Thursday, January 30, 2014

Monday, January 27, 2014

This Week In Real estate

It may have taken seven years, but the real estate market is closing in on getting back to a stable healthy market.  2013 was the rebound year for housing in that the industry marked the highest level of sales since the housing boom year of 2006.

The National Association of Realtors reported that 5.1 million previously owned homes were sold in 2013 which is an increase of 9.2% from 2012 and up nearly 20% from 2011.  December sales were up slightly from November.  As reported by most mortgage and real estate professionals, it is likely that January and February closings will decline due to a lack of purchase activity in December.  The good news is that these same professionals are reporting a surge in early purchase activity in January which should lead to more improvement in the housing data for March and April.

One slight concern about housing in the coming months is that inventory of available homes for sale has fallen sharply.  In November home supply was estimated at 5.1 months.  In December the supply declined sharply down to 4.6 months. The cold weather gripping most of the nation may very well be partly to blame for the significant decline.

Mortgage rates over the last couple of weeks have been dropping as the economic data has been rather lackluster and investors have been pulling out of the stock market more than usual and placing their money into government bonds.  The decline in mortgage rates is not very significant but it is certainly enough to increase refinance activity.

The Mortgage Bankers Association reported that for the week of January 17th refinance applications jumped 10%.  Applications for purchase applications declined by 4% however many believe that incredibly cold temperatures along with major snow storms in the Northeast have played a role in slowing purchases.

The run up in home prices that took place in 2013 appears to be slowing.  The Federal Housing Finance Agency reported on Wednesday that home prices in November rose only a slight .1%.  This is the 22nd consecutive monthly increase in home values however it is the smallest increase we have seen in almost 2 years.  Home prices are still 7.6% higher than the same time in the prior year.  Most real estate professionals remain very optimistic about the housing market in 2014.  Many believe that we are just returning to a more stable market demand and flow rather than spiking trends like we experienced in the summer of 2013.

Next week potential market moving reports are on the lighter side once again.

?        Monday January 27th ? New Home Sales
?        Tuesday January 28th ? Durable Goods Orders
?        Wednesday January 29th ? MBA Applications and FOMC Meeting Announcement
?        Thursday January 30th - First Time Jobless Claims and GDP
?        Friday January 31st ? Consumer Sentiment

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, January 22, 2014

How Escrow Works For You

Escrow is a way of keeping an amount of money safe while a legal transaction is going on. It's like having someone that both you and the buyer both trust hold on to payment for merchandise or services while the actual changing of hands takes place; in this case, the trustworthy helper is an account held by a broker. Escrow helps reduce the likelihood that either of the parties involved in the transaction will get scammed.
Generally, one of the first things that happens when the sale is in the escrow period is that the house is subject to an inspection. This practice ensures that the buyer is aware of any defects that would change their offering price, the conditions of the contract, or their desire to purchase the property.
In home sales, there are often contingencies, or specific conditions that must be met before the exchange of funds can be released to the seller. It may be the removal of undesirable items from the property, the completion of a satisfactory house inspection, or even a repair. Having the payment held in escrow until all the contingencies are met helps ensure that the transaction is mutually agreeable.
The escrow or title company hold the funds from the sale and the title to the property until such time that the contingencies are deemed to have been successfully dealt with, at which point the parties close the sale. The company then releases the title to the property to the buyer and the funds to the seller. The buyer and seller do not need to attend the closing of the sale together, which is more convenient for both parties.
Escrow is a safe and convenient way to avoid problems with the exchange of property title and funds, making your home purchasing or selling experience smooth and hassle free.

Article Source:

Saturday, January 18, 2014

A Rough And Tumble Week In The Market

It has been a rough and tumble week in the markets.  Although there were only a few economic reports released during the week, corporate earnings and projections seemed to play the most on the emotions of investors.

The Dow Industrial Average started the week at 16,424.  With a decline to as low as 16,254 and with a peak as high as 16,500, by the end of the trading day on Thursday the market closed almost exactly where it started at 16,417.

The roller coaster started the early part of the week on the upswing with the retail sales report coming stronger than expected.  In December the index rose .2% which was better than expected.  When you factor out gasoline and auto sales the index rose .6%.  The surprise comes in two places.  The holiday shopping season was slower than hoped by most retailers.  Combine that with the poor unemployment report from last week, the surprise was that retail increased at all.

The poor unemployment report had investors thinking mid week that the Fed may slow down the planned tapering of the government stimulus plan.  The irony of the whole stimulus focus is that mid last year the markets tanked when the Fed discussed starting the tapering.  In today?s market mindset investors want the Fed to taper the program.  The belief is that the tapering means the economy is healthy and growing which is good news for investors. 

To prove once again just how sensitive home owners and home purchasers are to interest rates, the recent drop in mortgage rates created a surge in loan applications according to the Mortgage Bankers Association.  Rates have been declining slightly over the last 2 weeks which created a 12% surge in mortgage applications for home purchases.  Home owners who have still yet to refinance elected to jump on the rate drop as well with refinance applications surging 11.0% for the week of January 10th.

On Friday on the report on housing starts will be released at 8:30AM.  The expectations for the report is a decline in starts after a 22.7 jump in November.  The reason for the expected decline is that in November the number of permits filed to begin construction declined 3.1%.  Typically when there is a decline in permits in the prior month, the following month housing starts declines.

The privacy of the American consumer is fast becoming the hot topic.  After the latest security breach at target in which data from over 110 million consumers was stolen, privacy fears are growing like wildfire.  So much so?that there was an article on that discussed growing fears of lack of privacy inside our motor vehicles.  Seriously, between GPS devices, smart phones, internet service providers, traffic light cameras, security cameras, store cameras?. Do you think the word ?privacy? even exists? (Latest estimates are that our pictures are taken a minimum of 300 times a day)

Next week is an extremely light week on the economic data front:

  • Monday January 20th  Martin Luther King Holiday  All Markets Closed
  • Thursday January 21st - First Time Jobless Claims, Existing Home Sales, FHFA HPI

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, January 15, 2014

Should You Talk To A Mortgage Professional Before House Hunting?

Absolutely! Even if you haven't so much as picked out houses to visit yet, it's important to see your mortgage professional first. Why? What can we do for you if you haven't negotiated a price, and don't know how much you want to borrow?

When we pre-qualify you, we help you determine how much of a monthly mortgage payment you can afford, and how much we can loan you. We do this by considering your income and debts, your employment and residence situations, your available funds for down payment and required reserves, and some other things. It's short and to the point, and we keep the paperwork to a minimum! 

Once you qualify, we give you what's called a Pre-Qualification Letter (your real estate agent might call it a "pre-qual"), which says that we are working with you to find the best loan to meet your needs and that we're confident you'll qualify for a loan for a certain amount.

When you find a house that catches your eye, and you decide to make an offer, being pre-qualified for a mortgage will do a couple of things. First, it lets you know how much you can offer. Your real estate agent will help you decide on an appropriate offer, but being pre-qualified gives you the confidence to know you can follow through.

More importantly, to a home seller, your being pre-qualified is like you walked into their house with a suitcase full of cash to make the deal! They won't have to wonder if they're wasting their time because you'll never qualify for a mortgage to finance the amount you're offering for the home. You have the clout of a buyer ready to make the deal right now!

Sunday, January 12, 2014

This Weeks Updates: January 13th 2014

The stock market has been trading in a narrow range all week.  With a lack of any real market moving data this week it seems that all eyes are on todays unemployment report being released at 8:30AM.  What increased the focus on employment data is that on Wednesday the Federal Open Market Committee released the minutes from their last meeting.  In the report it is clear that the Fed is watching very closely the labor markets to determine at what pace they will continue to taper the economic stimulus program.

As everyone knows by now the Fed has reduced their bond buying program by 10 billion a month starting with this month.  There is no set time table or schedule for future reductions as of right now and the employment reports, both today and in the future, are expected to play a major factor in the Fed?s monetary policy decisions in 2014.

Although the Fed and investors place most of the focus on today?s national employment statistics released by the department of labor, on Wednesday the ADP Employment Report was released.  ADP estimated 238,000 private payroll jobs were created last month.  This was slightly higher than expectations.  The stock market moved into positive territory on Wednesday based on this news however response was tempered due to ADP?s poor track record of employment predictions over the last year.  Truth be told, ADP estimates have been more in line with the national reports over the last few months however it seems that investors have not yet gotten over the massive employment miscalculations from ADP over the last few years.  First time jobless claims continue to remain in the 330k range.

(The expectation for the Employment Report this morning is that the unemployment rate will remain at 7.0% and that the economy will add approximately 200,000 new jobs.)

The big question is what is Congress going to do about the 1.3 million people that lost unemployment benefits on December 28th?  As is typical, both sides of Congress are not in agreement on what to do and the American public is caught in the middle.

Mortgage rates for the most part have been flat for the last 2 weeks.  Minor movement up and down has occurred but overall the rise in mortgage rate towards the end of 2013 is playing a role in housing.

Applications for purchase applications declined 1% in the prior week.  According to the Mortgage Bankers Association applications for purchase loans is down a whopping 20% from the same time last year.  Applications for refinances tipped up last week by 5% but that is not very significant since the total number of people refinancing at this point is much lower than in months and years past.

Next week potential market moving reports are on the lighter side once again.

  • Tuesday January 14th  Retail Sales
  • Wednesday January 15th  MBA Applications and Producer Price Index
  • Thursday January 16th - First Time Jobless Claims and Consumer Price Index
  • Friday January 17th  Housing Starts and Industrial Production

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Thursday, January 9, 2014

Obtaining a Mortgage in 2014 May Prove Problematical for Some Borrowers

The 2010 Dodd-Frank Mortgage Reform Act, authorizes more stringent qualification measures for mortgage borrowers. It came about due to the recent financial problems, brought on by financial service providers that were underwriting loans and selling them to lenders willing to cough-up the hefty fees to the loan originators. Many of these questionable loans were made to people who couldn't afford them. On the surface, the Act seems to punish borrowers. But in essence, it's supposed to free up funds for borrowers who can repay the mortgage by tightening up the qualifying process and cutting-down on loans to borrowers who cannot afford them. The Act tightens the mortgage process in 8 areas:
1. Proof of Income or Assets will be needed to show that you can make your mortgage payments. Yes, income is already part of mortgage qualification. But your other assets (anything that can be liquidated) will also be considered when determining your financial capacity to repay the loan.
2. Proof of Employment has also been part of the equation since forever. Besides determining that you have a job, lenders determine whether the position will exist long enough to repay the mortgage (e.g. temp or contract work, industries that may disappear in a few years) or whether you are self-employed with a minimum 2-year income history.
3. Proof of Ability to pay Property Taxes and Insurance is required by some mortgage lenders especially if these are not taken out of the escrow account, but paid separately. The reason for agreeing to pay these separately is that it makes the house payment lower. Lenders frequently tack on fees to process tax and insurance payments from the escrow account. And lender-financed insurance is frequently more expensive than policies you can find on your own. Get this in writing from the lender, though, before you sign anything.
4. Proof of Additional Mortgages that you're paying for businesses or rental properties will be required. Technically this may be considered an extension of the "assets" part of the Act. But it also shows where your money is being spent and can directly affect your ability to pay back the mortgage you're currently applying for.
5. Full Disclosure of Additional Properties includes those you're paying mortgages on as well as those that are paid-off. They're considered assets that can be liquidated, yes, but they will also need maintenance and upkeep, which means money going out to pay for repairs, which in turn affects your ability to repay the new mortgage.
6. Disclosure of Child Support and Alimony payments are not currently taken into account. However, they will weigh heavily in the borrower's income-to-debt ratio starting next year because they affect your ability to re-pay the loan.
7. Evidence of an Debt-to-Income (DTI) Ratio That's Less than 38% is also not news to anyone who's ever applied for a mortgage. But lenders will not consider anything higher than a 30-41% DTI from here on out. So if your DTI is 45%, then you'll need to find a way to lower that number.
8. A Good Credit History has been required for quite a while now. Your credit score is affected by the number of credit cards you have, their balance, their interest rates, and your payment history as well as your payment history on your bills and any other loans. Obtain copies of your credit scores and find ways to improve them before applying for a mortgage.
As with anything of this magnitude, get in writing and make sure you understand it all before you sign anything.

Article Source:

Sunday, January 5, 2014

With 2013 In The Rearview Mirror....

With 2013 in the rear view mirror, we head full steam into 2014 with renewed excitement of a new year.  Resolutions are in abundance from commitments to lose weight, get in shape, save more money, purchase a new home, or whatever anyone can think of.

The stock market which finished 2013 with a surge was blindsided on the first day of trading in 2014 with the market tumbling 156 points.  Although the economic slowdown that is taking shape in China was the main factor for the market drop, concerns about U.S. growth were a factor as well.

With Congress failing to extend unemployment benefits for over 1.2 million people, the concern about how this will impact the economy was discussed in many business media outlets on Thursday morning. There is a chance that Congress will restore the benefits in the coming weeks however we must wait and see what happens.

As you have been reading, the housing market has been struggling as of late however this week we did get a respite from the barrage of negativity.  Pending Home Sales for November ticked up by .2%.  This increase, although very small, was the first time in 5 months that the index rose.  The index is 1.6% below the same time last year however at least for the moment the downward trend has abated.

Tuesday the Case-Shiller Home Value Index also brought some relief to concerns over the direction of home values.  Home price momentum was solid and steady going into the end of the year where as October showed a gain of 1% in values.  The prior two months showed gains of 0.9 and 0.6 percent.  When looking at where we are versus a year ago values remain higher by 13.6%.

The trifecta of good news for housing this week came from the construction sector.  The construction spending report released on Thursday showed a 1% gain in spending for the month of November.  Overall spending is 5.9% above the same time last year.  The best part of the report is that the increase in spending is both in the residential and non-residential areas which shows balance in growth.

Heading into the 2014 consumers are not particularly optimistic about the future but they're feeling better about the current economic conditions. The consumer confidence index rose a strong 6.1 points in December to 78.1. Additionally, the present situation component rose up to 76.2 which is the highest level for this reading since the recovery started.

Next week economic data is on the lighter side however there are two major reports which can impact the markets significantly, FOMC Minutes and National Unemployment.

Next week?s market moving reports are:

?        Monday January 6th ? ISM Non-Manufacturing Index & Factory Orders
?        Wednesday January 8th ? ADP Employment Report, 10 YR Note Auction and FOMC Minutes
?        Thursday January 9th - First Time Jobless Claims
?        Friday January 10th ? National Unemployment

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Thursday, January 2, 2014

Rates Edge Higher as New Year Begins

Freddie Mac has released the results of its Primary Mortgage Market Survey (PMMS), showing average fixed-rate mortgages (FRMs) continuing to edge higher as 2014 begins, with the 30-year FRM averaging 4.53 percent with an average 0.8 point for the week ending Jan. 2, 2014, up from last week when it averaged 4.48 percent. A year ago at this time, the 30-year FRM averaged 3.34 percent.  The 15-year FRM this week averaged 3.55 percent with an average 0.7 point, up from last week when it averaged 3.52 percent. A year ago at this time, the 15-year FRM averaged 2.64 percent. 
"Mortgage rates edged up to begin the year on signs of a stronger economic recovery," said Frank Nothaft, vice president and chief economist, Freddie Mac. "The pending home sales index inched up 0.2 percent in November, after five consecutive months of decline. The Conference Board reported that confidence among consumers rose in December and the S&P/Case-Shiller 20-city composite house price index rose 13.6 percent over the 12-months ending in October 2013."
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.05 percent this week with an average 0.4 point, up from last week when it averaged 3.00 percent. A year ago, the five-year ARM averaged 2.71 percent. The one-year Treasury-indexed ARM averaged 2.56 percent this week with an average 0.5 point, unchanged from last week. At this time last year, the one-year ARM averaged 2.57 percent.