Monday, February 29, 2016

Best News Of The Week

The best news of the week is that if you have any investments in the stock market, you have likely seen a significant recovery of the money you have lost in the last couple of months.  For the last two weeks the stock market has been moving higher and most of the losses from earlier in the month have been recovered.  Panic over the glut of oil has seemed to subside for the time being and oil prices have stabilized.

Home prices continued to rise with December showing an increase of 0.8 percent according to the Case-Shiller's 20-city index.  This extends the strong monthly gains that have been happening since last year.  The only slight concern is that the year-on-year rate increase has slowed and is currently at 5.7 percent versus the previous report of 6.0 percent.

In another strong housing report for the week, existing home sales rose 0.4 percent for January.  December also had a strong increase and the momentum has kept going and is showing no signs of slowing.  Even stronger data in the report is that from the same time last year sales growth in this sector of the market is up 11.0 percent. In an indication of housing strength, the single family sector of the market rose 1.0 percent.

When it comes to selling prices, the story is slightly different.  It appears that some discounting may be taking place in that the median home price fell 4.2 percent to $213,800.  Home prices continue to be higher than the same time last year by 8.2 percent. Supply of homes available for sale, which has been very close to historic lows and holding back sales, seems to be rising.  Supply, which had been sitting at 3.4 months, rose up to 4.0 months.  This is still below the January numbers of 4.5 months however the market is moving in the right direction.

Reinforcing strong home price growth is the report from the Federal Housing Finance Agency.  The FHFA reported that home-price appreciation increased 0.4 percent.  Although this number is at the low end of the range predicted by analysts, it continues to show solid gains.  Home prices remain 5.7 percent higher than the same time last year.

The only housing report to show weakness for this week was the report on new home sales.  In an unexpected downturn, new home sales declined 9.2 percent in January to a lower-than-expected annualized rate of 494,000. The housing report is still respectable given that December’s numbers were not revised and that report showed a solid gain of 544,000.

The major potential market moving reports are:

·        Monday February 29th – Pending Home Sales
·        Tuesday March 1st – ISM Manufacturing Index & Construction Spending
·        Wednesday March 2nd - MBA Applications
·        Thursday March 3rd - First Time Jobless Claims
·        Friday March 4th - National Employment Situation

As your mortgage and real estate 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, February 23, 2016

203K Mortgage

Mike gives an overview as to why a 203K mortgage can be extremely beneficial to a home buyer. See more at

Wednesday, February 17, 2016

Understand The Mortgage Before Purchasing A Home

If you are thinking about purchasing a home, it is very important to understand mortgages. The benefits of owning a house are manifold. For example, it allows you to build equity and there is a tax deduction benefit for the tax payer on mortgage interest that is paid. In addition, the pleasure of staying in your own house is one of the biggest advantages of investing in the purchase of a home. The monthly payouts increase when you purchase a house and money needs to be kept aside for unexpected expenses.

Clear Existing Debt

As soon as you decide to purchase a home, you first need to check your credit report. It is better to close the credit cards that you never use. If there is any discrepancy in creditors' reporting, you should have it corrected. It is important to save as much money as possible for the down payment, however, you should not overlook the high interest rate debt. Do not use credit cards that have high prime rates and pay off all existing debts.

Choosing a suitable Lender

You can look for lenders online and can easily find details of lenders in your area. Narrow down your choice to three to four lenders and then obtain a copy of a good faith estimate or HUD-1 form from them. Analyze the charges on the HUD-1 form and once you finalize your choice of lender, allow them to check your credit report. You can negotiate on the loan origination, processing and underwriting fees with the lender. Avoid a lender who charges points, as when you pay points, the amount of down payment is increased.

It is better to hire a knowledgeable real estate agent who can tell which costs are flexible and can be eliminated and which ones you may need to bear.

Why Lenders charge PMI

Most lenders charge first-time buyers PMI (Private Mortgage Insurance) if they do not make an initial down payment of 20% or more. This insurance does not cover you but provides cover to the lender in case you default on the loan. On average if you take a loan of $200,000 and make a down payment of 10%, the PMI charges per month are around $100. When you reach an equity percentage of 20% of your home, you can cancel the PMI.

How to arrange for the Down Payment

In case you cannot afford a down payment of 20% and do not wish to pay PMI, you can take an additional home equity loan. The additional loan that you take must be paid off first, as it is likely to have a higher rate of interest.

Types of Loans

There are two main types of loans:

1) Fixed-Rate Loans

The most common loan is a 30-year, fixed-rate loan in which the interest rate does not change. The 15-year loan is becoming more popular as the total amount of interest that you pay is less, although these loans have a high rate of interest.

2) Adjustable-Rate Loans

These offer a lower interest rate for a fixed time period and should be considered if you plan to stay in the new home for a short time only. These are listed as 3-1, 5-1 or 7-1, which means the loan rate is fixed for an initial period and then changes every year, based on market conditions.

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Sunday, February 14, 2016

Mortgage Rates Are Dropping Like A Rock

Never before in the history of writing my weekly commentary have I referenced that the Energy Information Agency Petroleum Status Report.  I guess there is a first time for everything.  Every week this report provides the status of petroleum reserves in the United States.  We never pay much attention to it.  However, the last three weeks it has been a different story.

If you own a car, you know that gas prices at the pump have been plummeting and are now at the lowest point in 16 years.  This is due to the worldwide glut of oil and the fact that the U.S. petroleum reserves are virtually full.  Despite this, oil continues to be pulled out of the ground faster than the world is using it, and there is now a problem in the U.S. as to where to store it.

The economic slowdown in China, and now additional counties in Asia and Europe, has the worldwide consumption of oil declining even further.  This is creating even more of a storage and oversupply problem.  Prices continue to fall and this is killing corporate profits for major oil companies around the world.  This is leading to many energy companies to file bankruptcy.

As a consumer we may say we don’t care about the oil companies because we remember what it was like when oil was over $100 a barrel and a gallon of gas was more than $4.00.  It didn’t seem like the energy companies cared about us.

The issue at hand is that the energy sector is a major component of stock markets in the U.S. and around the world   If the energy companies struggle, or even go bankrupt, as so many already have, this has a direct impact on stock markets.  This is what has been happening.

There is a positive side to what has been happening.  Mortgage rates are dropping like a rock.  Rates have declined over ½% since the beginning of the year.  Although this has not yet translated into a significant jump in home purchases, existing homeowners are flocking to mortgage companies to once again refinance.  It should be just a matter of time before the purchase market jumps.

First time jobless claims, in which there were concerns that they may be trending upward, have shown that they continue to remain at a healthy level below 300,000.  Even last week’s national employment report showed that the underlying fundamentals of the labor market are strong.  Investors at the present time don’t seem to care as they continue to remain fixated on the oil markets right now.

It is likely that the next week will be another rollercoaster ride in the markets, but hang in there.

The major potential market moving reports are:

·        Monday February 15th – Presidents Day, Markets Closed
·        Tuesday February 16th – Housing Market Index
·        Wednesday February 17th - MBA Applications, Housing Starts, FOMC Minutes
·        Thursday February 18th - First Time Jobless Claims & EIA Petroleum Status Report
·        Friday February 19th – Consumer Price Index

As your mortgage and real estate 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.

Monday, February 8, 2016


Coming out of the recession, everyone was told that real estate would need to lead the way.  The reality was that the labor market took us out and real estate lagged behind.  Today it may be that real estate is the only thing that may keep the economy from returning to a recession.

With global markets in turmoil relating to the economic slowdown in China, as well as the world’s oversupply of oil, there appears to be more and more uncertainty happening.  Real estate appears to be the only real bright spot in the economy as of late.  However, even the real estate market may be starting to show signs of slowing, however it is still too early to tell.

The labor market seems to be weakening somewhat with more people making claims for unemployment benefits.  Recent weeks have been showing an upward trend in first time jobless claims and the pattern seems to be growing.  On top of this was Wednesday’s ADP Employment Report which showed less strength in hiring for the month of January.  ADP reported new hires of 205,000 which is down 62,000 from Decembers employment rally.  Friday morning at 8:30AM the Labor Department will release their employment data.  Analysts are expecting a decline in this number as well from last month’s 292,000 jump down to 188,000.

Mortgage rates have returned to 9 month lows and are likely to be a catalyst for more homebuyers to enter the market.  Higher demand may also be just what home sellers need to see in order to move them to finally get off the fence and start selling.  There continues to be a significant disparity between the demand for homes versus what is available.  Inventory in most of the country continues to remain tight.

The bright spot in housing came from the construction spending report for December.  Although the overall numbers were not worthy of a celebration, the good news is that the residential component was strong.  Construction spending in this sector reported a very strong 0.9 percent growth.  The year-on-year growth rate is up 8.1 percent which is partially due to the abnormally mild winter.

Those of you that read my newsletter on a regular basis, know that I always try to be positive.  It is just a little challenging this week on account of so many reports showing weakness in the economy.  We know this is only one week, but it still raises concerns.  We will have to wait for the middle of February before we start receiving significant housing data to determine which direction the market is heading in this sector.  I continue to remain positive on housing and believe that it may very well slow somewhat, but by no means push us into a recession.

The major potential market moving reports are:

·        Wednesday February 10th - MBA Applications & 10 Year Note Auction
·        Thursday February 11th - First Time Jobless Claims
·        Friday February 12th – Retail Sales and Consumer Sentiment

As your mortgage and real estate 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.

Friday, February 5, 2016

Current Home Loan File - Big Valley Mortgage

Mike at Big Valley Mortgage talks about the current documentation needed to get a home loan. Big Valley Mortgage can handle the new regulations. See more at