Saturday, September 27, 2014

The Stock Market Took It On The Chin

The stock market took it on the chin in a big way on Thursday with a drop of 265 points, which comes on the heels of additional declines on Monday and Tuesday.  The cause of the steep decline this week is focused on 3 main areas, global economic slowdown, rising tensions with Russia, and the Middle East.

The tech heavy Nasdaq tumbled 100 points on Thursday led down by Apple.  It seems that the initial concerns about the bending and warping of the new Iphone 6 and 6 Plus is becoming more and more of a problem.  What started out as a few random comments on social media, is now becoming larger and more vocal day by day. 

Apple, while trying to figure out what they will need to do to address the problem, they are doing their best towards social damage control. Apple has set new sales records with the release of the new phones, however if the issue of bending continue to grow, it is likely that future sales will be hurt significantly until Apple redesigns the casing, This of course will cut into sales and profits.

Russia this week was vocal in stating that the U.S, does not have the authority to engage in the bombing in Syria according to international law.  The U.S, differs in opinion and the disagreement is further ratcheting up tensions between the two superpowers.

Finally, Japan, China and Europe, are all showing signs of economic slowdown.  Although the United States is continuing to slowly chug along, declines in the 3 largest economies behind the U.S. is creating fear within the investment community.  One thing that became clear during the great recession is that when something happens in one large economy, it will have significant impact throughout the world.

The latest housing data was disappointing with existing home sales falling 1.8 percent in August to a lower-than-expected annual rate of 5.05 million.  Sales are also down from the same time last year by 5.3 percent.  This is greater than the previous month?s difference of 4.5 percent.  Limited supply continues to be a factor holding down sales which remained stable at 5.5 months.
Appreciation of home prices is stalling according to the Federal Housing Finance Agency.  The most recent report for July indicated that home prices rose only 0.1 percent versus 0.3 percent in the prior month.  Additionally, the year-over-year rate declined from 5.1 percent in June to 4.4 percent in July.

The one housing report that was a highlight for the week is the new homes sales report.  New home sales jumped 18.0 percent for the month of August.

Next week?s potential market moving economic reports are:

        Monday September 29th - Pending Home Sales
        Tuesday September 30th - Case-Shiller Home Value Index & Consumer Confident
        Wednesday October 1st - MBA Mortgage Applications, ADP Employment, Construction Spending
        Thursday October 2nd - First Time Jobless Claims
        Friday October 3rd - Employment Situation

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

Wednesday, September 24, 2014

Investors Are Loving The Latest News!

Investors are loving the latest news from the Fed regarding interest rates.  This week there was tons of speculation on whether the FOMC minutes released on Wednesday afternoon would have different wording in them regarding the Fed?s plan for the future of interest rates.

Many experts believe that the stock market has been steadily rising to new records because business loves borrowing money at low rates.  It makes it easier for companies to turn profits which is what investors want.  Concern this week was that the Fed might change their language towards when they might increase rates since the economy has been doing better.

Well?the Fed held steady with the course and plan for interest rates and they believe that increases will not occur until the summer of 2015.  At that time increases are expected to be very gradual in nature as to not disrupt economic growth.  This is the news that markets were hoping for and they got it!  The Dow Jones Industrial Average has risen 284 points for the first 4 days of the week.

Mortgage rates on the Fed news, have risen to their highest point in 4 months.  As investors feel more confident in the future of the stock market, this will continue to drive money out of government bonds and into the stock market.  This shift in where investors place their money causes bond yields and mortgage backed securities to rise which mortgage rates are based upon.

Despite mortgage rates rising over the last couple of weeks, applications for loans has risen.  The Mortgage Bankers Association of American reported that applications for purchases and refinances jumped 5.0 percent and 10.0 percent respectively.

It appears that homebuilders are being a little cautious about the future of housing as indicated by August?s housing starts and permits.  Starts on new home construction declined 14.4 percent which is in stark contrast to July?s jump of 22.9 percent.  Permits for new construction declined 5.6 percent after a rise of 8.6 percent in the prior month.  The multifamily component made up the majority of the decline in the latest data which means that single family construction has not contracted significantly.

In other news, inflation continues to be a non-factor which is one of the reasons the Fed has elected to keep interest rates where they are.  For the longest time the Fed has indicated that if inflation shows a pattern of rising, they might need to change their interest rate policy sooner than expected.

First time jobless claims came in much lower than expected.  At 280,000 for the week ending September 18th, this number is far below anyone?s expectations and shows an improving labor market.

Next week has very few market moving economic reports:

        Monday September 22nd - Exiting Home Sales
       Tuesday September 23rd - FHFA House Price Index
       Wednesday September 24th - MBA Mortgage Applications and New Home Sales
        Thursday September 25th - First Time Jobless Claims and Durable Goods Orders
     Friday September 26th - GDP

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

Saturday, September 20, 2014

Some Great Reviews!

I contacted Big Valley Mortgage regarding the purchase of a home.  Michael O'Rourke sat down with me and walked me through the whole process from everything that I need in order to start the process to the final closing.  Michael even directed me to one super-lady of a realtor.

Every single step of the process was amazing, Big Valley originally not only got me a low interest rate (locked for 30 years), the week of final review...I got an even lower interest rate-well below the current 'great rates'. The staff behind the scenes were also so easy to work with (Joanne and Marilyn you guys rock).  

Buying a house is a very STRESSFUL experience, however Michael and his team at Big Valley Mortgage made it a breeze.   If you are looking or even considering buying a house and want a great/honest and friendly mortgage company, then look no further than Big Valley Mortgage.

Perry H.
Vacaville, CA

I've know Jim for over 25 years and can speak of the character & professionalism that embodies what he does.  Jim was has always been honest and forthright in his assessment of the most appropriate route to take; whether re-financing, initial loan, bankruptcy or foreclosure.

When you deal with Jim you never feel there's anything it for him because he takes the time to listen and gather the pertinent information so the decision is appropriate...for the client, not for him.  He takes his time through the process and ensures you fully understand the terms.  

I will continue to work with Jim and tell others to at least hear what he has to say before finalizing any know when you find the "right" mechanic that you can trust when you bring your car in?  Well Jim Fox provides that same feeling when it comes to mortgages.

Nick P.
Providence, RI

Wednesday, September 17, 2014

Light Week For Economic News

In a week light on economic news, the markets were relatively quiet.  Although there was some intraday trading that caused the stock indices to make some significant moves, here we are at the end of the week and the DOW is within 100 points of where it started the week.

Housing seems to be quietly puttering along with no real indication of direction.  Housing inventories in some areas of the country have increased slightly however demand seems to be remaining somewhat stagnate.  This means that transactions continue to occur at a moderately slower pace but there certainly continues to be activity.

In a few interviews in different parts of the country it seems that confidence in the real estate market is beginning to return.  Homeownership since the market meltdown has been seen more as a ?want? than how it used to be viewed which was a need for long term wealth building.

After the great recession the view on real estate certainly has been impacted due to the extensive value declines experienced everywhere.  The good thing is that the sentiment towards housing is starting to return in America where it is being seen once again as investment tool for the future.  The sentiment is changing ever so slowly.

With the holiday shortened week, mortgage applications declined for both purchases and refinances.  Some of the decline is related to children returning to school in some parts of the country. Mortgage rates which have been trending slightly higher are also seen as part of the reason for the drop in mortgage activity.  Purchase applications according to the Mortgage Bankers Association of American dropped 3.0 percent.  Refinance applications plummeted 11.0 percent.  Refinances will always be more sensitive to interest rate movements and that is clearly shown in this past week?s numbers.

First time jobless claims increased from 304K to 315K last week.  This is the first significant increase we have seen in recent weeks.  It is premature to take anything from the increase as far as looking for a trend.  Claims will always vacillate from week to week.  Moving forward it will be important to keep our eye on the movement of claims as employment, although greatly improved since the recession, still remains a concern.

The big corporate news of the week was Apple?s announcement of the IPhone 6 and the IWatch.  Apple users are one of the most loyal consumers that exist.  Some are so loyal that they started since last Friday lining up outside the NYC Apple Store to be the first ones to get their hands on the new phone.

Next week has very few market moving economic reports:

    Wednesday September 17th - MBA Applications, Consumer Price Index & FOMC Announcement
    Thursday September 18th - First Time Jobless Claims and Housing Starts

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

Sunday, September 14, 2014

What You Need

Here is a list of information mortgage lenders will use to consider your Loan Application:
For all loans:
  • Social Security Card for each borrower.
  • Current Driver’s License for each borrower.
  • Most recent 2 year address history.
  • Most recent 2 years employment history; name of employer(s), dates of employment, employer address for current work location,  number of years on current job, number of years in same line of work/profession, current position, main business phone number for current work location.
  • Current paystubs covering most recent 30 consecutive days.
  • Last 2 years 1040’s (Federal Tax Returns), including all W-2’s and 1099’s.
  •  If applicable, Award Letters for Social Security Income and Pension Income and verification of receipt.
  • 2 months statements for all asset accounts, i.e. bank accounts, 401k’s, IRA’s, Investment Accounts (include all numbered pages).  All non-payroll deposits that exceed 10% of combined monthly gross income must be sourced/papertrailed. Any other deposits may require additional documentation, subject to underwriter discretion.  Prior to any questionable deposits, first discuss with us.
  • If a homeowner, current monthly mortgage statement, tax roll and home insurance policy on your property(s), and rental agreement if applicable.
  • If a purchase, please contact an insurance company of your choice and request an insurance quote for property once in contract.  Have insurance agent fax or email the quote to us showing coverage and premium amount.
  • If renting, 2 year residential history showing name, address and phone number of landlord(s).
  • List of liabilities and balances.
  •  If applicable, bankruptcy papers, divorce papers or explanation for delinquent accounts.
Other income information you may need:
If you are self-employed:
  • 2 years 1040’s (Federal Returns) for Sole Proprietorship
  • If a Partnership, include 2 years 1065’s and K-1’s
  • If an S-Corp , include 2 years 1120S and K-l’s
  • If a regular Corporation, include 2 years 1120’s
  • Note: current Balance Sheet and Profit and Loss signed by a CPA may be required.

If you are employed by a family member:
  • Most recent paystub(s) documenting 30 days income.
  • W-2’s covering the most recent 2 years.
  • 2 years 1040’s (Federal Returns), verifying no ownership interest in the company.  If not addressed in the personal tax returns, a CPA letter is required to verify no ownership in the company.
  • Written Verification of Employment covering the most recent 2 years.
  • A minimum of 24 months average of income must be used in qualifying.
If you are divorced or separated:
  • Complete executed Divorce Decree and Settlement Agreement.
  • Payment history of alimony/child support over the past 12 months, if it is a financial obligation.
  • If you choose to have this be considered as part of your income, (you do not have to) be prepared to provide 12 months cancelled checks or bank statements reflecting income deposits.

If you own real estate:
  • If you are selling your home but it has not closed: a copy of the sales contract.
  • If you have sold your home and it has closed and you will use the proceeds for your new down payment:  A copy of the Hud-1 Uniform Settlement Statement.
If you are buying a home:
  • Purchase Sales Contract or offer to purchase and all addendums and counter offers, fully executed with signatures of buyer, sellers and agents.
If  the source of your down payment is a gift:
  • Name, address and relationship of donor.
  • Gift Funds will be verified in both the donor and recipient’s accounts.
  • Note: Not all loan programs allow gifts to be a part of your down payment.
For VA Financing:
  • DD214 and Certificate of Eligibility
For Construction/Perm Loan:
  • Contact us regarding permanent financing requirements.

Wednesday, September 10, 2014

Mortgage Rates Rise to 1-Month Highs

Mortgage rates continued moving higher at a fairly quick pace today. Some borrowers may now start to see rate quotes moving up an eighth of a point. This is significant because most of the recent movement in the rate market has only affected the closing cost side of the equation. This can be thought of as a fine-tuning adjustment whereas actual changes in rate are a bigger deal. For instance, closing costs change daily, and sometimes multiple times during the day.

The interest rate part of rate quotes generally hasn't changed since early June for most borrowers. That means 4.125% has been the most prevalently-quoted rate for top-tier borrowers during that time. During the weaker moments, 4.25% has occasionally been a close second, but today's weakness brings it to roughly equal footing with 4.125%. Any rise in rates tomorrow would tip the scales in its favor.

So obviously we need to know what rates are going to do tomorrow! Unfortunately, there's never any way to be sure. What we do know is that bond markets are currently anxious about next week's Fed announcement. That happens on Wednesday, so rates are operating at a disadvantage until then. Keep in mind though, that there are always multiple factors in play when it comes to market movement. There is also very likely a limit on how much rates will rise between now and next Wednesday. The takeaway is that we could see a day or two of recovery between now and then, but it's probably not worth the risk to try to time that correctly.

Saturday, September 6, 2014

The Report You Have Been Waiting For...

The report that everyone has been waiting for all week is the employment data released by the Department of Labor on Friday morning. This report comes on the heels of Thursdays optimistic ADP Employment Report which estimated an increase in private payrolls at a healthy 204,000. However, the Department of Labor announced that only 142,000 jobs were added in the month of August. This is the lowest increase all year. Within minutes of the employment announcement the stock market futures tanked by over 60 points.

Outside of the employment data, there has been very little market news for investors to trade on. For the first 4 days of the week the stock market has ended almost exactly where it started. Other than the Labor Department?s Friday employment report, the three biggest reports for the week were on manufacturing, construction spending and jobless claims.

The first report was ISM manufacturing report which measures the opinions of 300 purchasing managers nationwide about the general direction of production, new orders, order backlogs, and their own inventories. The most recent survey show optimism for future manufacturing growth to be very strong. New orders for the month of August showed exceptional growth over an already strong reading in July.

Construction spending for the month of July showed a broad-based gain. Spending rebounded 1.8 percent after a drop in June of 0.9 percent. The increase in spending was broad and occurred in all areas of construction. Julys increase in spending was led by the public sector which jumped 3.0 percent. Private nonresidential spending rose 2.1 percent. Finally private residential outlays for construction spending rose 0.7 percent.

First time jobless claims have been maintaining their improvement over the last few weeks by remaining right in the 300K region. When claims hold steady in this area, that is considered healthy towards economic and employment sector stability. However claims and jobs being added are two different measurements as we can see by the difference between jobless claims and new jobs created.

The only real news in for the real estate market for the week is the Mortgage Bankers Association loan application report. For the week ending August 29th the MBA reported that applications for purchases and refinances were down 2.0 percent and up 1.0 percent respectively. The rather stagnant move in purchase applications for this time of year is not unexpected. With children returning back to school, and summer vacations coming to an end, decisions for home purchases are typically slow at the end of August.

Next week has very few market moving economic reports:

Wednesday September 10th - MBA Applications
Thursday September 11th - First Time Jobless Claims
Friday September 12th - Retail Sales and Consumer Sentiment

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

Tuesday, September 2, 2014

End Of Summer

Labor Day marks the unofficial end of summer, and as is normal, trading in the markets is extremely light.  Even though there is some movement in the indices, it is based on incredibly light volume of trading.  It appears that unless there is a major crisis or occurrence in the world, little will happen in the markets.

Even though the markets didn't show much interest, there was a significant amount of economic data released this week related to housing.  Excitingly, the majority of it was positive.

New home sales were revised upward for the month of May and June by a combined 28,000.  This offsets a lower-than-expected 412,000 annual sales rate for new home sales in July.  Despite being lower than expected, the report indicates an increase over June?s 406,000.  The majority of the increase was in the South which increased 8.1 percent for the month. 

One of the challenges to the new home sales market is limited inventory.  The good news is that supply rose 6,000 to 205,000 in the month of June which effectively raises the monthly supply to 6.0 months in July from 5.6 in June.

The two major housing reports related to home prices, the FHFA House Price Index and the S&P Case-Shiller Home Price Index sent a mixed message regarding home values.  The FHFA, which measures single family housing data supplied by Fannie Mae and Freddie Mac, indicated that home price appreciation improved in the month of June with a rise of 4.0 percent compared to an increase of 2.0 percent in May.  The year on year increase declined from 5.3 percent to 5.1 percent which indicates the value gap from last year to this year continues to close.

The Case-Shiller index, which tracks home prices in 20 metropolitan regions across the U.S., told a slightly different story relating to home values.  This index showed a 0.2 percent decline in June following a 0.3 percent decline in May.  The same as with the FHFA index, the year to year gap in the Case-Shiller index is also closing as indicated with a decline from 9.3 percent in May to 8.1 percent in June.

To finish the housing reports, and the week, on a positive note, the pending home sales index showed a strong jump of 3.3 percent.  This increase was higher than virtually all analyst?s expectations.  The Northeast led the way with an increase of 6.2 percent.  Home sales are getting a boost from new supply coming into the market and a slowing in price appreciation.

Next week the major economic reports are:

        Monday September 1st - Labor Day, All Markets Closed
       Tuesday September 2nd - ISM Manufacturing Index
       Wednesday September 3rd - MBA Applications and ADP Employment Report
       Thursday September 4th - First Time Jobless Claims
       Friday September 5th ? National Employment

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