January 2009
How to Sell Your Home for 17% More, 40% Faster this Spring
January 30, 2009 by James K Barath, CMPS® · Leave a Comment
Super Bowl Weekend traditionally marks the start of the Spring Buying Season in real estate. Anecdotally, real estate agents will tell you that buyer activity tends to tick higher at this time of the year.
Meanwhile, with mortgage rates still trolling near all-time lows and Congress debating a first-time homebuyer tax credit, 2009 may bring out even more buyers than we’ve seen in the past.
Just having your home on the market may not be enough to attract an offer, though — the home has to have appeal. That brings us to home staging — the process by which a homeowner re-organizes and re-presents his home to appeal to as many potential buyers as possible.
Home staging is part-science, part-art, and part-psychology. Homebuyers tend to judge homes within the first 8 seconds of seeing them so making a quality first impression can mean the difference between getting multiple bids, and just getting a lot of foot traffic.
The 4-minute video gives some quick-and-easy tips, including:
- Create more light in the home
- Clean up the closets and thin them out
- Remove the clutter from every room in the house
Even though home inventories are falling, supplies are still higher than in previous years. Home sellers wanting to stand out in a crowd may want to consider staging their homes to help them sell more quickly.
Staged homes sell for as much as 17% more money and as much as 40% faster than non-staged ones.
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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FOMC Evening Update
January 28, 2009 by James K Barath, CMPS® · Leave a Comment
Today’s FOMC meeting adjourned with no change to key short-term interest rates, keeping the benchmark Fed Funds Rate near 0%. The stock markets rallied following the adjournment, pushing the Dow up 200 points and the Nasdaq higher by 53 points on the day. The bond market soured though, driving bond prices lower that pushed yields and mortgage rates higher. Overall, we can expect to see an increase in tomorrow’s mortgage rates of approximately .375 of a discount point unless the morning’s data offsets those losses or pushes them higher.
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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What to Expect from the Fed Today and How It May Impact Mortgage Rates
January 28, 2009 by James K Barath, CMPS® · Leave a Comment
The Federal Open Market Committee adjourns from its 2-day meeting today.
The monetary policy-setting group is expected leave the Fed Funds Rate within its current target range of 0.00-0.250 percent.
This is the lowest range for the Fed Funds Rate in history and, frankly, there isn’t much room left to go lower. Therefore, markets aren’t really concerned about what happens to the benchmark lending rate today.
Instead, markets will focus on the Fed’s ideas to revive the U.S. economy.
In its post-FOMC press release last month, the Federal Reserve pledged to “employ all available tools” to get the economy moving in the right direction. At the time, some of those tools were already in play, including making direct loans to large companies and buying bad debts from commercial bank balance sheets.
And since that meeting, the Fed has put its money where its press release is.
Early this year, the Fed started a program to buy $500 billion in mortgage-backed debt and those ongoing purchases are part of what’s keeping mortgage rates relatively low. The Fed has since made it easier for member banks to borrow money, too.
Each of these steps is meant to pour gas into the U.S. economic engine and the Fed is pledged to keep trying new approached until something works. And this is what mortgage markets will be concerned with today.
If the Fed’s next stimulus plan is deemed ineffective or too costly for its own good, mortgage markets will likely sell off, causing mortgage rates to rise. The jump could be somewhat sudden because Fed announcements are often met with emotional, knee-jerk reactions.
By contrast, if the Fed’s next steps are deemed on target, expect mortgage rates to fall only slightly. To some extent, this outcome is already priced into rates as of this morning.
The FOMC’s official press release hits at 2:15 PM ET.
(Image courtesy: The New York Times)
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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Did We Just See The First 2 Signs of a Housing Recovery
January 27, 2009 by James K Barath, CMPS® · Leave a Comment
Don’t let the plunging median sales price fool you — December’s Existing Home Sales data has home sellers smiling.
Just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring’s Buying Season could be a competitive one.
Falling home prices helped fuel home sales. Nationally, the median sales price — the point at which half of all homes sold for more and half sold for less — was $175,400, down $32,000 from last year.
However, the most important part of December’s Existing Home Sales report isn’t making headlines.
At December’s sales pace, it would now take 9.3 months to exhaust the existing home supply. Last month it was 11.2 months. This means that buyers are competing to purchase fewer homes which, in turn, puts upward pressure on home prices.
This is Supply and Demand at its most basic definition.
Economists have long said that the keystone of housing’s recovery will be rebalancing in home supply. Coupled with the all-time low in housing starts, December’s Existing Home Sales data signals future strength.
(Image courtesy: The New York Times)
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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Mortgage Markets In Review: January 26, 2008
January 26, 2009 by James K Barath, CMPS® · Leave a Comment
Mortgage markets deteriorated last week on the heels of weak economic data and uninspiring corporate earnings.
Mortgage rates rose for the second week in a row. They’re now measurably higher than the low point set 3 weeks ago.
For mortgage rate shoppers, though, last week’s most important stories weren’t necessarily last week’s most reported stories; the most obvious of which was soon-to-be Treasury Secretary Tim Geithner’s assertion that China may be manipulating its currency.
This assertion poses risks to mortgage rates because China is one of the largest buyers of U.S. mortgage-backed bonds. Its ongoing bond buys helps keep mortgage rates down. But an angry China is less likely to buy U.S.-backed debt and that would pressure mortgage rates hgiher. Said China of the Geithner remarks, we’re angry.
Other mortgage rate-altering stories included:
- Corporate weakness at GE, Microsoft, and nearly every U.S. bank
- Concerns that political in-fighting could derail a stimulus plan
- Mounting job losses in nearly every economic sector
In addition, just to show how backwards markets are right now, in “ordinary” times, economic weakness often leads mortgage rates lower. In this market, however, it’s having the opposite effect. Whenever the economy looks sour, mortgage rates seem to rise.
Americans is want of a mortgage have been at the mercy of Wall Street’s fickle sentiment lately. It’s a nerve-racking place to be.
This week, markets hope to be calmed. There’s a handful of news releases including Existing Home Sales, New Home Sales and consumer confidence surveys that will help paint a clearer picture of the economy, but the Federal Reserve’s 2-day meeting should steal the spotlight. The Federal Reserve is expected to hold the Fed Funds Rate at its current range of 0.000-0.250 percent.
However, the Fed Funds Rate is somewhat of an afterthought this week. Markets are more concerned with what the Fed will be doing to loosen bank lending nationwide.
Markets will evaluate the Fed’s response and if they deem the stimulus to be too large (or too small), mortgage rates should rise. If the Fed’s moves are “just right”, look for rates to fall.
The Federal Open Market Committee adjourns at 2:15 P.M. Wednesday.
(Image courtesy: The Wall Street Journal Online)
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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Weekly Economic Releases for Jan. 25th
January 25, 2009 by James K Barath, CMPS® · Leave a Comment
This week is extremely busy in terms of economic data scheduled for release and will likely be another active week for mortgage rates. The number of releases is actually irrelevant due to the importance of the some of the reports. There are eight economic releases scheduled for the week in addition to the first Federal Open Market Committee (FOMC) meeting of the year. All but two of the releases scheduled are considered to be of moderate or high importance, meaning we should see quite a bit of movement in mortgage rates again this week.
The first report of the week is tomorrow’s release of December’s Existing Home Sales. It gives us a measurement of housing sector strength by tracking sales of newly constructed homes. It is one of the week’s least important reports, therefore, it will likely not have a significant impact on bond trading or mortgage rates. Current forecasts are calling for a small decline in sales.
December’s Leading Economic Indicators (LEI) will also be posted late tomorrow morning. This index attempts to measure economic activity over the next three to six months. It is considered to be of moderate importance to the bond and mortgage markets. Analysts are currently expecting to see a 0.3% decline, meaning that economic growth over the next few months will likely slow. A larger than expected drop would be good news for the bond market and mortgage rates, but an unexpected rise could lead to bond selling and an increase to mortgage rates tomorrow morning.
January’s Consumer Confidence Index (CCI) will be released Tuesday morning. This report is considered to be of high-importance to the bond market and therefore can move mortgage rates. It is an indicator of consumer sentiment, which is important because a decline would be construed as a sign that consumers may be less willing to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, market participants are very attentive to related data. A reading smaller than the expected 38.0 would be ideal for the bond market and mortgage rates.
There is no factual economic data scheduled for release Wednesday, but we will get the results of this year’s first FOMC meeting. It will begin Tuesday and adjourn at 2:15 PM ET Wednesday. It is expected to yield no change to short-term interest rate, but as is often the case, traders will be looking for any indication of the Fed’s next move. However, I am not expecting this meeting to have a major impact on the markets or mortgage rates because the Fed can’t lower key rates much more. There is little chance of indicating a possible rate hike in the near future, so I don’t believe that this meeting will have the influence they usually do.
Thursday morning brings us the release of December’s Durable Goods Orders. This data helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. The data often is quite volatile from month to month, but is currently expected to show a decline in orders of 1.8%. A larger than expected drop would be good news for bonds and mortgage rates.
December’s New Home Sales report, the sister release to Monday’s Existing Home Sales, will be posted late Thursday morning. It is expected to show another decline in sales of new homes, but is not important enough to heavily influence mortgage pricing.
Next up is Friday, which has three reports scheduled for release. The first of them is one of the most important reports that we see regularly. The initial reading of the 4th Quarter Gross Domestic Product (GDP) will be posted early Friday morning. This data is so important because it is considered to be the best measure of economic growth. The GDP itself is the total sum of all goods and services produced in the United States. Its’ results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. There are three readings to each quarter’s activity, each released approximately one month apart. The first, which usually carries the most volatility, is expected to be a decrease of 5.2%. A weaker reading would be great news for the bond market, but the 5.2% decline would be the biggest quarterly drop in 26 years.
The 4th Quarter Employment Cost Index (ECI) is also scheduled for release early Friday morning. It measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. It usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.7%. A lower than expected reading would be favorable to bonds and mortgage rates, but the GDP reading will be the biggest influence on trading and rates Friday morning.
The last report of the week is the revised reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer confidence, which is thought to indicate consumer willingness to spend. I don’t see this data having much of an impact on the markets or mortgage rates due to the importance of the employment index and GDP figures.
Overall, look for Tuesday or Friday to be the biggest days for mortgage rates. Friday’s GDP is the single most important piece of data this week, but we may see quite a bit of movement in rates Tuesday also. If we see weaker than expected results from the most important reports, we should see rates close the week much lower than last Friday’s closing levels. If the data shows stronger than expected results, we may see mortgage rates move higher again this week. This is of course, assuming that the Fed meeting doesn’t reveal any surprises. I strongly recommend that fairly constant contact is maintained with your mortgage professional this week if still floating an interest rate.
If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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Move-Up Homebuyers Face New Lending Challenges This Spring
January 23, 2009 by James K Barath, CMPS® · Leave a Comment
When a homeowner sells his home and decides to buy a new one, there are 3 basic options for the residence — sell it, keep it, or rent it.
Unfortunately, no matter which path they choose, move-up homebuyers in need of a new conforming mortgage will find qualifying for a home loan to be more difficult this season than in the past.
Mortgage guidelines are dramatically tighter for people “carrying two mortgages”.
Among the changes this spring’s buyers face:
Selling the primary residence
If you plan to close on your new home prior to the closing of your existing home — even if it’s only by a day — both payments must be listed as monthly debts on your mortgage application. This will disqualify the majority of homebuyers.
Converting your residence to a second home
If your current home has less than 30 percent equity in it, your mortgage application for the new home will not be approved unless you can show 6 months worth of mortgage payments + taxes + insurance in reserves for the current home and new home combined.
Converting your residence to an investment property
If your current home has less than 30 percent equity in it, any rental income derived from a tenant is disallowed on your mortgage application for the new home. You must still count the mortgage payment + taxes + insurance as a monthly debt.
In other words, being a move-up buyer isn’t as simple as it used to be. New lending rules make buying a new home an exercise in timing and financial planning. And the rules are expected to get tougher, too.
Therefore, if you expect to be a move-up buyer in the next 12 months, consider moving up your timeframe or — at least — planning ahead for it.
Understanding the new mortgage landscape and how they can influence your upcoming purchase may be the difference between getting approved for a home loan, and getting turned down.
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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Could Mortgage Rates Have Already Bottomed Out
January 22, 2009 by James K Barath, CMPS® · Leave a Comment
After improving through 11 straight weeks, mortgage rates finally ticked higher last week. This, according to Freddie Mac’s weekly mortgage rate survey. The Freddie Mac survey showed that mandatory mortgage fees rose last week, too.
Unfortunately, the bad news for rate shoppers doesn’t stop there.
Because Freddie Mac’s rate survey is conducted on Tuesday but its reports aren’t released until Thursday, the published data doesn’t even account for the previous 48 hours of activity in which rates and fees have risen further.
Versus last week, 30-year fixed, conforming mortgage rates are up 0.16% on average nationwide. On a $200,000 home loan, this equates to a roughly $20 extra per month, or $7,055 over the life of a 30-year loan.
The Era of Low Rates may not be over, but it may be time to get off the fence.
(Image courtesy: Freddie Mac)
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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An Interactive Chart For Home Values
January 21, 2009 by James K Barath, CMPS® · Leave a Comment
The S&P/Case-Shiller Home Price Index is a popular measure of domestic home prices, released monthly.
The index reports on the largest 20 U.S. markets, painting a broad picture of real estate values nationwide.
Despite the Case-Shiller Index’s two obvious flaws — (1) it only counts repeat sales on single-family residences, and (2) it only includes 20 major housing markets — the model is helpful in identifying broader real estate trends in our nation’s largest cities.
But data is just data. Sometimes, it takes a good picture to bring it all home. Enter The New York Times.
On its website, The Gray Lady posted an interactive Case-Shiller graphic. For each of the 20 cities studied, users can compare how home values rose versus the national composite throughout the early part of the decade, and how values have fallen since.
Not surprisingly, of the 20 cities that showed stable growth pre-2006, nearly all are outperforming in the current real estate climate.
James K Barath, CMPS®
James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!
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