What’s Ahead For Mortgage Rates This Week

Last week’s economic data supported recent reports indicating that housing markets are slowing, The

National Association of Home builders/Wells Fargo Home Builders Index (HBI) dropped by 10 points to a reading of 46 for February.
Home builder confidence dropped to its lowest reading in nine months,  and fell below the benchmark of 50, which indicates that more builders are pessimistic about current market conditions than not.
Severe weather was blamed for the lower builder confidence reading, which fell below the expected reading of 56.
Regional readings of builder confidence were also lower:

• Northeast: Builder confidence fell from 41 to 33 points. This suggests that weather is a major concern as this area has experienced a series of nasty winter storms.

• South: The HBI reading fell from 50 in January to 46 in February and was the smallest decline among the four regions. Fewer index points lost in the South appears to support builder’s concerns about bad weather in other regions.

• Midwest: Builder confidence dropped from 59 points to a reading of 50.

• West: Builder confidence fell by 14 points to February’s reading of 57. Desirable areas in the West had been leading the nation in home price appreciation. February’s reading may signal an easing of buyer enthusiasm as rapidly rising home prices have reduced affordable options for first-time and moderate income buyers.

Builders also cited concerns over labor and supplies as reasons for lower confidence readings.
Housing Starts Lower, Mortgage Rates Higher

On Wednesday, Housing Starts for January were released. Although analysts predicted a figure of 945,000 housing starts as compared to an upwardly adjusted 1.05 million housing starts in December, only 880,000 housing starts were reported for January.

The Department of Commerce also cited extreme winter weather as a cause for the drop in housing starts, which reached their fastest pace since 2008 in November. There is some good news. Economists said that housing starts delayed during winter could begin during spring.
According to Freddie Mac’s weekly survey, average mortgage rates rose across the board. The rate for a 30-year fixed rate loan rose by 5 basis points to 4.33 percent. The average rate for a 15-year fixed rate mortgage rose by two basis points to 3.35 percent.

The average rate for a 5/1 adjustable rate mortgage moved up by three basis points to an average rate of 3.08 percent. Discount points for all three products were unchanged with readings of 0.70 for 30-year and 15-year fixed rate mortgages and 0.50 percent discount points for 5/1 adjustable rate mortgages.

The Bureau of Labor Statistics reported that weekly jobless claims came in at 336,000 against expectations of 335,000 new jobless claims. The prior week’s reading was for 339,000 new jobless claims. Analysts said that job growth may be slowing after last year’s growth, but also noted that winter weather had slowed hiring in labor sectors such as construction and manufacturing.

Existing home sales fell by 5.10 percent in January according to the National Association of REALTORS®, which reported a seasonally-adjusted annual rate of home sales at 4.62 million sales against expectations of 4.65 million and December’s reading of 4.87 million sales of pre-owned homes. The national average home price rose to $188,900, which was 10.70 percent higher year-over-year.

January’s inventory of available existing homes was 1.9 million homes; this represented a 4.90 month supply of existing homes for sale. Real estate pros prefer to see at least a six month inventory of available homes for sale.
 
What’s Ahead

Next week brings a series of economic reports and opportunities for good news. The Case Shiller Home Price Indices, FHFA Home Price Index will be released. Consumer Confidence and the University of Michigan’s Consumer Sentiment report along with New and Pending Home Sales reports round out next week’s scheduled news.

Smart Ways To Create Equity Within Your Home

Home equity is the difference between what your home can sell for and what you owe on it. Generally, the longer you own your home, the more equity you build.
This is money you can use before you sell your home through a home equity loan. Just keep in mind that a home equity loan is secured with your home. If you can’t make the payments, you can lose your home.
Use Your Home Equity In Smart Ways:

1. Remodel Your Home - If you’ve wanted to add on a family room or modernize your kitchen, consider using your home’s equity to fund the project. Home improvements usually increase your home’s marketability and value.
2. Make Needed Major Repairs - Your home’s equity can be a funding source for major repairs like plumbing problems and re-roofs. Once again, this is an improvement for your home that will help keep its value up.
3. Buy Another Property - Real estate is still a safe investment. You can use your home equity to buy a second property when home values are down. When the market recovers, you can sell the investment property for a profit. This also works if you have to move out of town and are still trying to sell your home. If you can afford the payments, use your home’s equity to purchase your new home until the current one sells.
4. Pay For Unexpected Medical Expenses Or Job Loss - You never know when a medical emergency or job loss will leave you in debt. A home equity loan can give you the money you need to get through this difficult time.

It’s easy to build equity in your home when you find the right deal. Let me help you find your perfect home and negotiate a great price and terms for you. Contact your mortgage professional today.

What Are The Requirements To Sell A Home Using An FHA Loan?

Before an owner can market a property to buyers that want to use a FHA loan, he will want to familiarize himself with the FHA’s standards. FHA won’t insure loans on just any property.
 
While their standards aren’t as stringent as they used to be, a home needs to be in relatively good condition to qualify for FHA financing.

Location And Lot
To qualify for FHA financing, the property has to be located on a road or easement that lets the owner freely enter and exit.
The access also has to be paved with a surface that will work all year a long dirt driveway that washes out in spring won’t qualify.
The FHA also wants the lot to be safe and free of pollution, radiation and other hazards. For that matter, it also needs to provide adequate drainage to keep water away from the house.

Property Exterior

The FHA’s requirements for making a loan start with the home’s roof. To pass muster, the house must have a watertight roof with some future life left. In addition, if the roof has three or more layers of old shingles, they must all be torn off as part of the replacement process.
The property’s exterior has to be free of chipped or damaged paint if the home has any risk of having lead paint. Its foundation should also be free of signs of exterior (and interior) damage. It also needs full exterior walls.

Property Interior

The property’s interior also needs to be inspected. FHA standards require that the home’s major systems be in good working order.
Bedrooms should have egress routes for fire safety and the attic and basement should be free of signs of water or mold damage.
The bottom line is that the FHA wants to make loans on homes that borrowers can occupy. This doesn’t mean that a home has to be in perfect condition to be sold to an FHA mortgage-using borrower. It just needs to be a place that they can live.

What Is A Mortgage Pre-Approval?

When you are purchasing a home, your broker may recommend you obtain a mortgage pre-approval before you find the home of your dreams.
There are some benefits to being pre-approved before you find a home, but oftentimes, people confuse pre-qualifications with pre-approvals.
So the question many buyers have is what exactly is a mortgage pre-approval?
In a nutshell, it’s when the lender provides you (the buyer) with a letter stating that your mortgage will be granted up to a specific dollar amount.
What Do I Need For Pre-Approval?
In order to obtain a pre-approval for your home purchase, you will have to provide your lender all of the same information you would need to show for qualifying for a mortgage.
This means providing tax returns, bank statements and other documents that prove your net worth, how much you have saved for your down payment and your current obligations.
What Conditions Are Attached To A Pre-Approval?
Generally speaking, a pre-approval does have some caveats attached to it. Typically, you can expect to see some of the following clauses in a pre-approval letter:

• Interest Rate Changes – a pre-approval is done based on current interest rates. When rates increase, your borrowing power may decrease.
• Property Passes Inspection – your lender will require the property you ultimately purchase to come in with a proper appraisal and meet all inspection requirements.
• Credit Check Requirements – regardless of whether it’s been a week or six months since you were pre-approved, your lender will require a new credit report. Changes in your credit report could negate the pre-approval.
• Changes In Jobs/Assets – after a pre-approval is received, a change in your employment status or any assets may result in the pre-approval becoming worthless.

Getting pre-approved for a home mortgage may allow you more negotiation power with sellers and may help streamline the entire loan process.
It is important however to keep in mind there are still things that may have a negative impact on actually getting the loan.
It is important to make sure you keep in contact with the lender, especially if interest rates increase or your employment status changes after you are pre-approved.

What’s Ahead For Mortgage Rates This Week – February 18, 2014

Last week’s economic news was dominated by the first address by the new Fed chairperson, Janet Yellen.
Tuesday’s news included the Jobs Openings report for December 2013, which matched November’s reading of 4.0 million jobs available.
This information was taken from a gauge of competition for available jobs; in December, competition for job openings fell to its lowest level in five years.

Fed Chair Janet Yellen‘s First Address to House
Janet Yellen addressed the House Financial Services Committee for the first time on Tuesday as Chair of the Federal Reserve.
Ms. Yellen indicated that she expected “a great deal of continuity” in terms of Federal Open Market Committee (FOMC) monetary policy direction, and noted that markets should expect the FOMC to continue its support of low interest rates.
Chairman Yellen emphasized that the FOMC’s current tapering of its quantitative easing program was expected to continue, but is not on a pre-determined course.
If economic conditions change, the Fed’s monetary policy would be adjusted according to such developments.

Mortgage Rates Mixed According To Freddie Mac

According to Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS), the average rate for a 30-year fixed rate mortgage rose to 4.28 percent from the prior week’s 4.23 percent.
The average rate for 15-year fixed rate mortgage mortgages was unchanged at 3.33 percent. The average rate for a 5/1 adjustable rate mortgage dropped from 3.08 percent to 3.05 percent.
Discount points for each category were unchanged at 0.70 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.
In other news, Weekly Jobless Claims were higher last week at 339,000 against a forecast of 330,000 new jobless claims and the prior week’s reading of 331,000 new jobless claims.
Analysts cited bad weather and the possibility of slower economic growth as factors, but said that it was too soon to tell if economic growth is slowing down.
The University of Michigan’s Consumer Sentiment Index beat expectations with a reading of 81.2 against expectations for a reading of 80.0. February’s reading was unchanged from January.

What‘s Coming Up

This week’s economic news includes the NAHB Home Builder’s Housing Market Index on Tuesday. Wednesday’s events include Housing Starts and the minutes from January’s FOMC meeting.
In addition to Freddie Mac’s PMMS, Thursday’s scheduled reports include Weekly Jobless Claims, the Consumer Price Index (CPI) and Core CPI. Leading Economic Indicators (LEI) for January will also be released.
The National Association of REALTORS® will release data for existing home sales in January on Friday.

How A Mortgage Pre-Approval Can Help You Get A Better Deal On Your Home Purchase

Oftentimes, when you are searching for a new home, it may seem obtaining a pre-approval for your mortgage loan is a waste of time and energy. However, there are some significant benefits to a pre-approval which should not be overlooked.
In many cases, buyers can use a pre-approval for leverage when negotiating with sellers and may wind up buying a home for far less than what the listed price is.
Knowing Your Limitations
One significant benefit of a mortgage pre-approval is knowing exactly how much money you will be able to borrow. This means you will be looking at homes you know you can afford.
Whether you are working on your own or you’ve sought the assistance of a real estate broker, there will be no question in your mind how much money you can spend.
Approaching A Seller
When someone is attempting to sell a home, chances are they are either buying a new home or they are relocating. This means they may be facing certain time constraints which can be difficult when they list their home.
When sellers are faced with multiple offers, chances are the potential buyer who has a pre-approval will often be the offer that is accepted, even if it’s slightly lower than other buyers.
Benefits For The Seller
It may seem the seller has nothing to gain if they are taking less money for their home simply because you have a pre-approval. However, this is typically not the case.
Keep in mind the usual process is the buyer makes an offer, they search for a loan and they may eventually get turned down for a mortgage. This means the seller has to start the process all over again; typically 30 to 60 days after they received the first offer.
A pre-approval can give you a great deal of negotiating power simply because your lender has already validated your credit information, your employment, debt and income.
This means when you begin negotiating with a seller, the time from signing a purchase and sale agreement to closing your loan is typically significantly shortened.

What’s Your Home’s Real Value?

As a society, it seems like we’ve gotten away from appreciating our homes for their emotional and sentimental worth. Instead, we focus solely on their monetary value.

An Appraiser Can Estimate A Home’s Monetary Value, But To Gain A True Concept Of Your Home’s Worth, You Must Also Take Into Consideration:

1. Pride Of Ownership. You don’t buy a pair of Prada shoes because you’re going to be able to resell them and make a profit. You buy them because they make you look good and feel good.
2. Security And Stability.  Your home provides a roof over your head that’s in your control. You can decorate it how you want. You don’t have to worry about a landlord selling the property or asking you to move out. In the “olden days” (or should I say “golden days”), we called our homes our castles because, as owners, we felt like the kings and queens of our homes. You can still feel that way! Claim your castle and crown yourself king or queen today.
3. A Safe Haven.  After a tough day at work or a day of disappointments, where’s the first place you think of going? Home! As Dorothy says, “There’s no place like home.”
4. A Place To Make Memories.  Your son’s tree house and daughter’s playhouse.  The markings on the wall that tracked your children’s growth. The porch swing where you start and end every anniversary celebration.    
5. A Neighborhood Full Of Friends.  In the event of an emergency, your neighbors are your first line of defense. They’re also the simplest, best and least expensive form of security. Additionally, they may have the exact tool you need for a project; the extra pair of hands you need to complete a project or children to become playmates with yours. Neighbors also give you that much needed in-person, up-close social network. 
6.  

Even if your home’s economic value has dropped, you continue to benefit from its emotional values of community, stability, security and success.
Thinking of buying a home? I can help you evaluate the emotional and monetary worth of homes and find a home that fits your values and lifestyle. Give your trusted mortgage professional a call today.

3 Important Credit Considerations Before You Apply For A Mortgage

Before applying for a mortgage, borrowers need to build a plan for how they are going to manage their credit both going into the mortgage process and as they navigate through it.
Lenders like to know that borrowers have a strong likelihood of repaying the loans they take out and, as such, look carefully at an applicant’s credit.

Here are three must-dos that can help an applicant turn into a home owner.

Pre-Checking Credit Reports
Before even starting the home loan application process, borrowers are well served to check their own credit reports and see what appears. If everything is correct, their credit score can help them understand what type of loans are open to them and what they might cost.

When errors come up, pre-checking gives the applicant time to have the errors corrected before applying for a loan.
When an applicant has credit issues, knowing gives him time to fix them. He can pay down balances, add new lines to his report or take other action in advance of applying.

Manage The Debt To Income Ratio
Mortgage lenders calculate a borrower’s ability to borrow based on the debt-to-income ratio. They add up the proposed mortgage payment and the other debt payments and divide them into his monthly gross income.
If he has too much debt or not enough income he won’t get the loan he wants.
To manage this, borrowers have two choices.
One is to earn more by taking on a second job. The other is to have lower payments.
Paying down credit cards can be a quick way to solve this problem.

Avoid Taking On New Debt
When an applicant takes on more debt while applying for a home loan, it can cause three problems:

1. The inquiry can drop his credit score.
2. The payments can change his DTI.
3. The lender might not feel good about a borrower taking on more debt.

Getting a mortgage can be tough. The key is to understand what lenders want to see and give it to them.
If you need help understanding credit and how to prepare for your mortgage transaction, contact Gene Neal at eneal@athccorp.com

Top 10 Indoor Houseplants For Your Air Quality

Houseplants are great for decorating. They can brighten up any room. Plus, houseplants can increase the air quality in a room. That makes you happier, healthier and reduces stress.
Speaking of stress, these plants won’t create any at all. All of the plants on this list are great at producing oxygen and require very little care.
10. Heartleaf Philodendron
A tough plant that’s a good filter for toxins like formaldehyde, Heartleaf Philodendron makes a great houseplant. The only downside is that it’s toxic to eat, so it may not be the best choice for those with kids or pets. But if you can control your appetite, the Heartleaf Philodendron is an excellent indoor houseplant for air quality.
9. Snake Plant
Also called Mother-in-Law’s Tongue, the Snake plant thrives in the bathroom. It loves the steamy conditions and can do without much light. It’s a great air filter as well.
8. Bamboo Palm
It thrives indoors and requires little maintenance. The Bamboo Palm even produces flowers and berries.
7. Red-edged Dracaena
Another great air filter, the Red-edged Dracaena is interesting because of its size. It can grow all the way to the ceiling. This beast of an oxygen-producing plant makes a great addition to the living room.
6. Chinese Evergreen
This is one of the prettier options. With interesting leaf colorings as well as berries and blooms, the Chinese Evergreen will contribute to your décor as well as your air quality.
5. Peace Lily
The Peace Lily only needs water about once a week. This is a great houseplant for air quality, and it’s easy to care for.
4. Devil’s Ivy
This air purifier looks great in a basket. Try hanging it in the garage.
3. English Ivy
English Ivy is an excellent filter plant. It’s been shown to filter out formaldehyde, which can be found in some cleaning products, and it even filters fecal matter particles (I bet you didn’t even know there were any of those in your house). English Ivy is an invasive species though. It’s fine to keep inside as a houseplant, just make sure it doesn’t end up in the yard.
2. Weeping fig
A type of Ficus, this is a great houseplant for air quality. It’s a bit bigger than the others though. It would fit best in the living room.
1. Spider Plant
The Spider plant is nearly impossible to kill. Even if you’ve been a plant murderer in the past, try this one. It will do wonders for your air quality, and I promise you won’t kill it.
Houseplants have been shown to reduce stress in the home. Combine that with higher air quality and your quality of life can be greatly improved with the help of a new green friend.
Even if you don’t have a green thumb, you can take care of these. These are great houseplants for air quality.

The Low Down On Heating And Cooling Your Home

If the temperature in your home is too hot at night, then you can’t sleep. If it’s too cold during the day, then you have to wear excessive layers.
Everyone has his or her own idea of the ideal temperature, but to keep it on that perfect number can get expensive. So, below we’ve outlined five ways you can take care of your heating and cooling system and help it run more efficiently.
1. Set It And Forget It
To maximize the effectiveness of your heating and cooling systems, you need to program your thermostat and refrain from changing it. Adjusting the thermostat makes your system work harder.
The best way to avoid tempting temperature changes is to choose a thermostat that fits your schedule, such as one with 7-day, 5-1-1, 5-2 or 1-week programming options.
2. Clean The Air Ducts
Even though your air filter catches most dust, over time debris can build up. The accumulation of dirt can restrict airflow throughout your ducts and even start blowing particles out of your registers.
Check inside the ducts and if there is any mold, dead insects, rodent feces or a thick layer of dust, then consider hiring a professional to do a deep cleaning.
3. Put Your Ceiling Fans To Work
Ceiling fans can help with heating and cooling by distributing the flow of air throughout your home. Most fans are reversible, which means they can push air down in summer to create a nice breeze and pull air up in winter to aid in circulating the heat. To change the direction of the fan’s rotation, look for a switch on its base.
4. Replace Your Air Filter
It’s standard to change your air filter every 90 days. However, you should take a peek at it every month. If it looks grimy and clogged, then go ahead and change it.
Also, consider investing in high-efficiency pleated filters. They have an electrostatic charge that grabs onto even the smallest dirt specks.
5. Consider Booster Fans
If one room in your house is always warmer or colder than the rest of your home, it might not be your HVAC system. It could be the ductwork. The twists and turns of air ducts, especially in older homes, can reduce airflow.
Booster fans are easy to install and do exactly what their name implies. They boost the flow of air to the part of your home in need of more heating or cooling.

Can I Get Cash Out From My Home Right After I’ve Purchased It?

Generally when you are purchasing a home, you are buying below the appraised value and you are making a down payment. The good news is this means you have “instant equity” in your home.
For some homeowners, this means may be considering taking cash-out from your home equity in order to pay off credit card bills, purchase a car or pay for college for one of your children. However, it is important understand, this may not be as simple as it sounds.
Cash Out Refinance, Equity Loan Or Second Mortgage
There are three basic ways to access the equity in your home which are common these include:

• Cash Out Refinance – you refinance your current mortgage and you request cash-out for the equity. For example, if your home is worth $200,000 and you have a current mortgage of $100,000 you may be able to access an additional $60,000 to $70,000 in cash depending on your lender’s requirements.

• Home Equity Loan - a home equity loan is typically a line of credit that you take out with your local bank. These loans are typically what are known as “revolving” where you can access the funds over and over again as you make payments. Home equity loan interest payments are generally not tax deductible.

• Second Mortgage – in order to qualify for a second mortgage on your home, the lender would require you to meet specific credit requirements as well as certain debt-to-income ratios. Generally, new mortgage borrowers will not qualify for a second mortgage.

In most cases, lenders will require borrowers to have had their mortgage at least one year before they are allowed the option of any type of cash-out refinance.
What’s So Special About One Year?
The one year may seem subjective but there are some important things to keep in mind. When you applied for your original mortgage, your lender based their decision on your existing credit.
Before you can take cash out, you may need to demonstrate a history of making your mortgage payments on time, as agreed.
While you may already have a substantial amount of equity in your home, lenders are taking an additional risk if you are allowed to “tap into” that equity. Before you make the decision to access the equity, talk to your lender regarding possible restrictions including prepayment clauses.

Overpay On Your Mortgage Or Add To Your Savings, This Is The Question

So you find yourself with a little bit of extra money – perhaps due to a raise, an inheritance or an unexpected windfall?
Should you put all of your money toward paying down the mortgage on your home? Or would you be better off placing your extra cash into a savings account?
Deciding whether to pay down your mortgage or add to your savings is a complex choice and it depends on a number of factors in your personal financial situation.
Here are some of the things that you will need to consider when making the decision:
How Much Are Your Savings Earning?
Take a look at the savings accounts where you are keeping your money and assess the interest that your savings are earning. Is your money earning more in savings than you would save by paying down your mortgage earlier?
Does Your Mortgage Have Overpayment Penalties?
Some mortgage lenders will charge you a fee if you try to repay your mortgage earlier than the agreed upon term. Check with your lender to find out and calculate whether the extra costs will outweigh the benefits you get from overpaying your mortgage. If they do, put your windfall in savings instead.
What are Your Other Debts?
It doesn’t make sense to be overpaying on your mortgage if you have a lot of credit card debt that is charging you an enormous amount in interest. Prioritize your high-interest debt first before you think about overpaying on your mortgage.
Do You Have An Emergency Fund?
You should always have an emergency fund in cash that will protect you from having to use expensive credit card debt if an unexpected payment comes up such as a burst pipe or a flat tire on your car or if you lose your job.
A good rule is to have the equivalent of three to six months of savings in a bank account just in case you need it. This is a first priority and only when you have this emergency fund established should you consider overpaying on your mortgage.
These are just a few of the important factors that you should consider when deciding whether to overpay the mortgage on your home or place the money in savings. For more information, contact your trusted mortgage professional.

FOMC Statement Shows Tapering Of Quantitative Easing Purchases

According to a statement provided by the Federal Open Market Committee of the Federal Reserve, the committee has approved another reduction of the Fed’s monthly asset purchases.
The adjustment will be made in February and cuts monthly purchases of mortgage backed securities from $35 billion to $30 billion and monthly purchases of Treasury securities from $40 billion to $35 billion.
FOMC began reducing its asset purchase under its quantitative easing program in January, when the monthly purchases of mortgage-backed securities and Treasury securities was reduced from $85 billion per month to $75 billion.
Citing its goals of maximum employment and price stability, the FOMC said that it has seen consistent improvement in the economy and specifically mentioned a lower, but still elevated unemployment rate. The statement also indicated that the FOMC expected labor markets to improve.
FOMC Asset Purchases: How They Impact Mortgage Rates
The Fed initiated the QE program in an effort to control rising long-term interest rates, which include mortgage rates. Yesterday, the FOMC statement said that Fed expects its purchases of longer-term assets will continue to control long-term interest rates and mortgage rates while supporting mortgage markets.
FOMC’s statement reported that it sees the risks to its economic outlook and the labor market as having become nearly balanced. The FOMC is still looking for inflation to reach its 2.00 percent goal.
Fed Monetary Policy To Remain “Highly Accommodative”
The Fed intends to maintain a highly accommodative stance on monetary policy after the QE asset purchases end and the economy is significantly stronger. The current Federal Funds Rate of between 0.00 and 0.250 percent will be maintained at least until the national unemployment rate drops below 6.50 percent.
FOMC members reaffirmed their commitment to monitoring economic indicators as part of any decision to alter current QE measures or the Federal Funds Rate.
Indicators Mentioned In The FOMC Statement Include:

• Additional indicators of labor market conditions
• Inflationary pressures and expectations
• Readings on financial developments

FOMC statements have consistently included the committee’s assertion that no arbitrary benchmark alone will be sufficient for the committee to change either QE asset purchases or the Federal Funds Rate.
FOMC stated that it will seek a “balanced approach consistent with its longer-run goals of maximum employment and inflation at two percent.”
Although fears of tapering the Fed’s monthly asset purchases may persist, it appears that each FOMC decision to reduce asset purchases under the QE program indicates economic growth.