What’s Ahead For Mortgage Rates This Week – 03.10.14

what are mortgage rates doingLast week’s economic news included construction spending and the CoreLogic Home Price Index for January. Reports for February included ADP Employment, Non-Farm Payrolls and national unemployment data.

The Federal Reserve’s Beige Book report and weekly reports on mortgage rates and new unemployment claims rounded out the week’s economic news.

Highlights for last week include:

Consumer spending gained 0.40 percent for January. The expected reading was 0.20 percent and the reading for December was flat.

The Commerce Department reported that increased spending was less an indicator of consumer discretionary spending than an indicator of high utility costs caused by severe winter weather.

Construction spending ticked upward in January with gain of 0.10 percent as compared to expectations of -0.40 percent and the prior month’s reading of 0.10 percent.

January’s reading translates to a seasonally adjusted annual figure of $943.1 billion.

Federal Reserve: Winter Weather Obscures Accurate Economic Outlook

According to the Fed’s Beige Book report, much of the U.S. economy was impacted by severe winter weather. The report is based on anecdotal information provided by business contacts and industry leaders throughout the 12 regions of the U.S. Federal Reserve System.

Eight regions reported slow economic growth. Janet Yellen, chairwoman of the Fed, noted that winter weather was not expected to alter the Fed’s plan to continue reducing its asset purchases under its quantitative easing program. She also said that it may be months before accurate economic readings can be obtained in the aftermath of winter weather conditions.

Freddie Mac’s Primary Mortgage Market Survey brought good news on Thursday as mortgage rates fell across the board and discount points were also lower in most cases.

Average mortgage rates were down nine basis points for a 30-year fixed rate mortgage at 4.28 percent. The average rate for a 15-year fixed rate mortgage was 3.32 percent, a decrease of seven basis points.

The rate for a 5/1 adjustable rate mortgage was 3.03 percent, down by two basis points from the prior week. Discount points were unchanged for 30-year fixed rate mortgages at 0.70 percent, but dropped to 0.50 percent for 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Employment Sector: Surprise Results

The ADP payroll report showed a reading of 139,000 jobs added in February as compared to the prior month’s 127,000 jobs. ADP tracks private sector jobs. The BLS released its Non-Farm Payrolls report for February, which also surpassed expectations.

175,000 jobs were added against expectations of 140,000 jobs added and January’s reading of 129,000 jobs added. The national unemployment rate rose to 6.70 percent against an expected drop to 6.50 percent from January’s reading of 6.60 percent. Once again, foul weather was seen as a major influence.

Whats Ahead This Week

This week’s economic news schedule is relatively light with no releases set for today.

Mortgage rates will be released by Freddie Mac on Thursday, along with weekly jobless claims. Retail sales and the University of Michigan consumer sentiment index round out next week’s schedule.

How To Make Your Home Look More Luxurious On A Budget

how-to-make-your-home-look-luxuriousHave you been looking through home décor magazines and gazing with wonder at the gorgeous homes inside? Do you want to add a touch of elegance and luxury to your home, but you are on a tight budget?

No need to worry, there are many ways that you can make your home look like a million bucks, without actually having to spend a fortune.

Luxury Home Decor Ideas

Here are a few great ideas that don’t have to cost a lot, they just require a little bit of planning and some elbow grease and they will take your home from ordinary to luxury.

Mount your curtains at ceiling level rather than the top of the windows. This draws the eye upwards and gives the illusion of high ceilings.

Paint your interior doors a sleek and shiny shade of black. This looks very modern and sophisticated and is much cheaper than buying expensive doors.

If your home doesn’t have crown moulding, paint a white band around the ceiling to fake the look.

The little details can make a big difference when it comes to making a home look elegant and luxurious. Add in finishing touches such as a beautiful glass vase, a stack of coffee table books, fresh flowers or a piece of artwork.

Remember, less is more and a cluttered house will not create the impression of luxury. Eliminate as much clutter as possible, making your home seem more spacious and sophisticated.

Lighting can also have a big impact on how luxurious your home appears. Invest in a few beautiful and stylish lamps, or a chandelier, and you will transform the entire space.

When choosing fabrics for accessories and upholstery, go for fabrics that have a luxurious texture such as velvet, satin or fur. They can be faux to make them cheaper, but they will still add to the luxurious look.

You can take simple and cheap accessories such as a candle holder or a vase from the dollar store and then paint them with gold paint. They will have a luxurious look, for much less than the real thing!

These are just a few ideas that you can incorporate into your home décor of your home in order to make it look and feel more luxurious. For more helpful information, contact your mortgage professional.

How Can I Get A Cash-Out Refinance Using An FHA Loan?

fha-cash-out-refinancesWhile homeowners typically equate the FHA loan program with low-down payment mortgages, FHA refinances are also available.

In addition to easy-to-source rate-and-term and streamline refinances that replace an existing FHA mortgage with a better one, the FHA even offers cash-out refinance loans.

A cash-out FHA loan refinance allows the borrower to take out up to 85 percent of the value of his property. In today’s market, the ability to pull out 85 percent of a home’s equity is attractive, but not as generous as a 96.5 percent FHA purchase mortgage.

Nevertheless, while the borrower doesn’t get the high leverage of a regular FHA mortgage, he still gets many of its other benefits.

FHA Refinance Requirements

FHA cash-out refinances don’t impose limitations on how borrowers use the cash they take out. In addition, they also don’t require the applicant to have stellar credit.

It’s possible that someone could qualify with a credit score in the 500s. What they don’t need is an existing FHA mortgage — FHA cash-out loans are available even when a borrower is coming from a conventional mortgage.

100% And Beyond

It is also possible to borrow more than 100 percent of your home’s value through the FHA 203(k) program. 203(k) loans have one catch, though. Borrowers have to spend the money on their home.

203(k) loans are sometimes referred to as rehabilitation loans. Based on the assumption that the repairs or renovations performed with the money will raise the home’s value, the FHA lets borrowers take out extra money to pay for them.

Applying for a 203(k) loan isn’t always easy, but it can provide extra money for repairs. If a borrower thinks of an FHA loan as only being a tool to buy a house, he is missing out on some of the FHA program’s biggest benefits.

For many people, it is also the best cash-out refinance program available, whether in its traditional or in its 203(k) guise.

Case Shiller Price Index Shows That It’s A Buyers Market

buyers market for home salesTwo major indicators of home price trends showed a slowing momentum for home prices in December. The S&P Case Shiller 10 and 20 city indices reported that of 20 cities tracked, home prices were lower in December than for November.
Case-Shiller’s seasonally adjusted month-to month reading showed that home prices rose by 0.8 percent as compared to 0.90 percent in November.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said that “Gains are slowing from month-to-month and the strongest part of home price recovery may be over.” He also noted that seasonally adjusted data was showing a loss of momentum for home prices.

December home prices posted a year-over-year gain of 13.40 percent, down from November’s year-over-year reading of 13.70 percent. December’s reading reflected the highest year-over-year increase in home prices since 2005.

Analysts note that a slower pace of increasing home prices may allow more buyers to enter the market, and may also encourage more buyers to list their properties for sale. This would increase inventories of available homes and relieve pent-up demand for homes.

Although home price growth is cooling off, average home prices remain 20 percent below their pre-recession peak in 2006.

Home Prices Face Challenges In 2014

Another factor in slower growth of home prices is regional differences in the rate of economic recovery. Cities including Dallas, Texas and Denver, Colorado recently set records for escalating home prices.

Five states including Florida and Michigan accounted for almost half of foreclosures completed during 2013. Slow job growth and poor winter weather were also blamed for slower gains in home prices.

New mortgage rules and relatively strict mortgage lending standards may continue to dampen housing markets, but there is some good news as some lenders are easing credit standards.

FHFA: Home Prices Higher For 10th Consecutive Quarter

The Federal Housing Finance Administration reported similar trends in December home price data for properties either financed or owned by Fannie Mae or Freddie Mac.

Home prices rose by a seasonally adjusted rate of 0.80 percent in December as compared to November’s reading. Home prices were 7.70 percent higher for the fourth quarter of 2013 than for the same period in 2012. Adjusted for inflation, this reading indicates an approximate year-over-year increase of 7 percent.

FHFA reported higher readings for 38 states in its fourth quarter 2013 Home Price Index, as compared with 48 states in in the third quarter of 2013.

In order of home price appreciation, the top five states with highest growth in home prices were Nevada, California, Arizona, Oregon and Florida. These calculations were seasonally adjusted and based on home purchases only.

Existing Home Sales Lowest Since 2012

home-sales-slow-a-bitSales of existing homes fell by 5.10 percent in January according to the National Association of REALTORS.

Pre-owned home sales slowed to a seasonally-adjusted annual rate of 4.62 million homes against an expected reading of 4.65 million and December’s reading of 4.87 million existing homes sold.

Rising home prices are reducing the number of affordable homes and a shrinking inventory of available homes were said to be underlying causes to January’s slump in existing home sales.

Severe winter weather also contributed to lower sales.

January’s reading was the lowest for existing home sales since July of 2012. The national inventory of available pre-owned homes was 1.90 million, which represents a 4.90 month supply at the current sales pace.

Real estate pros look for a 6 to 6.50 month supply of existing homes to balance demand and availability between buyers and homes for sale.

High demand against a low supply of available homes suggests that some home sales weren’t completed due to a bottleneck between willing buyers and a low supply of available homes. Rising home prices also limit affordability for first-time and moderate income home buyers.

Regional Sales Of Existing Homes Lower

Existing home sales fell across all four regions:

Northeast: -3.10 percent
Midwest: -7.1 percent
South: -3.5 percent
West: 7.3 percent

Slow job growth, new mortgage rules and high loan approval standards were also reported as causes for slower sales. Short supplies of existing homes in high demand locations are causing multiple offers on homes, and in some areas, cash offers are in play. High competition for homes can eliminate home buyers with a limited range of purchasing power.

Reports on new construction and home builder confidence in housing market conditions supported the slower rate of existing home sales in January

Home prices, while still increasing, are not growing at the rapid rates seen in 2013. The national median home price in January rose to $188,900, which represents a 10.70 percent increase year-over-year. Analysts said that existing home sales that weren’t completed due to the winter weather can be expected to recover as warmer weather arrives.

Distressed Home Sales Impact Average Home Price

Distressed sales of existing homes including foreclosed properties and short sales represented 15 percent of January sales of existing homes, down from 24 percent in January 2013, and higher than December’s reading of 14 percent.

Sales of foreclosed homes averaged 16 percent below market value and short sales were completed at an average of 13 percent below market value. Discounted home prices impact home prices in areas that have larger numbers of distressed homes for sale.

As warmer weather approaches, new home construction will pick up and more homeowners will be likely to put their homes on the market.

What’s Ahead For Mortgage Rates This Week – 03-03-14

mixed-market-signalsLast week’s economic news was mixed, with new home sales increasing and weekly jobless claims higher than expected.

Case-Shiller and FHFA home price reports reflected slower growth in home prices. Mortgage rates moved higher for the third consecutive week.

Weakness in the jobs sector and harsh winter weather were seen as factors contributing to economic events, but sales of new homes jumped unexpectedly to their highest since 2008.

Case-Shiller, FHFA Report Slower Growth for Home Prices
The Case-Shiller composite home price index for December reported that home prices declined by 0.10 percent in December, which was the second consecutive monthly decline.

On a seasonally adjusted basis, home prices rose 0.80 percent in December as compared to November’s reading of 0.90 percent. Year-over-year, home prices grew at a rate of 13.40 percent, their fastest pace since 2005.

The momentum of year-over-year home prices declined in December as compared to November’s year-over-year reading of 13.70 percent. 11 of 20 cities included in the Case-Shiller composite index declined.

Analysts said that low inventories of available homes, higher mortgage rates and severe winter weather contributed to slower growth in home prices.

FHFA’s quarterly House Price Index for the fourth quarter of 2013 posted its tenth consecutive gain in quarterly home prices. Seasonally adjusted home prices rose by 0.80 percent from November to December 2013.

FHFA, which oversees Fannie Mae and Freddie Mac, reported that home prices increased by 7.70 percent from the fourth quarter of 2012 to the same period in 2013. Adjusted for inflation, the agency reported a year-over-year increase of 7.0 percent.

FHFA House Price Index data is based on sales information for homes with mortgages held or securitized by Fannie Mae and Freddie Mac.

Fixed Mortgage Rates, New and Pending Home Sales Rise
Freddie Mac reported that average rates for fixed-rate mortgages rose last week, with the rate for a 30-year fixed rate mortgage rising 4 basis points to 4.37 percent.

The rate for a 15-year mortgage also increased by 4 basis points to 3.39 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.05 percent. Discount points were unchanged at 0.7 0 percent for fixed rate mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

Weekly jobless claims also rose to 348,000 against projections for 335,000 new jobless claims. The four-week average for new jobless claims remained steady at 338,250.

The Department of Labor noted that weekly readings are more volatile than the four -week average reading. Poor winter weather and a softer labor market were cited as possible causes for the jump in new claims.

New home sales provided unexpected good news; they jumped by 9.60 percent in January, to a seasonally-adjusted annual rate of 468,000 sales against expected sales of 405,000.

December’s reading was upwardly revised from 414,000 to 427,000 new homes sold.

January’s reading was the largest increase in new home sales since July 2008, and there may be more positive housing news ahead as builders said that some of the sales lost during winter months may be recouped during spring.

Pending home sales increased by 0.10 percent in January to an index reading of 95 as compared to December’s reading of 94.9, which was the lowest reading since November 2011.

What‘s Coming Up
This week’s scheduled economic news includes construction spending, the Federal Reserve’s beige book report, weekly jobless claims, and Freddie Mac’s report on mortgage rates.

Friday, the Bureau of Labor Statistics releases its Non-Farm Payrolls and National Unemployment reports for February.

Smart Ways To Create Equity Within Your Home

increasing-home-equity-valueHome equity is the difference between what your home can sell for and what you owe on it. Generally, the longer you own your home, the more equity you build.

This is money you can use before you sell your home through a home equity loan. Just keep in mind that a home equity loan is secured with your home. If you can’t make the payments, you can lose your home.

Use Your Home Equity In Smart Ways:
Remodel Your Home – If you’ve wanted to add on a family room or modernize your kitchen, consider using your home’s equity to fund the project. Home improvements usually increase your home’s marketability and value.

Make Needed Major Repairs – Your home’s equity can be a funding source for major repairs like plumbing problems and re-roofs. Once again, this is an improvement for your home that will help keep its value up.

Buy Another Property – Real estate is still a safe investment. You can use your home equity to buy a second property when home values are down. When the market recovers, you can sell the investment property for a profit. This also works if you have to move out of town and are still trying to sell your home. If you can afford the payments, use your home’s equity to purchase your new home until the current one sells.

Pay For Unexpected Medical Expenses Or Job Loss – You never know when a medical emergency or job loss will leave you in debt. A home equity loan can give you the money you need to get through this difficult time.

It’s easy to build equity in your home when you find the right deal. Let me help you find your perfect home and negotiate a great price and terms for you. Contact your mortgage professional today.

What Are The Requirements To Sell A Home Using An FHA Loan?

Before an owner can market a property to buyers that want to use a FHA loan, he will want to familiarize himself with the FHA’s standards. FHA won’t insure loans on just any property.

While their standards aren’t as stringent as they used to be, a home needs to be in relatively good condition to qualify for FHA financing.

Location And Lotselling your home with fha financing

To qualify for FHA financing, the property has to be located on a road or easement that lets the owner freely enter and exit.

The access also has to be paved with a surface that will work all year a long dirt driveway that washes out in spring won’t qualify.

The FHA also wants the lot to be safe and free of pollution, radiation and other hazards. For that matter, it also needs to provide adequate drainage to keep water away from the house.

Property Exterior

The FHA’s requirements for making a loan start with the home’s roof. To pass muster, the house must have a watertight roof with some future life left. In addition, if the roof has three or more layers of old shingles, they must all be torn off as part of the replacement process.

The property’s exterior has to be free of chipped or damaged paint if the home has any risk of having lead paint. Its foundation should also be free of signs of exterior (and interior) damage. It also needs full exterior walls.

Property Interior

The property’s interior also needs to be inspected. FHA standards require that the home’s major systems be in good working order.

Bedrooms should have egress routes for fire safety and the attic and basement should be free of signs of water or mold damage.

The bottom line is that the FHA wants to make loans on homes that borrowers can occupy. This doesn’t mean that a home has to be in perfect condition to be sold to an FHA mortgage-using borrower. It just needs to be a place that they can live.

What Is A Mortgage Pre-Approval?

mortgage-preapprovalWhen you are purchasing a home, your broker may recommend you obtain a mortgage pre-approval before you find the home of your dreams.

There are some benefits to being pre-approved before you find a home, but oftentimes, people confuse pre-qualifications with pre-approvals.

So the question many buyers have is what exactly is a mortgage pre-approval?

In a nutshell, it’s when the lender provides you (the buyer) with a letter stating that your mortgage will be granted up to a specific dollar amount.

What Do I Need For Pre-Approval?

In order to obtain a pre-approval for your home purchase, you will have to provide your lender all of the same information you would need to show for qualifying for a mortgage.

This means providing tax returns, bank statements and other documents that prove your net worth, how much you have saved for your down payment and your current obligations.

What Conditions Are Attached To A Pre-Approval?

Generally speaking, a pre-approval does have some caveats attached to it. Typically, you can expect to see some of the following clauses in a pre-approval letter:

  • Interest Rate Changes – a pre-approval is done based on current interest rates. When rates increase, your borrowing power may decrease.
  • Property Passes Inspection – your lender will require the property you ultimately purchase to come in with a proper appraisal and meet all inspection requirements.
  • Credit Check Requirements – regardless of whether it’s been a week or six months since you were pre-approved, your lender will require a new credit report. Changes in your credit report could negate the pre-approval.
  • Changes In Jobs/Assets – after a pre-approval is received, a change in your employment status or any assets may result in the pre-approval becoming worthless.

Getting pre-approved for a home mortgage may allow you more negotiation power with sellers and may help streamline the entire loan process.

It is important however to keep in mind there are still things that may have a negative impact on actually getting the loan.

It is important to make sure you keep in contact with the lender, especially if interest rates increase or your employment status changes after you are pre-approved.

Questions First-Time Home Buyers Should Ask

first-time-home-buyersNationwide, mortgage rates are low and home prices remain relatively low, too. This combination, plus rising rents, is pushing renters in some cities toward first-time homeownership.

Buying your first home can be exciting, but you should also do your research to make sure that you ask the proper questions of the process, and make the best choices for yourself and your household.

For example, recommended questions for first-time buyers to ask home sellers include :

What major repairs have been made to your home?
Although standard disclosure forms are supposed to provide information regarding past damage and renovation to the property, there are occasionally repairs that are omitted or otherwise forgotten. Be proactive and ask pointed questions about the roof, the foundation, and the electrical system. Some home issue have a way of resurfacing many years later and it’s best to know in advance. •

To which school district does the home belong?
As a first-time homebuyer, you may or may not have school-aged children. However, in many areas, public school rankings positively (or negatively) affect home values. Ask your real estate agent for school district data. Consider asking the seller for feedback, too.

Is this a “distressed” property, and what does that mean to me?
For many home buyers, the allure of a foreclosed home or a home in short sale can be large. Prices are discounted as compared to comparable real estate — sometimes by as much as 20%. However, many distressed properties are sold as-is,” with little room for negotiation. This means that homes may be defective or, worse, uninhabitable. Ask your real estate agent for help with distressed homes and their suitability to your home buying needs.

After asking the above questions, and other questions, too, it’s important to remember that buying a home can be an emotional decision; and one that requires using your “brain” as much as your “heart”. Try to keep emotions in check so that you don’t overpay for a home that’s unsuitable, for example.