September, 2013 | Arizona Mortgage

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What’s Ahead For Mortgage Rates This Week-September 30, 2013

What's Ahead For Mortgage Rates This Week-September 30, 2013 Last week brought a variety of housing related news. Highlights included the S&P/Case-Shiller Home Price Index for July, which showed a 12.40 percent year-over-year increase in national home prices. This was up from 12.10 percent in June.

The FHFA Housing Price Index reading traces home prices on properties securing mortgages owned or backed by Fannie Mae and Freddie Mac. The year-over-year reading for July showed an increase of 8.80 percent as compared to a year-over-year reading of 7.80 percent in June.

Rising mortgage rates and rising home prices have caused some buyers to leave the market, while others are jumping in before mortgage rates move higher. Pent-up demand for homes and short supplies of homes for sale are expected to sustain buyer interest and home prices.

The Consumer Confidence Index for September fell to 79.70 percent for September as compared to August’s reading of 81.80 percent, but was slightly higher than the expected reading of 79.50 percent.

Sales Of New Homes Surpass Expectactions

Sales of 421,000 new homes in August surpassed expectations of 420,000 sales and the revised number of 390,000 sales of new homes in July. A short supply of existing homes for sale is attracting buyers to new homes.

Freddie Mac’s weekly Primary Mortgage Market Survey provided good news as average mortgage rates fell. The average rate for a 30-year fixed rate mortgage was 4.32 percent as compared to last week’s 4.50 percent.

The average rate for a 15-year fixed rate mortgage was 3.37 percent as compared to last week’s reading of 3.54 percent. Discount points were unchanged at 0.70 percent. The average rate for a 5/1 adjustable rate mortgage was 3.07 percent, which was four basis points lower than last week. Discount points were unchanged at 0.50 percent.

Pending home sales fell by 1.60 percent in August as compared to July; the National Association of REALTOR cites higher home prices and mortgage rates along with depleted supplies of available homes as reasons for fewer signed contracts in August.

The West reported a drop of 1.60 percent in pending sales and the Midwest reported 1.40 percent fewer pending sales in August. The Northeast came out ahead with 4.00 percent more pending home sales in August.

Weekly jobless claims were reported at 305,000 new jobless claims as compared to expectations of 327,000 new jobless claims and the prior week’s reading of 310.000. The Federal Reserve recently cited the national unemployment rate of over seven percent as a clear indication that employment levels are not recovering quickly.

Next Week’s Economic News

While few housing and mortgage related reports are set for release next week, the calendar should provide indications of overall economic conditions. On Tuesday, Construction Spending for August will be released. Wednesday brings the ADP employment report for September. This report tracks private sector jobs.

Thursday brings Freddie Mac’s PMMS report of average mortgage rates and the weekly jobless claims report.

The federal Non-farm Payrolls and National Unemployment Reports for September are set for release on Friday.

5 Cool Ideas For Green Home Remodeling

5 Cool Ideas For Green Home Remodeling Every home seems to have a never-ending remodeling list. As you consider tackling your next project, it usually pays off if you also think about helping the environment.

Green remodeling can last longer, utilize recycled materials and typically end up saving you money in the long run. Below are several environment-friendly ideas that will have your neighbors green with envy.

1. Rain Gardens

Rain gardens are a shallow depressions in your yard planted with native shrubs and flowers. When there is a large rainfall, all the water rushes along roadways picking up dirt and pollutants along their way to drainage systems and eventually rivers and streams.

Rain gardens catch water run-off, which reduces the street flooding and makes for cleaner water sources.

2. Reclaimed Hardwoods

Using reclaimed wood is all of the rage right now – and it’s easy to see why. Reclaimed wood helps the environment by being recycled and repurposed from other structures. Turning an old barn into your new hardwood floors not only saves trees and looks great, but is an interesting conversation point.

3. Paper Covers Rock

Most kitchen remodels usually include the discussion of to go with granite or quartz countertops. However compressed paper or glass surfaces are actually better for the environment. Instead of harvesting natural resources, you’ll be recycling resources that have already been used.

4. One Shower Head

It’s tempting to use multiple showerheads and powerfully flushing toilets. However, reducing your water usage saves you money. Install low-flow water fixtures and limit yourself to just one fantastic showerhead in each bathroom. You’ll help the earth and your pocketbook by saving water.

5. Passive Solar Design

Solar panels are a great way to trap the sun’s energy and reduce your utility bills. However, if you’re not ready to directly tap into the grid, then there are ways you can remodel your home using passive solar design. Concrete floors and thick concrete, brick or plaster walls soak up the suns rays during the day and release them at night when the temperature drops.

Going green doesn’t have to hamper your lifestyle or your home’s design. With the five green remodeling ideas above, you’ll add value to your home, help the environment and put money back in your bank account.

4 Quick Tips On Becoming A Young Real Estate Investor

4 Quick Tips On Becoming A Young Real Estate Investor Investing in property at a young age seems like a bit of a daunting prospect sometimes. Most young people don’t have a lot of disposable income, often have poor credit and perhaps even student loans.

When you are in your early 20s, you are not likely thinking about investing in property and are probably focusing on other things. However, investing in property at a young age can bring you a lot of advantages.

It requires a different approach and style and you might be the only one of your peers who is doing so, but you will definitely reap the benefits later on in life. When you invest long-term, you will start building your financial independence.

Some might believe that it is impossible for a young person to start investing so early in life, but investing in your 20s is completely possible.

You are not “too busy”, in fact you will find that you have even less spare time as your responsibilities grow when you get older. You will need a little bit of money to get started, but often you can purchase your first property with as little as 3.5% down.

If you want to get started early, here are some tips that will help you along the way:

Get into very good saving habits from a young age by putting aside your money from first jobs. When you want to take out a mortgage, you will typically need to be able to show savings of 3% of your purchase price.
Maintain a clean credit history and pay all of your bills on time in order to build a great credit rating, so that you can obtain a mortgage with a good rate.
Make the most of technology and social media to learn more about investing in property and to find the best opportunities. You have a wealth of information on investing, all at your fingertips.
Find an older mentor – someone with successful experience who can give you tips on how to choose the right investment.

Another main advantage to investing when you are young is that if anything goes wrong, you will have more time to make mistakes and still recover without affecting your retirement. You have nothing to lose and everything to gain, so why not get started?

Case Shiller Price Index Shows An Annual Growth Rate Of Home Prices

Case Shiller Price Index Shows An Annual Growth Rate Of Home Prices Home prices were still gaining in July, but for 15 of 20 cities included the S&P Case-Shiller 10 and 20-city Home Price Indices, the pace of increasing home prices is slowing down. National home prices rose by 1.80 percent in July as compared to 2.20 percent in June.

Home prices grew by 0.60 percent from June to July on a seasonally-adjusted basis. This was the lowest month-to-month gain since September 2012.

David Blitzer, index committee chairman of S&P Dow Jones Indices, said that higher mortgage rates are hitting the housing market. Mr. Blitzer noted that mortgage rates rose by more than a percentage point between May and the Federal Reserve’s statement last week.

The Fed was widely expected to reduce its monthly bond purchases from $85 billion to $75 billion, but the Fed decided not to reduce its bond purchases as the economy has not recovered sufficiently.

Mortgage Rates Fall

High home prices and unemployment are making it difficult for first-time and moderate income buyers to compete; buyers sitting on the sidelines are eventually expected to add to the demand for homes.

Mortgage rates fell after the Fed’s announcement, but Mr. Blitzer said that the drop in mortgage rates would likely have a temporary impact on housing. He said that the rate of increase [in home prices] may have peaked.

Conditions contributing to the run-up in home prices include a shortage of available homes and pent-up demand among home buyers. As of July, home prices for the Case-Shiller 20-city index increased by 12.40 percent year-over-year; this was the highest annual rate of increase since home prices peaked in 2006.

Home prices in the Case-Shiller 10-city index increased by 12.30 percent annually. In spite of the rapid price gains, July home prices remained 21 percent below their pre-recession peak.

Home prices in all 20 cities included in the 10 and 20 city indices increased on a month-to-month basis, with home prices increasing by 1.80 percent for the 20 city index and by 1.80 percent for the 10 city index.

Home Prices Show Strong Recovery

Las Vegas, Nevada had the highest annual gain in home prices for July with a 28 percent increase. Las Vegas was one of the cities hardest hit by the recession. Annual home prices for San Francisco, California rose by 25 percent, and New York City had the lowest annual growth rate for home prices at 3.50 percent.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, released its home prices report for properties securing mortgage loans owned or backed by Fannie and Freddie. The annual growth rate for home prices was 8.80 percent as of July, but remains 9.60 percent lower than the peak growth rate reported in April 2007.

Highest Existing Home Sales Since February 2007

Highest Existing Home Sales Since February 2007 Sales of existing homes reached their highest volume in almost six years in August. The National Association of REALTORS reported Thursday that sales of existing homes rose 1.70 percent in August to a seasonally-adjusted annual rate of 5.48 million existing homes sold.

This was the highest number of existing home sales since February of 2007.

August’s results exceeded estimates of 5.20 existing homes sold, which was based on July’s unrevised reading of 5.39 million existing homes sold.

The NAR also reported that the national median home price increased to $212,100 in August. This represents a year-over-year increase of 14.70 percent and was the largest annual increase in the national median home price since October 2005.

Sales concentrated in areas with higher home prices contributed to this significant increase in the national median home price.

Homebuyers Increase Despite Higher Home Rates

The reading for existing home sales in August suggests that homebuyers are not shying away from higher home loan rates; it may also indicate that the recent shortage of existing homes for sale is beginning to ease.

August’s higher number of existing home sales was attributed to home buyers anxious to lock in lower loan rates in an environment of rising mortgage rates. Also, economists had expected the Federal Reserve to begin reducing its monthly securities purchases, which did not happen.

Had the Fed tapered its securities purchases, long-term interest rates including mortgage rates, would likely have continued rising. The Fed may have decided not to reduce its monthly securities purchase in an effort to slow rising mortgage rates.

The average rate for a 30-year fixed rate mortgage has increased by more than one percentage point since May. Home buyers may respond to rising mortgage rates by delaying their home purchase to see if mortgage rates will fall, or they may rush to buy a home before rates go higher.

Mortgage Rates Affect Home Buyers In Three Ways:

1. As rates increase, monthly house payments also rise, which can impact affordability for first-time and moderate income buyers.

2. National unemployment rates remain higher than the Federal Reserve’s target rate of 6.50 percent. While home prices are increasing and other facets of the economy are showing improvement, jobless claims remain higher than average.

3. Mortgage credit requirements are strict; this keeps some would-be buyers from qualifying for a home loan.

These factors are offset by high demand for homes and short supplies of available homes and developed lots in some areas.

What’s Ahead For Mortgage Rates This Week — September 23, 2013

What's Ahead For Mortgage Rates This Week – September 23, 2013 Last week’s economic news was dominated by the Federal Reserve’s decision not to taper its $85 billion in monthly securities purchases.

Fed Chairman Ben Bernanke noted in a scheduled statement after the Federal Open Market Committee meeting that economic conditions were not yet adequately improved to withstand any decrease in the federal quantitative easing program.

The Fed also reaffirmed that the target federal funds rate would remain at 0.00 to 0.25 percent until the national unemployment rate reached 6.50 percent and inflation reaches 2.00 percent.

The national unemployment rate was 7.30 percent and the Fed projects that inflation will remain under 2.00 percent through 2015.

In both the FOMC statement and his press conference, Chairman Bernanke repeatedly emphasized that the Fed would take no action to reduce QE until the economy strengthens. No automatic reduction of QE purchases would take place without full consideration of the nation’s economy.

The QE program is intended to keep long-term interest rates low, and the announcement that QE would not be tapered brought mortgage rates down after they had increased by more than one percent since May.

Builder Confidence High, Mortgage Rates Lower

The National Association of Home Builders/Wells Fargo Housing Market Index for September revealed that home builder confidence in housing market conditions remained stable at 58; a reading of 59 was expected. Readings over 50 indicate that more builders are confident about market conditions than not.

Housing starts for August did not reflect the high level of builder confidence and fell short of expectations at 891,000. Expected housing starts were estimated at 921,000. There was good news in that August’s reading surpassed the July reading of 883 housing starts. Building permits for August also dropped to 918,000 against expectations of 955,000 and July’s reading of 954,000 building permits.

Higher labor and materials costs and concerns over tight mortgage credit and rising mortgage rates likely contributed to the lower than expected readings for housing starts and building permits.

Freddie Mac’s Primary Mortgage Market Survey reported that average mortgage rates dropped across the board on Thursday. The average rate for a 30-year fixed rate mortgage fell by seven basis points to 4.50 percent with discount points moving from 0.80 percent to 0.70 percent.

The average rate for a 15-year fixed rate mortgage fell by five basis points from 3.59 percent to 3.54 percent with discount points unchanged at 0.70 percent.

The average rate for 5/1 adjustable rate mortgage was lower by 11 basis points to 3.11 percent. Discount points were unchanged at 0.50 percent. This provides a break for home buyers who’ve been faced with rising mortgage rates and home prices amidst a shortage of available homes in many areas.

This Week

Economic news scheduled for this week includes the Case/Shiller Home Price Index for July, the FHFA Home Price Index also for July. New home sales and the pending home sales index will be released.

Freddie Mac will release its weekly summary of average mortgage rates and weekly jobless claims will also be released Thursday. The week will end with consumer related data including personal income and consumer spending for August along with the University of Michigan’s consumer sentiment index for September.

Quick Tips To Beat Out Cash Buyers

Quick Tips To Beat Out Cash Buyers You’ve been searching for the perfect home for quite a while, and finally, you’ve found it! You get all of your finances in order and place an offer on the house.

However, you’re not the only one that loves the home, because there are multiple offers — and one of them is cash.

Cash buyers are seen as desirable because they’re almost always a guaranteed quick close.

They don’t have to borrow money from a bank therefore won’t have any financing hang-ups, which is where a large portion of offers fall through. Don’t worry; not all hope is lost.

Follow the steps below to beef up your offer and get your foot in the door.

Less Expensive Homes

If you’ve put offers in on homes at the asking price and are continually beat out by buyers that are paying more, then you might want to consider looking in a lower price range. This is an especially smart strategy for those living in fast-selling markets. By looking at less expensive homes, you can be the one that puts in an offer over the asking price.

20 Percent Down Payment

Save up a higher down payment for the price range of homes you’re considering. If you can come up with 20 percent, then you’re in a position to wave the appraisal contingency for financing with the bank. The more you have in cash, the better.

Take-It-Or-Leave-It Home Inspection

This means that based on the home inspection, you’ll take the property with all its issues, or you’ll walk away. What you won’t do is ask the seller to waste more of their time and money fixing every little problem that’s found.

Fees

Waive the seller concessions, such as closing costs and the home warranty, and pay your real estate broker’s fees. These extra costs add up in the mind of the seller and will show that you really want the property.

Going up against cash buyers can be extremely discouraging. But, just because they’re dealing in cash doesn’t mean they’ll get the property. Many investors think they can put in a low offer because they’re dealing in cash.

So show you’re serious about a property, follow the steps above and put in your best offer. You’ll be a homeowner soon enough!

Fed Meeting Minutes Expose Mortgage Rates As Remaining Historically Low

Fed Meeting Minutes Expose Mortgage Rates As Remaining Historically Low The Federal Open Market Committee of the Federal Reserve decided not to reduce the Fed’s current quantitative easing program of purchasing $85 billion monthly in Treasury securities and mortgage-backed securities.

Going against wide expectations that the Fed would reduce the QE purchases, Fed Chairman Ben Bernanke said that current economic conditions aren’t strong enough to warrant tapering.

The Federal Reserve May Reduce Monthly Securities Purchases

The FOMC, which sets monetary policy for the Federal Reserve has hinted that it might soon reduce the monthly securities purchases, but has also stated that it would closely review emerging economic news and conditions as part of any decision to reduce the securities purchases under QE.

Chairman Bernanke clearly indicated that the decision to reduce asset purchases would be “deliberate and dependent” on economic developments.

He underscored this point by saying that benchmarks for tapering QE purchases “are not triggers, but targets” and that no automatic tapering of QE purchases would be made only because an economic benchmark had been met.

The two benchmarks associated with QE are a national unemployment rate of 6.50 and a target inflation rate of 2.00 percent. The Fed expects that inflation will gradually increase, but is likely to remain below 2.00 percent through 2016.

The Fed chairman noted that the unemployment rate has decreased from 8.10 percent to 7.30 percent year-over-year, he said that the jobless rate remains “unacceptable.”

The current QE program, which involves the monthly securities purchases and keeping the target federal funds rate at between 0.00 and 0.25 percent was implemented a year ago.

Chairman Bernanke repeated the FOMC position that the federal funds rate would be kept at the current target rate as “no meaningful change can be made.” It’s likely that the federal funds rate will remain at its lowest target level through 2015.

Fed Expects Moderate Economic Improvement

Chairman Bernanke remarked that tight credit policy could be hampering economic recovery and that the FOMC expected a gradual reduction in “financial headwinds” affecting the economy.

After making the post-meeting statement for FOMC, Mr. Bernanke conducted a press conference. His responses to media questions strongly emphasized the Fed’s intention to maintain open communications with the media.

The chairman seemed concerned that the Fed’s prior statements about possible changes to QE had been misunderstood.

The Fed’s decision to maintain QE asset purchases at current levels are expected to help keep mortgage rates low. Although mortgage rates have been rising since May, they remain historically low.

News for housing starts and building permits issued for August support the Fed’s position that economic recovery is lagging behind expectations. Housing Starts came in at 891,000 as compared to expected starts of 921,000, but were higher than July’s reading of 883,000 housing starts.

Building permits for August also fell shy of expectations; 918,000 permits were issued and fell short of the 955,000 expected building permits. 954,000 building permits were issued in July.

Home Builder Confidence Has Far Outpaced Actual Home Construction

Home Builder Confidence Has Far Outpaced Actual Home Construction Home builder confidence was unchanged for September according to the National Association of Home Builders/Wells Fargo Housing Market Index HMI released Tuesday. After four months of rising confidence, September’s HMI reading came in at 58, which was not far from expectations of a reading of 59.

August’s reading of 58 was revised from 59. Readings over 50 indicate that more builders view housing market conditions as being positive than negative.

Housing Market Index Readings Rise

Components of September’s HMI include readings for home builder views of current market conditions, which maintained August’s reading of 62. The September reading for buyer foot-traffic rose to 47 from 46 in August.

Builder expectations for housing market conditions within the next six months slipped from a reading of 48 in August to 45 for September. Lower expectations for market conditions within the next six months likely take into consideration the coming winter months when weather conditions slow construction and home sales.

Home builder confidence has far outpaced actual home construction on a year-over-year basis; the HMI increased by 45 percent since September 2012. Investors expect a seasonally-adjusted reading of 921,000 housing starts for August on Wednesday. This figure represents a year-over-year increase of 23 percent for housing starts.

Rising mortgage rates affected September’s reading. In addition, David Crowe, chief economist for NAHB also cited consumer credit restrictions, a low inventory of lots available for development and rising labor costs as factors contributing to a plateau in builder confidence.

Fed Decision On Quantitative Easing Tapering Expected

Wednesday’s highly anticipated statement from the Federal Reserve’s Federal Open Market Committee (FOMC) has created a “wait-and-see” mood among home buyers, home builders and investors. The Fed is expected to announce whether or not it will begin tapering its $85 billion monthly purchases of securities.

This program, which is called quantitative easing, was designed to keep long-term interest rates low. Speculation on the Fed’s upcoming decision about reducing its securities purchases has caused mortgage rates to rise since May.

Economists are expecting the Fed to announce moderate tapering of QE to $75 billion in monthly purchases. Reducing or not reducing the fed’s securities purchases has become an elephant in the room to those concerned with mortgage rates; in recent months, the Fed has hinted at its intention to taper QE purchases before year-end.

If the Fed reduces its securities purchases, the demand for securities (bonds) is expected to fall, along with bond prices. When bond prices fall, mortgage rates typically rise. The good news is that once the Fed announces a decision on QE, the guesswork will be done for a while.

Don’t Overlook These Important Factors When Buying A New Home

Don't Overlook These Important Factors When Buying A New Home Most of the time when buying a property, there are a few obvious factors that you will consider – such as the location, the number of bedrooms, the accessibility to schools or your workplace, the need for repairs and any interior features. However, there are a few things that might not have crossed your mind during your house hunting but are still quite important.

Water Quality

Most home buyers don’t even think about the water quality at the property until they get to the inspection stage. However, if you find out that the home has hard water this will dull your clothes when you wash them and irritate your skin.

Hard water will also create calcium deposits within your showers and faucets and even inside your washing machine and dishwasher. Have the water tested so you know its quality and can look into options for a water purification system.

Cell Phone Reception

When looking at a house, don’t forget to pull out your cell phone and check to make sure that you get good reception. There are a number of “dead zones” throughout the country and you don’t want to buy a house where you can’t make a phone call on your cell.

If you have found your dream house but it has poor phone coverage, there is the option to buy a wireless cell phone signal booster.

Lead, Asbestos And Other Health Risks

When buying homes that are older, make sure that you have the home thoroughly inspected for any health risks such as lead paint or asbestos insulation.

These materials were commonly used several decades ago, before anyone realized how toxic they really are. If you find any toxic substances you can have them removed safely or look for a healthier home.

Slope Of The Land

Take a walk around the property and look at the land around the house. Is it flat, or does the earth dip or slope in one corner of the property? Keep in mind that when it rains, water will flow to the lowest point on the property.

If the house is at the bottom of a slope you might have issues with dampness collecting around the foundations. This can be corrected only with serious landscaping, so it’s much easier to buy a house on higher ground.

These are just a few factors to consider that you might not have thought of when buying a house. For more real estate tips on property, contact your real estate professional.

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Archive for September, 2013

What’s Ahead For Mortgage Rates This Week-September 30, 2013

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