What’s Ahead For Mortgage Rates This Week – May 31, 2016

Last week’s economic reports included new home sales, pending home sales along with weekly mortgage rates and new jobless claims.

New Home Sales Surpass Expectations

Sales of new homes surpassed expectations and the prior month’s reading. April’s reading of 619,000 sales exceeded expectations of 523,000 new homes sold and 531,000 new homes sold in March.  New home sales rose by 16.60 percent on a seasonally adjusted annual basis, which was the highest increase in 24 years.

Analysts said that April’s new home sales indicate that builders are increasing production of new homes to meet high demand for homes. Short inventories of available homes are credited with driving up demand and home prices. Buyers seeking family homes are contending with investor buyers and cash buyers in popular markets.

With affordability becoming limited in many cities, first time and moderate income homebuyers aren’t buying as many homes as they once did. This development contributes to slowing markets, as move-up buyers generally rely on first time buyers to purchase their homes.

Shortages of available homes has pressured home builders to break ground on new home construction projects, but builders continue to cite labor shortages and a lack of buildable lots as reasons why they aren’t building homes as fast as homes are needed.

Pending Home Sales Numbers Suggest Peak Buying Season Returns

Pending home sales were also higher than forecast in April with a reading of 5.10 percent as compared to expectations of 0.80 percent for April and the March reading of 1.60 percent. Pending home sales gauge future closings for home sales and reached their highest level in 10 years and posted a year-over-year gain of 4.60 percent.

Three of four regional readings for pending home sales posted gains, with home sales in the Midwest posting slower growth. On a year-over-year basis, he South posted a gain of 6.80 percent and the Northeast posted a gain of 1.20 percent. The West saw a jump in pending sales with a reading of 11.40 percent after posting a negative reading in March.

April’s expansion in new and pending sales suggests that the peak home buying season is back.

Mortgage Rates Rise; New Jobless Claims Fall

Freddie Mac reported higher average mortgage rates. The rate for a 30-year fixed rate mortgage was six basis points higher at 3.64 percent; the rate for a 15-year mortgage rose eight basis points to 2.89 percent. The average rate for a 5/1 adjustable rate mortgage rose seven points to 2.87 percent. Discount points averaged 0.50 percent for all mortgage types.

New jobless claims dipped last week to 268,000 as compared to an expected reading of 275,000 new claims and the prior week’s reading of 278,000 new claims. Analysts said that New York school employees that were eligible for benefits boosted jobless claims earlier in May due to a non-typical law that allows some school workers to draw unemployment during school closures such as spring break or labor disputes.

What‘s Ahead This Week

This week’s scheduled economic news includes Case-Shiller Home Price Indices, construction spending and reports on inflation, core inflation and consumer sentiment. No reports were scheduled for Monday due to the Memorial Day holiday.

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4 Neglected Home Maintenance Tasks That Are a MUST

There are a number of home maintenance tasks that are easy to forget about in favor of more obvious renovations, but forgetting to do some of them can end up costing you a lot down the road. If you’re hoping to keep your home in tip-top shape, here are a few tasks that you shouldn’t forget about.

Sealing Off Access Points

Small rodents and insects can wreak havoc on your home if they gain access, so ensure that you maintain the foundation of your home and seal off any areas where these pests might get inside. Check all the windows and doors, and survey the foundation of your home, making sure to patch up any areas where sealant or mortar has come loose.

Cleaning The Shingles

The reality of algae eating away at your roof shingles can be an unpleasant, expensive renovation, so clean your roof on a regular basis before any black streaks can take your shingles with them. Simply mix together hot water, bleach and detergent and spray this from your garden hose on a cooler day so you can save your roof from rot. This will also save you the cost of having to hire a professional

Maintaining Your Wood Deck

There are few things that will age your yard like a poorly maintained deck, so take the time to re-stain and seal your deck so it doesn’t quickly see the effects of time and weather. While harsh weather can have an ill effect on your deck’s appearance, properly maintaining it will mean you can avoid the high cost of replacement that will be required.

Keeping It Clutter Free

Many homeowners get pretty comfortable in their home, and this can often mean that many boxes of unused items get stored away. Instead of keeping old items though, do a clean out once every 6-12 months to get rid of the things you don’t use. By having a clean basement and garage, you’ll also have the ability to notice many other maintenance issues that might not be visible with all the extra stuff.

There are a number of maintenance tasks around the home that people often forget, but neglecting to complete them can often times cost a pretty penny down the road.

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What’s Ahead For Mortgage Rates This Week – May 23, 2016

Last week’s economic news included the NAHB Housing Market Index, reports on housing starts, building reports and existing home sales. Minutes of the Federal Reserve’s last FOMC meeting were also released.

Homebuilder Confidence Unchanged, Housing Starts and Building Permits Increase

The National Association of Home Builders (NAHB) reported that builder confidence held steady with a reading of 58 in May. Analysts projected a reading of 58 and April’s reading was also 58. Builder confidence in market conditions could be slowing due to concerns over acquiring skilled labor and a shortage of developed lots. Demand for homes remains high, but a slim inventory of available properties and builder emphasis on higher-priced homes contributed to sidelining moderate income and first-time buyers.

Commerce Department reports for April Housing Starts and Building Permits issued suggest that tight housing inventories may receive some relief. April housing starts rose from a revised March reading of 1.099 million to 1.170 million starts. Housing starts increased by 6.60 percent in April. Housing starts have slowed as compared to the year-over-year period from April 2015 to 2016; housing starts increased by 10 percent for the same year-over-year period in 2015. While any increase in home construction is welcome, some analysts said that they did not expect a huge increase in home construction in coming months.

Construction of multifamily housing units rose by 10.70 percent, while single-family home construction increased by 3.30 percent. Rising rents and millennials delaying home purchases were seen as fueling multifamily home construction. As homes become less affordable, would-be buyers are continuing to rent, which places higher demand on rental units.

Pre-owned Home Sales Rise in April

Sales of previously owned homes rose by 1.70 percent in April to a seasonally-adjusted annual rate of 5.45 million sales. Sales increased by 12.10 percent in the Midwest, where homes are most affordable, and fell by 1.70 percent in the West, where homes are most costly. This development suggests that rapidly rising home prices have or will soon reach maximum levels in high-cost areas. Home prices in many areas rose rapidly in preceding months as short inventory and high demand created bidding wars and keen competition for available homes. A lack of affordable single family homes has caused some buyers to buy condos while others have put buying on hold.

Mortgage Rates Rise, New Jobless Claims Fall

Mortgage rates rose for 30-year fixed rate mortgages rose by one basis point to 3.58 percent; the average rate for a 15-year fixed rate mortgage was unchanged at 2.82 percent and the average rate for a 5/1 adjustable rate mortgage rose by two basis points to 2.80 percent. Discount points were 0.60, 0.50 and 0.50 percent respectively. Analysts are watching the Fed closely for any indication that it will raise the target federal funds rate in June, although concerns over the possibility of Great Britain leaving the European Union could cause the Fed to hold off on raising the rate. If the Fed raises the target federal funds rate, loan rates for credit cards and mortgages would also increase.

New jobless claims fell last week to 278,000 new claims against expectations of 279,000 new claims and the prior week’s reading of 294,000 new claims. Analysts said that a telecommunications strike caused the prior week’s raise in claims as striking workers who are replaced during a strike are eligible for jobless benefits.

What’s Ahead

This week’s scheduled economic releases include new and pending home sales along with weekly reports on mortgage rates and new jobless claims.

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3 Ikea Hacks That Can Be Done This Weekend

Whether you’re moving into your first apartment or preparing to purchase a second home, Ikea is a favorite for those trying to economically fill up the extra space in their home. While Ikea may have plenty of inexpensive options that you might not think can be dressed up, there are actually a lot of simple pieces that you can add to for a stylish, DIY look that will take no time at all.

Cue The Cocktails

The popularity of the bar cart has seen a resurgence, but many of these decorative pieces can be quite pricey for the person who isn’t sure they want to commit to the cost. Instead of shelling out of for this overpriced piece, purchase the BYGEL utility cart from Ikea for less than $50 dollars and spray paint it in the color of your choice. While this will serve as a basic bar cart, it will easily look the part with some glasses, liquor bottles and an ice bucket.

Bring On The Board Games

With its four square legs and flattop, the LACK table is one of the plainest items in IKEA, but this inexpensive table can be fixed up as part of a fun activity with your kids. Once you’ve purchased your own brightly colored table, pick up some paint and using stencils paint the family’s favorite board game right onto its surface. Whether it happens to be backgammon, chess or Monopoly, this will add a lot of personality to the family room.

Create Your Own Sitting Table

The EXBY ALEX shelf is a relatively simple shelving unit that attaches to a wall for extra storage space, but it can also serve as a perfect starting point for an item that’s completely different. Instead of attaching this shelf to the wall, add a set of legs so the unit will serve as a cabinet without any need for wall mounting. While this will still serve as an understated piece, it can say a lot more about your room than the average wall cabinet.

Many people head to IKEA for the economical furniture options, but it’s also a great place for coming up with your own home DIY projects that are sure to make for a unique look. If you’re planning on purchasing a home contact us for more information.

How Are Mortgage Rates Determined?

If you’ve been paying attention to the mortgage rate news, you may be wondering exactly how it is banks decide what mortgage rates to offer. Do they just pick a number at random? Mortgage rates may seem somewhat arbitrary, but there’s actually something of a science to them.

So how does your bank or lender determine what your interest rate will be? Here are just some of the factors that go into the equation.

Rates Always Account For Inflation

First and foremost, every mortgage interest rate needs to account for inflation. Inflation is the average annual change in purchasing power brought about by changing economic conditions. When inflation goes up, money loses purchasing power and when it goes down, money gains purchasing power.

For example, an annual inflation rate of two percent means that a $100 bill minted in 2014 would be able to buy just $98 worth of goods in 2015. Mortgage interest rates always take the inflation rate into account, because if your bank’s mortgage rate were lower than the rate of inflation, your bank would actually lose money on your mortgage.

The Default Risk Premium: Your Likelihood Of Default Impacts Your Rate

The default risk premium is a rate that your lender adds to the inflation rate in order to mitigate the risk of not recovering the loan. Different kinds of loans carry different risk levels, and your lender needs some way of staying profitable even when losses happen. The default risk premium helps your lender to profit more on high-risk mortgages, which mitigates the problems associated with a default.

The more at risk of defaulting on a loan you are, the higher this premium will be.

The Liquidity Premium: Can Your Lender Recoup Potential Losses?

The liquidity premium is similar to the default risk premium, but rather than addressing the possibility that the borrower might default, this premium mitigates the risk of not being able to re-sell the property after the borrower defaults. If a borrower enters default, the lender’s only option is to sell the property in order to recover its losses. However, a home is a non-liquid asset, and it’s very difficult to turn a home into cash and the liquidity premium compensates the lender for the additional time and effort it takes to sell a non-liquid asset.

Mortgage rates may seem like sorcery, but there is a clear science and a logical method involved in calculating rates and premiums. To learn more about mortgage rates, or to find out what kind of a mortgage rate you may be eligible for, contact your trusted local mortgage professional.

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How To Determine The Price Of Your Home For Sale

Many people rely on the price they paid for their home as a starting point for selling, but with the ever-shifting tides of the real estate market, the price paid is not always the best metric to go by. If you’re putting your home up for sale and are looking for the ideal price point, here are some ways you can arrive at a number that will keep potential buyers interested.

Check Out Your Neighborhood

Your house may have a lot of different features than the homes of your neighbors, but checking out what real estate in your area is selling for can still be a good means of determining the price you’ll be able to ask for. Instead of just perusing the pricing, ensure you’re looking at the listings for what’s been successfully sold in your neighborhood as only this will allow you to determine the conditions of the market and what people will be prepared to offer.

Complete A Home Inspection

Instead of being surprised by repairs that need to be completed after an offer price has been accepted, organizing a home inspection before your home is sold can make a difference in the price you’re able to ask for. Not only will this provide you with a determination of what needs to be repaired or overhauled, it can be a boon to potential buyers who won’t have to worry about your inspection revealing any hidden flaws.

Utilize Your Agent’s Advice

Even if you’ve done your research and carefully considered the value of your home, it can still be complicated to come up with the right price, so be sure to enlist an agent who will be able to determine a fair amount with you. Since your agent has no attachment to your home, they’ll be able to objectively strike the right balance between what won’t sell and what’s too low. The right price, after all, may mean you’ll get to spend a lot less time selling it.

There are a lot of factors that go into arriving at the proper asking price for your home, but by organizing a home inspection and being aware of what’s going on in the market, you should be able to arrive at a reasonable sum. Contact us for more information.

5 Mortgage Terms You Need to Know

When it comes to finding a new home, there are lots of complex ratios, terms, and contracts that you’ll encounter – and at times, it’ll feel like you’re trying to navigate a minefield. Here are five mortgage terms you may not encounter regularly that you’ll need to know when buying a home.

Escrow: Money Held In Trust To Pay Taxes

An escrow account is a bank account that your lender maintains on your behalf. When you close your mortgage, you’ll need to deposit a certain percent of your annual property taxes into the escrow account, which your lender will hold in trust and use to pay your property taxes.

PITI: How Your Lender Calculates Your Monthly Payments

Your lender uses a specific formula used to calculate exactly how much money you need to pay your lender each month. Each month, your mortgage payment will include portions that go toward your principal loan amount (P), your interest payment (I), your property taxes (T), and your homeowner’s insurance (I). If you have private mortgage insurance, it’ll be included with this PITI payment.

Rate Buydown: Lowering Your Interest Rate With A Larger Down Payment

A rate buydown, also known as a discount point, is a chunk of your mortgage interest that you pre-pay in order to get a lower monthly interest rate over the life of the loan. Each point you buy reduces your interest rate by a small amount.

Loan Estimate: What Your Lender Must, By Law, Give You

A loan estimate is a form that your lender is required to give you when you apply for a mortgage, as per the Truth in Lending Act. Your loan estimate will include your estimated costs of carrying the loan – including monthly payments, interest rates, and processing fees. Loan estimates allow you to compare terms and rates across different lenders.

Loan-To-Value: Determining How Much House You Can Afford

Your LTV (loan-to-value) ratio is a ratio that is used to calculate the amount of equity you have in your home and to assess your risk as a borrower. Typically expressed as a percentage, your LTV is determined by dividing the total amount of your mortgage loan by the property’s fair market value. Borrowers generally prefer to see lower LTV ratios.

Mortgages contain a variety of legal terms that can be challenging for the uninitiated to understand. But with a qualified mortgage advisor on your side, you’ll have no difficulty navigating mortgage contracts and finding the right mortgage for you. Contact us to learn more.

What’s Ahead For Mortgage Rates This Week – May 9, 2016

Mortgage rates fell across the board last week according to Freddie Mac’s Primary Mortgage Market Survey. Other economic news included reports on construction spending, public and private sector employment and national unemployment.

Construction Spending Grows in March

The Commerce Department reported that the growth rate for construction spending fell in March to 0.30 percent/Analysts expected a reading of 0.70 percent based on February’s upwardly revised growth rate of 1.0 percent. Construction spending was propelled by a 1.50 percent increase in residential construction spending; this is good news for would-be home buyers who’ve been shut out of the market due to high demand and low inventories of available homes.

Housing market analysts have repeatedly said that new home construction is the answer to short supplies of homes and high buyer demand. Year-over-year, construction spending is up 8.0 percent overall; residential construction spending grew by 7.60 percent year-over-year.

Mortgage Rates Dip

Average mortgage rates were lower last week. The rate for a 30-year fixed rate mortgage fell by five basis points to 3.61 percent; the average rate for a 15-year fixed rate mortgage was three basis points lower at 2.86 percent and the average rate for a 5/1 adjustable-rate mortgage dropped six basis points to an average of 2.80 percent.

While any drop in mortgage rates is welcomed by home buyers, the high demand for homes continues to drive prices up and has raised concerns about affordability of single-family homes in many communities.

Jobs Growth Slows

The national unemployment rate held steady at 5.0 percent in April, but job growth slowed in public and private sectors. ADP reported private sector jobs increased by 156,000 jobs as compared to 194,000 jobs added in March. According to the Bureau of Labor Statistics, Non-Farm Payrolls increased by 160.000 jobs as compared to expectations of 203,000 jobs added and March’s reading of 208,000 jobs added. Non-Farm payrolls measure public and private sector job growth.

New jobless claims rose by 17,000 to 274,000 new claims but remained below the benchmark of 300,000 new claims for 61 consecutive weeks. Analysts projected that new claims would grow by 265,000 new claims based on the prior week’s reading of 257,000 new claims. The less volatile four-week rolling average of new jobless claims indicated that 258,000 new claims were filed. The labor force participation rate dropped from 65 percent to 63 percent in March. Retiring baby boomers contributed to some but not all of this workforce decline.

What’s Ahead

This week’s scheduled economic news includes weekly reports on mortgage rates and new jobless claims along with a report on consumer sentiment.

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How to Lower Your Mortgage Interest Rate

Mortgage interest rates are at historical lows right now, but they’re expected to start rising soon. That’s why savvy buyers are taking steps to ensure they get the best possible interest rates on the market and then lock those rates in for the long term. But even if interest rates are already low, that doesn’t mean you can’t reduce them further.

So how can you save even more money on your monthly interest payments? Here’s what you need to know.

Buy Down Your Rate With Interest Points

Interest points are a form of pre-paid interest that can help you to greatly reduce your interest rate. When you buy down your rate using interest points, you’re essentially paying interest up-front in order to reduce your monthly payments. Each point that you purchase could reduce your monthly rate by up to 0.25%, which makes interest points a worthwhile investment when considering you’ll be paying interest for the entire life of the loan.

Refinance At A Lower Rate

Refinancing is a great way to benefit from historically low interest rates if you originally bought your home during a time when interest rates were high. With a mortgage refinance, you essentially pay off your first mortgage with a second mortgage, which you can negotiate as a completely new loan. This is a great option if you originally had poor credit when you first bought your home but have since improved your credit score.

Set Up Automatic Monthly Mortgage Payments

If you want to reduce your monthly interest rate, you’ll need to offer your lender something in return. One great way to get a lower interest rate is to set up automatic bank withdrawals that pay your mortgage for you every month. In exchange for this guaranteed monthly payment, your bank will be more flexible regarding your rate.

Opt For A Mortgage With A Shorter Term

If your income is about to see a large increase, choosing a shorter-term mortgage is a great way to significantly reduce the amount of interest you’ll pay. Shorter mortgages like a 15-year fixed mortgage typically have lower interest rates than longer mortgages, and you can save thousands of dollars over the life of the loan by choosing a shorter mortgage term.

Mortgage interest rates are the scourge of many a home buyer, but with smart buyer strategies and the guidance of a qualified mortgage advisor, you can reduce your interest rate and save thousands of dollars on your home purchase. Want to learn more about how you can reduce your interest rate? Contact us today for more information.

When is Refinancing Not a Good Idea?

Refinancing your home can be a great way to reduce monthly mortgage payments or interest rates – or even pay off your debt faster. And while it is a useful tool in budgeting for millions of homeowners, a home refinance may not necessarily be useful in every situation.  In fact, there are some situations where refinancing can cost you a great deal of money.

So when should you skip the refinance and simply keep with the original plan? Here’s what you need to know.

If You’ve Already Paid Off Much Of Your Mortgage

When you first start paying a mortgage, most of your monthly payment goes toward the loan’s interest rather than its principal amount. But as you start paying down your mortgage, more and more of your payments are applied directly to the principal. And if you only have 10 years left on your mortgage, the vast majority of your payments are being applied to the principal.

Refinancing a mortgage essentially restarts the loan over from scratch – so if your mortgage is mostly paid off, a refinance will put you back where you started and cause you to owe much more money in interest payments.

If You’re Not Prepared To Pay More Closing Fees

Refinancing can be a great way to lower your interest rate, extend your loan, or get better terms, but it also comes at a cost. Since refinancing essentially starts a new home loan, you’ll need to pay all of the closing costs associated with a new mortgage – and on average, closing costs can total up to 5% of your home’s value. If you don’t have enough cash on hand to pay for your closing costs for a second time, refinancing your mortgage will harm you more than it will help you.

If You’re Giving Up An FRM For An ARM

If you have a fixed-rate mortgage, you have a great guarantee that your mortgage rate will stay the same. And if you already have a low-interest rate, trying to get a lower interest rate will make it difficult for you to break even on your closing costs – unless you go with an adjustable-rate mortgage, which typically has lower closing costs.

But opting for an adjustable-rate mortgage is a poor idea right now. Today’s interest rates are at historical lows, which means they have nowhere to go but up. If you refinance with an adjustable-rate mortgage, you’ll end up paying more money than if you simply kept your existing fixed-rate mortgage.

Refinancing is often a useful tool, but it’s not always helpful in every situation. A qualified mortgage advisor can tell you whether refinancing is right for you. Contact us today to learn more.

What’s Ahead For Mortgage Rates This Week – May 2, 2016

Last week’s economic news included Case-Shiller Home Price Indices, along with new and pending home sales readings. The Federal Open Market Committee of the Federal Reserve met analyst’s expectations and did not raise the target federal funds rate, which remains at 0.25 to 0.50 percent. Freddie Mac’s mortgage rates survey and the Labor Department’s weekly jobless claims report were also released.

Case-Shiller: Home Price Growth Slows in February

Average home prices growth slowed in February according to the S&P Case-Shiller Home Price Index. Home prices fell from January’s year-over-year reading of 5.70 percent to 5.40 percent. 13 of 20 cities included in the index showed slower growth in home prices. Portland, Oregon showed the highest year-over-year price gain at 11.90 percent followed by Seattle, Washington at 11.00 percent and Denver, Colorado at 9.70 percent

Washington, DC had the slowest year-over-year growth rate of 1.40 percent; Chicago, Illinois and New York, New York where home prices grew 1.80 percent and 2.10 percent respectively. S&P Index Chairman David Blitzer said that tight inventories of available homes continued to drive home prices. Analysts are concerned with shrinking affordability, which keeps first-time and moderate income buyers from buying homes. Analysts caution that first-time and moderate-income buyers are the “bread and butter” of housing markets. Without their participation, current homeowners cannot sell and move up to larger homes.

New Home Sales Lower after February Reading Revised

New home sales dipped in March to a seasonally-adjusted annual rate of 511,000 after February’s reading was revised upward to 519,000 sales. Regional results for new home sales were mixed. The Northeast posted flat sales in March; The Midwest posted the highest year-over-year growth in home prices at 18.50 percent followed by the South with a year-over-year gain of 5.00 percent. New home sales fell by 23.60 percent in the West, which was likely due to rapidly escalating home prices in high-cost metro areas.

Pending home sales for March grew by 1.40 percent for a second consecutive monthly increase. Analysts viewed March’s reading as positive for a healthy spring season for home sales. Pending home sales forecast future closings and mortgage lending.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher mortgage rates last week with the average rate for a 30-year fixed rate mortgage seven basis points higher at 3.66 percent. 15-year fixed mortgage rates were four basis points higher at 2.89 percent; the average rate for a 5/1 adjustable-rate mortgage was five basis points higher at 2.86 percent. Discount points averaged 0.60, 0.50 and 0.50 percent respectively.

New jobless claims also rose last week with 257,000 new claims filed as compared to expectations of 260,000 new claims and the prior week’s reading of 248,000 new claims filed. Analysts said that fewer layoffs suggest strengthening job market. Last week’s four-week average of new jobless claims was 256,000 new claims, which was the lowest reading since December 1973. Improving labor markets can encourage would-be home buyers to become active buyers.

What’s Ahead

This week’s scheduled economic news includes reports on construction spending, private sector employment, non-farm payrolls and the national unemployment rate. Weekly reports on new jobless claims and mortgage rates will be released as usual.

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