June 2009

How Do I Priortize Paying Monthly Bills Versus Saving For Retirement?

Suze Orman recently appeared on The Today Show and gave 5 minutes of practical money management advice. Not everyone’s a fan of Ms. Orman, but this is an interview worth watching.

The segment’s theme is “What should you do first?“, pitting real-life financial scenarios against each other, including:

* Pay off credit card debt, or save for an emergency?
* Pay off student loan debt, or pay off credit card debt?
* Save for retirement, or save for a child’s college tuition?

The advice is practical and relevant to most homeowners’ lives and, although financial tips are never one-size-fits-all, there’s some real gems in the segment.

Watch the entire interview at The NBC Today Show website.

Tulsa, Oklahoma Tops Relocate America’s 2009 List Of Top 100 Places To Live

In choosing its 2009 lineup of Top 100 Places To Live In America, Relocate America focused on areas with stable local economies and in which the housing market has avoided precipitous price drops.

It’s not a bad formula and topping the list of Top 100 Places To Live In America is Tulsa, Oklahoma, a city in which unemployment rates are 3 percent below the national average and the housing stock is, in general, considered affordable.

This was a common theme among the cities included, the Top 10 of which are:

1. Tulsa, Oklahoma
2. Dallas/Ft Worth, Texas
3. Pittsburgh, Pennsylvania
4. Raleigh/Durham, North Carolina
5. Huntsville, Alabama
6. Houston, Texas
7. Albuquerque, New Mexico
8. Lexington, Kentucky
9. Little Rock, Arkansas
10. Oklahoma City, Oklahoma

Relocate America notes that the cities on its 2009 list are poised to make a faster comeback from the economic recession than other U.S. cities, and few experienced the effects of the housing boom earlier this decade.

View the complete Top 100 Places To Live In America 2009 list at the Relocate America website.

The Number Of Homes Under Contract Soar In April. Are Buyers Losing Their Negotiation Leverage?

The number of homes under contract to sell soared in April, climbing nearly 7 percent nationwide versus a month ago.

It’s the third straight month in which the Pending Home Sales Index gained and the biggest monthly jump since October 2001, the month prior to the end of the Early 2000s Recession.

A “pending” home sale is one that’s under contract to close, but has yet to do so.

The Pending Home Sales Index is an imperfect statistic because not every home under contract makes it to closing, but the data can a reliable indicator of home buyer activity.

It’s not tough to understand why homes-under-contract are spiking:

1. There’s a $8,000 tax credit for first-time home buyers
2. Conforming and FHA mortgage rates are hovering near 5 percent
3. Home prices are still soft nationwide

These elements are combining to make homes more affordable than they’ve been in the recent past. Indeed, in April, the Home Affordability Index posted its second highest reading since 1970.

We can’t know if home prices will rise or fall going forward, but if Pending Home Sales translate into closed home sales, values will be pressured to rise. This is because each closed transaction takes a home “off the market”, reducing the supply of available properties.

If demand rises while supplies fall, sellers regain the upper-hand in negotiations and higher prices are the inevitable result.

An estimated 80 percent of all Pending Home Sales close within 2 months.

Mortgage Rates Tack On One-Half-Percent For The Second Time In A Week

Mortgage rates soared again Monday, tacking on a half-percent in a day for the second time in under a week.

Each half-percent adds $62 to a $200,000 home loan’s monthly payment, or $744 per year.

For home buyers recently under contract, it’s a gut-wrenching time to be shopping for a home loan. Morning mortgage rates have been typically gone by early-afternoon and — in some cases — lenders have changed rates five times in one-day span.

The reasons for surge in rates are varied, but each is related to the idea that the economic recession may be nearing its end.

• Consumer optimism is as high as it’s been all year
• Consumer spending is falling at a slower pace than in months prior
• China’s factories reported an expansion in business

Each of these points bodes well for the economy and pushes Wall Street investors towards more risky investments. As a result, “safe” investments get sold — including mortgage-backed bonds, the basis for conforming mortgage rates.

For as long as the future of the economy remains in question, expect mortgage rates to remain volatile. We won’t get half-point rate swings or five pricings in a day every day, but both are becoming more common.

Be careful when shopping for a mortgage — the rate you’re quoted may not last long.

What’s Ahead For Mortgage Rates This Week: June 1st

Mortgage markets took a beating last week, sending conforming mortgage rates soaring Wednesday afternoon. Despite a modest recovery Thursday and Friday, though, mortgage rates still moved higher on the week overall.

It was the fourth time in 5 weeks that mortgage rates worsened.

By far, the biggest news of last week was Wednesday’s mortgage market meltdown.

Beginning shortly after 1:00 PM ET, and in the span of about 90 minutes, the 30-year fixed mortgage rate soared. The action was so swift that a number of mortgage lenders shut down their Lock Desks, unwilling to accept new business.

There was no “news”-like reason for the action, by the way — just a general feeling on Wall Street that the U.S. government’s massive debt load may lead to inflation sometime in the future. As inflationary fears rise, mortgage rates often rise with them and this is what we witnessed happened Wednesday.

Markets regained their cool Thursday and Friday, but could only erase half of Wednesday’s surge.

This week, look for data to determine whether mortgage rates rise or fall. Monday and Friday will be the biggest days.

On Monday, in addition to releasing consumer spending data from May, the government publishes the Federal Reserve’s preferred inflation gauge. If either number comes in hotter-than-expected, mortgage rates should rise.

Similarly, if Friday’s employment data is better-than-expected, rates should rise, too. More working Americans means more consumer spending and spending makes up two-thirds of the economy.

Markets expect that another 550,000 workers lost their jobs last month, raising the 12-month total to 5.65 million.

Between Monday and Friday, a number of Federal Reserve members will be speaking publicly, including Fed Chairman Ben Bernanke. Each speaker’s statements, of course, can influence mortgage rates as well.

Overall, markets remain volatile and mortgage rates are jumpy. If you find a rate that fits your budget and with which you can be comfortable, consider locking it in before the news gives the rate reason to change.

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