Archives for September 2013

What’s Ahead For Mortgage Rates This Week – September 16, 2013

What's Ahead For Mortgage Rates This Week - September 16, 2013Last week didn’t feature any housing-related news other than Freddie Mac’s weekly survey of mortgage interest rates.

Reports on consumer credit, job openings and weekly jobless claims suggest that without some relief in the jobs market, Americans may be taking a “wait-and-see” stance toward buying homes.

Consumer Credit Rose By $10.40 Billion In July

The Federal Reserve reported Tuesday that revolving credit fell by an annual rate of 2.60 percent as compared to an annual decrease of 5.20 percent in June. Non-revolving consumer credit such as vehicle and education loans rose at an annual rate of 7.40 percent.

Freddie Mac’s Primary Mortgage Market Survey indicated that mortgage rates were unchanged for both 30-year and 15-year fixed rate mortgage loans. The average rate for a 30-year FRM was 4.57 percent with discount points of 0.80 percent; this was higher than last week’s 0.70 percent.

Average rates for a 15-year fixed rate mortgage were unchanged at 3.57 percent with 0.70 percent in discount points. The average rate for a 5/1 adjustable rate mortgage fell by six basis points from 3.28 to 3.22 percent with discount points unchanged at 0.50 percent.

Mortgage rates are likely to change next week in response to any announcement by the Federal Reserve regarding its plan for reducing the amount of monthly bond purchases in its current quantitative easing program.

Mortgage rates would likely rise if the Fed begins tapering its $85 billion monthly purchase of securities, but if the Fed maintains its current rate of purchases, mortgage rates could remain steady or fall in response to the news.

Retail sales fell short of expectations on Friday. The Department of Commerce reported a seasonally-adjusted growth rate of 0.20 percent in August against an expected reading of 0.50 percent and July’s revised reading of 0.40 percent, which was initially reported at 0.20 percent.

The University of Michigan/Thompson Reuters Consumer Sentiment Index for September fell to its lowest reading since April. The September reading was 76.80 percent as compared to expectations of 81.50 percent and August’s reading of 82.10 percent.

What’s Coming, Will The Fed Taper Its Securities Purchases?

This week’s economic news is highlighted by the Fed’s FOMC statement scheduled on Wednesday after its two-day meeting. The announcement is expected to include an indication of the Fed’s intention concerning its QE program and whether or not monthly securities purchases will be reduced. Fed chairman Ben Bernanke is scheduled to give a press conference after the FOMC statement.

Other scheduled economic news for this week includes the Consumer Price Index and Home Builders Housing Market Index on Tuesday; Wednesday brings reports on Housing Starts and Building Permits in addition to the FOMC statement and press conference. Thursday’s economic reports include Weekly Jobless Claims and the Freddie Mac PMMS along with Existing Home Sales and Leading Indicators.

What You Need To Know About Mortgage Insurance

What You Need to Know About Private Mortgage InsuranceIf you are on the verge of buying real estate, you’ve probably heard the term Private Mortgage Insurance. Mortgage professionals talk about it a great deal, but you may be asking, “What is it exactly? And why should I care?”

Private Mortgage Insurance Defined

PMI is required by lenders if the down payment of a purchase is less than 20 percent of the home’s value. It protects the lender if the borrower defaults on the loan.

It also makes the lender more apt to loan, even if the down payment is as low as 3%, because in the long run, the lender’s investment is protected.

You Pay For It

Unlike other types of insurance which you pay to protect your interest in an asset, you pay Private Mortgage Insurance to the mortgage company to protect its interest in your new real estate. (Note that PMI is not usually tax deductible. Check with a tax professional for details.)

Make It Go Away: PMI Can Be Terminated Once You’ve Paid Down Your Loan

Once you pay down your mortgage to the point where it hits the magical 80% of the original purchase price or appraised value, whichever is less, you can request cancellation of PMI. The Homeowners Protection Act requires that loans made after 1999 include notifications to the borrower when you arrive at this point in your payments.

Your PMI payments must be automatically canceled once you pay down your loan to 78%. At closing, and on a yearly basis, you should receive information from your lender about when you can request cancellation.

Whether you’re ready to buy real estate or need more information before taking the plunge, I can help. Contact your trusted mortgage professional today.

Before And After Tips When Dealing With A Disaster

Before And After Tips When Dealing With A DisasterWeather patterns across the United States seem to be getting more and more erratic. From tornadoes and earthquakes to flash floods and wild fires, there are many natural disasters that can quickly consume your home without warning. Because you never know when disaster might strike, it’s best to be prepared.

Disaster insurance is the only precaution you can put in place to ensure compensation for your belongings and get your life back to normal as soon as possible. Below are the tips to take before misfortune strikes.

Create An Inventory

Most insurance agencies prefer if you include photographs of every room, including the insides of closets and cabinets. Shooting a video is even better. Then you can include audio of how much things cost or if they’re one of a kind.

It’s also a good idea to create a spreadsheet with a list of major items and their value by room. Be sure to email these to yourself, so that you can access them anywhere.

Double-Check Your Coverage

Once you’ve inventoried your possessions, then ensure you have enough coverage. Also, speak with your agent to see if there are any supplemental disaster insurance policies he or she would recommend for your region.

Tips To Do After A Disaster Does Strike

Contact Your Insurer Immediately

Call your agent as soon as possible and be prepared for mountains of paperwork. Be sure to ask for the claim number for your region and use it on all paperwork and in every conversation. This will help expedite your claim.

Secure Your Property

It’s your responsibility to ensure your property is secure after the disaster. Be sure to take photographs and video and then cover or stabilize any vulnerable points. You don’t want the insurance agency to have any discrepancies when determining if the damage was done during the disaster or afterward.

Keep A Correspondence Record

You are going to be completely overwhelmed after such an unfortunate event, but it’s important to maintain your wits. Keep a log of every conversation you have with insurance agents. Log the time, name, phone number and the key points of the conversation. This will help minimize the he-said-she-said accusations that can arise during these hectic times.

Hopefully you’ll never have file a disaster insurance claim. However, if you do, it’s best to be as prepared as possible. Create an inventory of your possessions and make sure you have the appropriate coverage. Then if mayhem strikes, you’ll be that much closer to putting your life back together.

How To Interview An Architect When Building A New Home

How To Interview An Architect When Building A New HomeMaking the decision to build a home might be one of the biggest you make in your life. You’ve found the perfect plot of land and have a vision of what type of home you want, but you need someone to bring your dream to life.

That means it’s time to start interviewing architects.

Hiring an architect isn’t as simple as just calling up a few and seeing who might have the time.

You’ll want to ensure you choose a professional that understands your design aesthetic, communicates well, can design on budget and has an upstanding reputation.

Below are a few key questions to ask when deciding whom to hire.

Do You Have A Specific Design Style?

When interviewing architects, be sure to ask each one if they have a specific aesthetic and if you can see a portfolio of his or her work. While most are adaptable, they usually all have design themes that recur in their projects.

Whether you want a minimalist structure or LEED certified construction, you’ll want to know they have the experience.

What Is Your Fee?

You’ll need to inquire whether they charge a flat fee for their designs or a percentage of the total building cost. Most architects charge a percentage of the overall cost of your home, usually ranging from 5-20 percent.

This is important to know because it means that for every floorboard installed, you’ll need to add on the architect’s additional percentage.

Do You Provide Project Management Services?

There are many services that architects should include within their contract, such as checking the contractor’s work, making adjustments as the construction moves forward and obtaining lien waivers.

Get a list of what each architect you interview includes in his or her fee. Additional charges can add up and might play a part in who you choose.

Interviewing architects and finding the right professional can make all the difference when it comes to building exactly what you want. One you work well with can make the construction experience extremely pleasant, while a negative relationship can leave you hating your new home.

Read This Before Signing Your Reverse Mortgage

Read This Before Signing Your Reverse MortgageThere are many reasons people take out reverse mortgages. However, this option is usually considered by cash-strapped seniors who own their homes and are looking to ease the burden of their golden years.

The beauty of reverse mortgages is that you’ll receive money as long as you are current on property taxes and homeowners insurance.

While this seems like an appealing opportunity, it’s a decision that should not be made lightly. Not only is the reverse mortgage complicated in itself, but homeowners make all sorts of mistakes when they’re too quick to sign the dotted line. So if you’re considering one, be wary of the common pitfalls below.

Buying Into A Scam

With reverse mortgages becoming a more common option for those over 62, mischievous opportunists are searching for ways to solicit seniors in need of help. Scammers will take advantage by charging high fees, funneling off parts of payments, creating fake loans or committing identity theft. Ensure you use a lender approved by the Federal Housing Association.

Confusing Your Payment Options

Reverse mortgages come in many forms. You can get the amount in one lump sum. Tenure payments are another option that give you a certain amount each month until you die or move out. There are also term payments, lines of credit, and modified tenure and term payments. You need to take the time to research your options and decide which one will be best for you in the long run.

Compromising Government Assistance

There are several government assistance programs that set asset limits on your monthly spending. These programs provide aid for low-income and disabled individuals. If any assistance programs financially support you, then be sure to consult their advisers before determining your reverse mortgage plan.

Disregarding Other Options

Reverse mortgages are extremely expensive and many people see them as their only option. However, there are other alternatives. Consider taking out a personal loan, downsizing or even taking on roommates. The Golden Girls always seemed to have fun.

A reverse mortgage could be just the thing to give you the extra cash flow you need and ease your mind. However, make sure you’re consulting a trusted home financing specialist, reading the fine print and have carefully considered all your options.

What’s Ahead For Mortgage Rates This Week – September 9, 2013

What's Ahead For Mortgage Rates This Week - September 9, 2013Last week was relatively calm due to the Labor Day Holiday on Monday providing little mortgage and housing related news. However, there were several positive indicators for overall economic conditions.

Construction spending rose by 0.60 percent in July and surpassed economists’ expectations of 0.30 percent and June’s zero percent growth. While this may seem a small increase, any indication that construction spending is increasing could indicate that residential construction is ramping up.

This would be good news for home buyers, who’ve been facing a shortage of available homes in many areas of the U.S.

The Fed Released Its Latest Beige Book Report

Federal Reserve districts reported rising consumer spending in most districts, modest expansion in manufacturing and moderate residential real estate sales. Higher mortgage rates may have dampened home buyer enthusiasm, but an ongoing shortage of available homes is also likely to have contributed to slower sales.

Mortgage rates will likely rise if the Fed tapers its $85 billion monthly purchase of mortgage-backed securities and Treasury bonds as demand for bonds is expected to decrease. When bond prices fall, mortgage rates usually rise.

ADP released its report on private sector jobs added for August; 176,000 jobs were added against expectations of 185,000 jobs added and July’s 198,000 jobs added. The three-month rolling average of private sector jobs added shows steady job growth as jobs added rose from 140,000 in May to 188,000 jobs for August.

Freddie Mac’s Primary Mortgage Market Survey reported that the average rate for a 30-year fixed rate mortgage rose by six basis points to 4.57 percent with discount points unchanged at 9.70 percent. 

The average rate for a 15-year fixed rate mortgage rose by five basis points to 3.59 percent with discount points unchanged at 0.70 percent. The average rate for a 5/1 adjustable rate mortgage rose by four basis points to 3.28 percent with discount points unchanged at 0.50 percent.

According to the Bureau of Labor Statistics Non-Farm Payrolls Report for August, 169,000 jobs were created, which fell shy of expectations of 173,000 new jobs. Expectations were based on the original number of 162,000 jobs created in July, but July’s number was revised downward to 104,000 jobs created.

The unemployment report for August was 7.30 percent, down 0.10 percent from July’s reading of 7.40 percent.

The combination of higher mortgage rates, persistently high unemployment and fewer jobs created could signal the Fed to postpone its plan to start reducing its monthly securities purchases.

What’s Coming Up

This week’s scheduled mortgage and housing news is relatively flat, but Freddie Mac’s Primary Mortgage Market Survey will provide the last indication of mortgage rates’ direction before the FOMC meeting on September 18.

The Fed will also likely be watching the Weekly Jobs report and the University of Michigan’s Consumer Sentiment Index as part of its decision-making process on whether to taper or maintain current QE securities purchases.

How To Create The Perfect Garage Workshop

Creating The Perfect Garage WorkshopMost men, and even handy women, dream of a perfectly organized work space where their tools are orderly and they can tackle that list of home DIY projects.

However, renovations can get put on hold because there’s not a designated place to work. Tools are usually scattered throughout closets and the kitchen table serves as a workbench.

You can create a space for all of your improvement projects by turning a section of your garage into a construction-friendly, wonderfully organized haven for your tools and home makeover endeavors.

Below are easy steps to building the perfect garage workshop.

Make Sure You Have Adequate Space

Ideally, you’d still like to be able to get your cars in their designated space, so look for a vacant area at the back of the garage or along one side. If you’re garage isn’t quite large enough, then you might want to consider adding on to it or building an outdoor shed.

Create A Work Surface

For your work surface, you could repurpose old kitchen cabinets with a counter or build yourself a rough table using lumber from your local hardware store. Whatever you choose, make sure it’s sturdy. Cabinets will provide storage for all of the nuts, bolts, paint and little tools you’ll accumulate.

Clear A Wall

Whether this is above your workstation or alongside it, you’ll want an open area to hang up and organize your tools, so that they don’t clutter your surface. Put up a pegboard and create custom spaces with hooks.

There’s a certain satisfaction that comes will seeing all your tools hanging with in reach — and a desire to fill it up.

Install Decent Lighting

You need to see what you’re doing when working with power tools. High-intensity lights, such as halogens or LEDs are perfect for brightening up your space. Utilizing them in track lighting or on bendable gooseneck fixtures can help you adjust the light to exactly where you need it.

Don’t let the thought of a home improvement project send you scurrying all over the house for tools. Take one weekend to follow these four steps and create a designated space for your garage workshop.

Everything will be in one place and it won’t matter how long a project takes or how much of a mess you make!

For more tips on home maintenance contact your trusted mortgage professional today.

Reasons To Think Twice Before Paying Off Your Mortgage Too Quickly

Reasons to Think twice before paying off your mortgage too quicklyMost of the financial advice out there is focused on how you can pay off the mortgage on your home as quickly as possible, from making lump sum payments to switching to bi-weekly payments rather than monthly.

However, there are a few things that you might want to consider before you put all of your financial efforts into paying off your mortgage as quickly as possible.

Diversifying Your Investments

Of course, paying off your mortgage as fast as possible has a number of obvious advantages. You will be able to own your home a lot sooner and you will decrease the amount of interest you pay over the years. However, are you diversifying your assets?

Savvy investors know that they should decrease their risk by spreading their money into a number of different types of assets and investments so that they don’t have “all their eggs in one basket.”

If you have extra money and you want to invest it, you might want to make sure that you have a variety of investments including savings, stocks and bonds, rather than just investment in your home.

Liquid Assets

Another thing to consider is that having your money invested in your home means that it will not be a very liquid asset. If you needed the cash right away, you could have to sell your home or take out a home equity loan, which is a complex and time consuming process.

Before investing all of your money in your mortgage, consider creating an emergency fund as well so that you have some easily accessible money when you need it.

Earning More With Better Investments

Before investing all of your money in your mortgage, find out whether you would be able to earn more by investing it into other opportunities such as interest-bearing bonds. Sometimes stocks, bonds and mutual funds have better returns over time than the typical mortgage interest rates.

Perhaps paying off your mortgage as quickly as possible is the best option for you. However, make sure that you consider all of the factors before committing to this decision.

To find out more about mortgages and your home, contact trusted mortgage professional today.

Rounding Up Your Mortgage Payment, Will It Really Help?

Rounding Up Your Mortgage Payment, Will It Really Help?Paying off the mortgage on your home as quickly as possible will ensure that you pay less interest and save money in the long term. But how can you accelerate those payments so that you own your home sooner?

One simple and easy way that you can pay off your mortgage faster is to round up your mortgage payment to the nearest $100 interval. So, for example, if your mortgage payment is $756 per month, you can pay $800 instead.

Not only will this help you to pay off your mortgage sooner, but round numbers are also much easier to handle for simple calculations. You will be able to look at your bank account and easily subtract your mortgage payment in your head to get an idea of where your money stands.

Will This Really Make a Difference? 

By rounding up your mortgage payment, you won’t notice the difference in your day to day expenses but you will really notice the difference when it comes to the overall lifespan of your mortgage.

In your monthly budget, you will have already mentally allocated your mortgage payment as $800, so having that $44 less per month won’t make much difference and you can easily adjust. It is an amount that is small enough that you won’t “miss” it.

However, paying $44 extra per month will add up to $528 per year. That’s almost like making an extra payment every year. This extra money will go straight into the principal of the loan, which will make your interest payments go down every year faster and faster.

Over the years, this will compound and will mean that you actually end up reducing your mortgage term by a few years. The savings that you can enjoy over the total life of the loan can be in the thousands!

There are many other ways that you can pay down your mortgage faster, such as contributing a lump sum payment or switching to bi-weekly payments. However, it is interesting to know that just rounding up your payment can make such a significant difference!

For more information about the mortgage on your home, contact me. 

7 Tips On Getting A New Mortgage After Bankruptcy

7 Tips On Getting A Mortgage After BankruptcyYou 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.