Archives for October 2014

NAHB Reports: Home Builder Confidence Drops in October

NAHB Reports Home Builder Confidence Drops in October The National Association of Home Builders (NAHB) reported that home builder sentiment lost its momentum in October and posted a seasonally adjusted reading of 54 in its Home Builder Market Index.

This reading was five points lower than expected and also five points lower than September’s reading. October’s reading was the first time in five months that builder confidence has fallen.

To put October’s reading in perspective, things aren’t all that bad. A reading over 50 indicates more builders are confident about housing market conditions than not. Also, October’s lower reading of 54 after the HMI reading reached a nine-year high in September.

Low Mortgage Rates, Pent-up Demand Expected to Drive Housing Markets

David Crowe, Chief Economist for NAHB said that low mortgage rates, improved labor markets and “significant” pent-up demand for homes all point to continued growth for housing markets.

NAHB reported that builders’ views on current market conditions dropped from September’s reading of 63 to 57 in October. The confidence rating for upcoming sales fell from 67 to 64. The gauge of home buyer traffic for new homes fell by six points to a reading of 41.

Analysts said that although stronger jobs markets can help would-be buyers get into the market, concerns over ultra-strict mortgage standards are dampening potential home sales.

Multi-family Housing Starts Outstrips Single Family Home Construction

Starts for all types of housing gained 8.60 percent in the first eight months of 2014, but single family housing construction accounted for only 3.10 percent of housing starts between January and August. September’s housing starts are set for release today (Friday).

New Jobless Claims Fall to Lowest Since 2005

In related news, the Labor Department reported that weekly jobless claims were lower than expected and also lower than for the prior week. The reading for new jobless claims was 264,000 new claims; this was 23,000 fewer new claims than the prior week’s reading of 287,000 new jobless claims filed. A reading of 289,000 new jobless claims had been expected. This was the lowest reading for new jobless claims since April 2005.

Three Reasons Why Setting Your Listing Price is the Most Important Aspect of the Home Sales Process

Three Reasons Why Setting Your Listing Price is the Most Important Aspect of the Home Sales ProcessHave you decided to sell your home, perhaps to make an upgrade to a newer, larger house? Whatever your reasons for selling, you’ll have a number of decisions to make as you craft your listing and begin receiving offers from buyers but few are as important as your initial selling price.

Let’s take a look at three reasons why setting your listing price is the most important factor in your home sale.

Reason #1: You Can Scare Off Potential Buyers With A High Price

You’ll receive the majority of your buyer interest in the first few days and weeks after you place your home up for sale, so it’s critical that your price isn’t set so high that it scares a number of buyers off.

While some sellers believe that it’s better to price high and let buyers submit lower offers, this can actually work against you. It’s better to have your home priced fairly from the beginning as you can always refuse offers that you deem are too low.

Reason #2: Your Price Directly Impacts How Long Your Sale Will Take

If you’re interested in seeing your home sell quickly it’s going to be in your best interest to have it priced competitively. Buyers will be shopping around for similar homes in your community and if there are other listings with lower prices on the market you may find it takes you a while to get your home sold.

Also, if you do find a buyer that is interested they’ll likely try to enter into price negotiations with you which can extend the length of the sale by a week or more as you go back and forth to reach an agreement.

Reason #3: A Low Price Means Leaving Money On The Table

While pricing too high can cause issues with your sale, pricing your home too low isn’t going to benefit you either. While you’ll likely find that you receive a high number of offers very quickly, you’ll end up leaving some of your home equity on the table – equity that you could easily have realized as buyers would have been willing to pay the difference.

Refinance Now or Wait? How to Determine the Best Time to Refinance Your Mortgage

Refinance Now or Wait? How to Determine the Best Time to Refinance Your MortgageRefinancing your mortgage is a great way to reduce your monthly payments or take out some of the equity in your home to reinvest in renovations, upgrades or in other areas in your financial portfolio.

Let’s take a quick look at a few questions that you can ask yourself in order to determine whether you should refinance now or wait until sometime in the future.

Can You Lock In A Lower Interest Rate?

Depending on when you first purchased your home and took out your mortgage, you may find that by refinancing now you can lock in a lower interest rate.

Getting a lower rate can end up saving you thousands of dollars a year in interest, but you’ll need to weigh the closing costs of the refinancing against the savings you’ll obtain to ensure that refinancing is worthwhile.

How Much Do You Owe On The Home?

If you still owe a significant amount on your home you may find that it’s worth refinancing, especially if you’re confident that you won’t be selling the home any time soon. Conversely, if you’re very close to having your mortgage paid off you may find that refinancing has little benefit.

Do You Need To Tap Into Your Home Equity?

If you feel that now is the time to tap into the equity you’ve built up in your home over time in order to cover renovation or upgrade costs you may want to consider refinancing. This will allow you to take out a large chunk of cash without having to open a new loan or line of credit. If possible, try to secure a lower interest rate for added benefit.

Do You Plan On Moving?

If you’re planning on moving in the next couple of years then you may want to hold off on refinancing your mortgage. As mentioned above, there are closing costs attached with a refinancing deal and these must be factored in when assessing whether or not you stand to gain or lose.

If you’re staying in your home for the near future there’s a far better chance that the costs of a refinancing will be covered by the amount that you save.

Every financial situation is unique, and you may find that you have other questions about refinancing that aren’t listed above. Don’t hesitate to contact your mortgage professional as they’ve worked with all sorts of refinancing clients and can share helpful advice that is relevant to your situation.

What’s Ahead For Mortgage Rates This Week – October 14, 2014

Whats Ahead For Mortgage Rates This Week October 14 2014Economic news was lean last week as the first week of the month tends to be calm in the aftermath of the rush of end-of-month reporting.

Of note was CoreLogic’s report on housing markets, the release of the minutes from the most recent FOMC meeting and lower mortgage rates reported by Freddie Mac.

CoreLogic Reports Lowest Home Price Gains in Almost Two Years

August home prices hit their slowest growth rate in nearly two years according to CoreLogic data released last Tuesday. Annual home prices grew by 6.40 percent in August as compared to July’s reading of 6.80 percent. Year-over-year home price growth reached a rate of 11.40 percent in August.

Analysts have recently said that a slow-down in home price growth may increase slowing demand for homes as inventories of available homes have increased in recent months. Low inventories of available homes and high demand contributed to rapid growth of home prices in 2013.

The slower pace of home price gains is expected to continue next year; analysts predicted an annual growth rate of 5.20 percent in August 2015. Home prices remain about 12 percent below peak levels reached in 2006.

Federal Reserve Policy Makers Watch U.S. Dollar, European Markets

Minutes of the Federal Open Market Committee meeting held in September were released Wednesday. Of note were member concerns that changing the committee’s language for its oft-repeated assertion that target rates for federal funds would remain between 0.00 percent and 0.250 percent for a considerable time” after asset purchases under the QE program ended could be viewed as a fundamental policy change.

The FOMC also registered concerns over the impact of a stronger U.S. dollar on the economy and said that persistent weakening of the European economy could cause the dollar to strengthen too much. This would cause exports to decrease and could also slow inflation.

The Fed decided not change language in its forward guidance in order to avoid unintended reactions in the financial markets.

Mortgage Rates and Jobless Claims Fall

Freddie Mac’s Primary Mortgage Market Survey reported that average mortgage rates fell last week. The average rate for a 30-year fixed rate mortgage dropped by seven basis points to 4.12 percent with discount points higher at 0.50 percent.

The average rate for a 15-year fixed rate mortgage fell by six basis points to 3.30 percent with discount points unchanged at 0.50 percent. The average rate for a 5/1 adjustable-rate mortgage was lower by one basis point to 3.05 percent with discount points unchanged at 0.50 percent.

Weekly jobless claims were lower at 287,000 new claims filed against predictions of 294,000 new claims filed and the prior week’s reading of 288,000 new claims filed. This supports recent indications of stronger job markets; coupled with lower home prices, this could prompt more would-be homebuyers to buy homes.

What’s Ahead

Markets are closed for Monday’s Columbus Day holiday and no economic reports are scheduled for Tuesday. The Fed releases its Beige Book report Wednesday and the NAHB Home Builder’s Market index for October is due Thursday along with Freddie Mac’s PMMS report and weekly jobless claims.

Housing Starts and the Consumer Sentiment Index are scheduled for next Friday.

The Pros and Cons of Buying a New Home Versus Buying Pre-owned

The Pros and Cons of Buying a New Home Versus Buying Pre-ownedAre you thinking about buying a new home? Congratulations!

Buying a house, condo or townhouse is an exciting and rewarding time which tends to be a lot of fun. However, along the way you’ll need to make a number of decisions – including whether you want to buy a pre-owned home or one that has been built recently and is brand new.

Let’s take a quick look at some of the pros and cons of buying a new home versus buying pre-owned.

New Homes Tend To Have Fewer Problems

One of the major upsides of buying new is that newly-built homes tend to have very few problems within the first few years of ownership.

While you’ll still be required to make regular maintenance on a new home, when you buy pre-owned you’re buying a house that has seen years or decades of weather and regular wear-and-tear.

New Construction Allows For Customization

If you want to be able to customize certain aspects of your home, it might be better to buy brand new as the builder will be able to incorporate your requests as they’re building the home. Of course, you can always renovate and upgrade a pre-owned home but if you have significant needs you may find it easier to get them built into the home as it’s being developed.

The Major Downsides To Buying New: Cost And Location

While there are a number of upsides to buying new, there are some downsides that you’ll need to know.

First, new homes almost always cost more than an equivalent pre-owned home. Brand new homes are filled with new appliances, fixtures and modern building materials which add to the overall cost of the home. Unless the pre-owned home is on a larger lot or property, you’ll generally be able to save a bit when you buy pre-owned.

Depending on where you’re buying, you may also find that the location where brand new homes are being constructed is much further from the downtown or urban area. In many cities, the only available space for new construction is in suburban areas, which means that you may be in for a lengthy commute to and from work each day if you choose to buy new.

These are just a few of the factors that you’ll need to consider when buying your next dream home.

Self Employed and Seeking a Mortgage? How to Ensure That Your Lender Knows You’re Able to Pay

Self Employed and Seeking a Mortgage? How to Ensure That Your Lender Knows You're Able to PayWhether you’re a freelance web designer who spends their days working from a coffee shop or a small-business entrepreneur with a team of staff, if you’re a self-employed individual and you’re thinking about buying a new house you may face some difficulty getting approved for a mortgage.

In today’s blog post we’ll share how you can provide paperwork and other evidence to show your mortgage lender that you’re a quality applicant who has the ability to make their payments.

Have Your Accountant Prep Your Paperwork

As a general rule of thumb, if you’re in business you should invest in the services of an accountant to handle your tax preparation and other financial matters so that you don’t miss anything important.

If you have an accountant, let them know that you’re applying for a mortgage and ask them to create a package that includes your business financials as well as your past two or three years of income tax documents.

Watch Your Debt-to-income Ratio

Your debt-to-income ratio is one of the primary factors calculated during the mortgage application process and if you don’t have a regular paycheck or salary this is how your lender will assess your ability to pay.

In short, this number is the percentage of your monthly gross income that is used to pay debts, taxes, insurance, and other items. Add up your car payment, loan payments, credit card payments, child support and any other regular debts and divide this number from your monthly income. If this number is too high, your application may be declined.

Ensure You Have A Clean, Stable History

Your credit rating – and that of your business – will be intensely scrutinized by any potential lender in order to determine whether or not you present a significant risk of missing a payment or defaulting entirely.

Maintaining a positive credit history can be challenging as an entrepreneur, especially if you’re in the early stages of your business and you’re relying on loans or other financing to help fund your operations. Try to make sure that every bill is paid and avoid situations that can leave a blemish on your credit report.

Seek The Advice Of A Mortgage Professional

Even if you have your past taxes and a clean credit history you may still face a bit of an uphill battle in getting that mortgage approved. It’s best to seek a mortgage professional’s advice as early on in the process as you can, as they work with self-employed individuals regularly and will be able to help you craft your application. Good luck!

Closing Costs: Understanding What It Costs to Close on a Home and What You Can Expect to Pay

Closing Costs: Understanding What It Costs to Close on a Home and What You Can Expect to PayIf you’re in the process of buying a new home, you’ve likely heard the term “closing costs” in regards to the many different fees and taxes that you’ll be required to pay during the purchase process.

In this post we’ll look at a number of these closing costs and what you will be expected to pay when you buy that next dream home.

Taking out a Mortgage? There Will Be Fees Attached

If you’re taking out a mortgage to finance the cost of buying your home you’ll end up incurring a variety of fees. Nearly all lenders will charge a mortgage application fee, which covers the cost of processing your application and all of the necessary paperwork.

You’ll likely have to pay for a professional appraisal of the home as well, as the lender will want to ensure that they aren’t lending you more than the house and property are actually worth.

Inspection And Insurance Costs Will Add Up

If you’re buying a pre-owned home you’ll need to pay for a home inspection to gain an understanding of the home’s condition and if you’ll need to make any repairs in the near future. You’ll also need to purchase homeowner’s insurance on the property to protect yourself in the event that something does go wrong with the home.

If you put less than 20 percent down on the cost of the home, your mortgage lender may also require that you purchase private mortgage insurance; this will vary depending on which state or province you are buying in.

Don’t Forget About Escrow Fees and Taxes

As with any major financial transaction you’ll need to satisfy the tax man by paying various taxes on your purchase. These will vary depending on where you are buying your home, but might include sales taxes, property taxes, transfer taxes, recording fees, title transfer fees and more.

If you used a third-party escrow service to manage these fees or to hold your deposit during the closing process you’ll also need to pay escrow fees prior to signing the final paperwork.

Shopping Around: How to Compare Mortgages from Different Lenders or Underwriters

Shopping Around: How to Compare Mortgages from Different Lenders or UnderwritersBuying a home is a major financial transaction, especially if you’re going to need mortgage financing to help cover the purchase cost.

The only way to know if you’re getting the best deal on a mortgage is to shop around, but with so many different lenders vying for your business it can be very tough to choose which mortgage is the best fit for your own situation.

In this post we’ll share how you can compare mortgages from different lenders or underwriters so that you can get the best possible deal on your mortgage loan.

Start By Comparing Interest Rates

The most important factor in your mortgage is the interest rate that you’ll be required to pay so this should be your starting point.

While most lenders will keep their rates competitive with one another, you may find that there are discounts available based on your credit or financial history. You might also find that some lenders are willing to adjust the rate based on how long of a mortgage term you’ll need, and how much you’re investing in your down payment.

Get An Estimate Of Your Total Closing Costs

While the number that you’re likely focused on is the total monthly payment that you’ll be making for the next few years, you’ll also want to find out how much in fees and closing costs you will have to pay in order to take out the mortgage.

Every lender charges different fees and the amounts can vary wildly, so be sure to get an estimate on these costs to find out how they’ll affect your home purchase.

Watch Out For Early Payment Penalties

Finally, you’ll want to keep an eye out for early repayment penalties as these can cause you a headache later on if you decide you want to pay your mortgage off a bit faster. The ideal mortgage is one that allows you to repay the principal amount at any time without facing a penalty, but depending on the other terms that you require you might need to shop around a bit before you find a mortgage like this.

You may find that comparison shopping can be a bit overwhelming with so many different mortgage options, terms and interest rates to choose from. If you have questions or you need help sorting through it all to determine which mortgage suits you best, contact your local mortgage professional today to book a quick consultation.

What’s Ahead For Mortgage Rates This Week – October 6, 2014

Whats Ahead For Mortgage Rates This Week October 6 2014Last week’s economic news included multiple reports on housing and the labor sector. The good news is that job markets appear to be stronger, with new jobless claims and the national unemployment rate lower. Unfortunately, housing continues to struggle in its recovery.

Pending home sales slumped in August and the S&P Case-Shiller Housing Market Index reports for July showed slower growth in home prices with 19 of 20 cities posting lower gains than for June.

Mortgage rates were mixed, but remained relatively steady.

Housing Reports Show Slower Price Gains, Suggest Falling Demand

The National Association of REALTORS® released data for August that showed that pending home sales dropped by 1.10 percent to a reading of 104.7 as compared to July’s reading of 105.8. Pending home sales indicate upcoming closings and mortgage loan volume.

Pending home sales fell by 2.20 percent year-over-year. Analysts attributed the drop in pending sales to lower investor participation.

Analysts said that as distressed home sales diminish, mortgage rates and home prices rise, investors are not buying as many homes Regional results showed fewer pending sales in all regions except the West, where pending sales rose by 2.60 percent in August. A reading of 100 in the pending home sales index is consistent with 2001’s average contract level.

S&P Case-Shiller Housing Market Index reports indicated that July home prices gained 6.70 percent year-over-year as compared to June’s year-over-year reading of 8.10 percent. Prices even dropped in San Francisco to its lowest reading since 2012. On a seasonally adjusted basis, July home sales fell by 0.50 percent in July as compared to June’s decrease of 0.30 percent. 19 of 20 cities showed lower rates of price growth in July.

Slower growth of home prices was viewed by analysts as potentially increasing demand for homes provided that mortgage rates stay low.

Construction spending for August fell by 0.8 percent on a seasonally adjusted basis. The good news here is that spending on residential construction dropped only 0.10 percent.

Freddie Mac Mortgage Rates: No Major Changes

According to Freddie Mac’s PMMS report, average mortgage rates were a mixed bag. The average rate for a 30-year fixed rate mortgage dropped by one basis point to 4.19 percent with discount points lower at 0.40 percent. The average rate for a 15-year fixed rate mortgage held steady at 3.36 percent with discount points unchanged at 0.50 percent. The rate for a 5/1 adjustable rate mortgage fell by two basis points to 3.06 percent; discount points rose from 0.40 percent to 0.40 percent.

Lower mortgage rates are seen as a potential stimulus for housing markets as more buyers may be encouraged to enter the market.

Jobs Reports Readings Improve, Unemployment Rate Drops

Job markets are showing signs of improvement according to data on weekly jobless claims and reports released by the Department of Commerce. Weekly jobless claims grew by 287,000 as compared to expectations of 298,000 new claims filed. The prior week’s reading was also higher at 295,000 new claims filed.

The Department of Commerce released its Non-farm Payrolls report for August with more good news. 248,000 jobs were added against expectations of 220,000 new jobs and 180,000 new jobs reported in the prior week. The national unemployment fell below the six percent benchmark in August with a reading of 5.90 percent, which indicates proof that the jobs market is improving.

September’s Consumer Confidence Index suggests that economic conditions continue to concern consumers. The reading for September was 86.0 against an expected reading of 92.3 and Augusts reading of 93.4.

What’s Ahead

There is no scheduled housing news for next week other than Freddie Mac’s weekly report on mortgage rates. Other economic news includes Labor Market Conditions Index, Job Openings, and the release of minutes from the last FOMC meeting, which is expected to reaffirm the Fed’s position that it doesn’t expect to increase the target federal funds rate for a “considerable time” after the Fed concludes its asset purchases this year.

Looking for a Value-adding Upgrade? Why Residential Solar Panels Are Becoming a Popular Renovation

Looking for a Value-adding Upgrade? Why Residential Solar Panels Are Becoming a Popular RenovationIf you’re looking for a home upgrade that can add resale value to your home while paying itself off over time, look no further than a solar panel setup. In the past few years, the cost of installing residential solar has declined while the efficiency of the panels has increased. This combination has made home solar one of the best investments that a homeowner can make – provided they live in an area that receives a good deal of sunshine.

Solar Adds Immense Value To Your Home

While solar panel installations are not inexpensive, in almost every case they add at least their total cost to the value of the home as soon as they are installed. If you decide to sell your home, it will be very attractive to those who are interested in leaving a lighter footprint or for anyone who was thinking of going solar after they bought their new home.

A Quality Install Will Pay For Itself Over Time

As they generate electricity which can be used in your home or sold back in to the public grid, residential solar panels are one of the only home upgrades that will pay for themselves over time. If you live in a very sunny area and watch your home energy consumption, you may even find that after a few years your solar setup actually begins generating a profit each month. Home solar setups typically come with a 25-year warranty so you can rest assured that your panels will be producing energy for at least the next couple of decades.

Tax Credits And Incentives Reduce The Up-front Financial Cost

Renewable energy sources like solar quality for significant tax credits and rebates which will vary depending on the city and state or province that you live in. A quick web search will show you which types of incentives that you will qualify for, or you can call a local residential solar installer as they’ll be fully aware of all of the various incentives that are available.