Fed's target range of 0.000-0.250 percent.

This outlook is consistent with recent research showing that the recession is over, and that growth has resumed -- albeit at a slower pace than what was originally expected.

The Fed also highlighted strengths in the economy:

Growth is ongoing on a national level
Inflation levels remain exceedingly low
Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period".

There were no surprises in the Fed’s statement so, as a result, the mortgage market's reaction to the release has been neutral. Mortgage rates are thus far unchanged this afternoon.

The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.

The Federal Reserve Meets Today. Should You Lock Your Rate Before It Adjourns?

2010-09-21T06:00:00.003-07:00

The Federal Open Market Committee adjourns from its 6th scheduled meeting of the year today, and 7th overall.

Upon adjournment, Federal Reserve Chairman Ben Bernanke will release a formal statement to the market. In it, the Fed is expected to announce "no change" to the Fed Funds Rate.

Currently, the Fed Funds Rate is within a target range of 0.000-0.250 percent. It's been at this same level since December 2008.

Note that the Feds Funds Rate is not "a mortgage rate" -- nor is it a a consumer rate of any kind. The Fed Funds Rate is a rate that defines the cost of an overnight loan between banks. And, although the Fed Funds Rate has little direct consequence to everyday homeowners, it is the basis for Prime Rate, the interest rate on which most consumer cards are based, plus many business loans, too.

Therefore, because the Fed Funds Rate won't change today, neither will credit card rates. Mortgage rates, however, are a different story. Mortgage rates should change today -- regardless of what the Fed does.

It's more about what the Fed says.

In its statement, the Federal Reserve will highlight strengths and weaknesses in the economy, and threats to growth over the next few quarters. Depending on how Wall Street interprets these remarks, mortgage rates may rise or fall.

If the Fed's comments signal better-than-expected growth, bond markets should lose and mortgage rates should rise. Conversely, if the Fed's comments signal worse-than-expected growth, mortgage rates should fall.

If you're actively shopping for a mortgage, it may be prudent to lock your rate ahead of the Fed's announcement today. The Fed adjourns at 2:15 PM ET. Call your loan officer to lock your rate.

The Fed meets 8 times annually.

The Federal Reserve Meets Today. Should You Lock Your Rate Before It Adjourns?

2010-09-21T06:00:00.001-07:00

The Federal Open Market Committee adjourns from its 6th scheduled meeting of the year today, and 7th overall.

Upon adjournment, Federal Reserve Chairman Ben Bernanke will release a formal statement to the market. In it, the Fed is expected to announce "no change" to the Fed Funds Rate.

Currently, the Fed Funds Rate is within a target range of 0.000-0.250 percent. It's been at this same level since December 2008.

It's more about what the Fed says.

If you're actively shopping for a mortgage, it may be prudent to lock your rate ahead of the Fed's announcement today. The Fed adjourns at 2:15 PM ET. Call your loan officer to lock your rate.

The Fed meets 8 times annually.

Unique Homes Across The Country

2010-09-20T05:50:00.003-07:00

If a home is an expression of personality, then these 10 homes say something unique about their owners.

Culled by Zillow, this list of one-of-a-kind properties make for excellent party conversation. There's the "round house", the geodesic dome, the firehouse home, and the earth-ship, among others.

Some highlights from the collection:

The Shoe House (Hallham, PA) : The Shoe House was completed in 1949. It's pink, it's made of stucco, it's 25-feet tall, and in the shape of a workboot. Oh, and every window is decorated with a stained glass shoe.
The Cave House (Festus, MO) : This 15,000 square foot home is tucked inside a mountain, and consists of three chambers -- one for the bedrooms, one for laundry and storage, and one where musicians like Bob Seger once performed. Because of geothermal and passive solar heat, this home is extremely energy-efficient.
The Decommissioned Missile Site House (Othello, WA) : If you've ever dreamed of owning a decommissioned Titan 1 missile complex, than this is the home for you. Located roughly 3 hours east of Seattle, this home is built to withstand nuclear blasts. It's a 6-story descent to the 125-foot diameter "center room" with 65-foot ceilings. Missiles not included.

A few of the properties as listed by Zillow are for sale and most have accompanying pictures. Unfortunately, buyers of the homes should expect to pay cash because getting a mortgage for a unique home can be veritable challenge.

(Image courtesy: Zillow)

Unique Homes Across The Country

2010-09-20T05:50:00.001-07:00

If a home is an expression of personality, then these 10 homes say something unique about their owners.

Culled by Zillow, this list of one-of-a-kind properties make for excellent party conversation. There's the "round house", the geodesic dome, the firehouse home, and the earth-ship, among others.

Some highlights from the collection:

The Shoe House (Hallham, PA) : The Shoe House was completed in 1949. It's pink, it's made of stucco, it's 25-feet tall, and in the shape of a workboot. Oh, and every window is decorated with a stained glass shoe.
The Cave House (Festus, MO) : This 15,000 square foot home is tucked inside a mountain, and consists of three chambers -- one for the bedrooms, one for laundry and storage, and one where musicians like Bob Seger once performed. Because of geothermal and passive solar heat, this home is extremely energy-efficient.
The Decommissioned Missile Site House (Othello, WA) : If you've ever dreamed of owning a decommissioned Titan 1 missile complex, than this is the home for you. Located roughly 3 hours east of Seattle, this home is built to withstand nuclear blasts. It's a 6-story descent to the 125-foot diameter "center room" with 65-foot ceilings. Missiles not included.

(Image courtesy: Zillow)

Rent A Home Or Buy A Home : The Case For Both Sides

2010-09-17T06:02:00.003-07:00

Is it better to rent a home, or to buy one? The answer may not be as clear-cut as you think. In this balanced, 3-minute joint interview from NBC's The Today Show, you'll hear the case for both sides.

From the pro-renting part of the talk, there's valid points about the economic impact of low credit scores and/or no cash for downpayment, and the ongoing, annual cost of home maintenance -- estimated at 2% of a home's value. Plus, renters have the ability to "follow a job" to a new town or region whereas a homeowner may be restricted, somewhat.

From the pro-purchase part, however, there's excellent points that were made, too:

Mortgage rates are low and each 1% drop to rates equates to a 9% drop to home price
Buyers can zero in on a particular area with particular schools or walkability, for example, better than renters
A home can a piggybank over the long-term; a place for "forced savings" for families that want it

The segment then closes with 5 of the best cities in which to rent, and 5 of the best cities in which to buy.

Whether buying or renting, don't try to go at it alone. There's lot of resources online, and an email to a local real estate or mortgage pro can set you in the right direction.

Rent A Home Or Buy A Home : The Case For Both Sides

2010-09-17T06:02:00.001-07:00

Is it better to rent a home, or to buy one? The answer may not be as clear-cut as you think. In this balanced, 3-minute joint interview from NBC's The Today Show, you'll hear the case for both sides.

From the pro-purchase part, however, there's excellent points that were made, too:

Mortgage rates are low and each 1% drop to rates equates to a 9% drop to home price
Buyers can zero in on a particular area with particular schools or walkability, for example, better than renters
A home can a piggybank over the long-term; a place for "forced savings" for families that want it

The segment then closes with 5 of the best cities in which to rent, and 5 of the best cities in which to buy.

Whether buying or renting, don't try to go at it alone. There's lot of resources online, and an email to a local real estate or mortgage pro can set you in the right direction.

Home Affordability Rankings For 225 Metropolitan Statistical Areas

2010-08-27T05:55:00.001-07:00

With home prices holding firm and mortgage rates still dropping, home affordability is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It's a slightly higher reading as compared to last quarter, and the second highest reading in the survey's history.

As with all aspects of real estate, however, home affordability varies by locale.

For example, 97.2% of homes sold in Syracuse were affordable for families making the area's median income, earning the New York city its first "Most Affordable Major City" designation. Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter. Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it's ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

New Home Sales Drop In July -- Just Like Existing Home Sales

2010-08-26T05:59:00.001-07:00

One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months. At July's rate of sales, the nation's new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It's all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April. A "housing start" is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down. The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there's two sides to the story. Although the New Home Sales data looks bad for builders, it can be terrific for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home may have just become cheaper.

Existing Home Sales Plummet In July; Home Buyers Gain Leverage

2010-08-25T06:03:00.001-07:00

The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors®' Existing Home Sales report.

It's a drop of 27 percent from June; single-family home resales are at the report's lowest levels since May 1999.

Furthermore, because of the sharp drop in sales volume, home inventories are spiking.

Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.

Home supply was just 8.9 months in June.

For home sellers , the Existing Home Sales report is a bit of bad news. Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices. It may also increase time-on-market.

For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.

It helps that home affordability is up, too.

Although there's reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today's rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.

Mortgage rates are down 0.75 percent since mid-April.

Bank Mortgage Lending Policies Appear To be Easing

2010-08-24T06:02:00.001-07:00

The tightening in mortgage-lending policies that characterized the last 3 years appears to be slowing.

According to the Federal Reserve's quarterly survey of senior bank loan officers, roughly 1 in 10 lenders added mortgage qualification hurdles between April and June. It's a huge departure from just 2 years ago when the mortgage industry was facing its first wave of challenges.

During that period, eight in 10 lenders added hurdles.

For mortgage applicants , this quarter's Fed survey results signals that mortgage lending may have reached its limits of restriction.

Since 2007, mortgage guidelines have become increasingly restrictive. There's extra scrutiny on assets and tax returns; employment history is given more weight; loan purpose matters. There's a bevy of traits that can stand between you and an approval that didn't exist a few years ago.

That said, lots of homeowners are still getting loans.

Verifiable income, good credit scores and equity are the "magic formula" and banks want to lend to good credit risks. And the best news for those that qualify is that mortgage rates are fantastic right now.

According to Freddie Mac, mortgage rates are as low as they've been in history.

So, if you're among the many wondering if now is the right time to buy a home -- or refinance one -- remember that, although mortgage guidelines likely won't get worse, mortgage rates probably will.

How To Re-Grout And Caulk Bathroom Tiles

2010-08-23T06:01:00.001-07:00

Over time, the grout in a shower can become dirty and discolored, and start to separate from its grout lines. This is a potentially dangerous condition for a home because broken grout lines allow water to seep into the walls, which can then lead to the growth of mold spores.

Fortunately, keeping your grout in tip-top shape is simple.

In this 2-minute video, you'll learn how to clean the existing grout in your shower and to prepare for a new coating. You'll also learn how to replace its caulk.

The video's tips include:

Why you should remove excess grout diagonally with a sponge
How to protect your tub from damage while the re-grout is in process
Choosing the right caulk for the job

The North American Tile Cleaning Association also offers helpful grout-cleaning advice. Visit their website at http://www.tilecleaning.org.

Mortgage Rates Make New Lows For The 9th Week In A Row

2010-08-20T06:00:00.001-07:00

Another week, another new low for conforming mortgage rates. In fact, this week marks the 9th time in a row it's happened.

Mortgage rates are (again) at their lowest levels in history.

The data comes from the Freddie Mac, a government group and major loan securitizer for the U.S. mortgage market. Freddie Mac's weekly survey is among the most widely-cited reports on mortgage rates and is the data used in home affordability models, among other statistics.

The 30-year fixed rate is averaging 4.42% nationally with an accompanying cost of 0.7 points. 1 point is equal to 1 percent of the loan size. This week's reported rate is lower by 0.02 percent from last week, and lower by 0.70 percent from one year ago.

On a region-by-region basis, though, "average" 30-year fixed mortgage rates are different.

Northeast : 4.44 with 0.6 points
Southeast : 4.44 with 0.8 points
N. Central : 4.42 with 0.4 points
Southeast : 4.46 with 0.5 points
West : 4.35 with 0.8 points

But this isn't to say that mortgage pricing is better in, say, California as compared to Florida. Note that the West Region -- with the lowest average rate -- has the highest required points. This is because mortgage rates and mortgage fees move in opposite directions. The type of low-rate/high fee structure common in the West may be right for some home buyers and would-be refinancers, but may not be right for others.

What's important to remember is that, as a rate-shopper , it's always your choice on how your loan is structured. Banks offer multiple set-ups -- with or without points -- to meet every applicant's budget.

As mortgage rates continue to slide and touch new lows, it's an excellent opportunity to see what your lender can do for you. Low rates won't last forever.

How Much Should You Expect To Pay In Mortgage Closing Costs?

2010-08-19T06:02:00.001-07:00

How much does a mortgage cost? The answer depends on where you live. But no matter which your locale, chances are strong that you'll pay more for a mortgage in 2010 as compared to 2009.

According to Bankrate.com and its annual Closing Cost Survey, a typical $200,000, purchase mortgage now carries an average $3,741 in closing costs -- up nearly 37 percent from last year.

As defined by Bankrate.com, "closing costs" is defined as the sum of two numbers. The first group is labeled "origination charges", a category that includes such items as underwriting fees, application fees and processing fees. These fees are paid directly to the loan originator's company at the time of closing.

The second grouping of costs is labeled "third-party fees". Third-party fees include appraisals, credit reports, settlement fees and title searches -- items paid in connection with the loan, but not paid to the lending bank or broker.

It's unclear why closing costs appear to have escalated into 2010, but Bankrate.com suggest that recently-enacted federal lending laws are a culprit:

The new law requires loan officers to be accountable to a Good Faith Estimate's accuracy. Bankrate.com's prior-year surveys may have been "understated", therefore, because of a lack of accountability.
The cost of federal compliance is high, and banks may be passing on compliance costs to consumers

To see the complete list of closing costs by state, visit the Bankrate.com website.

Single-Family Housing Starts Fade In July

2010-08-18T05:59:00.001-07:00

Sometimes, you need to look deeper than the headlines to get the news that matters. This basic truth's latest example comes from the July Housing Starts data, as published by the U.S. Census Bureau.

According to the newspapers, Housing Starts improved last month:

US Housing Starts Make Modest Rebound (FT)
Housing Starts Rise Slightly (MoneyWatch)
Housing Starts Tick Higher In July (MarketWatch)

However, these stories are speaking in terms of all housing starts -- not just the single-family ones. This is a major point of difference for home buyers because the most people don't buy the multi-unit homes and apartment buildings that's also a part of the Housing Starts data.

The overwhelming majority of buyers buy single-family homes and in July, as in the previous 3 months, the number of single-family housing starts fell.

In fact, single-family housing starts are down by nearly 25 percent since April and are now at their lowest levels since May 2009.

This is a much different message from the headlines above.

It's not surprising that single-family housing starts are down; builder confidence is down as well and the two metrics tend to trend in the same direction.

Furthermore, building permits for single-family homes fell in July, too.

As a home buyer, the drop in Housing Starts should help reduce housing inventory in the months ahead. This may lead home prices to rise because home values are based on supply and demand. For home sellers, falling starts should help reduce competition for buyers.

Each real estate market is unique and supply levels will vary from ZIP code to ZIP code. For up-to-the-minute inventory levels, make sure to talk with your real estate agent.

Home Builder Confidence Falls Again; Home Buyers Gain Leverage?

2010-08-17T06:14:00.001-07:00

Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.

After reaching a 3-year high just 90 days ago, the National Association of Homebuilders' Housing Market Index is now at a multi-year low. It's since dropped by almost half.

As an economic indicator, the HMI's goal is to "take the pulse of the single-family housing market". It surveys home builders across the country and asks them to report on 3 facets of their business:

How are market conditions today?
How do market conditions look 6 months from now?
How is the prospective traffic of new buyers for new homes?

Responses are then collated, weighted, and presented as the Housing Market Index.

The August HMI reading of 13 is the lowest since March 2009.

Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.

Builders report watching foot traffic stagnate and most likely won't want to be stuck with excess inventory into the fall and winter months. For home buyers , drops in builder confidence like this can be an excellent negotiation tool.

Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower.

This one-two combination can make for cheaper homes with cheaper monthly payments.

How To Unclog A Sink That Won't Respond To Drano

2010-08-16T06:02:00.001-07:00

Sometimes, a backed-up sink is too big of a job for a bottle of Drano. To clear the clog, you have to get your hands dirty. But what do you do? This quick, 2-minute video from Lowe's is an excellent tutorial.

The video starts with basic safety preparation, then shows you how to:

How to identify the J-trap beneath your sink
Position a plastic bucket to catch water run-off
Use your finger to clear out debris
Replace the J-trap beneath the sink

Unclogging a sink can be simple homeowner project, but if you're uncomfortable working with plumbing or just want to outsource, be sure to call a professional.

Higher (And Lower) FHA Mortgage Insurance Premiums Start October 4, 2010

2010-08-13T06:02:00.001-07:00

For the second time this year, the FHA is modifying mortgage insurance.

Beginning with FHA case numbers issued on or after October 4, 2010, the FHA is changing its upfront and annual mortgage insurance premium structure.

Under the new terms, assuming a 30-year fixed rate FHA mortgage with at least 5 percent equity:

Upfront MIP drops to 1.000% of the amount borrowed from 2.250%
Annual MIP increases to 0.850% of the amount borrowed from 0.500%

For homeowners , this switch in MIP decreases the upfront cost of an FHA-insured mortgage, but increases the loan's long-term costs.

Using a $100,000 mortgage as an example, upfront MIP falls to $1,000 from $2,250; monthly MIP jumps to $70.83 from $41.67. The FHA expects the change will yield an additional $300 million in premiums monthly.

The update is a huge win for the FHA whose reserve funds are self-proclaimed to be "perilously low". The extra monies should help recapitalize and stabilize the government group.

The FHA is on pace to back 1.7 million loans this year.

For the majority of refinancing FHA homeowners and home buyers, the MIP change is neither good nor bad -- the borrowing landscape will just looks a bit different. Yes, loans will cost more to carry each month, but also they'll be less expensive to procure. It's a trade-off and you can apply math formulas to solve for the best time to apply FHA.

It may be wise to get your FHA case number before October 4, for example, depending on your time frame in the home and the expected life of the mortgage. Or, it may be better to wait until after October 4 to apply.

If you're unsure of how the new FHA mortgage premiums will impact your mortgage, be sure to call or email your loan officer for help.

NOTE : The FHA originally announced an implementation date of September 7. It was subsequently amended to October 4, 2010.

How Big Is The Foreclosure Market? It Depends On Where You Live, Of Course.

2010-08-12T06:02:00.001-07:00

Foreclosure filings rose 4 percent nationwide last month versus June, according to foreclosure-tracking firm RealtyTrac.com. For the 17th straight month, total filings topped 300,000.

A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

As with most months, just a handful of states dominated foreclosure activity nationwide.

California : 14.9 percent of all activity
Florida : 11.6 percent of all activity
Arizona : 6.4 percent of all activity
Michigan : 6.2 percent of all activity
Georgia : 6.1 percent of all activity
Texas : 4.9 percent of all activity

Together, these 6 states represent just 30 percent of the overall U.S. population.

The other 44 states (and Washington D.C.) were home to the remaining 49.0%.

Despite this imbalance, though, in all markets, foreclosures and REO are making a profound impact on pricing and product. "Distressed" homes now represent 32 percent of the overall resale market nationwide, according to the National Association of Realtors®.

Buying a foreclosed home can make for a terrific "deal", but buying in the REO market is decidedly different from buying a non-foreclosed property.

As 3 examples:

Buying bank-owned homes can take 120 days to close.
Foreclosures aren't always listed for sale publicly. Some inventory is privately-held.
Bank-owned homes are often sold "as is". There may be defects that render the homes mortgage-ineligible.

If you have an interest in buying REO, consider talking with a real estate agent first. Even the negotiation process is different as compared to a non-distressed sale. It helps to have an experienced professional representing your interests.

A Simple Explanation Of The Federal Reserve Statement (August 10, 2010 Edition)

2010-08-10T12:00:00.001-07:00

Today, in its first meeting in 6 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Fund Rate remains at a historical low, within a prescribed target range of 0.000-0.250 percent.

In its press release, the FOMC said that, since June, the pace of economic recovery "has slowed". Household spending is increasing but remains restrained because of high levels of unemployment, falling home values, and restrictive credit.

Today's statement shows less economic optimism as compared to the prior year's worth of FOMC statements dating back to June 2009. The Fed is looking for growth to be "more modest in the near-term" than its previous expectations.

Weaknesses aside, the Fed highlighted strengths in the economy, too:

Growth is ongoing on a national level
Inflation levels remain exceedingly low
Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period".

There were no surprises in the Fed's statement so, as a result, the mortgage market's reaction to the release has been neutral. Mortgage rates are unchanged this afternoon.

The FOMC's next meeting is scheduled for September 21, 2010.

The Fed Is Meeting Today. Should You Float Or Lock Your Mortgage Rate?

2010-08-10T06:02:00.001-07:00

The Federal Open Market Committee holds a one-day meeting today, its fifth scheduled meeting of the year, and sixth overall since January.

The FOMC is the government's monetary policy-setting arm and the group's primary tool for that purpose is an interest rate called the Fed Funds Rate.

The Fed Funds Rate is the prescribed rate at which banks borrow money from each other and, since December 16, 2008, the Federal Reserve has voted to keep the benchmark rate within a target range of 0.000-0.250 percent.

It's the lowest Fed Funds Rate in history.

Because the Fed Funds Rate is near zero, it's accommodative of economic growth, spurring businesses and consumers to borrow money on the cheap. This, in turn, fosters economic growth within a U.S. economy that is somewhat tentative and facing headwinds.

The Fed has said over and again that it will hold the Fed Funds Rate "exceptionally low" for as long as conditions warrant. It's expect that the Fed will reiterate that message in today's post-meeting press release.

However, just because the Fed Funds Rate won't be changing today, that doesn't mean that mortgage rates won't. Mortgage rates are not set by the Federal Reserve; open markets make mortgage rates.

Mortgage rates tend to be volatile when the Fed is meeting. This is because the Fed's press release highlights strengths and weaknesses in the economy and, depending on how Wall Street views those remarks, bond markets can undulate and mortgage rates are based on the price of mortgage-backed bonds.

When Ben Bernanke & Co. speak, Wall Street listens.

The Fed's press release today will be dissected and analyzed. Talk of higher-than-expected inflation, or better-than-expected growth should have a negative effect on rates. Talk of an economic slowdown may help rates to fall.

Either way, we can't be certain what the Fed will say or do this afternoon so if you're floating a rate right now and wondering whether the time is right to lock, the safe choice is to lock before 2:15 PM ET today.

Are You Throwing Out Food Before It Goes Bad?

2010-08-09T06:04:00.001-07:00

Just because the expiration date has passed, that doesn't mean that the food is spoiled. It's a deep-seated misconception that results in the average American household wasting 14% of all food purchases.

The estimated cost of waste like that totals in the billions.

The data comes from a study commissioned by ShelfLifeAdvice.com, a website devoted to helping households cut food bills by providing better information of how to properly store food; of how food expiration dates work; and, by defining what "use by", "sell by" and other product dates actually mean.

Among survey participants, women fared better than men, older people fared better than younger people, and married people fared better than non-married people. Overall, however, there's room for better understanding.

For example:

Milk will remain safe for about a week after the "sell by" date. It's safe to drink beyond that, but the taste may change for the worse.
Cottage Cheese will remain safe for about 2 weeks after the "sell by" date.
Mayonnaise will last for up to 4 months after opening, when kept cold

And, perhaps the biggest surprise, is that eggs, if properly refrigerated, will remain fresh for up to 5 weeks after the "sell by" date on the carton.

Read the survey's complete results on the ShelfLifeAdvice.com website, including facts you may not have known about keeping your food beyond its expiration date. What you learn will keep you from pitching food prematurely, and help you save money at the grocery store.

Home Values Within 12.5 Percent Of April 2007 Peak, Nationwide

2010-08-06T06:02:00.001-07:00

According the Federal Home Finance Agency's Home Price Index, home values are now off just 12.5 percent from their April 2007 peak nationwide. This, after a half-percent monthly increase in prices in May, on average.

Given the state of the market since April 2007, the Home Price Index results are a positive for both the housing market and the economy, but we have to remember that May's half-point increase is an average, and not specific to a particular area.

In contrast to "national markets", the real estate markets in which you and I live are decidedly local. It's a major difference and the distinction renders the Home Price Index somewhat less important.

After all, the HPI doesn't account for housing activity in individual neighborhoods , nor does it track value across cities. Instead, it summarizes data in giant chunks of geography.

A quick look at the HPI regional data proves the point. Of the HPI's 9 tracked regions, only one was within one-tenth of one percent of the national, half-point average. The others varied by as much 1.3 percent.

As a sample:

Mountain Region : + 1.7 percent
New England : + 0.2 percent
South Atlantic : +1.0 percent

And this is on a regional basis. The HPI's applicability to state, city and neighborhood markets is even less appropriate.

Real estate values cannot be captured in a national survey. For home buyers and seller, what matters is the economics of a block, on a street, in a neighborhood. That type of granularity can't be tracked in a report like the Home Price Index.

The best place to get that data is from a local real estate agent that knows the market well.

Nervous About Mortgage Rates Rising? Lock Thursday -- Ahead Of Friday's Jobs Report

2010-08-05T06:04:00.001-07:00

Mortgage rates have been falling since April but that momentum could reverse tomorrow.

The Bureau of Labor Statistics releases the July jobs report at 8:30 A.M. ET Friday. With a stronger-than-expected reading, mortgage rates should rise, harming home affordability. Jobs are a keystone in economic growth and growth is tied to rates.

Earlier this year, job growth went positive and reached as far north as 431,000 jobs created in May. That figure slipped negative last month, however, as the temporary, decennial census workers left the workforce.

Jobs matter to the U.S. economy. Among other concerns, unemployed Americans spend less on everyday goods and services, and are more likely to stop payments on a mortgage. These effects retard the economy, spur foreclosures, and harm home values.

The reverse is also true. More workers means more disposable dollars and, in theory, a stronger economy.

Analysts expect that a net 65,000 jobs were lost in July. Wall Street -- and Main Street -- have a big interest in those results.

Poor jobs data would likely result in a stock market sell-off which would, in turn, boost the value of government-backed mortgage bonds. This is because bonds tend to perform well when the economy is sagging and higher bond prices mean lower mortgage rates.

Strong jobs data, however, would likely push stock markets up and bond markets down. This would cause mortgage rates to rise. The stronger the employment figures, the higher mortgage rates should go.

So, if you're happy with where mortgage rates are today and you're concerned about what the jobs report may do to them tomorrow, consider talking to your loan officer about locking your rate as soon as possible.

Once the jobs report is released, it may be too late.

As The Pending Home Sales Index Falls, Home Buyers See Dollar Signs

2010-08-04T06:03:00.001-07:00

The Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June. The index remains at record-low levels.

A "pending home sale" is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.

The Pending Home Sales Index is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report. This is because of the relatively large sample set used for the PHSI, and because 80 percent of homes under contract close within 60 days, according to the National Association of Realtors.

June's Pending Home Sales Index is weak by most measures, but if you're a home buyer , the headlines aren't so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.

Plus, there's other positives in the market for today's buyers:

Home supplies are up, which creates competition among sellers
Builder confidence is down, which leads to "free" upgrades and incentives
Mortgage rates are low, which increases cash flow and disposable income

All things equal, the current home buying conditions haven't been this favorable in years.

The falling figures in June's Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.

If you're planning to buy a home later this year, consider moving up your time frame.

It's an excellent time to be a buyer.

What Does It Mean To Escrow Taxes And Insurance?

2010-08-03T06:02:00.001-07:00

The fiscal responsibility of a homeowner extends beyond the mortgage's basic principal and interest repayments. Homeowners are also responsible for the real estate taxes on the home and its insurance premiums, too.

Failure to pay taxes can lead to foreclosure, and failure to insure is breach of your mortgage contract.

As a homeowner, you have a choice about how you manage your real estate tax and insurance bills. You can choose to pay them from your own bank account when the bills come due, or you can choose to pay 1/12 of the annual bill to your mortgage servicer each month, and then let your servicer pay the bills on your behalf when they come due.

Not surprisingly, servicers prefer the latter method -- it reduces two major lender risks:

That the home's real estate taxes go delinquent and are sold to a third-party
That the home endures catastrophic damage during a lapse of insurance coverage

In theory, when the servicer is paying the bills, the home's taxes are always current and the home's insurance is always paid. This method of managing taxes and insurance is commonly called "escrowing".

To calculate a home's monthly escrow payment is simple. Just take the sum of the annual real estate tax bills and insurance bill, then divide it by 12 months in the year.

As a example, a $4,000 annual tax bill with a $800 insurance policy = $4,800 annually = $400 paid into escrow monthly. These monies are collected as part of the regular mortgage payment along with the mortgage's scheduled principal + interest payment.

Homeowners choosing to escrow tend to get the lowest rate, lowest fee loans. This is because lenders often charge a premium to "waive escrow" (i.e. pay their own taxes and insurance). Escrow waiver fees vary between banks, but can range up to half-percent of the amount borrowed. The larger the loan, the stiffer the penalty in dollar terms.

Choosing to waive escrow can also raise your mortgage rate by up to 0.250 percent.

If you're unsure whether escrowing is right for you, talk to your loan officer and/or financial planner. There's good reason to go either route depending on your profile.

Ex-Burglars Share Tips On Protecting Your Home From Break-Ins

2010-08-02T06:01:00.001-07:00

This week marks the start of August, a popular vacation month for Americans. Maybe you're among the many that will leave town for a few days -- or a few weeks. But, before you leave your home, make sure you don't leave clues for burglars.

Sure, there's the basics like using an alarm system, locking your doors, and having a neighbor pick up your mail, but there's additional precautionary steps you should follow, too. In a piece titled "Tips a Burglar Won't Tell You", NBC's The Today Show shares some of them. They're tips gleaned for a series of interviews with ex-convicts.

Among the advice:

Have neighbors remove fliers and other solicitations from your driveway and/or mailbox
If you don't have a safe, hide valuables in a child's room -- not in a sock drawer
Don't announce your vacation on Facebook, Twitter or other websites

It's impossible to protect your home from burglary completely, but you can take steps so that your home is not the most obvious target on the block. Start with common sense protection, then follow the extra tips from the video.

30-Year Mortgage Rates Make New Lows, But Look Ready To Spike

2010-07-30T06:04:00.001-07:00

No doubt you've heard that mortgage rates are low. They're lower than they've ever been in history. The news is everywhere.

Just check out some of these headlines from the last 24 hours:

Mortgage rates set new lows for the 6th straight week (Reuters)
Mortgage rates fall again; 30-year fixed at 4.54% (Wall Street Journal)
Mortgage rates hit another low : 4.54% (NPR)

Fixed mortgage rates are now down more than 1/2 percent from the start of the year, and 3/4 percent from just 1 year ago. The drop has dramatically improved home affordability for home buyers while creating refinance opportunities for existing homeowners.

From a payment perspective, a conforming, 30-year fixed rate mortgage is now cheaper by $41.94 per month per $100,000 borrowed versus July 2009.

A homeowner with a $300,000 mortgage, therefore, is saving $45,295.20 over 30 years.

Low mortgage rates rarely last long and rates appear to have troughed. After a big downhill between April and July, they're now flat. This could mean rates have finished falling, or that they're gearing up for another drop lower. Either way, if you haven't talked to your real estate agent about home affordability, or your loan officer about refinancing, it may be time to make that call.

If today's market marks the end of low rates, rates are expected to rise quickly.

Falling Consumer Confidence Helps Drag Mortgage Rates Lower. For Now.

2010-07-29T06:04:00.001-07:00

For the second consecutive month, U.S. consumer confidence is plunging. July's official reading is its lowest since July of last year and the figures run in stark contrast to just two months ago, when the index touched a multi-year high.

According to The Conference Board, July's figures are reflective of a more pessimistic consumer; one concerned about "business conditions and the labor market".

Falling confidence numbers are presumed to be poor for the economy. For homeowner and home buyers , however, they can create opportunity. Low confidence can influence the mortgage market in a positive manner, driving mortgage rates down.

Mortgage rates are already at their lowest levels of all-time.

The link between consumer confidence and everyday mortgage rates roots in consumer spending.

Consumer spending accounts for close to 70% of the overall U.S. economy so, the thought goes that, a less confident consumer is less likely to spend money, thereby retarding economic growth. This harms the stock markets and drives cash to bonds, including mortgage-backed bonds.

More bond demand leads bond prices to rise which, in turn, pushes mortgage rates lower.

The other side of lagging confidence is that Americans may be less likely to take new financial risks when they're feeling unsure, including buying a new home. This can then drag on the housing market, negatively impacting home prices.

Falling home values can help buyers, harm sellers, and stymie would-be refinancers.

It's tough to predict how consumer confidence data will work its way through the economy, but in the near-term, it appears to be helping mortgage rates stay low. If you're floating a mortgage rate with your lender, or contemplating a refinance, the time may be right to lock in a rate.

Low rates can't last forever.

Case-Shiller Shows Home Price Improvement In 95% Of Cities

2010-07-28T06:02:00.001-07:00

Standard & Poors released its Case-Shiller Index Tuesday. On a seasonally-adjusted basis, between April and May 2010, home prices rose in 19 of Case-Shiller's 20 tracked markets. It's the second straight month of strong Case-Shiller findings.

Also, May's numbers are a mirror-image of February's. In February, 19 of 20 markets lost value.

In its press release, the Case-Shiller staff resisted calling May's data proof of a housing recovery, noting that home values remain flat as compared to October of last year. However, there are some noteworthy numbers in the Case-Shiller report.

13 of the 20 tracked cities are showing home price improvement year-over-year
Foreclosure posterchlld San Diego has now shown 13 straight months of improvement
San Diego, San Francisco and Minneapolis are showing double-digit annual growth

These are all good signs for the housing market, but the Case-Shiller Index is not without its flaws. Most notably, the data is limited to just 20 cities nationwide -- and they're not even the 20 largest ones.

Cities like Houston, Philadelphia, and San Jose are excluded from Case-Shiller, while cities like Tampa (#54) are not.

Another Case-Shiller flaw is that it reports on a 2-month delay.

Therefore, today is several days from the start of August but we're now reflecting on data from May. Given the speed at which the real estate market can change, May's data is almost ancient. Today's values may be higher or lower than what Case-Shiller reports.

For home buyers, reports like the Case-Shiller Index may not be useful in making a "Buy or Not Buy" decision, but can aid in watching longer-term trends in housing. For real-time data, talk to a real estate agent with access to local figures instead.

New Homes Sales Gain in June, But Gains Are Relative

2010-07-27T06:01:00.001-07:00

After a down month in May, the sales of newly-built homes appears back on track.

As published by the Census Bureau, June's New Home Sales report showed:

A 24 percent sales volume increase from the month prior
A 2-month drop in the supply of newly-built home

There are now just 210,000 new homes for sale nationwide.

June's data is a major improvement over May, but it's possible that the true "new home market" may be softer than the statistics suggest. This is for several reasons.

First, we're comparing June's sales data to the worst month in New Home Sales history.

In May, sales of new homes totaled just 267,000 units nationwide. That's one-quarter fewer sales than in the previous worst month in New Home Sales history. May's sales levels were awful by any measure but June's improvement to 330,000 units remains second-worst sales levels ever posted.

Second, although much improved, June's new home supply of 7.6 months is elevated versus the historical norm near 6.0 months. The last year has averaged 7.7 months.

For buyers of new homes , this combination of low sales volume and higher-than-normal inventory may be a positive. It's the main reason why homebuilder confidence is reeling and the downturn has opened some doors for big discounts and deals. Free upgrades and closing cost credits can make a well-priced home even more attractive.

Plus, with mortgage rates at all-time lows and expected to rise, home affordability is may never be better.

How To Prevent Mercury Poisoning With CFL Light Bulbs

2010-07-26T06:03:00.001-07:00

According to the EPA, if every household in America replaced one "traditional" bulb with an energy-saving compact fluorescent lamp (CFL) light bulb, it would result in $700 million in energy cost savings each year, plus a greenhouse gas savings equivalent to that of 800,000 automobiles.

They're expensive, but CFL bulbs tend to pay for themselves in less a year, and often last for several. It's no wonder they're so popular. But, CFLs also come with health risks.

Namely, CFL bulbs contain mercury -- an average of 4 milligrams per bulb.

The mere presence of mercury doesn't make CFLs dangerous. It just means that you should exercise care when handling them, and take certain precautions when disposing of them.

The Environment Protection Agency offers some tips:

Screw/unscrew the bulb from the base and not the bulb to prevent breakage
Never force a CFL bulb into a light socket
When the bulb burns out, bring it to one of 3,106 recycling centers

The EPA website also give guidance for dealing with broken bulbs. Among the recommendations: Don’t wash mercury-covered clothing to prevent contaminating other clothing, too, and don't vacuum up the poison, either. There are special handling instructions to prevent poisoning yourself and others in your household.

The EPA's CFL safety PDF is 3 pages long and can be viewed on its Web site.

CFLs provide long-term energy and environment cost savings. And, with some common sense care, their risks to your health can be minimized.

Existing Home Sales Drop In June But Hint At Support For Higher Price Tiers

2010-07-23T06:14:00.001-07:00

Consistent with most post-home buyer tax credit housing news, the National Association of Realtors® says Existing Home Sales eased lower last month.

An "existing home" is a home that cannot be considered new construction.

The 5 percent drop in sales from May to June was expected, but a closer look at the month's data reveals some interesting trends.

First, repeat buyers accounted for 44 percent of home resales in June, up from 40 percent in May. That's a healthy increase for just 4 weeks' time and the tax credit is a likely catalyst. First-timer buyers bought starter homes owned by former first-timers, who were then free to "move up" to larger, more expensive property.

Housing markets can be trickle-up and, not coincidentally, the jumbo/luxury housing market is now in the midst of rebound.

Second, June's "distressed sales" accounted for 32 percent of all home resales, up from 31 percent in May.

A figure like this hints at the large role foreclosures continue to play in a home buyer's home search strategy. And why not? The National Association of Realtors® suggests that distressed homes are sold at a 15 percent discount.

Lastly, take note that home inventories are rising. June's 8.9 months of supply is the highest in 10 months. Excess supply leads home prices lower, all things equal.

Overall, the Existing Home Sales data from June is a mixed bag. There's support for the middle- and upper-price tiers, but a growing overhang of supply. The market looks favorable for buyers given low mortgage rates and strong negotiation leverage.

Yes, You Can Still Get A Mortgage If You're Pregnant

2010-07-22T06:04:00.001-07:00

The New York Times ran an important story this week concerning pregnancy and mortgage approvals. Titled "Need a Mortgage? Don't Get Pregnant", the article discussed the difficulties that expecting and recently-expanded families are having with their mortgage financing.

NBC's The Today Show picked up the story as well, as shown in the 3-minute clip above.

The crux of the issue is that maternity/paternity leave often leads to a change in household income and mortgage lenders will no longer assume one or both parents will go back to work full-time. The loss of income can raise a household's debt-to-income ratio to unlendable levels.

Now, your loan officer cannot ask you about a pregnancy; such questions would be in violation of Equal Credit Opportunity Act. But he can ask if whether you expect your future employment and income situation to change. This would be a perfect time to broach the topic. And you should. If you're found to have withheld employment and income information from your lender at a later date, it could result in an immediate loan denial plus a loss of earnest monies paid.

Across both pieces, though, the prevailing message is this: Families concurrently planning to (1) have a baby and (2) buy a home should be up-front and forthcoming with their loan officers. Financing is often still available for families expecting an addition -- there's just some extra paperwork though which to work.

Be prepared for that paperwork and you're more likely to get your loan.

Housing Starts Ease 0.7 Percent In June -- 7x Better Than The Headline Data

2010-07-21T06:01:00.001-07:00

Single-family Housing Starts eased lower last month, falling by 0.7 percent from May, or 3,000 units nationwide.

A "housing start" is a home on which construction has started.

June's Housing Starts data is somewhat soft and may partially explain why home builder confidence dropped to its lowest level since April 2009, but for buyers and sellers , the Housing Starts report is not nearly as bad as headlines say.

This is because when the press reports on Housing Starts, it doesn't single out single-family homes. The press lumps every type of home into a single, giant reading. As a result, news outlets are reporting Housing Starts down 5 percent -- a somewhat misleading figure.

The 5 percent figure is actually a combination of 3 separate housing types:

Single-Family Housing Starts
Multi-Unit Housing Starts (2-4 Units)
Apartment Building Housing Starts (5 or more units)

But, single-family homes are what most Americans purchase. This is why the single-family starts data is more relevant than the combined figure commonly reported by the press. 2-4 units and apartment buildings are a different realm of buyer.

That said, though, we can't even be sure that June's Single-Family Housing Starts report is accurate. As noted in the Department of Commerce's press release, the data's margin of error is 10.7 percent which means the reported results are of "no confidence".

In other words, there is no statistical evidence to prove the actual change was different from zero.

If Housing Starts did, in fact, drop in June, it will help to reduce the housing inventory, which will provide support for local home values. For home sellers, this could be good news. Fewer homes for sale means less competition for buyers.

Sagging Homebuilder Confidence Opens The Door For Good Deals

2010-07-20T06:02:00.001-07:00

Builder confidence in the housing market slipped this month, according to the National Association of Homebuilders' monthly Housing Market Index.

The Housing Market Index is actually a weighted composite of 3 separate surveys. One measures current single-family sales; one measures projected single-family sales; and one measures traffic of prospective buyers.

All three surveys were down in July:

Single-Family Sales : From 17 (June) to 15 (July)
Single-Family Project : From 22 (June) to 21 (July)
Buyer Foot Traffic : From 13 (June) to 10 (July)

The HMI's July reading of 14 puts confidence at its lowest point since April 2009.

For home buyers , a drop in builder confidence could create an opportunity for negotiation.

Remember, it wasn't too long ago that most builders were flush with home inventory, unable to find willing buyers. To help move product at that time, builders dropped prices and offered incentives including free upgrades. If confidence continues to sag going forward, home purchase deals of that nature may return -- especially as the foreclosure market gets larger.

See, in the past, builders' main competition for buyers were the existing home sellers. Today, builders compete with the existing home sellers and the banks with REO.

It's a terrific time to be a home buyer, in other words -- sellers are fighting for you. It's no wonder sellers have little leverage anymore. Couple that with all-time low mortgage rates and affordability for homes is at an all-time high.

If you're planning to buy a home later this year, you may want to consider moving up your time frame. The market looks ripe for good deals this summer.

25 Cities In Which To Get A Bang For Your Homebuying Buck

2010-07-19T06:01:00.001-07:00

Home affordability is at an all-time high. Home values are still in recovery while mortgage rates continue to make new lows. But where are homes the most affordable?

CNNMoney.com recently ran a piece titled "Where Homes Are Affordable", listing 25 communities around the U.S. in which median incomes are relatively high and median homes are relatively low. It's a housing market "bank for your buck" list.

The top 10 cities as listed by the editors:

Deerfield Beach, FL
Lafayette, IN
San Antonio, TX
Deltona, FL
Spring, TX
Glendale, AZ
Avondale, AZ
Bolingbrook, IL
Fishers, IN
Des Moines, IA

Of the top 10, 2 picks are from the Southeast; 4 are from the Midwest; and 4 are from the Southwest. 2 are "major" cities and the rest are suburbs of bigger cities. Lafayette stands lone as a college town.

The rest of CNNMoney.com's 25 cities follow a similar pattern -- larger suburbs geographically concentrated in the Midwest and Southwest. Surprisingly, though, New Jersey and Virginia do find themselves represented. Even the expensive Eastern Seaboard has its good buys.

The Fed's June Minutes Keep Mortgage Rates In Rally-Mode

2010-07-16T06:01:00.001-07:00

According to Freddie Mac, mortgage rates made new all-time lows this week and the good news is that rates look poised to fall even more.

Since the Federal Reserve's release of its June 2010 meeting minutes Wednesday, mortgage rates are dipping even more and one of the main reasons why is because of some choice Fed words.

If you've never seen a Fed Minutes release, it reads academic. The document is page after page of stats, facts and figures about the U.S. economy, accompanied by an in-depth recap of the intra-Fed member debates that shape the nation's monetary policy.

At 7,333 words, the June Fed Minutes is the unabridged version of the more well-known, post-meeting press release. The corresponding press release was just 360 words.

As it turns out, Wall Street didn't like what it read in the minutes. Specifically:

The Fed expects below normal growth through 2012
The Fed's outlook for employment has dipped
Credit conditions are easing only slowly

Furthermore, the Fed said its action may be needed if the economy were "to worsen appreciably".

Overall, the economic optimism the Fed displayed earlier this year appears to be waning. The economy is moving forward -- just not as quickly as expected. That should bode well for mortgage rates and home shopping.

Mortgage rates were down Wednesday afternoon and Thursday and remain historically low. All it would take to reverse rates, however, is a run of positive news on jobs, growth, and consumer spending. Therefore, if you know you need to lock a mortgage rate in the near-term, it may be a good time to make the call.

Lock your mortgage rate and move on.

Foreclosure Activity Slows Again In June 2010

2010-07-15T06:00:00.001-07:00

313,841 foreclosure filings were made in June, according to foreclosure-tracking firm RealtyTrac. The figure represents a 3 percent drop from May and 7 percent drop from June of last year. However, foreclosure filings remain relatively high nationwide.

June marks the 16th straight month the filings topped 300,000. 1 in every 411 U.S. homes received some form of notice last month with foreclosure density varying wildly from state-to-state.

Like everything else in real estate, it seems, foreclosures are a local phenomenon.

The states with the highest foreclosures per capita were:

Nevada : 1 foreclosure filing per 88 homes
Florida : 1 foreclosure filing per 171 homes
Arizona : 1 foreclosure filing per 189 homes

The states with the lowest foreclosures per capita were:

Vermont : 1 foreclosure filing per 26,051 homes
West Virgina : 1 foreclosure filing per 8,058 homes
South Dakota : 1 foreclosure filing per 6,528 homes

Overall, 40 states beat the national Foreclosure Per Capita average and 10 states fell below. The sheer volume of REO, though, is creating interesting buying opportunities for first-timer buyers, move-up buyers, and real estate investors.

Homes bought from banks are usually less expensive than non-foreclosure homes. This is one of the major reasons why distressed sales account for roughly 30 percent of all home resales. Less expensive, though, doesn't always mean "cheaper". Foreclosed homes are often sold as-is and may be defective or otherwise uninhabitable.

Making repairs to get these homes into "living condition" can be costly.

Therefore, if you're buying a foreclosed home, make sure you know what you're buying before you make your bid. Have a certified professional inspect the home to check for damage, and consider enlisting the help of a real estate agent to assist with negotiations and management of the contract.

The process of buying a foreclosed home is different from buying a typical resale. Make sure you do your homework.

Mandatory Loan Fees Keep Borrowers From Getting Their Absolute Lowest Rate

2010-07-14T06:01:00.001-07:00

Conforming mortgage rates may be posting all-time lows this week, but that doesn't mean you'll be eligible for them. You may have already called your loan officer and found this out the hard way.

It's because of a federally-mandated mortgage-pricing scheme known as "loan-level pricing adjustments".

In effect since April 2009, loan-level pricing adjustments are changes to a loan's base rate and/or fee structure based on that loan's inherent risk to Wall Street. It's similar to auto insurance pricing adjustment in that a sports car, all things equal, will cost more to insure than a comparably-priced minivan.

More risk, more cost.

In mortgage lending, loan risk can be loosely grouped into 5 categories. Mortgage applications featuring any of the five traits are subject to price adjustments:

Credit Score (i.e. the borrower's FICO is below 740)
Property Type (i.e. the subject property is a multi-unit home)
Occupancy (i.e. the subject property is an investment home)
Structure (i.e. there is a subordinate/junior lien on title)
Equity (i.e. mortgage insurance is required by the lender)

Furthermore, loan-level pricing adjustments are cumulative.

A 3-unit investment home will face larger adjustments than an owner-occupied 3-unit home, for example. It's these adjustments that explain why you may not be eligible for the rates you see advertised online and in the newspapers -- your particular loan may be subject to this risk-based pricing that raises your mortgage rate and closing costs.

The government's loan-level pricing adjustment schedule is public information. See what your lender and how your loan quote is made at the Fannie Mae website. Or, if you find the charts confusing, just call or email your loan officer for help with interpretation.

Should You Refinance Your ARM, Or Let It Adjust Lower?

2010-07-13T06:01:00.001-07:00

If your adjustable rate mortgage is due to adjust this year, don't go rushing to replace it just yet. Your soon-to-adjust mortgage rate may actually go lower. It's related to the math behind the ARM.

Conventional, adjustable-rate mortgages share a common life cycle:

There's a "starter period" in which the interest rate remains fixed
There's an initial adjustment period after the starter period called the "first adjustment"
There's a subsequent annual adjustment until the loan's term expires -- usually at Year 30.

The starter period will vary from 1 to 10 years, but at the point of first adjustment, conventional ARMs become the same. A homeowner's new, adjusted mortgage rate is determined by the sum of some constant, and a variable. The constant is most often 2.25% and the variable is most often the 12-month LIBOR.

As a formula, the math looks like this:

(Adjusted Mortgage Rates) = (12-Month LIBOR) + (2.250 Percent)

LIBOR is an acronym standing for London Interbank Offered Rate. It's the rate at which banks borrow money from each other and, lately, LIBOR has been low. As a result, adjusting mortgage rates have been low, too.

Last year, 5-year ARMs were adjusting to 6 percent or higher. Today, they're adjusting to 3.375%.

Based on the math, it may be wise to just let your ARM adjust this year. Or, depending on how long you plan to stay in your home, consider a refinance to a new ARM. Starter rates on today's adjustable rate mortgages are exceptionally low , as are the rates for fixed rate loans.

Either way, talk to your loan officer about making a plan. With mortgage rates as low as they've ever been in history, homeowners have some interesting options. Just don't wait too long. LIBOR -- and mortgage rates in general -- are known to change quickly.

How To Install A Ceiling Fan In Your Home

2010-07-12T05:49:00.001-07:00

Up to 50% of your home's energy bill can be tied to heating and cooling costs. Thankfully, it's easy to lower those bills. The addition of a ceiling fan can cut your household energy bills dramatically.

Plus, the installation may be simpler than you think.

In this 4-minute video from the Lowe's YouTube collection, you'll learn how to measure, mount and install a ceiling fan, step-by-step:

Choose the right-sized fan for your room based on its "longest wall"
Cut the power to your room, and test that the power is off
Assemble a ceiling fan
Secure a ceiling fan motor to the ceiling
Restore power to the room

If you're uncomfortable around electricity, or feel the video's instructions are "too complicated", by all means, call an electrician. The money you spend on installation will be dwarfed by what you save in energy bills.

For an electrician referral , reach out to me anytime by phone or email. I am happy to help you.

The Flawed Home Price Index Shows Home Values Up 0.8 Percent

2010-07-09T05:59:00.001-07:00

Last week, the Case-Shiller Index reported home values up 0.8 percent across 20 tracked markets. The public-sector Federal Housing Finance Agency has reached a similar conclusion.

Reporting on a two-month lag, the government's Home Price Index shows home values up 0.8 percent in April, buoyed by the expiring federal home buyer tax credit and low mortgage rates. It's a positive signal for a recovering housing market.

But just because the Home Price Index says home values are rising, that doesn't mean they are. The Home Price Index methodology is flawed on multiple fronts.

First, the Home Price Index reports on a 60-day delay. This two-month lag turns the HPI a trailing indicator for the housing market instead of a forward-looking one. If you're a home buyer looking for direction, HPI won't give it to you -- you'll have to get that analysis from your real estate agent.

Second, HPI only accounts for home values in which the home's attached mortgage is backed by Fannie Mae or Freddie Mac. As the FHA market share grows, fewer homes get included in the HPI sample set, and HPI values may be skewed high or low.

And, third, HPI doesn't account for new home sales -- only repeat ones. This, too, eliminates a major segment of the market.

All of that said, though, the Home Price Index remains important to housing. It's still the most comprehensive home valuation model in print and it's been giving strong readings since the start of year. You can't ignore that on any level.

It's July and you may have missed the "rock bottom" home prices from earlier in the year, but homes are still relatively inexpensive. Couple that with all-time low mortgage rates and home affordability looks excellent. Consider making an offer while the terms are right.

Household Finances : Which Bills Should I Pay First?

2010-07-08T06:02:00.001-07:00

Morning television can be "light", but as far as personal finance interviews go, this Suze Orman segment from The Today Show is loaded with practical financial planning advice.

Titled "What Should You Do First?", Ms. Orman addressed the real-life, money management conundrums households face, such as:

Should I pay off credit card bills, or create an emergency cash fund?
Should I pay off student loan debt, or pay off credit card bills?
Should I save for a child's college tuition, or save for my retirement?

In 5 minutes, the segment covers a half-dozen scenarios like the ones above, explaining what to do, and why to do it.

Ms. Orman's style may not interest you and financial advice is rarely universal, but the piece is worth watching.

Watch the clip on the NBC website.

June's Jobs Report Wasn't As Bad As The Headlines (And How You Can Take Advantage)

2010-07-07T06:00:00.001-07:00

In June, for the first time since December 2009, the U.S. workforce shrank.

According to the Bureau of Labor Statistics, the economy shed 125,000 jobs last month even as the Unemployment Rate dropped to 9.5 percent. The drop in the Unemployment Rate is being attributed to fewer Americans looking for work.

At first glance, the jobs report looks weak but a deeper look shows something different.

Excluding the 225,000 government Census workers that recently left the workforce, the total number of employed persons actually grew by 83,000 in June. That's 50,000 more working Americans as compared to May.

And, since the start of the year, the U.S. workforce has grown by 857,000.

Jobs growth is closely tied to economic growth because more working Americans means more disposable income which, in turn, stokes consumer spending. Job growth is better than job loss.

Consumer spending makes up the majority of the U.S. economy so as consumer spending grows, investor mentality tends to shifts toward "return on principal" (i.e. stock markets) from "safety of principal" (i.e. bond markets).

A move like this is often bad for home affordability because falling demand for bonds is tied to higher mortgage rates. In addition, with the growing number of Americans earning a paycheck, demand for homes is likely to increase, thereby helping to push home prices higher.

Overall, therefore, the jobs report should be bad for rate shoppers and home buyers in. Except, the markets aren't reacting that way. For now, mortgage rates are slightly improved since the jobs report's release.

Perhaps Wall Street is watching the wrong figures, but don't let that be your loss. If you're shopping for a mortgage, a home, or both, now may be your best time to make a move; while rates are still low; with home prices down; before traders change their tune.

Because when markets change, it'll likely happen fast.

How To Improve Your Home's Indoor Air Quality

2010-07-06T06:02:00.001-07:00

An EPA study shows that close to dozen common air pollutants are 2 to 5 times more concentrated indoors versus outdoors, regardless of whether the home is is located in Rural America, or in an industrial zone.

The cause is volatile organic compounds, more commonly known as VOCs.

VOCs are gases emitted from certain liquids and solids including paints, cleaning supplies, pesticides, air fresheners and permanent markers, among others. In the short-term, can cause respiratory irritation. In the long-term, VOCs can lead to "Sick Building Syndrome", cancer and other illnesses.

There are a number of ways to keep VOC levels in your home to minimum and the EPA published some tips to help with home health safety. The advice includes:

Meet or exceed all product label precautions
When buying paints and chemicals, don't buy bulk. Buy only what you need. Dispose of the rest.
If a product label says "use in well-ventilated area", move to the outdoors or use a fan

VOC levels can remain elevated for long periods of time even after the VOC-generating activity is completed. Therefore, take care to protect your home and your health.

Read the EPA's complete guide to volatile organic compounds on its website.

Was The Pending Home Sales Report Really That Bad? It Depends Who You Ask -- Buyer Or Seller.

2010-07-02T06:00:00.001-07:00

The Pending Home Sales Index plunged in May 2010, just one month after the expiration of the federal home buyer tax credit program.

The Pending Home Sales Index is now at a record-low level.

A "pending home sale" is an existing home under contract to sell, but not yet closed. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days.

Because of this timeline, we can expect the summer's Existing Home Sales to be weak, too. With fewer homes going under contract, fewer homes can close.

On the surface, May's Pending Home Sales Index looks like terrible news for housing. And, if you're a seller, it just might be. But, if you're a buyer, the story reads differently. Just consider the market conditions.

A broad look at the housing market shows:

Home supplies are rising in most markets
Home sales are falling in most markets
Mortgage rates are at all-time lows

In other words, in most markets, more sellers are competing for fewer buyers, and the "winning" buyers are financing their homes at the lowest rates in history.

It's an excellent time to be a home buyer.

The Year Is Half-Over. How Did The Housing Experts Fare On Their Predictions?

2010-07-01T06:00:00.001-07:00

As 2009 was ending, the "experts" were busy making forecasts about the U.S. economy and what to expect in 2010.

With respect to the housing markets, two predictions were made again and again:

Home prices would fall in the first half of 2010
Mortgage rates would be higher in 2010

Well, it's July 1 and the year is half-over. Both predictions are proving to be incorrect. Home values are rising in most markets and mortgage rates are down. Way down.

It reminds us that economists are much more skilled with analysis of the past versus predictions of the future.

A pile of data can only get you so far.

Think of housing market predictions like watching a local weather forecast. A meteorologist can look at the radar and tell you that rain is coming, but it's never with 100% certainty. There is always a chance of change.

The housing market is the same way. Just as the U.S. economy is unpredictable, so are housing prices, and so are mortgage rates.

Therefore, when you have a personal finance decision to make, evaluate your options based on the information at hand today rather than an educated guess about the future. The future, after all, is subject to change -- despite what the experts forecast.

Case-Shiller Shows Home Price Improvement In 90% Of Cities

2010-06-30T06:06:00.001-07:00

Standard & Poors released its Case-Shiller Index Tuesday. The index is a monthly home valuation report from select cities and among the private sector's most popular home pricing models.

In reviewing the April Case-Shiller Index and its accompanying analysis, it appears that the housing market's rebound is gathering momentum.

In the index's 20 tracked cities:

18 of 20 improved from March to April 2010
Versus April 2009, home prices are up nearly 4 percent
The two "down" cities from April -- Miami and New York -- are off just 0.5% and 1.0% annually, respectively

Furthermore, as another sign of strength, San Diego, a city in which homeowners have lost a lot of equity since 2007, has now shown 12 straight months of home price improvement.

However, the Case-Shiller Index must be kept in context. It's far from perfect.

For one, the index reports on a 60-day delay; it's only now showing data from the end of April, when the federal homebuyer tax credit was expiring. Home sales have been weak since then it's been reported.

And second, the Case-Shiller Index is limited to just 20 cities nationwide. Therefore, the index doesn't consider every home sale in every American city -- it only considers a select few. Many more U.S. homes are excluded from the Case-Shiller Index than are included.

But, despite its flaws, the Case-Shiller Index remains important with respect to economic analysis. Much like the government’s Home Price Index, Case-Shiller helps to identify broader trends in housing that shape government and monetary policy.

The 1 Force That Can Really Change A Mortgage Rate

2010-06-29T06:04:00.001-07:00

All day, every day, conforming and FHA mortgage rates are in flux. Rates move in response to hundreds of factors which exact varying levels of influence.

Among the biggest influences on mortgage rates is inflation. When inflation is unexpectedly high, mortgage rates tend to rise quickly. Conversely, when inflation is unexpectedly low, rates tend to fall quickly.

But what is inflation?

By definition, inflation is when a currency loses its value; when what used to cost $1.00 now costs $1.10.

As consumers, we recognize inflation by the items we buy on a daily basis becoming more expensive. However, it's not that goods are more expensive -- it's that the dollars we're using to buy them have become worth less.

With respect to mortgage rates, this is a big deal because mortgage rates are directly related to the price of a special type of bond called a mortgage-backed bond.

On Wall Street, mortgage-backed bonds are priced, bought, and sold in U.S. dollars so as inflation renders those dollars less valuable, so it does to mortgage-backed bonds as well. It's a chain reaction by which mortgage bonds lose value, leading investors sell them, causing bond prices to fall on the excess supply.

And, because mortgage rates move opposite of bond prices, as inflation takes hold, mortgage rates rise.

Lately, inflation has been exceptionally low. The Federal Reserve acknowledged as much in its last statement to the markets, and available data backs that position. This, after predictions that inflation would be "runaway" in 2010.

The Cost of Living is up just modestly this year and it's helping mortgage rates stay low. And, so long as it lasts, the cost of owning a home will remain relatively inexpensive.

How To Use A Fire Extinguisher In Your Home

2010-06-28T06:02:00.001-07:00

In 2006, in the U.S., a person died in an in-home fire every 2 hours, 42 minutes, on average; someone was injured every 32 minutes. Nearly $7 billion of property damage was caused.

In this 2-minute video from Lowe's, you'll get a basic education on fire extinguishers:

How to pick the right fire extinguisher for the right job
Where to place fire extinguishers in a home
How to use the "PASS" technique on a fire

Keeping your household safe from fire requires preparation, and part of that preparation is keeping fire extinguishers on-hand, and ready for use. Fire deaths are preventable -- make sure your home is properly equipped.

Buyers Take The May 2010 New Home Sales Data All The Way To The Bank

2010-06-25T06:01:00.001-07:00

One month after the federal homebuyer tax credit's official expiration, the New Home Sales report turned in its worst showing ever.

In May 2010, for the first time in 11 months, the inventory of unsold new homes crossed the 8-month marker, posting an 8.5 month supply overall.

Additionally, new homes sales volume fell to 300,000 units nationwide -- a drop of 32% and its lowest level since the Commerce Department started tracking data in 1963.

Now, universally, the press is referring to the May New Home Sales report as "poor". A closer look, however, shows that may not be the case.

For one, we have to keep New Home Sales in perspective as a percentage of overall home sales. Yes, there were just 300,000 new homes sold in May, but there were also 5.66 million "existing" homes sold.

New Home Sales, therefore, accounted for just 5 percent of the total housing market -- a very small percentage.

Another reason why the weak New Home Sales data isn't so awful is that, when New Home Sales stall, it actually benefits home buyers. Excess supply puts a strain on sellers which, in turn, gives buyers a tremendous amount of leverage in negotiation.

When home inventories are high, builders are more apt to appease their customers in hopes of making a sale. For home buyers, this can result in buying a better product at a lower price.

Especially with builder confidence plummeting.

Since February 2009, housing has shown steady gains. There's been both peaks and valleys across units, inventories, and prices, but overall, the market is improving. May's New Home Sales data shows how now may an opportune time to "buy new".

A Simple Explanation Of The Federal Reserve Statement (June 23, 2010 Edition)

2010-06-23T11:51:00.001-07:00

Today, in its first meeting in 5 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Fund Rate remains within its target range of 0.000-0.250 percent.

In its press release, the FOMC said that, since April, "the economic recovery is proceeding" and that the jobs market "is improving gradually". Business spending "has risen significantly", too, with the exception of commercial real estate.

Today's statement is the 8th straight press release in which the Fed shows optimism for the U.S. economy, dating back to June 2009. Since that time, the Fed has terminated all of the programs it created to support the economy through the economic crisis.

The recession is widely believed to be over.

And, although the Fed's statement acknowledged economic growth, it did highlight lingering threats, too.

Employers are still reluctant to hire new workers
European debt concerns could spill-over to the U.S.
Bank lending is contracting

Also, as expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period", citing that "inflation has trended lower" recently.

Mortgage market reaction has been positive thus far. Mortgage rates in are slightly improved post-FOMC.

The FOMC's next scheduled meeting is August 10, 2010.

A Simple Explanation Of The Federal Reserve Statement (June 23, 2010 Edition)

2010-06-23T11:49:00.001-07:00

Today, in its first meeting in 5 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Fund Rate remains within its target range of 0.000-0.250 percent.

The recession is widely believed to be over.

And, although the Fed's statement acknowledged economic growth, it did highlight lingering threats, too.

Employers are still reluctant to hire new workers
European debt concerns could spill-over to the U.S.
Bank lending is contracting

Also, as expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period", citing that "inflation has trended lower" recently.

Mortgage market reaction has been positive thus far. Mortgage rates in are slightly improved post-FOMC.

The FOMC's next scheduled meeting is August 10, 2010.

May 2010 Existing Home Sales Is Better Than The Headline Data Suggests

2010-06-23T06:02:00.001-07:00

Existing Home Sales dropped in May for the first time in 3 months but still managed to post its second-highest since November 2009, buoyed by the expiring federal tax credit program.

An "existing home" is a home that cannot be considered new construction; a resale of an existing home. Existing Home Sales fell 2.2 percent in May.

The press is calling the drop in sales "unexpected" and disappointing, but a deeper look at the data shows the news isn't as bad as it first appears.

First, on a regional basis, sales were mostly solid. Only the Northeast region posted a loss. The West even managed a gain.

Northeast : -18.3 percent
Midwest : 0.0 percent
South : +0.5 percent
West : +4.9 percent

Second, the supply of homes for sale dropped to 8.3 in May and, because home prices are based on supply and demand, this is a positive for pricing.

By comparison, in 2008, the average existing home inventory was 10.4 months.

And, lastly, in May, first-time home buyers represented 46 percent of all buyers. The number was likely buoyed by the tax credit program but that doesn't damper the fact that first-time buyers provide a support floor for the housing market.

First-time buyers enable "existing owners" to move-up to bigger homes, which, in turn, trickles up to the mid-size and jumbo markets.

Analysts expected more from May's numbers and that may explain why the reaction to the data is generally negative. However, in many cities, home resales did just fine.

Making A Mortgage Rate Strategy Ahead Of The Fed's Meeting This Week

2010-06-22T06:03:00.001-07:00

The Federal Open Market Committee begins a 2-day meeting today, its fourth scheduled meeting of the year, and fifth overall.

The FOMC is the monetary policy-setting part of the government and its primary tool for that purpose is the Fed Funds Rate.

The Fed Funds Rate is the dictated rate at which banks borrow money from each other and, since December 16, 2008, the Federal Reserve has voted to keep the benchmark rate within a target range of 0.000-0.250 percent.

This is the lowest Fed Funds Rate in history. A rate near zero-point-zero percent renders borrowing by business and consumers cheap which, in turn, promotes investment and growth.

There's no expectation for the Fed to change the Fed Funds Rate after it adjourns tomorrow, but that doesn't mean consumers should expect mortgage rates to remain unchanged, too.

To the contrary, mortgage rates tend to be volatile when the FOMC is meeting. This is because the FOMC issues a press release after each meeting and in that press release, it comments on the economy's unique threats, strengths and weaknesses.

When the FOMC speaks, Wall Street listens.

The words of the Chairman Ben Bernanke's press release will be dissected and analyzed. A single mention of higher-than-expected inflation levels, or better-than-expected growth, and traders will rush to dump their bond positions in favor of equities.

This has a negative effect on mortgage rates.

Conversely, if the Fed is dour on the economy, mortgage rates may fall.

We can’t know for sure what the Fed will say or do tomorrow afternoon so if you're floating a mortgage rate and wondering whether to lock, the safe choice is to lock prior to 2:15 PM ET Wednesday.

The Largest Historic Homes In The United States

2010-06-21T06:01:00.001-07:00

In 2009, the median size of new homes started was roughly 2,100 square feet. This figure was down from 2,200 square feet between 2005-2007 which, itself, was down from 2,350 in 2004.

Homes are getting smaller across the United States.

But, as compared to the nation's largest homes, the shrinking is laughable. The Biltmore Estate, built in 1895 by George Washington Vanderbilt II, measures 175,000 square feet -- 83 times the size of a typical home today.

The Biltmore Estate in Asheville, North Carolina is the largest home in the country and, meanwhile, another Vanderbilt-built property built in 1895 checks in at number two. The Breakers, in Newport, Rhode Island, measures 165,000 square feet and cost $150 million to build in today's dollars, adjusted for inflation.

Both homes are open to the public.

The next three largest U.S. estates in terms of square footage are:

Oheka Castle in Huntington, New York (109,000 square feet)
Winterthur in Winterthur, Delaware (96,582 square feet)
Meadow Brook Hall in Rochester Hills, Michigan (88,000 square feet)

Hearst Castle, arguably the most famous "large home" in the country, measures 60,645 square feet and ranks 7th.

See the complete list of Largest Historic Homes In The United States, including their build date and architecture style, on Wikipedia.

The Home Buyer Tax Credit Extension Has Not Been Passed Into Law (Yet)

2010-06-18T06:05:00.001-07:00

As its June 30, 2010 closing deadline approaches, the federal home buyer tax credit is back in the news.

Unfortunately, the headlines are misleading.

Contrary to what you may have read (or heard), the federal home buyer tax credit has not been extended past June 30, 2010. At least not yet. And here's why there's confusion.

Look at these headlines from earlier this week:

Senate Extends Date On Home-Buying Tax Credit (Philadelphia Inquirer)
U.S. Senate Approves Extension Of Home Buyer Tax Credit (NASDAQ)
Senate Approves Home Tax Credit Extension (Reuters)

Now, nothing above is factually incorrect, but each neglects a key piece of the country's law-making process -- it takes more than the Senate to pass a law. For a bill to become a law, it must pass the Senate and the House of Representatives and then it must be ratified by the President.

To date, we've only cleared just one of those 3 steps.

This means that the federal home buyer tax credit has not been formally extended. As of now, it's still in discussion. Ultimately, though, if the extension does pass, it's expected to extend the closing date deadline for home buyers beyond the original June 30, 2010 date into September 2010.

Homeowners must still have been in contract as of April 30, 2010 to claim up to $8,000 in federal tax credits.

Good News For Sellers : Housing Starts Fall To 1-Year Low In May 2010

2010-06-17T06:02:00.001-07:00

Single-family housing starts plummeted to a one-year low in May, just 30 days after soaring to a 20-month high. It's no wonder home builders are confused.

Against a revised April figure, Housing Starts fell 97,000 units in May, a figure representing almost one-fifth of the total market size.

It's the worst showing for Housing Starts since May 2009, a surprise to builders and economists alike.

Furthermore, single-family Building Permits plunged in May, too -- down 10 percent from April. A permit is a certification from local government that authorizes home construction.

Housing permits are a precursor to Housing Starts with 82% of homes starting construction within 60 days of permit-issuance. Fewer permits, therefore, directly reduces the number of new homes coming to market in the coming months.

For home buyers , this should create a sense of urgency.

Home prices are based on supply and demand and supply appears to be falling about the same time that economists predict a surge in home demand. It could spell rising home prices and a complete loss of negotiation power with home sellers.

For now, though, home affordability remains high with properties cheap and mortgage rates near all-time lows. If you plan to buy a home later this year, the May 2010 Housing Starts data may be a reason to move up your timeframe a bit.

Loan Application Alert : Conforming, Interest Only Mortgages Guidelines Change Next Week

2010-06-16T06:04:00.001-07:00

If you plan to finance your home with a conforming interest only mortgage, get your loan application submitted no later than this Friday, June 18.

Starting next week, Fannie Mae is clamping down on the popular loan product.

An "interest only" mortgage is exactly what its name implies -- a mortgage for which the monthly payments consist entirely of interest with no principal reduction. Because there's no amortization, payments are less costly on a month-to-month basis.

For example, assuming principal + interest payments at 5 percent, a $250,000 mortgage carries a monthly payment of $1,342. The payment on a comparable interest only mortgage, however, drops to $1,042.

That's a payment difference of $300 and the size of the cost savings, not surprisingly, is the biggest reason why Fannie Mae is making its changes.

In its official announcement, Fannie Mae says it wants the give the interest only option to "borrowers who are in a position to choose it as a financial management tool" rather than allowing homeowners use it as an affordability tool for their budgets.

Going forward, there are new minimum standards for interest only home loans.

Applicants must have a 720 credit score or better
Applicants must have at least 24 months of reserves
The property type may not be a 2-unit, 3-unit or 4-unit
The property must be a primary residence, or vacation home

Furthermore, only purchase and rate-and-term refinances are eligible. Cash out refinances are prohibited.

Interest only home loans aren't for everyone, but if you plan to finance with a Fannie Mae mortgage and interest only is your preference, get your loan application submitted as soon as possible. Starting Monday, approvals will be tougher to come by.

Shopping And Paying Bills Online? Here's Methods To Protect Your Online Financial Identity

2010-06-15T06:02:00.001-07:00

In May 2010, Retail Sales at non-store retailers -- a category that includes Amazon and eBay -- topped $29 billion, up 16 percent from May 2009. Clearly, Americans are doing an increasing amount of shopping online. And we're paying our bills online, too.

But how well are we protecting our identities?

In this 5-minute piece from NBC's The Today Show, you'll learn the basics of online fraud and methods to minimize the likelihood of identity theft. Furthermore, the tips go beyond the basic "choose a challenging password". For example, you'll hear about:

Why you shouldn't pay bills from a coffee shop
Who might be hiding behind an unprotected public wifi network
The dangers of storing credit card numbers with an online retailer

And, although, at one point, the interviewee goes over the top with respect to spyware and anti-phishing prevention, the point being made is a good one -- you can't be too careful with your online financials and common sense goes a long way.

Change Your Air Filters Monthly (But Don't Go Cheap)

2010-06-14T06:00:00.001-07:00

As the mercury rises into the summer months, don't forget to change your home's air filters regularly. It not only extends the life of your HVAC unit, but can help keep your energy costs down, too.

Not all air filters are created alike, however. Don't go cheap.

Your local hardware store carries a variety of air filters ranging in price from less than a dollar to $20 or more per filter. They're all purported to do the same job, but after watching this 1-minute video, you'll see why cheaper isn't necessarily better.

Airborne particles are smaller than most mesh filters. Pleated filters are recommended instead.

Most high-quality air filters start around $11 and can be purchased in bulk from Amazon at discounts of up to 20 percent. 3M's Filtrete line of products is a popular, well-selling brand and can last up to 3 months.

If your home has shedding pets or is dust-prone, consider changing them monthly.

FHA Mortgage Insurance Premiums Approved To Triple In Cost

2010-06-11T06:00:00.001-07:00

Starting sometime later this year, the monthly cost to carry an FHA-insured mortgage is expected to rise.

In a near-unanimous vote, the House of Representatives gave the FHA power to raise the monthly mortgage insurance premiums it charges to its borrowers.

Currently, monthly mortgage insurance premiums are 0.55% of the unpaid loan balance, divided by 12. The recently approved Federal Housing Administration Reform Act provides for an increase in monthly premium of up to 1.55 percent, among other details of the bill.

Despite the ability to charge 1.55 percent, FHA officials say an increase to 0.90 percent would be sufficient to self-insure its loans.

In everyday terms, assuming a $200,000 mortgage, the math to a homeowner looks as follows:

Current Premium (0.55%) : $91.67 monthly mortgage insurance premium
Expected Increase (0.90%) : $150.00 monthly mortgage insurance premium
Maximum Increase (1.55%) : $258.33 monthly mortgage insurance premium

A increase in monthly mortgage insurance premiums will reduce home affordability and strain household budgets.

The news isn't all terrible, however.

Because higher monthly insurance premiums are expected to pad the FHA coffers sufficiently, the FHA has said it plans to reduce its upfront mortgage insurance premium paid at closing from 2.25 percent down to 1.000 percent.

On the same $200,000 mortgage, a move like that would reduces closing costs by $2,500.

The bill awaits companion legislation in Senate and final approval into law, but considering the House's lopsided vote Thursday, it could happen rather quickly. If you're planning to buy or refinance a home using an FHA mortgage, you may find that waiting to take the next step could be a costly one, long-term.

The FHA insured close to a quarter of all mortgages made in the first three months of 2010.

Bank Reposessions Reach Record Levels For The Second Straight Month

2010-06-10T05:59:00.001-07:00

According to foreclosure-tracking firm RealtyTrac.com, bank repossessions reached record levels for the second straight month in May, topping 93,000 properties nationwide.

As compared to May 2009, all 50 states now show an increase in annual REO activity.

Data like that won't surprise today's active home buyers. Foreclosed homes are prevalent, available and accounted for one-third of all home resales made in April.

Furthermore, total foreclosure actions -- the sum of REO, default notices, and foreclosure auctions in May -- topped 300,000 for the 15th straight month.

Foreclosures remain a huge influence on the housing market.

However, two interesting trends emerged in the data:

9 of the top 10 metro areas for foreclosure posted annual activity decreases
Each of the top 4 states for Foreclosures per Household posted annual activity decreases

We can infer, therefore, that foreclosure activity may be in permanent decline in the areas hardest hit through 2007, 2008, and 2009. In 2010, the data shows, foreclosures are waning.

This is reason for optimism -- especially as FHA delinquencies slow nationwide. As fewer homeowners go delinquent, the pace of foreclosures will slow further and that should help boost home values on every block in the country.

If you've been considered bank-owned homes for your own purchase, give a look at the RealtyTrac foreclosure report. It's provides insight on a state-by-state level, and in the nation's largest metropolitan areas.

Then, to complement your research, talk to your real estate about the foreclosure market and what opportunities may exist. Competition for bank-owned homes can be fierce at times, but there's plenty of "deals" out there.

You just have to know where to look.

Conforming Loan Costs Are Rising, Says Freddie Mac

2010-06-09T06:06:00.001-07:00

Mortgage rates may be dropping, but mortgage costs are not.

According to Freddie Mac, the average required discount points on a conforming mortgage rate are higher by 0.1 percent since early-May.

A "discount point" is prepaid mortgage interest; an up-front fee paid by a borrower in exchange for a lower mortgage rate. In most cases, discount points are tax-deductible.

Tax-deductible or not, though, rising costs are rising costs and Freddie Mac glosses over it. In its weekly press release, the government group offers mortgage rate comparisons to weeks prior, but doesn't do the same for required points.

The press fails to mention discount points entirely.

An increase of 1/10 percent in discount points costs homebuyers and refinancing households an extra $100 per $100,000 borrowed.

The hike reminds us that there's more to a mortgage than just its rate -- costs matter, too. And if you've only been watching the headlines, you would have missed how costs are rising.

Fannie Mae's Loan Quality Initiative : Repulling Your Credit Just Before Closing

2010-06-08T06:18:00.001-07:00

A new loan quality initiative from Fannie Mae is making it harder for home buyers and refinancing homeowners everywhere to close on a mortgage.

Beginning June 1, 2010, with all new applications, Fannie Mae wants lenders to verify that borrowers have not taken on new debt during the underwriting phase of the mortgage.

If new debts are found, the mortgage is subject to a re-underwrite and a possible turndown.

For Fannie Mae, the goal is to reduce the number of loans that go bad because of new, non-disclosed debt. Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing.

The underwriters will be looking for 3 things in particular -- even after your loan is approved.

First, your updated credit report will show your current credit card bills and minimum monthly payments. Those numbers will replace your original numbers made at the time of application. If the debts exceed a certain threshold, your loan will be denied.

Second, underwriters will be looking at your updated credit score. If your FICO has dropped below minimum lending standards, your loan will be denied. Or, you may be subject to a new loan-level pricing adjustment.

Loan level pricing adjustments are mandatory loan fee based on your credit score.

And, lastly, underwriters will be looking at your credit report's Credit Inquiry section. The goal is to see if you've been applying for credit elsewhere. Underwriters can use this information at their discretion.

Fannie Mae's Loan Quality Initiative is just one more way that the government-backed group is trying to improve its loan pools. Unfortunately, it'll mean more turndowns for mortgage applicants.

Therefore, take extra care of your credit between the time of application and the time of closing. Don't buy new cars, don't buy new appliances, and -- most definitely -- don't open new credit cards. Be extra safe with your credit because a mortgage application that's supposedly cleared-to-close can be revoked at the eleventh hour.

When in doubt, talk to your loan officer about what may or may not trigger the Loan Quality Initiative. Your loan approval is at stake.

Fannie Mae's Loan Quality Initiative : Repulling Your Credit Just Before Closing

2010-06-08T06:05:00.001-07:00

A new loan quality initiative from Fannie Mae is making it harder for home buyers and refinancing homeowners everywhere to close on a mortgage.

Beginning June 1, 2010, with all new applications, Fannie Mae wants lenders to verify that borrowers have not taken on new debt during the underwriting phase of the mortgage.

If new debts are found, the mortgage is subject to a re-underwrite and a possible turndown.

The underwriters will be looking for 3 things in particular -- even after your loan is approved.

Loan level pricing adjustments are mandatory loan fee based on your credit score.

Fannie Mae's Loan Quality Initiative is just one more way that the government-backed group is trying to improve its loan pools. Unfortunately, it'll mean more turndowns for mortgage applicants.

When in doubt, talk to your loan officer about what may or may not trigger the Loan Quality Initiative. Your loan approval is at stake.

May 2010 Jobs Report Gives A Temporary Boost To Home Affordability

2010-06-04T07:17:00.001-07:00

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls data from the month prior.

The release is more commonly called "the jobs report" -- a major factor in mortgage rates and monthly payments.

Especially now.

With the recession officially over and growth returning to the U.S. economy, the recovery's next frontier is jobs. As job growth increases, home affordability should take a hit. Here's why:

As the number of working Americans increases, so should total consumer spending
As consumer spending increases, so should a return to risk-taking on Wall Street
As risk-taking returns to Wall Street, bond markets should start to lose

Mortgage rates, therefore, should rise.

Furthermore, as the jobs market stabilizes and recovers, renters should be more apt to buy their first home, and homeowners should be apt to up-size. More home buyers means more competition for homes and higher home prices typically follow.

Job growth can be trickle-up for housing.

Today, however, the jobs data was not so strong. According to the government, 431,000 jobs were created in May, but of those new jobs, 95.4% represented temporary staffing for the 2010 Census. The number of private-sector jobs created fell well short of expectations and Wall Street is voting with its dollars right now. Mortgage bonds are gaining so, therefore, rates are falling.

The May 2010 jobs report may not reflect well on the economy, but home affordability around the country is improving because of it.

Pending Home Sales Data Shows Great Deals On Homes Are Getting Harder To Find

2010-06-03T06:12:00.001-07:00

The Pending Home Sales Index shot higher in April as low mortgage rates and a soon-to-expire federal tax credit spurred home buying across the county.

A "pending home sale" is a home that's under contract to sell but not yet closed.

Region-by-region, April's pending home sales varied versus March's data:

Northeast Region: +29.5%
Midwest Region : +4.1%
South Region : -0.6% (after a +15.9% posting in March)
West Region : +7.5%

On an annual basis, the Pending Home Sales Index is higher by 22 percent.

April marks the third straight month that pending home sales are up and today's buyers should take note. This is because, according to the National Association of Realtors®, 80% of homes under contract close within 60 days.

In other words, May and June's existing home sales data should be similarly strong, causing the real estate market to gently shift in favor of sellers. In fact, already, we're seeing home resales touch multi-year highs while new home supplies fall to multi-year lows.

All of it tends to push home prices higher while simultaneously reducing buyer negotiation leverage. That, coupled with the high probability of higher mortgage rates ahead, means that finding "deals" will get tougher for the average home buyer.

In looking at the housing market data, it appears that the best month in which to have bought a home this year was February. The next best time may be right now.

Talk to your real estate agent if you're planning to buy a home this year. It may be sensible to move up your time frame a few months.

Consumer Confidence Hints At Higher Home Prices And Higher Mortgage Rates, Too

2010-06-02T06:15:00.001-07:00

The Consumer Confidence Index is rising, a potentially double-edged sword for Americans, in general.

According to The Conference Board, economic confidence is as high as it's been since August 2007 -- 4 months before the start of the recession. Americans are optimistic again.

Confidence matters to the economy because as confidence increases, in theory, consumer spending follows. Consumer spending accounts for 70 percent of the U.S. economy.

It's why Wall Street is responsive to confidence data.

When consumer confidence is rising, households start to make big-ticket purchases they may have otherwise put off indefinitely. Maybe it's a replacing old appliances; or, trading in an old automobiles; or, splurging on a vacation.

Rising confidence can also spur real estate sales.

When confidence is rising, a growing family that chose to "make do" in their 3-bedroom, 1.5-bathroom starter home may opt to move-up to a 4-bedroom, 3-bath instead at a slightly higher monthly carrying cost. And there are families in every city in every state making those same decisions.

As a result, the housing market gets a boost -- especially in the mid-to-upper price ranges. Values rise on higher demand for homes.

The downside is that growing confidence tends to push conforming and FHA mortgage rates up. This is because an expanding economy draws investment dollars away from bonds and into stocks -- including mortgage bonds.

The reduced demand for mortgage-backed bonds leads bond prices to fall and mortgage rates to rise. Sometimes by a little, sometimes by lot.

So, if you're buying a home or thinking of a refinance, rising confidence in the economy may be a signal to act sooner rather than later. Talk to your real estate agent and/or your loan officer about next steps and get your plan in place.

How To Replace Your New Home's Deadbolt Locks

2010-06-01T05:50:00.001-07:00

After moving into a new home , you should immediately replace its deadbolt locks. It's not just the home's former residents that have the key, after all, but so might a relative, a friend, a neighbor, a dog-walker, and others.

You may call a locksmith for the job, but you can save some money if you can do-it-yourself.

In this detailed, 2-minute video, you'll learn how to remove and replace a deadbolt lock using nothing but a Phillips screwdriver and a deadbolt from a hardware store. It's a simple project that requires little mechanical skill.

And one that can make your new home more safe.

The Supply Of New Homes For Sale Just Dropped Off A Cliff

2010-05-28T06:14:00.001-07:00

The supply of newly-built homes for sales plummeted in April, a positive indicator for the housing market as we head into the summer months.

It's no wonder that homebuilders are breaking new ground at the fastest clip in 2 years.

At the current sales pace, the nation's complete supply of new homes would be sold in just 5 month's time. That's more than double the pace of a year ago.

Also, as more good news, in terms of total housing units, the government reports that New Home Sales topped one half-million homes sold for the first time since May 2008.

It's a similar spike as within the Existing Home Sales data released earlier this week.

But before we declare the housing market "repaired in full", we have to consider a few of the reasons why home sales are charting so strongly.

The first reason is the federal homebuyer tax credit's April 30 expiration. In order to claim up to $8,000 in tax credits, home buyers must have been in mutual contract for a property before May 1. There is no doubt this contributed to a run-up in sales, especially among first-time home buyers.

The second reason is that mortgage rates have remained exceptionally low, defying expert predictions. Low rates don't sell homes, but they do make monthly payments easier to manage for households torn between renting or buying.

And, lastly, March and April's new home sales may have been buoyed by aggressive discounting on behalf of homebuilders. As compared to February 2010, April's average new home sale price was lower by 13 percent. That's a sharp drop in a short period of time.

For now, though, homes are selling, supplies are dropping, and buyer interest is high. It's no wonder builder confidence is soaring.

Should You Refinance Your Mortgage?

2010-05-27T06:13:00.001-07:00

Because of strife in Greece, Spain and North Korea, conforming mortgage rates are back to all-time lows. They're at levels not seen in 50 years. For homeowners that missed the Refi Boom of November 2009, it's a second chance.

In this well-presented, 3-minute video from NBC's The Today Show, you'll get tips getting low rates and choosing the best time to lock in.

Some of the topics covered include:

Why were the experts wrong about rates moving higher this summer?
How much money can you save with a 1 point drop in your interest rate?
Should you buy a bigger home now that rates have fallen?

The advice in the piece is matter-of-fact and centered. There is no cheerleading and the message is honest. Mortgage rates are low and they likely won't stay that way. If you've been thinking about a refinance, talk to your loan officer as soon as possible.

Home Price Index Rises 0.3% in March 2010

2010-05-26T06:16:00.001-07:00

Home values rose in March, according to the Federal Home Finance Agency's most recent Home Price Index. Values were reported higher by 0.3 percent, on average, from February.

We use the phrase "on average" because the Home Price Index is broad-reaching, national housing statistic. It ignores the dynamics of neighborhood real estate markets as well as citywide markets , too.

Instead, the Home Price Index focuses on state and regional statistics.

For example, in March 2010 as compared to February:

Values in the East South Central region rose 2.5%
Values in the Mountain states rose 1.1%
Values in the Middle Atlantic states fell 1.0%

Of course, none of this data is especially helpful for today's home buyers and sellers.

Real estate is a local phenomenon that can't be summarized by state or region. What matters most to buyers and sellers is the economics of a neighborhood and that level of granularity can't be served up by a national housing report like the Home Price Index.

The Home Price Index data is additionally unhelpful to buyers and sellers in that it reports on a 2-month delay.

In other words, Home Price Index is not even a fair reflection of today's market -- it highlights the real estate market as it existed 60 days ago.

So why is the Home Price Index even published? Because government, business and banks rely on the reports. As a national indicator, the Home Price Index helps governments make policy, businesses make decisions, and banks make guidelines. This, in turn, trickles down to Main Street where it impacts every one of us -- and eventually influences real estate.

Since peaking in April 2007, the Home Price Index is off 13.44 percent.

Home Supplies Tick Higher, Creating An Opening For Today's Home Buyers

2010-05-25T06:12:00.001-07:00

Sales of existing homes rose in April, buoyed by an expiring home buyer tax credit and exceptionally low mortgage rates.

As compared to March, April's Existing Home Sales rose by 410,000 units nationwide -- the second straight month of large gains. An "existing home" is a home resold by a prior owner (i.e. not new construction).

It's a solid report for housing overall, with rising sales suggesting that the real estate market's recovery is ongoing. However, the data presented a mixed message.

According to the National Association of Realtors®, although the number of homes sold ticked higher in April, so did the supply of existing homes for sale, too.

Sellers are now listing homes faster than buyers can buy them.

After adding another 0.3 months of supply in April, resale home supply is nearly two full months larger than at November 2009's low-point. This put downward pressure on home prices.

Furthermore, because 49% of April's buyers were first-time buyers and the tax credit has since ended, we can expect that sellers will continue to outweigh buyers in the months ahead.

It presents an interesting opportunity for June's home buyers. Mortgage rates are still at their lowest levels of the year -- despite expert predictions to the contrary -- and homes remain affordable. Plus, in a lot of markets, home values have started to creep higher.

There's good values and good rates but neither should last long. For the next few weeks, real estate may be in its 2010 sweet spot.

If you were thinking of moving in September of this year or later, consider moving up your timeframe.

Video : The Right Way To Water A Garden

2010-05-24T05:53:00.001-07:00

From one pot to a lush garden, we all have plants for which to care in our lives. But are they getting the right amount of water? Too little water and the plant dies. Too much water and root rot sets in.

In general, plants want 1 inch of water per week but Mother Nature doesn't always provide. It's up to us to make up the difference.

In this short video from ExpertVillage, Doug Smiddy shows us how to make sure our plants get the right amount of water they need to survive. He answers questions including:

How do you know if your plants need water right now?
What is best time of day to water outdoor plants?
What is the proper way to water a plant?

The video runs a little bit over 2 minutes and is stocked with helpful tips. If you care for any plants in your life, it's a must-watch video.

Home Opportunity Index Ranks 225 Metro Areas For Affordability

2010-05-21T06:08:00.001-07:00

With home prices still relatively low and mortgage rates trolling near their all-time best levels, it's no surprise that home affordability is extraordinarily high in most U.S. markets.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between January-March 2010 were affordable to families earning the national median income.

It's the second highest reading in the survey's history.

Of course, on a city-by-city basis, home affordability varies.

In the first quarter of 2010, for example, 98.7% of homes sold in Bay City, Michigan were affordable for families earning the area's median income and in Indianapolis, the percentage was almost 95 percent.

Indianapolis has held the top quarterly ranking for close to 5 years now.

On the opposite end of the spectrum, the New York-White Plains, NY-Wayne, NJ region earned the "least affordable" metropolitan area for the 8th consecutive quarter. Just 20.9% of homes are affordable to families earning the local median income.

The rankings for all 225 metro areas are available on the NAHB website but regardless of where your town ranks, home affordability remains high as compared to historical values but it likely won't last long. Home values are recovering in many markets and mortgage rates won't stay this low forever.

All things equal, buying a home may never come this cheap again. If you were planning to buy later this year, consider moving up your timeframe.

The Fed's April Minutes Push Mortgage Rates Even Lower

2010-05-20T06:10:00.001-07:00

After starting the day in the red, mortgage rates rebounded Wednesday afternoon after the Federal Reserve released its April 27-28, 2010 meeting minutes.

It's good news for home buyers and would-be refinancers. Mortgage rates continue to troll along multi-year lows.

"Fed Minutes" are lengthy, detailed recaps of Federal Open Market Committee meetings, not unlike the minutes you'd see after a corporate conference, or condo association gathering. The Federal Reserve publishes Fed Minutes 3 weeks after each respective FOMC get-together.

The Fed meets 8 times annually.

Because of the minutes' content and density, it's of tremendous value to Wall Street and investors. Fed Minutes provide a glimpse into the conversations and debates that shape the country's monetary policy.

The broad scope of the published meeting minutes are in sharp contrast to the more well-known, post-meeting press release which reads more like a policy summary.

And the extra words matter.

Here's some of what the Fed discussed last month:

On Greece : A crisis in Greece could slow U.S. domestic growth
On housing : Despite government support, growth appears to have stalled
On its mortgage buyback program : There's little reason to sell mortgage bonds right now

When the markets saw the Fed Minutes, what had been a down day for bond markets turned positive. The less-than-sunny outlook for the near-term U.S. economy sparked bond sales, pushing prices higher.

Mortgage rates move opposite mortgage bond prices.

Wall Street is always in search of clues from inside the Fed about what's next for the economy and post-FOMC minutes usually give good fodder. April's meeting was no different.

For now, mortgage rates remain near all-time lows but once the Eurozone issues are settled, rates are likely to rise. If you haven't locked a mortgage rate, your window may be closing. Once the economy is turning around for certain, mortgage bonds will be among the first of the casualties.

The Right Way To Take A Cash Gift For Downpayment

2010-05-19T05:52:00.001-07:00

As lenders tighten mortgage guidelines for home buyers, minimum downpayment requirements are increasing. Several years ago, you could finance a home with nothing down. Today, most conventional mortgages require at least 10 percent.

Anecdotally, guideline changes have led to an increase in the number of home buyers accepting cash gifts from family.

Gifts are allowed in most cases but the problem is, if you don't accept the gift in a "lender-friendly" way, the mortgage underwriter could reject it, and negate it.

You can't just deposit a cash gift into your bank account. You have to follow a series of steps and keep records.

Provide an acceptable gift letter signed by all parties
Provide documentation of the gifter's withdrawal of funds via teller receipts
Provide documentation of the giftee's deposit of funds via teller receipts

Lenders require these 3 steps for two basic reasons. First, they want to make sure that the cash gift is "clean" (i.e. not laundered). Second, they want to make sure the gift is really a gift and not a loan-in-disguise.

It's why lenders typically require that the loan application be accompanied by a signed, dated letter.

For example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift -- not a loan -- and there is no expectation of repayment.

Signed,
[Signature of gifter]

As an additional step, home buyers receiving cash gifts should make sure that gifted funds are not commingled at the time of deposit. If the cash gift is for $10,000, therefore, the bank's deposit slip should indicate that a $10,000 deposit was made -- nothing more, nothing less. Don't add a random $100 deposit to the transaction, in other words. The $100 deposit should be a separate transaction.

It's also worth noting that gifting funds between family members can create both legal and tax liabilities. If you're unsure about how donating or receiving a gift may impact you, call or email me directly. If I can't help you with your questions, I can refer you to somebody that can.

A Dual-Edged Roller Knife To Make Your Chopped Salads Easier

2010-05-17T05:54:00.001-07:00

With the Oxo Salad Chopper, making chopped salad for the family and/or friends is both faster and safer.

Using a dual-blade roller knife similar to a pizza cutter, the ergonomic Salad Chopper cuts lettuce, vegetables, fruits, meats and nuts with just a few rolls. There's no need for a separate cutting board (and no worries of slicing a finger).

Made from stainless steel, the angle-handled roller is built to trace the curves of the accompanying Oxo bowl. The blades remain in constant contact with the plastic and the rim has a built-on grip to help you get a handle on your work.

The 5.5-quart bowl is big enough for 6 servings and is dishwasher-safe. Oxo says you can serve in it, too, but that's up to you.

Trade in store-bought salad bags and opt for something fresher. Oxo's Salad Chopper sells on Amazon.com for $25.

Your Mortgage Approval Isn't Final Until It's Funded

2010-05-14T06:10:00.001-07:00

A mortgage approval is never final until it's funded.

A host of things can "go wrong" while your home loan is underway. Some are in your control, many more are not. And just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

MSN Money ran a summary piece on the topic titled "10 Things That Can Kill A Home Loan".

It's an excellent article because, unlike most "get approved" articles that advise against things like buying a car before closing, or opening a bunch of new credit cards, the MSN Money piece addresses more uncommon factors that can lead to a similar loan turndown.

For example, a home may be unfundable if it's unsuitable for human habitation -- a condition you may not discover until after a thorough home inspection's been made. Broken windows, lack of plumbing, and/or major foundation damage are all deal-breakers with a lender.

Either fix the home prior to closing, or don't close at all.

Homes in "declining markets" have danger spots, too. Especially for conforming mortgage applicants with less than 20% equity.

Because of how private mortgage insurers operate, some homes carry tougher, ZIP code-based PMI eligibility requirements. As a mortgage applicant, it's important to understand this because you may be PMI-eligible in one neighborhood, but not in another.

There's others ways in which a mortgage approval can go bad, too:

You're self-employed and your income was lower last year versus the year prior
Your tax return shows large amounts of unreimbursed employee expenses
You failed to return required paperwork to the lender within a reasonable time frame

Mortgage approvals are delicate and, despite an improving economy, lenders still operate with caution. Talk with your real estate agent and your loan officer and put together a game plan.

The best way to beat the mortgage system is to know the rules before you start to play.

Foreclosure Activity Slows For The First Time In Several Years

2010-05-13T06:10:00.001-07:00

The national foreclosure rate is finally falling.

According to foreclosure-tracking firm RealtyTrac.com, the number of foreclosure notices dropped 2 percent between April 2009 and April 2010.

2 percent may not seem like much, but it's the first time in the history of the RealtyTrac report that the annual foreclosure rate has dropped.

To be sure, foreclosure rates remain elevated -- more than 300,000 were reported last month, but default notices appear to be approaching a plateau.

The RealtyTrac report shows some other interesting statistics, too:

6 states accounted for more than half of April's bank repossessions nationwide
For the 40th month in a row, Nevada topped the nation's foreclosure rate
Foreclosure rates dropped in both California and Arizona, 2 foreclosure hot-spots through 2009

The good news for housing doesn't stop there. 9 of the top 10 leading metropolitan areas for foreclosure-related activity showed a drop in annual activity. Only Reno, Nevada showed an increase.

Buying distressed homes is big business, according to the National Association of Realtors®, accounting for 35 percent of all home resales with a typical discount ranging near 15 percent on value.

But with the discount comes some caution. You need to know how buying a foreclosed can be different from buying a non-foreclosed home.

For example, distressed properties are often sold as-is and may have defects that render them "un-lendable". Secondly, "quick closings" aren't usually possible with bank-owned homes -- you're often at the bank's schedule and mercy.

And, lastly, not all foreclosed homes are searchable online. You'll usually find more stock if you work with a real estate agent versus searching online.

The RealtyTrac foreclosure report is thorough and can help you gauge what's happening on a state-by-state level, and in the nation's largest metropolitan areas. Once you've done your research, talk to your real estate agent about what to do next.

There's still good deals in the foreclosure market — you just have to know where to find them.

Relocate America's Top 100 Places To Live (2010 Edition)

2010-05-12T06:52:00.001-07:00

Relocate America recently released its 2010 list of Top 100 Places To Live In America. The rankings are topped by some cities you may expect, and some you may not.

According to Relocate America, the rankings highlight communities "moving in the right direction", defined as having a combination of strong leadership, job opportunities, improving real estate markets, recreational options and a good quality of life.

It's not a bad formula and topping the list of Top 100 Places To Live In America is Huntsville, Alabama. Huntsville was chosen for its low levels of unemployment, stable housing stock, and low cost of living. Last year, Huntsville placed fifth on the Relocate America list.

The Top 10 cities in which to live, as selected by Relocate America are:

Huntsville, AL
Washington, DC
Austin, TX
San Diego, CA
San Antonio, TX
Tulsa, OK
Charlotte, NC
Raleigh, NC
Boulder, CO
Minneapolis, MN

View the complete Top 100 Places To Live In America 2010 list at the Relocate America website.

Relocate America's Top 100 Places To Live (2010 Edition)

2010-05-12T06:46:00.001-07:00

Relocate America recently released its 2010 list of Top 100 Places To Live In America. The rankings are topped by some cities you may expect, and some you may not.

The Top 10 cities in which to live, as selected by Relocate America are:

Huntsville, AL
Washington, DC
Austin, TX
San Diego, CA
San Antonio, TX
Tulsa, OK
Charlotte, NC
Raleigh, NC
Boulder, CO
Minneapolis, MN

View the complete Top 100 Places To Live In America 2010 list at the Relocate America website.

Shopping For Mortgage Rates Is Part Research Skills, Part Luck

2010-05-11T06:11:00.001-07:00

Shopping multiple lenders for a "good mortgage rate" can sometimes save you 1/8 percent on your rate and/or a few hundred dollars in fees. However, when it comes to getting the best mortgage rate, you're going to more than good research skills.

You're going to need some luck.

Mortgage rates are unpredictable, ever-changing, and rarely change as expected.

For example, when the Federal Reserve left the mortgage market March 31, 2010, analysts said that mortgage rates would rise by a half-percent or more. It was practically stated as fact on TV. When April 1 came around, though, rates didn't rise.

Instead, a volcano erupted and mortgage rates dropped on safe haven buying.

Then, a week later, as the volcano ash cleared, mortgage rates were supposed to resume their rise. Only they didn't. Instead, a debt crisis emerged in the Eurozone and mortgage rates dropped.

Since March 31, conforming mortgage rates are lower by roughly 0.125 percent, according to Freddie Mac's weekly mortgage rate survey. At today's rates, the savings are roughly $20 per month per $200,000 borrowed -- or $100 per month based on their original, post-March 31 forecast.

It brings us to one of the most important axioms in rate shopping: You can't shop for good luck.

On some days, rates go higher
On some days, rates go lower
On some days, rates stay the same

Occasionally, there are days when rates do all three.

As a home buyer or would-be refinancer, what rate you get depends on at what time of day you do your shopping.

You can't predict what will happen next in mortgage markets -- even just an hour from now. Therefore, the smartest move, sometimes, is just lock your rate now. At least that way, you've got a guarantee.

Your Microwave Wastes $70 Per Year And Other Vampire Energy Facts

2010-05-10T06:17:00.001-07:00

Even when they're not "on", a multitude of everyday home appliances continue to draw power from the grid, raising home energy bills and increasing atmospheric emissions. These so-called "Energy Vampires" cost U.S. homeowners $4 billion, collectively, in 2005.

In 2010, that figure is likely higher.

In the video above, some of the more common Energy Vampires are highlighted. As an example of how costly standby power can be, researchers show that idle microwave ovens consume enough energy each day to pop an entire bag of microwave popcorn. Annually, the kind of energy consumption wastes close to $70 per household.

Other household Energy Vampires include:

Idle battery chargers
Computers in "standby" mode
Remote control sensors

Simply being aware of home energy-suckers is one easy way to reduce your electricity bill and do something good for the environment. The video shows you how you can both.

Markets Ignore The April Jobs Report And It's Good News For Mortgage Rates

2010-05-07T07:12:00.001-07:00

On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls report.

More commonly called "the jobs report", Non-Farm Payrolls is a major market mover. The number of working Americans is directly tied to the health of the economy which, in turn, drives the stock and bond markets.

In general, when jobs numbers improve, it's good for stocks and bad for mortgage bonds. It follows, therefore, that conforming mortgage rates rise because rates always move opposite of mortgage bond prices.

Conversely, when jobs numbers worsen, it tends to be bad for stocks and good for mortgage bonds. Mortgage rates fall.

Today, markets are behaving a bit differently.

Despite 290,000 jobs created in April 2010 -- nearly twice the expected amount -- and a 40 percent upward revision of March's numbers, mortgage rates are essentially unchanged.

In a normal environment, rates would be higher. Today is not normal.

Today is a departure because, for all of the jobs report's import to Wall Street, it's less important to markets than what's happening in Greece right now.

Greece is struggling to meet its debt obligations and its citizens are rioting.

Until a debt solution for Greece is made that sticks, unrest in the region will drive safe haven buying both domestically and abroad. U.S. mortgage bonds will gain on that movement because mortgage bonds are "safe", and mortgage rates will fall.

Indeed, this is exactly what's been happening since the start of April. Mortgage markets have been rallying for 5 weeks.

So, today's jobs news is terrific for the economy and mortgage rates should be rising because of it. But, they're not. Consider taking advantage -- lock in a rate.

1 In 8 Banks Tightened Prime Mortgage Standards Last Quarter

2010-05-06T06:10:00.001-07:00

The Federal Reserve says that financial markets "remain supportive of economic growth". Residential mortgage guidelines, however, continue to tighten.

If you've applied for a home loan recently, you probably felt it; extra scrutiny on income, assets and credit scores, among other things. The hard proof of the changes, however, can be found in the Federal Reserve's quarterly survey of its member banks.

Every 3 months, the Federal Reserve asks senior bank loan officers around the country whether their respective banks' "prime" residential mortgage guidelines tightened since the last survey.

For the period January-March 2010, 1 in 8 banks surveyed toughened their qualification standards.

Only 4% loosened them.

When we account for the Fed's survey in conjunction with new underwriting standards from Fannie Mae and FHA, it's clear that getting approved for a mortgage in 2010 is more difficult than at any time in recent memory.

Today's homeowners and home buyers have taller hurdles to leap:

Minimum FICO scores are higher
Downpayment/equity requirements are larger
Debt-to-Income thresholds are smaller

In other words, mortgage rates may stay low throughout 2010, but that won't matter to homeowners failing to meet the new, minimum eligibility standards as set forth by the lenders.

If you're among the many people wondering if now is the right time to buy or refinance a home, remember that -- along with a probable increase in mortgage rates -- mortgage approvals are getting more scarce.

The best home price or mortgage rate in the world won't matter if you're ineligible for financing.

March Pending Home Sales Point To Stronger Spring Market

2010-05-05T06:01:00.001-07:00

The Pending Home Sales Index moved higher in March as home sales were spurred by low mortgage rates and an expiring tax credit.

A "pending home" is a property that is under contract to sell, but not yet closed.

March marks the second straight month in which the Pending Home Sales Index improved after a series of weak showings this past winter.

March showed a 5 percent increase over the month, but the Pending Home Sales Index is still off its October 2009's peak. October 2009 is a comparable period to March 2010 in that it marked the 1-month deadline before the home buyer tax credit's initial expiration date. The credit was later extended to April 2010, of course.

That said, March's surge in sales is being felt on the street.

Home buyers no doubt noticed the change in activity. Around the country, anecdotally, multiple offer situations were more common last month and "right-priced" homes tended to go under contract quickly.

The increase in March's Pending Home Sales is diminishing the nation's home supply which, in turn, should cause prices to rise in most markets.

Today's buyers should consider making an offer sooner rather than later. Looking at the data, it appears the best time to have found a "deal" on a home may have been in February.

Fannie Mae Tightens Guidelines On ARMs And Interest Only Products

2010-05-04T06:08:00.001-07:00

For the first time this year, Fannie Mae announced significant updates to its mortgage underwriting guidelines.

The changes include newer, harsher ARM qualification standards, the elimination of a once-popular loan product, and tighter rules for interest only mortgages.

Fannie Mae made its official announcement April 30, 2010. The changes will roll out to home buyers and homeowners over the next 12 weeks.

The first guideline change is tied to ARMs of 5 years or less.

Mortgage applicants must now qualify based on a mortgage rate 2% higher than their note rate. For example, if your mortgage rate is 5 percent, for qualification purposes, your rate would be 7 percent.

The elevated qualification payment will disqualify borrowers whose debt-to-income levels are borderline.

The second change is Fannie Mae's elimination of the standard 7-year balloon mortgage. Balloon mortgages were popular early last decade. Lately, few borrowers have chosen them, though. Mostly because rates have been relative high as compared to a comparable 7-year ARM.

And, lastly, Fannie Mae is changing its interest only mortgages guidelines.

Effective June 19, 2010, Fannie Mae interest only mortgages must meet the following criteria:

The home must be a 1-unit property
The home must be a primary residence, or vacation home
The borrower's FICO must be 720 or higher
The mortgage must be a purchase, or rate-and-term refinance. No "cash out" allowed.

Furthermore, borrowers using interest only mortgages must show two full years of mortgage payments "in the bank" at the time of closing.

Earlier this year, Fannie Mae-sister Freddie Mac announced that as of September 2010, it will stop offering interest only loans altogether.

Between Fannie Mae, Freddie Mac, the FHA, and other government-supported entities, the U.S. government now backs 96.5% of the U.S. mortgage market. So long as mortgage default rates are high, expect approvals for all borrower types to continue to toughen.

Shopping For Mattresses, Or How Buy A Good Night's Sleep

2010-05-03T05:52:00.001-07:00

NBC's The Today Show hosted Consumer Reports for its take on mattresses. Some of the results may surprise you.

At 7 minutes, the video is long, but it's stuffed with helpful comfort tips, including the scientific reason why a mattress should be replaced every 8 years or so. Some of the other advice includes:

How to reduce morning aches and pains with proper pillow choices
Why "hot sleepers" should stay away from memory foam
How to properly test a mattress in the store before you buy it

After its testing and a series of interviews with consumer and industry workers, Consumer Reports also concludes that -- for a queen-sized bed -- a $1,000 list price is going to give you "a lot of bed"; there's little need to spend more. And, furthermore, because mattress prices are usually negotiable by half-off or more off, you could buy that $1,000 mattress at a significant discount.

More than 70% of people successfully negotiate lower mattress prices.

Consumer Reports acknowledges that there's no "#1 mattress", per se, because mattresses are a personal fit in terms of both firmness and size. With respect to durability, however, most will last for years.

The Headlines Were Overly Rosy On February's Case-Shiller Index

2010-04-30T05:54:00.001-07:00

Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas.

Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase. The other 19 markets averaged a 1.23 percent decline between January and February.

However, that's not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.

Unfortunately for active home buyers and sellers, year-over-year data isn't all that helpful when making a real estate decisions. It's the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.

The rosier, annualized data published this past week just doesn't capture the reality of what was the February 2010 market. And even then, the data is somewhat useless because it's from February and May will be upon us next week.

Case-Shiller is on a 2-month lag -- hardly reflective of the "right now" of real estate.

When you're looking for real estate data that actionable, consider using sources that are more "real-time". A real estate agent may be the right place to start. Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.

A Simple Explanation Of The Federal Reserve Statement (April 28, 2010 Edition)

2010-04-28T12:02:00.001-07:00

Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

In its press release, the FOMC noted that, since March, the U.S. economy "has continued to strengthen" and that the jobs markets "is beginning to improve". This is a step up from the last meeting after which the Fed said jobs were "stabilizing".

It also reiterated that business spending "has risen significantly".

Today's statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year's financial crisis.

Threats remain to growth, however. The Fed fingered a few:

Employers are reluctant to hire new workers
High unemployment threatens consumer spending
Consumer credit (still) remains tight

Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent "for an extended period". This was expected.

Overall, the statement's tone was positive and the Fed noted that inflation is within tolerance.

Mortgage market reaction has been muted thus far. Mortgage rates are unchanged post-FOMC.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010. The 55-day span between meetings will be the FOMC's longest of 2010.

The Fed Adjourns From A 2-Day Meeting Today And What It Means For Mortgage Rates

2010-04-28T06:06:00.001-07:00

The Federal Reserve adjourns from a scheduled, 2-day meeting today. It's one of 8 scheduled Fed meetings for 2010.

Upon adjournment, Fed Chairman Ben Bernanke & Co. will release a formal statement to the market. In it, the Fed is expected to announce "no change" in the Fed Funds Rate.

The Fed Funds Rate is currently in a target range of 0.000-0.250 percent.

The Fed Funds Rate is an inter-bank lending rate. It's also the basis for Prime Rate, a consumer interest rate on which credit card payments are based, among other consumer loans. Prime Rate is equal to the Fed Funds Rate + 3 percent. Credit card rates, therefore, will likely stay flat today, too.

Mortgage rates, however, should change. Possibly by a lot. The 30-year fixed mortgage does not correlate with the Fed Funds Rate (as shown in the chart at right).

The reason mortgage rates will change today is because, in its statement, the Federal Reserve will highlight vrious parts of the economy, identifying strengths, weaknesses and probable threats to growth.

These observations influence investors with a stake in bond markets and future returns and, with Wall Street on edge right now -- unsure of whether recent economic growth is a longer-term trend or a short-lived blip -- mortgage rates could shoot higher or they could drop, depending on how traders interpret the Fed.

It's a difficult time to be shopping mortgages.

Further complicating matters is Greece's recent debt downgrade to junk status. A small contagion fear is budding worldwide and, as a result, the flight-to-quality has picked up steam. Mortgage rates are down because of it but could reverse higher at any moment.

Therefore, if you're actively shopping for a mortgage today, it may be prudent to lock your rate ahead of the Fed's announcement and any major market reversal. Mortgage rates may fall today, but there's very little room for them to fall. This is, however, a lot of room for them to rise.

The Fed adjourns at 2:15 PM ET. Call your loan officer to lock your rate.

2010-04-10T10:23:00.000-07:00

Double [Dip] or Nothing?
California home sales have been leveling out, the median price of homes has pulled back from the $300,000 threshold that was crossed in late 2009, along with reports on weakness in the national numbers and the large numbers of distressed sales across the board, the front and center question is: Are we headed for a double dip?

Signs Say Not So Fast… Looking at the sales picture, the pace of sales in California has been above the 500,000 mark for a year and a half, which is consistent with pre-peak levels of activity. The seasonally adjusted annualized rate of 528,930 existing detached home sales in February 2010 was down 11.7 percent from year ago levels and down 2.2 percent in month-to-month terms. Despite the recent declines, the February rate of sales was well above the trough of 254,650 homes that occurred in October 2007. Given the high levels of affordability compared to peak years, a drop off in sales to trough levels of 255,000 homes seems very unlikely.As far as prices are concerned, California’s median price was $279,840 in February 2010, 14.1 percent above the year ago median of $245,230, which was also the monthly trough for this cycle. While a 14 percent increase from the low point is welcome, the median actually declined over the last two months, causing concerns about a double dipin the median price. The possibility of a return to the $245,000 range seems remote for the following reasons:• First, even at current prices, affordability is more than double the levels of two and three years ago. This should continue to drive demand and prevent a significant decline in home prices.• Second, despite recent increases in inventory levels (6.3 months in February, compared an average of 4.1 months in the second half of 2009), inventory in California was still below the long-run average of 7 months. Historically, inventory levels below that threshold have fueled year-to-year price gains.This would suggest that as long as inventory remains relatively low, prices should remain stable over the coming months, all else being equal.…

But Still Some Uncertainty Lies Ahead Collectively, these observations imply that the market should see prices stabilize or edge up over the foreseeable future, yet there is still a lot of uncertainty about the rest of the year. For one thing, it remains to be seen how the housing market will sustain itself once the federal Homebuyer Tax Credits end on June 30th. Moreover, there are long-standing concerns about a second wave of foreclosures and how it will impact housing market values. Recent changes to the HAMP loan modification program, including principal forgiveness, and similar changes to the loan modification programs of major banks, along with growing evidence that the California market has shown improvement in recent months, the likelihood the housing market will experience a double dip is small.