Pending Home Sales Indicates That The Housing Recovery Is Progressing

pending-home-salesThe National Association of REALTORS reported Wednesday that pending sales of existing homes fell by 1.30 percent in July.

According to the organization’s Pending Home Sales Index, this was the second straight month that pending home sales dropped. July’s Pending Home Sales Index reading was 109.50.

Signed Purchase Contracts For Existing Homes Tracked In The U.S.
·Northeast: – 6.60 percent
·Midwest: – 1.00 percent
·West: – 4.90 percent
·South: + 2.60 percent

Pending home sales were 6.70 percent higher year-over-year on a national basis. This indicates that the housing recovery is progressing, but at a slower pace.

Short supplies of available homes have also impacted sales. In some areas homebuyers are facing competition from multiple buyers for individual homes.

Another report released earlier in the week showed that the pace of rising home prices also slowed. This connects with fewer pending home sales, as when demand for homes cools, prices are likely to fall as well.

Pending home sales serve as an indicator for future home sales, as purchase contracts typically lead to completed home sales within two to three months.

Housing Market Developments Could Delay Fed Stimulus Decision
The Federal Reserve has indicated that it may begin reducing its stimulus program of buying $85 billion per month in U.S. Treasury bonds and mortgage-backed securities.

The Fed has repeatedly stated that continued monitoring of economic trends would weigh heavily on its decision if and when to modify its current stimulus program.

Mortgage rates have risen more than a percentage point since May when the Fed began discussing potentially “tapering” its monthly bond purchases.

The Fed may interpret the slower pace of rising home prices and pending home sales as a sign that it’s not yet time to reduce its stimulus program. This could help with lowering mortgage rates, which are expected to rise when the Fed reduces its monthly securities purchases and eventually ends its stimulus plan.

Housing has led the economic recovery; faltering indicators in the housing sector suggest that the overall recovery is a fragile process.

Existing Home Sales Report Shows Highest New Home Inventory Since January 2012

existing home inventory-webThe National Association of REALTORS reported that existing home sales for July came in at 5.39 million on a seasonally adjusted annual basis. July’s reading exceeded both expectations of 5.21 million existing homes sold and June’s reading of 5.06 million homes sold.

This suggests good news for home buyers who’ve been constrained by limited supplies of homes for sale.

As home prices continue increasing in many areas, more homeowners are likely to list their homes for sale. Existing home sales for July rose by 6.80 percent year-over-year.

The Federal Housing Finance Agency Home Price Index reported a 7.70 percent year overyear increase in prices for homes financed by Fannie Mae or Freddie Mac.

This reading was slightly higher than May’s year-over-year reading of a 7.60 percent increase in home prices.

New Home Sale Inventories Also Growing
New home sales for July dropped by 13.40 percent to a seasonally adjusted annual reading of 394,000; this was lower than expectations of 485,000 new homes sold, but this expectation was based on June’s original reading of 497,000 new homes sold. June’s reading has been adjusted to 455,000 homes sold, which likely would have resulted in a lower expectation.

New home sales were lower in all four U.S. regions:
-16.1 percent in the West
-13.4 percent in the South
-12.9 percent in the Midwest
– 5.7 percent in the Northeast

While this isn’t great news for developers and home builders, supplies of new homes for sale jumped from a 4.30 month supply of new homes in June to a 5.20 month inventory of available new homes in July. This was the highest inventory of available new homes since January 2012.

Monthly New Home Sales Continue Upward Trend
Month to-month sales of new homes tend to be volatile, but July’s year-over-year home sales were 6.80 percent above new home sales in July 2012.

Higher mortgage rates likely stifled sales, but slower sales would increase inventories of available homes. More homes available would help ease constraints on buyers and level then playing field for home buyers who have been competing for few homes in strong seller’s markets.

Rising mortgage rates could continue, especially if the Federal Reserve begins tapering its $85 billion in monthly bond purchases, a program known as quantitative easing. The Fed has announced that it may start reducing the QE program before year-end.

When QE purchases are reduced, securities prices can be expected to fall due to less demand, and mortgage rates can be expected to rise.

7 Tips On Getting A New Mortgage After Bankruptcy

mortgage approval underwritingYou have found your dream home and you are eager to get a mortgage, move into the property and start enjoying life there. However, there is only one problem standing in your way – the fact that you have been through some hard financial times in the past.

If you (or your partner) have been bankrupt previously, will this affect your chances of being able to buy the home you want?

The good news is that it is still possible to obtain a mortgage even if you have been bankrupt before.

Here are some tips that will help you to increase your chances of mortgage success:

  • Choose the right lender. Some lenders may not approve your new mortgage if a bankruptcy shows up on your credit history. However, there are some that do as long as you are able to prove that you have the income to make your payments.
  • If your bankruptcy was caused by factors that are beyond your control, it may be easier to get a new mortgage as opposed to a bankruptcy that was caused by poor money management. Explain the circumstances of your credit history to your mortgage loan officer.
  • When you are buying a home after bankruptcy, try to save up as much of a down payment as possible. Your lender may want to see a minimum of 10% as a down payment, but more is better.
  • Build up your credit again by always paying your credit card bills each month along with any other debt. The higher your credit score, the better chance you will have of being able to obtain a mortgage.
  • Avoid writing checks that you think might bounce, as this shows up poorly on your credit report as well. Any retirement plans or 401 K assets will make your credit look good, so if you can set these up it may help you to obtain a mortgage.
  • Don’t switch jobs right before applying for the mortgage, the lender wants to be able to see that you have a reliable source of income and that you have been at the same line of work for a good amount of time.

    Keeping these tips in mind will help you to obtain a mortgage even if you have been bankrupt before.

    For more information about buying a home and securing your next mortgage please contact your trusted mortgage professional today.

    Preventing And Clearing Clogs In Your Home

    drain-cleaningYou’re brushing your teeth and you turn on the faucet. It’s not draining and starts to back up. Here’s the dilemma; do you spit and let it sit or run to the kitchen? One thing is for sure; having a clogged drain can be a major annoyance.

    Clogs not only frustrate a homeowner but they can be hard on your plumbing. The added pressure they create puts stress on your pipes and can shorten their lifespan.

    So end the issue by following the guidelines below. You’ll learn how to prevent clogging and clear the ones you already have.

    No Food Down The Drain

    Even if you have a disposal, it’s not good for your pipes to have sticky, mushy food shoved through them. Peel vegetables and scrape plates into the trashcan.

    Also, avoid pouring grease down the drain. Animal fat can congeal into a solid and form a blockage. Instead, store it in a sealable container in the freezer. Once it’s full, trash it!

    Only TP In The Toilets

    All feminine hygiene products should be thrown away, because most don’t dissolve quickly enough and can cause a backup. And be sure to secure toilet lids from curious children, because you have to admit that it is pretty fun to watch almost anything go “bye-bye.”

    Hair Today, Problem Tomorrow

    Don’t wash loose hair down the drain. Collect it and throw it away after your shower. If you shed a lot, it might be beneficial to install drain screens to catch loose hair and make it easy to dispose. Be sure to clean these out every few weeks.

    Chemicals Should Be Used With Caution

    Be wary about using chemical drain cleaners. They can erode cast-iron pipes and usually don’t remove an entire clog, so it can easily recur. You should consider hiring a professional plumber to snake your drains; or better yet, buy your own augur at the hardware store for about $15.

    Homeowners can be hard on their drains. From hair to food, clogs are a time-consuming frustration that might cost you big. Treat your plumbing with a little love and it’ll reward you by quickly removing water and waste from your sight!

    For more helpful tips on periodic home maintenance, please feel free to contact your trusted mortgage professional today.

    Fed Meeting Minutes Reflect Support For Reducing QE Program

    reducing-fed-QE-programThe minutes of last month’s Federal Open Market Committee (FOMC) meeting show significant support for tapering the Fed’s current amount of monthly securities purchases. These purchases, known as quantitative easing (QE), are an effort to maintain lower long-term interest rates including mortgage rates.

    The Fed has been buying $85 billion per month in Treasury securities and mortgage-backed securities (MBS).
    Ben Bernanke, chairman of the Federal Reserve and FOMC has hinted at “tapering” the Fed’s securities purchases by year-end in recent statements. The FOMC minutes released Wednesday further suggest that tapering based on strengthening economic trends is likely.

    FOMC Members Express Mixed Views
    The minutes for the last FOMC meeting, which took place on July 30 and 31, states that many members are “broadly comfortable” with tapering QE securities purchases later this year if the economy continues to improve. At the same time, many FOMC members indicated that it “isn’t yet time” to scale back the purchases.

    All along, the FOMC has emphasized that it will closely monitor domestic and global financial and economic developments as part of its decision about when tapering the QE purchases will begin.

    The minutes for July’s meeting reflected this sentiment and noted “A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases.”

    On the other side of the issue, the minutes note that a few members said that “It might soon be time to slow somewhat the pace of purchases as outlined in the QE plan.”

    QE Tapering Not The Only Influence On Mortgage Rates
    The Fed is likely to monitor its words as well as economic conditions, as previous announcements about tapering QE made by Chairman Bernanke and FOMC have created havoc in world financial markets.

    In relation to mortgage rates, it’s likely that tapering QE purchases will cause mortgage rates to rise. Demand for bonds will fall as the Fed reduces its purchases, falling bond prices usually cause mortgage rates to rise.

    It’s important to keep in mind that tapering QE securities purchases is only one among many things that can impact financial markets, mortgage rates and the economy.

    While the Fed is expected to begin tapering its securities purchases as soon as September, developing economic news throughout the world can potentially impact mortgage rates and could cause the Fed to revise its timeline for tapering the volume of its securities purchases.

    Follow These Steps When Using Gift Funds For Your Down Payment

    gift-funds-for-new-home-purchaseAs 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 5 – 10 percent.

    Incidentally, these 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.

    Three Steps To Success With Your Down Payment Gift Funds

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

    1. Provide an acceptable gift letter signed by all parties
    2. Provide documentation of the gifter’s withdrawal of funds via teller receipts
    3. 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]

    Keep The Cash Gift Funds Separate From Your Other Money

    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.

    Home Builder Confidence Highest Level In Nearly 8 Years

    new construction homesThe National Association of Home Builders (NAHB) reported Thursday that its Housing Market Index rose three points to a reading of 59 for August.

    Confidence among builders is likely growing in connection with stronger housing markets and high demand for homes. These conditions are being driven by short supplies of homes for sale in many markets.

    Builder confidence in current market conditions rose by three points to a reading of 62, while builder confidence in market conditions within the next six months rose by one point to a reading of 68. Confidence in buyer foot traffic was unchanged from July’s reading of 45.

    Readings above 50 indicate that more builders surveyed view housing market conditions as positive rather than negative; there was some concern that the high builders’ confidence reading could trigger the Fed to announce the tapering of its $85 billion monthly purchase of Treasury securities and mortgage-backed securities.

    Housing Starts Driven By Apartment Construction

    Housing starts rose in July, but were led by the volatile apartment sector rather than single- family homes.

    On Friday, the U.S. Department of Commerce reported 896,000 housing starts on a seasonally adjusted annual basis. This reading fell short of expectations of 915,000 housing starts, but exceeded June’s reading of 846,000 housing starts.

    Starts for residential buildings with five or more units rose by 20.90 percent year-over-year while construction of one of one-to-four family residential buildings fell by 2.20 percent. Demand for rental properties and a shortage of available single family homes was seen by economists as contributing to increasing multi-family housing construction.

    Analysts said that some home builders may be holding back on single-family home construction due to increasing materials and labor costs, but this doesn’t reflect the record level of builder confidence reported in the NAHB Housing Market Index.

    Building homes at less than optimum capacity isn’t good news for the shortage of available single-family homes. Rising mortgage rates are also a concern for home builders, as fewer borrowers may be able to qualify for mortgage loans needed for financing home purchases.

    Building permits numbers were also released on Friday, and presented a more positive picture than housing starts. July’s reading for building permits issued rose by 2.70 percent in July to an annual reading of 943,000 permits against expectations of 953,000 permits issued and exceeded June’s reading of 918,000.

    Building permits issued provide an indication of future housing starts.

    What’s Ahead For Mortgage Rates This Week – August 26, 2013

    mortgage rates this weekLast week brought mixed economic news, but Leading Indicators released Thursday suggest that the U.S. economy is growing at a moderate rate.

    Mortgage rates for fixed rate loans were higher, but the average rate for a 5/1 adjustable rate mortgage was unchanged from the prior week. Weekly jobless claims were also higher.
    The National Association of REALTORS released its Existing Home Sales report for July and reported existing home sales came in at 5.39 million on an annualized basis.

    This reading surpassed expectations of 5.21 existing homes sold as well as June’s reading of 5.06 million existing homes sold on an annualized basis.

    FOMC Minutes Released, Mortgage Rates Rise
    The minutes for the July 31 FOMC meeting were released, and emphasized the likely “tapering” of the Fed’s quantitative easing program possibly as early as September, though no dates have been set. Many of the FOMC members support reducing the $85 billion in monthly securities purchases made by the Fed; fewer members supported tapering the asset purchases sooner than planned.

    Previous announcements by the Fed regarding its plan to reduce QE have created erratic responses in financial markets, but the release of the meeting minutes seemed to cause a sharp rise in mortgage rates.

    Freddie Mac reported that the average rate for a 30-year fixed rate mortgage moved from the prior week’s average rate of 4.40 percent to 4.58 percent; average discount points moved up from 0.70 to 0.80 percent. Average rates for a 15 year fixed-rate mortgage also rose from 3.44 percent to 3.60 percent with average discount points moving from 0.60 to 0.70 percent.

    Average rates for a 5/1 adjustable rate mortgage were unchanged from the previous week at 3.21 percent with average discount points paid at 0.50 percent.

    FHFA reported that home prices for homes with mortgages owned by Fannie Mae and Freddie Mac rose by 7.70 percent year-over-year in June, home prices rose slightly from May’s year-over-year- rate of 7.60 percent.

    Leading Economic Indicators (LEI) for July rose by 0.60 to a reading of 96.0; this exceeded expectations for an increase of 0.50 percent. The LEI measures the health of the economy by measuring 10 top economic sectors; eight of 10 factors measured increased; these were led by the spread on interest rates, availability of credit, stock prices and permits issued for building new homes.

    New home sales for July were lower than expected at 394,000; Wall Street expected new home sales to come in at 485,000 on a seasonally-adjusted annual basis against the revised number of 455,000 new home sales reported for June. 497,000 homes were initially reported sold in June. Hew home sales gained by 6.80 percent year-over-year in July.

    What’s Coming Up
    Scheduled economic news for this week includes the Case-Shiller Home Price Index, and Consumer Confidence on Tuesday, Pending Home Sales will be out Wednesday. Thursday brings Weekly Jobless Claims, and Friday brings consumer spending and the University of Michigan’s consumer sentiment report.

    Tips For Helping Your Kids Adjust To A New School

    back to schoolAugust means it’s time to get your children ready for school once more. Picking out backpacks, going clothes shopping and finding all the right school supplies can be hectic enough.

    However, when you’ve moved and your children have to start all over in a new district, there’s even more to worry about!

    Summer fun can make the sunny months fly by. It’s easy to forget that with the beginning of school comes excitement and anxiety for your little ones — especially if they’re starting out somewhere new.

    So help them get adjusted with the back-to-a-new-school strategies below.

    Explain Why You’ll Be Moving

    Whether you’re moving states or just school districts, it’s best to give your children as much notice as possible and explain to them the reason for the change. They’ll need time to get used to the idea and say goodbye to friends.

    Be Positive

    As the first day draws near, be positive about what they’ll experience. School will be a place where they’ll learn new things and make great friends.

    Become Involved

    Think about joining the PTA, so you can learn about what’s happening in the school, meet teachers and be able to discuss policies and issues with your children.

    Stick To A Routine

    A new school is going to hold a lot of unknowns for your little ones. So it’s best to keep a consistent routine at home. This will help children know what to expect and feel they at least have some control in their own space.

    Tap Into Their Feelings

    Your children might be excited or sad about the new change and they’ll need someone to release all of this positive or negative energy upon. Just listen and be sure not to minimize their feelings. They’ll need an understanding ear throughout this adjustment.

    Encourage Participation

    While it’s always important for your children to focus on their schoolwork, they would also benefit by joining some sort of club, group or team. The sooner they make friends, the more settled they’ll feel.

    Moving to a new school can be tough on your children, which in turn makes it tough on you.

    If you can set aside the time to prepare for the first weeks, talk positively about their upcoming experiences and take the time to really listen to your children, then adjusting to the new environment can be a smooth transition for all.

    For more helpful tips on adjusting to a new home and neighborhood, please feel free to contact your trusted mortgage professional today.

    These Overlooked Issues Can Become Deal-Killers For Your Mortgage Application

    Mortgage-ApplicationA mortgage loan approval is never final until it’s funded. And that means after you’ve signed the final paperwork and the bank has wired funds to escrow.

    Mortgages are made up of many moving parts, any of which might “go wrong” while your home loan is underway.

    Some are in your control, like deciding to purchase new items on credit during the mortgage process, many more are not. These “not in your control” items are the ones that you may not be thinking of.

    Just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

    What Many Mortgage Articles Don’t Say

    Many mortgage related articles offer similar things like buying a car before closing, or opening a bunch of new credit cards, but there are more uncommon factors that can lead to a similar loan turndown.

    For example, a home not be able to get approved if it’s unsuitable, or unsafe, for human habitation — a condition you may not discover until after a thorough home inspection’s been made.

    Broken windows, lack of plumbing, major electrical code violations and/or major foundation damage are all deal-breakers with a lender.

    You’ll either have to fix the home prior to your loan closing, or don’t close at all.

    More Mortgage Pitfalls To Avoid

    There are others ways in which a mortgage approval can go bad, too:

    You’re self-employed and your income was declining over the years leading up to your mortgage application
    Your tax return shows large amounts of unreimbursed employee expenses
    You have switched lines ofwork or had unexplained breaks of employment in recent years

    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.

    And the best way to know the rules is to speak with your trusted mortgage professional today!