Get The Low Down On Pending And Existing Home Sales This Month

pending-home-saleThe National Association of REALTORS reported Monday that pending home sales dropped by -0.60 percent in October after falling at a revised rate of -4.60 percent in September. According to Lawrence Yun, chief economist for NAR, 17 percent of real estate agents reported delays in loan closings due to the government shutdown in early October.

Lenders were unable to verify borrower income through the IRS, which was closed during the shutdown. October was the fifth consecutive month with fewer pending home sales reported.

Homeowners who owe more on their mortgages than their homes are waiting to sell, and recent spikes in mortgage rates were cited as factors contributing to fewer pending sales.

Pending home sales are defined as homes for which signed purchase offers have been received and are considered an indicator of future home sales. The NAR notes that most pending sales close within 30 to 60 days of an offer being signed.

High Demand And Low Supply Of Homes Thwarts Buyers

Would-be homebuyers may be including their dream homes on their wish lists for the holidays as many areas continue to experience a short supply of homes against high demand. In desirable areas this can lead to bidding wars and homes being sold before they are listed for sale.

Cash buyers are benefitting from these situations, while first-time and moderate income buyers may be sidelined due to affordability issues and the inability to compete with cash buyers.

Mortgage rates fell last week and the previous week. While a recovering housing market has been causing home prices to rise, economists described current readings for pending sales as a “pause” in the housing market recovery and said that a significant decline in home sales could adversely impact overall economic recovery.

Regional Pending Sales Mixed

Pending sales for the Northeast and Midwestern regions increased slightly and declined in the South and West. This suggested to some economists and analysts that the formerly hot housing market is cooling off along with the weather. Some decline in home sales is expected during fall and winter months.

Sales Of Existing Homes Better Than Expected

October sales of existing homes surpassed expectations of 5.10 million sales with a reading of 5.12 million existing homes sold. Again, the government shutdown and related concerns of consumers and home builders were cited as reasons for sales falling shy of September’s reading of 5.29 million existing homes sold.

What’s Ahead For Mortgage Rates This Week – 12.02.13

case-schiller-index-updateThe short holiday week brought a flurry of economic reports last week. Highlights included pending home sales, the S&P Case-Shiller Housing Market Indices and the FHFA home price index. No reports were released on Thursday and Friday in observance of the Thanksgiving holiday.

The NAR released its Pending Home Sales report for October. Although pending home sales dropped by -0.60 percent, the decline was less than September’s reading of -4.60 percent.

NAR cited higher home prices and mortgage rates along with concerns over the then-pending government shutdown as factors that contributed to fewer pending sales. Pending sales are determined by signed purchase contracts and are considered an indication of future completed home sales and mortgage loan closings.

Department of Commerce reported that building permits issued increased from 974,000 in September to 1.03 million for October. Permits for multi-family dwellings rose by 17 percent from September, but permits for single-family homes rose by 1.00 percent.
A lagging supply of available single-family homes has been driving home prices up as demand also increases. The multi-family reading reflected the sector’s volatile nature and was largely concentrated in the West.

Case-Shiller And FHFA Report Higher Year-Over-Year Average Home Prices
The S&P Case-Shiller 20-City Housing Market Index for September reported its highest year-over-year gain in seven years, but the month-to-month reading was lower. The year-over-year reading was 13.30 percent in September and the month-to-month reading showed lackluster growth at 0.70 percent.

When seasonally adjusted, September’s reading was 1.00 percent against the seasonally-adjusted August reading of 1.90 percent.
In addition to the then-looming government shutdown, concerns over rapidly rising home prices in the West may have caused would-be buyers to sit on the sidelines as fears of another “housing bubble” gained traction.

Rising home prices also impact affordability and impact the ability of buyers depending on mortgage loans to compete with cash buyers.
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued its housing market index report for September. Based on sales of homes financed with Fannie Mae or Freddie Mac-owned mortgages, FHFA’s report indicated that year-over-year home prices at an annual rate of 8.50 percent in September as compared to August’s year-over-year reading of 8.40 percent.
Economists noted that the increase of home prices is slowing due to a number of factors including higher mortgage rates and restrictive lending policies that are making it more difficult for buyers to purchase homes.

Analysts said that next year could bring a more sustainable rate of home appreciation with year-over-year readings averaging between five and eight percent.

Freddie Mac issued its weekly Primary Mortgage Market Survey on Wednesday; average mortgage rates for 30 and 15 year mortgages rose to 4.29 percent and 3.30 percent respectively.

Discount points for fixed rate mortgages were unchanged at 0.70 percent. The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 2.94 percent with discount points unchanged at 0.50 percent.

What’s Ahead
This week’s scheduled economic reports include Construction Spending, ADP Employment, New Home Sales and the Fed’s Beige Book. The Bureau of Labor Statistics will release its Non-farm Payrolls report and the national unemployment rate.
Weekly jobless claims and Freddie Mac’s Primary Mortgage Market Survey will be released as usual on Thursday.

3 Tips To Get The Best Financing On Your Second Home Purchase

beach-house-second-home-financingAre you buying a property as your second home? Perhaps you are looking for a small cottage or apartment where you can escape to for your vacations, or maybe you want to have another home closer to your relatives?

Maybe you want to rent out your second property and make a steady income from your investment. Whatever the reason, a second piece of real estate can be a fantastic investment. However, sometimes getting a mortgage on your second home can present a challenge.

Generally, a mortgage lender will have tougher standards for vacation home — or second home — loans than primary home loans. This is because usually when you are buying a second home your finances will be stretched thinner and you will have less money to spare due to already paying a mortgage on your primary home.

This additional risk may mean that your second home mortgage can be more difficult to close and likely could carry a higher interest rate.

Here are three tips to keep in mind that will help you to get the best mortgage on your second property:

Build up a decent amount of savings.

Your mortgage lender will want to be able to see that you have a large amount of savings in reserve so that you will have enough to pay for the mortgage even if you were to lose your job or other income source.

Pay off any credit card or installment debt.

Many lenders will be hesitant to approve your second home mortgage if they see that you have a lot of debt on your credit card. They will want to see that you have a low debt to income ratio so that you will be able to pay back the loan.

Use your primary home as a resource.

If you have always made your payments on time and you are well on your way through paying off your first house, you may have equity to borrow against for some or all of your second home purchase. Be careful here though. There is a little known IRS regulation that requires the second home be financed under it’s own home loan within 90 days of closing to get the best tax advantages.

These are just a few tips to keep in mind in order to make getting a mortgage for your second property as easy as possible.

To find out more about investing in a second home or vacation property, contact your trusted real estate professional today.

Fed Meeting Minutes Show Hope In Economic Growth

economic-growth-and-developmentThe minutes of the Federal Reserve’s Federal Open Market Committee meeting held October 29 and 30 were released Wednesday. The meeting began with a report from the Manager of the System Open Market Account and included updates on developments within domestic and foreign financial markets.

According to the report, no intervention by the Federal Reserve was required on foreign currencies during the period between the last and current FOMC meetings.

FOMC: Key Data Delayed by Shutdown
The FOMC noted moderate economic growth in the period since its last meeting, but also noted that several federal agencies delayed release of key statistics due to the government shutdown in early October. The FOMC minutes included updates on several economic sectors including:

Labor: Private non-farm payrolls for September increased at a slower rate than for August and the unemployment rate remains high at 7.20 percent. The FOMC has set a target unemployment rate of 6.50 percent as a benchmark for considering changes to the Fed’s quantitative easing program, which supports lower long-term interest rates and mortgage rates.

A high rate of part-time employment and a slight drop in full-time employment may indicate why would-be home buyers remain on the sidelines. FOMC members noted that while weekly unemployment claims rose during some weeks in October, this was likely fall-out related to the government shutdown.

Manufacturing: Production rose slightly, but was flat other than for motor vehicles. The committee expected to see gains in production in the near term.

Personal Consumption Expenditures: This sector rose in August and retail sales excluding autos were significantly higher in September. Factors impacting consumer spending were mixed. Homeowners enjoyed increasing home prices and home equity, but overall consumer sentiment declined even as disposable income increased in August.

Housing: The committee said that little current data was available for the housing sector due to the shutdown. Building permits and housing starts for single family homes rose in August. After a significant drop in July, sales of new homes rose in August while sales of existing homes fell. Pending home sales also fell during August and September.

Quantitative Easing: FOMC members decided not to alter its current QE program during its September meeting; this caused investors and analysts to revise their expectations for the Fed taking action to reduce its current pace of $85 billion in monthly bond purchases.
Expectations for the total amount of asset purchases under QE were revised upwardly, which suggested that no major changes in current Fed monetary policy is anticipated.

Overall, the minutes of October’s FOMC meeting echoed the committee’s recent perception of moderate economic growth as expressed during its 2013 meetings, and its intention to maintain asset purchases and the target federal funds rate at current levels in the coming months.

4 Ways To Save For That Down Payment

save-for-down-payment-on-a-houseIn order to save up a huge amount of cash for the down payment on your first mortgage, you need a solid savings plan!

When you take out a mortgage on your new home as a first time homebuyer, the more you can pay as a down payment the better. The down payment on a mortgage reduces the principle of the loan and means that you will be paying tens of thousands less in interest payments over the life of the loan.

Most financial experts recommend that you should save up at least 20% of the value of the home as a down payment. Depending on the value of the home that you want to buy, this can be a serious chunk of money.

The conventional saving tricks of skipping your morning latte and eating dinner at home just aren’t going to cut it when saving up this much money! You will need some strategies for saving big.

Here are some tips to help you get closer to that down payment:

Make A Separate Savings Account

No matter how much you have already saved for your down payment, create a new savings account to put the money in. When the money is in your personal account it is so much more tempting to spend it on day to day expenses. Also, a savings account will give you a better rate of interest so that you can help you money grow.

Pay Off Your Credit Cards First

If you have credit card debt, you will be paying interest charges to the credit card company every month. These charges can really add up, especially if you are only paying the minimum on your loans. If you can pay down this debt you will have extra money every month to put into your savings instead.

Get A Part-Time Job

If you want to accelerate yourself towards having your down payment saved up, you could consider taking on a part-time job in addition to your full-time job on a few evenings and weekends.

It doesn’t have to be something that you do forever, but even sticking with it for six months to a year will give you thousands in extra income that you can put straight towards your down payment.

Make A Backwards Budget

Do you find that after you have paid all of your bills and your living expenses, there is nothing left over to save? Rather than calculating all of the money that you use on your monthly expenses and then saving whatever is left afterwards, why not make your budget the other way around?

Start off with how much you want to be able to save per month then subtract that amount from your net income. The number you have left is what you have to live off.

You will find that you naturally change your habits to make this amount of money work for you and if it if not enough you can increase your income by getting a side gig. These are just a few ways that you can save up for a down payment on your first home in order to save money over the years on your mortgage.

Housing Market Index Shows Builder Confidence Remains Above 50

builder-confidence-is-upThe National Association of Home Builders released its Housing Market Index for November on Monday. This month’s HMI reading was 54 against expectations of a reading of 55. October’s reading was also 54 after being downwardly revised.

Readings over 50 generally indicate that a majority of builders surveyed are confident in current housing market conditions, but the current pause came after two months of decline in home builder confidence. While the short term index readings are lower than in past months, the HMI is currently 20 percent higher than last year.

David Crowe, chief economist for NAHB said that “the fact that builder confidence remains above 50 is an encouraging sign.” Mr. Crowe also cited federal debt and budget issues as factors that keep builders and consumers from building and buying homes.

Fluctuating Mortgage Rates Of Concern To Builders, Home Buyers

Home builders are also subject to the impact of volatile mortgage rates, which can create affordability issues for first time and moderate income home buyers. There is some good news concerning mortgage rates as the Federal Reserve announced its plant to keep its quantitative easing program in effect in the coming months.

QE was implemented in 2012 and consists of the Fed purchasing $85 billion per month is treasury and mortgage-backed securities with the goal of keeping long-term interest rates and mortgage rates low.

Home builder confidence readings are not in synch with construction rates, as builder confidence was rapidly driven by excessive demand for homes against minimal inventories of available homes in many areas.

Components of November’s HMI provide more precise indications of builder confidence. November’s reading for confidence in sales of single family homes within the next six months fell from 61 in October to 60 in November.

Builder sentiment for current home sales was unchanged at 58 and the November reading for builder confidence in buyer foot traffic fell by one point from 43 in October to 42.

Regional Home Builder Confidence Readings Mixed

Regional builder confidence readings for November were as follows:

Northeast: This region gained 14 points with a reading of 44 for November.

South: Builder confidence rose by one point to a reading of 55.

Midwest: November’s reading declined by eight points to 54.

West: The reading for November was one point lower at 58.

Home sales are typically slower during the holiday season and winter months.

What’s Ahead For Mortgage Rates This Week – 11.25.2013

nahb image buildingLast week’s scheduled economic news was varied, but mortgage rates fell and jobless claims were significantly lower than expected. The minutes for last month’s FOMC meeting were released, and confirmed the Federal Reserve’s intention to leave its quantitative easing program unchanged at least for the near term.

The National Association of Homebuilders Wells Fargo Housing Market Index for November indicated that builder confidence, while still positive, dipped by one point to a reading of 54 as compared to an anticipated reading of 55, and October’s revised reading of 54.

Retail Sales for October Rose By 0.4 Percent

NAHB noted that uncertainty over the federal budget and political gridlock may have kept builder and consumer confidence levels from achieving further gains in November.

The Consumer Price Index for October contracted by -0.10 percent against expectations of 0.00 percent growth and September’s reading of 0.20 percent growth. The Core CPI, which excludes volatile food and energy sectors, rose by 0.10 percent against expectations of 0.20 percent and was unchanged from September’s reading.

The National Association of REALTORS reported that Existing Home Sales for October were lower than for September’s reading of 5.29 million, but slightly exceeded the expected reading of 5.10 million. October’s reading came in at 5.12 million sales of existing homes.

Analysts attributed the lower reading to tight supplies of available homes in many areas and higher home prices and mortgage rates that impacted affordability.

The FOMC minutes indicated that the committee has ongoing concerns over national unemployment rate of 7.20 percent against the committee’s target unemployment rate of 6.50 percent.

Weekly Jobless Claims were notably lower at 323,000 new jobless claims as compared to the prior week’s reading of 344,000 new jobless claims. Analysts and investors had expected a reading of 334,000 new jobs. Analysts noted the Veterans Day holiday as a likely contributor to the lower reading for new jobless claims.

Freddie Mac provided good news in its weekly Primary Mortgage Market Survey; the average rate for a 30-year fixed rate mortgage fell from 4.35 percent to 4.22 percent with discount points unchanged at 0.70 percent. The rate for a 15-year mortgage fell from 3.35 percent to 3.27 percent with discount points unchanged at 0.70 percent.

The average rate for a 5/1 adjustable rate mortgage remained unchanged at 2.61 percent with discount points unchanged at 0.40 percent. This was encouraging news for home buyers and homeowners who have recently faced rising mortgage rates and home prices.

What’s Coming Up

This week’s schedule for economic reports includes several of interest to mortgage and housing professionals. Pending Home Sales will be out on Monday; Tuesday’s calendar is full with Housing Starts and Building Permits, the Case-Shiller Housing Market Index, the FHFA Home Price Index and the Consumer Confidence Index.

Wednesday’s news includes Weekly Jobless Claims, the University of Michigan Consumer Sentiment Index and Leading Economic Indicators. No economic news is scheduled for Thursday or Friday in observance of the Thanksgiving holiday.

How To Be Energy Efficient This Fall

attic-insulation-energy-efficientSummer has been over and Fall is really here, temperatures are beginning to drop, and you’re dreading having to turn the heat on for the first time. Firing up the furnace can burn a hole in your pocket, but there’s something you can do about it. Consider these tips to help lower your heating bill.

Replace Your Air Filters

Get new air filters for your central heating and cooling. The filters get clogged and it takes more and more energy to keep your house warm. Be sure to clear out any dust bunnies or cobwebs from behind the filter. Use a vacuum if necessary.

Does Your Attic Need Insulation?

Heat rises, and if your attic is not adequately insulated, then your central heating system will be stuck sending all your hot air (and your heating bill) straight through the roof. There are three options for attic insulation: roll on insulation, spray on insulation, or polyurethane foam. Roll on insulation is the best option for the do-it-yourselfers out there, but you might consider using polyurethane foam if you plan to turn that attic space into a bedroom.

Caulk Up The Windows

Cold air is constantly sneaking into your house through the cracks in your window. Use a temporary silicone caulk to seal up your windows during the winter. When you’re ready to open them up again in the spring, the silicone caulk will crack right off without damaging the paint.

Wrap Your Pipes

Wrapping your pipes will insulate them from the cold to prevent freezing, as well as saving you money on energy bills. Use a special insulation sleeve from the hardware store or do it the old fashioned way with heat tape. This is especially important if you have pipes in an crawlspace or basement that isn’t insulated.

Let The Light In

You don’t have to buy special panels to take advantage of solar power. Open the curtains on south-facing windows, and heat up your house the natural way. With the sun’s help, you won’t need to bump your thermostat up as often.

Be Smart With The Thermostat

Don’t be afraid to turn your thermostat down a little bit. If you’re leaving the house for a while, bump it down a few degrees and give your system a rest. Try throwing an extra blanket on the bed and dropping a few degrees before bed. You’ll only see a difference on your bill. You might try a programmable thermostat as well!

Now that it’s getting cold, you can finally make some hot chocolate and put on your brand new coat, but you shouldn’t have to wear it inside. With these easy tips you can learn to keep your house warm without having to crank up the thermostat.

Reasons Why You Should Consider Refinancing Your Mortgage

refinancing-my-mortgageRefinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years. While interest rates now are still low, there’s a good chance they will be heading up in the coming months.

The Fed won’t maintain the current bond purchasing level forever, and just as rates spiked in September when the Fed hinted the bond purchasing would change, rates will spike even more when purchasing levels actually do change.

As interest rates remain very low for 30-year and 15-year mortgages, homeowners can benefit greatly from a refinance. Several types of people in particular should consider refinancing.

Carrying A High Rate
Anyone with an interest rate well above today’s level should think about a refinance. Unless the homeowner is planning to sell within the next few years, a refinance will almost always save money in the long run if the rate can be lowered by at least a percent.

Switching From FHA To Conventional
Given that FHA mortgages now carry mortgage insurance premiums for the life of the loan, it makes a lot of sense for borrowers to switch away from them when they can. Refinancing may be possible once the homeowner has built up enough equity to qualify for a mortgage from a traditional lender, without the burden of mortgage insurance.

ARM Coming Up On Adjustment
The low rate of an adjustable rate mortgage sticks only for the first few years of the mortgage. After this point, the rate adjusts each year based on market trends.

Rather than paying the adjusted rate, which is almost always higher, homeowners can refinance into a new fixed rate mortgage to lock in one of today’s low fixed rates for the duration of the mortgage.

Cash Out To Consolidate Debt
Homeowners carrying high-interest debt, like credit cards and personal loans, can often benefit from consolidating it into their mortgage. As long as they maintain at least 20 percent equity in their home, they can get a cash-out refinance for an amount higher than their current mortgage balance.

They can then use the difference to pay off high-interest debt. For more information about refinancing your mortgage feel free to contact your trusted mortgage professional.

3 Tips To Sidestep These Common FHA Loan Hang-ups

fha-loans-my-mortgage-news-dailyFHA loans are becoming increasingly popular these days as potential homeowners are not able to qualify for mortgages from traditional lenders. The FHA insures these high-risk loans, in turn allowing borrowers with low down payments and less than perfect credit to purchase homes and bolster the housing market.

However, getting through the loan process with the FHA is more difficult than with a traditional lender, and you may need to cope with some of these common loan hang-ups.

Property Condition
You can’t buy just any property with a FHA loan. The appraiser must deem it to be livable, without any conditions that could jeopardize health or safety. If the home has chipping paint, a leaky roof, or a wobbly banister, the financing could fall through.

Sometimes you can get the seller to make the needed repairs to pass inspection, but in other cases, you may have to go an alternate route. The FHA 203K streamline loan allows you to borrow up to $35,000 over the purchase price of the home for repairs and updates. It’s important to check with your local mortgage lender to determine any specific local FHA 203k loan details.

Low Appraisal
In addition to inspecting the property, appraisers also estimate its market value. These estimates are based on the property’s features and a comparison to similar properties that have sold recently. If the appraisal is low, the FHA loan funding could fall through because the FHA will not let you borrow more than the home’s appraised value.

Rather than trying to scrape together a bigger down payment, just take the information to the seller to renegotiate the purchase price. The seller will likely recognize that other buyers would be in the same boat, leading the seller to agree to a lower purchase price.

High Debt-to-Income Ratio
Your FHA loan may encounter a snag in the underwriting process if your total debt payments, including your new mortgage, would be a high percentage of your income. If you are in this situation, ask your lender to try running you through the automated underwriting program called TOTAL.

The process is quick, and often you can make up for a high debt-to-income ratio with other compensating factors, like a larger down payment or a cash reserve of several months of mortgage payments. For more information on common FHA loan hang-ups feel free to contact your trusted mortgage professional today.