Friday, May 28, 2010

The Supply Of New Homes For Sale Just Dropped Off A Cliff

New Home Supply April 2009 - April 2010The supply of newly-built homes for sales plummeted in April, a positive indicator for the housing market as we head into the summer months.

It's no wonder that homebuilders are breaking new ground at the fastest clip in 2 years

At the current sales pace, the nation's complete supply of new homes would be sold in just 5 month's time.  That's more than double the pace of a year ago.

Also, as more good news, in terms of total housing units, the government reports that New Home Sales topped one half-million homes sold for the first time since May 2008.

It's a similar spike as within the Existing Home Sales data released earlier this week.

But before we declare the housing market "repaired in full", we have to consider a few of the reasons why home sales are charting so strongly.

The first reason is the federal homebuyer tax credit's April 30 expiration. In order to claim up to $8,000 in tax credits, home buyers must have been in mutual contract for a property before May 1. There is no doubt this contributed to a run-up in sales, especially among first-time home buyers.

The second reason is that mortgage rates have remained exceptionally low, defying expert predictions.  Low rates don't sell homes, but they do make monthly payments easier to manage for households torn between renting or buying.

And, lastly, March and April's new home sales may have been buoyed by aggressive discounting on behalf of homebuilders.  As compared to February 2010, April's average new home sale price was lower by 13 percent.  That's a sharp drop in a short period of time.

For now, though, homes are selling, supplies are dropping, and buyer interest is high. It's no wonder builder confidence is soaring.

Thursday, May 27, 2010

Should You Refinance Your Mortgage?

Because of strife in Greece, Spain and North Korea, conforming mortgage rates are back to all-time lows. They're at levels not seen in 50 years.  For homeowners that missed the Refi Boom of November 2009, it's a second chance.

In this well-presented, 3-minute video from NBC's The Today Show, you'll get tips getting low rates and choosing the best time to lock in.

Some of the topics covered include:

  • Why were the experts wrong about rates moving higher this summer?
  • How much money can you save with a 1 point drop in your interest rate?
  • Should you buy a bigger home now that rates have fallen?

The advice in the piece is matter-of-fact and centered.  There is no cheerleading and the message is honest. Mortgage rates are low and they likely won't stay that way.  If you've been thinking about a refinance, talk to your loan officer as soon as possible.

Why Are Interest Rates Going Down?

For months the alleged experts (including me) espoused the logic that after the Fed exited the Mortgage Backed Securities Purchase Program on March 31, interest rates would move up. But here we sit, 60 days later, and rates are at their lowest point of the year. What’s up with that?

Let’s start with some general economic realities. First, there is a finite amount of cash in the world. Second, there are only four basic places to put that cash:

  • In the stock market.
  • In the real estate market, which includes the financing of real estate (Mortgage Backed Securities).
  • In the Commodities Market (gold, silver, orange juice, pork bellies, etc).
  • Or leave it in cash (CDs, money markets, etc).
Cash itself has a near zero rate of return. Rates on CDs barely outpace inflation. Commodities are mostly an unknown for the average investor. So, for the most part, we look at cash moving back and forth from Stocks to Bonds (MBSs) and vice versa.

When the stock market is moving up, investors buy stocks with their cash, which means the cash leaves the bond market. To attract buyers back to bonds, the bond traders have to offer bonds with higher yields (that is loans with higher interest rates).

When the stock market is trending lower, you hear the expression “flight to quality” towards the safety and stability of bonds. When more people look to buy bonds, bond traders lower the yields (hence lower rates).

How does this relate today? Look at the failing economies in Europe and Greece. Investors are nervous about the impact on our stock market as international partners struggle. The Dow has dropped nearly 2000 points! So people are pulling their cash out and buying MBSs at a feverish rate… therefore, lower rates.

Will it last?

Many stock analysts are predicting a rebound beginning in July. That seems to make sense for me.
We are back into a more traditional interest rate forecasting model. Watch stocks, watch inflation and watch jobs numbers, and you will make wiser decisions.

by  Dean Hartman, Chief Planning Officer at Continental Home Loans

Wednesday, May 26, 2010

Home Price Index Rises 0.3% in March 2010

Home Price Index from April 2007 peakHome values rose in March, according to the Federal Home Finance Agency's most recent Home Price Index. Values were reported higher by 0.3 percent, on average, from February.

We use the phrase "on average" because the Home Price Index is broad-reaching, national housing statistic. It ignores the dynamics of neighborhood real estate markets as well as citywide markets , too.

Instead, the Home Price Index focuses on state and regional statistics.

For example, in March 2010 as compared to February:

  • Values in the East South Central region rose 2.5%
  • Values in the Mountain states rose 1.1%
  • Values in the Middle Atlantic states fell 1.0%

Of course, none of this data is especially helpful for today's home buyers and sellers.

Real estate is a local phenomenon that can't be summarized by state or region. What matters most to buyers and sellers is the economics of a neighborhood and that level of granularity can't be served up by a national housing report like the Home Price Index.

The Home Price Index data is additionally unhelpful to buyers and sellers in that it reports on a 2-month delay.

In other words, Home Price Index is not even a fair reflection of today's market -- it highlights the real estate market as it existed 60 days ago.

So why is the Home Price Index even published? Because government, business and banks rely on the reports.  As a national indicator, the Home Price Index helps governments make policy, businesses make decisions, and banks make guidelines. This, in turn, trickles down to Main Street where it impacts every one of us -- and eventually influences real estate.

Since peaking in April 2007, the Home Price Index is off 13.44 percent.

Tuesday, May 25, 2010

Home Supplies Tick Higher, Creating An Opening For Today's Home Buyers

Existing Home Sales Apr 2009-Apr 2010Sales of existing homes rose in April, buoyed by an expiring home buyer tax credit and exceptionally low mortgage rates.

As compared to March, April's Existing Home Sales rose by 410,000 units nationwide -- the second straight month of large gains. An "existing home" is a home resold by a prior owner (i.e. not new construction).

It's a solid report for housing overall, with rising sales suggesting that the real estate market's recovery is ongoing. However, the data presented a mixed message.

According to the National Association of Realtors®, although the number of homes sold ticked higher in April,  so did the supply of existing homes for sale, too.

Sellers are now listing homes faster than buyers can buy them.

After adding another 0.3 months of supply in April, resale home supply is nearly two full months larger than at November 2009's low-point. This put downward pressure on home prices.

Furthermore, because 49% of April's buyers were first-time buyers and the tax credit has since ended, we can expect that sellers will continue to outweigh buyers in the months ahead.

It presents an interesting opportunity for June's home buyers. Mortgage rates are still at their lowest levels of the year -- despite expert predictions to the contrary -- and homes remain affordable. Plus, in a lot of markets, home values have started to creep higher.

There's good values and good rates but neither should last long. For the next few weeks, real estate may be in its 2010 sweet spot. 

If you were thinking of moving in September of this year or later, consider moving up your timeframe.

Monday, May 24, 2010

Video : The Right Way To Water A Garden

From one pot to a lush garden, we all have plants for which to care in our lives. But are they getting the right amount of water?  Too little water and the plant dies. Too much water and root rot sets in.

In general, plants want 1 inch of water per week but Mother Nature doesn't always provide. It's up to us to make up the difference.

In this short video from ExpertVillage, Doug Smiddy shows us how to make sure our plants get the right amount of water they need to survive. He answers questions including:

  • How do you know if your plants need water right now?
  • What is best time of day to water outdoor plants?
  • What is the proper way to water a plant?

The video runs a little bit over 2 minutes and is stocked with helpful tips. If you care for any plants in your life, it's a must-watch video.

Friday, May 21, 2010

Home Opportunity Index Ranks 225 Metro Areas For Affordability

Home Affordability - Top and Bottom 5 markets 2010 Q1

With home prices still relatively low and mortgage rates trolling near their all-time best levels, it's no surprise that home affordability is extraordinarily high in most U.S. markets.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between January-March 2010 were affordable to families earning the national median income.

It's the second highest reading in the survey's history.

Of course, on a city-by-city basis, home affordability varies. 

In the first quarter of 2010, for example, 98.7% of homes sold in Bay City, Michigan were affordable for families earning the area's median income and in Indianapolis, the percentage was almost 95 percent.

Indianapolis has held the top quarterly ranking for close to 5 years now.

On the opposite end of the spectrum, the New York-White Plains, NY-Wayne, NJ region earned the "least affordable" metropolitan area for the 8th consecutive quarter.  Just 20.9% of homes are affordable to families earning the local median income.

The rankings for all 225 metro areas are available on the NAHB website but regardless of where your town ranks, home affordability remains high as compared to historical values but it likely won't last long.  Home values are recovering in many markets and mortgage rates won't stay this low forever.

All things equal, buying a home may never come this cheap again. If you were planning to buy later this year, consider moving up your timeframe.

Thursday, May 20, 2010

The Fed's April Minutes Push Mortgage Rates Even Lower

FOMC April 2010 Minutes

After starting the day in the red, mortgage rates rebounded Wednesday afternoon after the Federal Reserve released its April 27-28, 2010 meeting minutes.

It's good news for home buyers and would-be refinancers.  Mortgage rates continue to troll along multi-year lows.

"Fed Minutes" are lengthy, detailed recaps of Federal Open Market Committee meetings, not unlike the minutes you'd see after a corporate conference, or condo association gathering. The Federal Reserve publishes Fed Minutes 3 weeks after each respective FOMC get-together.

The Fed meets 8 times annually.

Because of the minutes' content and density, it's of tremendous value to Wall Street and investors.  Fed Minutes provide a glimpse into the conversations and debates that shape the country's monetary policy.

The broad scope of the published meeting minutes are in sharp contrast to the more well-known, post-meeting press release which reads more like a policy summary.

And the extra words matter.

Here's some of what the Fed discussed last month:

  • On Greece : A crisis in Greece could slow U.S. domestic growth
  • On housing : Despite government support, growth appears to have stalled
  • On its mortgage buyback program : There's little reason to sell mortgage bonds right now

When the markets saw the Fed Minutes, what had been a down day for bond markets turned positive. The less-than-sunny outlook for the near-term U.S. economy sparked bond sales, pushing prices higher.

Mortgage rates move opposite mortgage bond prices.

Wall Street is always in search of clues from inside the Fed about what's next for the economy and post-FOMC minutes usually give good fodder.  April's meeting was no different.

For now, mortgage rates remain near all-time lows but once the Eurozone issues are settled, rates are likely to rise. If you haven't locked a mortgage rate, your window may be closing.  Once the economy is turning around for certain, mortgage bonds will be among the first of the casualties.

Wednesday, May 19, 2010

The Right Way To Take A Cash Gift For Downpayment

How to accept a cash gift on a mortgageAs lenders tighten mortgage guidelines for home buyers, minimum downpayment requirements are increasing.  Several years ago, you could finance a home with nothing down. Today, most conventional mortgages require at least 10 percent.

Anecdotally, guideline changes have led to an increase in the number of home buyers accepting cash gifts from family.

Gifts are allowed in most cases but the problem is, if you don't accept the gift in a "lender-friendly" way, the mortgage underwriter could reject it, and negate it.

You can't just deposit a cash gift into your bank account. You have to follow a series of steps and keep records.

  1. Provide an acceptable gift letter signed by all parties
  2. Provide documentation of the gifter's withdrawal of funds via teller receipts
  3. Provide documentation of the giftee's deposit of funds via teller receipts

Lenders require these 3 steps for two basic reasons.  First, they want to make sure that the cash gift is "clean" (i.e. not laundered).  Second, they want to make sure the gift is really a gift and not a loan-in-disguise.

It's why lenders typically require that the loan application be accompanied by a signed, dated letter.

For example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift -- not a loan -- and there is no expectation of repayment.

[Signature of gifter]

As an additional step, home buyers receiving cash gifts should make sure that gifted funds are not commingled at the time of deposit. If the cash gift is for $10,000, therefore, the bank's deposit slip should indicate that a $10,000 deposit was made -- nothing more, nothing less. Don't add a random $100 deposit to the transaction, in other words. The $100 deposit should be a separate transaction.

It's also worth noting that gifting funds between family members can create both legal and tax liabilities.  If you're unsure about how donating or receiving a gift may impact you, call or email me directly.  If I can't help you with your questions, I can refer you to somebody that can.

Tuesday, May 18, 2010

The Truth about Foreclosure "Facts"

The goal of this blog is to create clarity from the confusion in today’s real estate market. We try to take complicated issues and break them down into simpler pieces, and then try to explain how the pieces fit together. There is no situation more difficult to dissect than the current foreclosure numbers.

Yet, understanding this issue is critically important. The number of distressed (discounted) properties entering the market will have a major impact on house values as we proceed through 2010.

Ascertaining an accurate forecast seems impossible at times however. Foreclosure reports consistently seem to be contradicting one another. Take this month’s RealtyTrac Foreclosure Report, which was released last week. The headline screamed “Foreclosure Activity Decreases 9% in April”. News sources and industry heads shouted this news from mountaintops. Things in the foreclosure sector are finally getting better they claimed.

Here at this blog we attempt to go past the headlines and look at the complete story.

It is true that one type of foreclosure activity did decrease:
During the month a total of 103,762 properties received default notices, a decrease of 12 percent from the previous month and a decrease of 27 percent from April 2009 — when default activity peaked at more than 142,000.

However, reading further in the report we find that:
Bank repossessions (REOs) hit a record monthly high for the report in April, with a total of 92,432 properties repossessed by lenders during the month — an increase of 1 percent from the previous month and an increase of 45 percent from April 2009.

The numbers of notices filed were down 27%, but the number of houses taken back by banks was up 45%. That doesn’t sound like such great news to us. And what is the reason notices are down? Could it be that the banks were concentrating their time and efforts repossessing the homes they had already foreclosed on? We already have reported that there are borrowers as much as two years in arrears on their mortgage payments that have yet to receive a foreclosure notice. CNBC reported on this exact point last week:

The fact that fewer loans are going into the pipeline should be our focus, and that’s a positive. That’s what I thought until I interviewed RealtyTrac’s Rick Sharga.

“People are sitting in their houses not paying their mortgages, and the banks are letting those delinquencies extend longer and longer periods of time before they put them in foreclosure,” Sharga told me.

That, he adds, is the main reason we’re seeing lower numbers of new defaults. The borrowers are in default, but the banks aren’t paying attention, so they don’t show up in the numbers.

Let’s take a closer look at all the pieces of the foreclosure pipeline that add up to our current situation:

Just because one element of the foreclosure process has slowed (in this case #2 – “Notices”) does not mean that the other three elements are not continuing on a fast pace.

What does this mean to you?
In order to pick the best option for you and your family, you need someone who truly understands the current housing environment. Find that person, and have them sit down with you and accurately define the market.

Monday, May 17, 2010

A Dual-Edged Roller Knife To Make Your Chopped Salads Easier

OXO Good Grips Salad Chopper and Bowl

With the Oxo Salad Chopper, making chopped salad for the family and/or friends is both faster and safer. 

Using a dual-blade roller knife similar to a pizza cutter, the ergonomic Salad Chopper cuts lettuce, vegetables, fruits, meats and nuts with just a few rolls.  There's no need for a separate cutting board (and no worries of slicing a finger).

Made from stainless steel, the angle-handled roller is built to trace the curves of the accompanying Oxo bowl. The blades remain in constant contact with the plastic and the rim has a built-on grip to help you get a handle on your work.

The 5.5-quart bowl is big enough for 6 servings and is dishwasher-safe.  Oxo says you can serve in it, too, but that's up to you.

Trade in store-bought salad bags and opt for something fresher.  Oxo's Salad Chopper sells on for $25.

Friday, May 14, 2010

Your Mortgage Approval Isn't Final Until It's Funded

Approval not final until fundedA mortgage approval is never final until it's funded.

A host of things can "go wrong" while your home loan is underway. Some are in your control, many more are not.  And just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

MSN Money ran a summary piece on the topic titled "10 Things That Can Kill A Home Loan".

It's an excellent article because, unlike most "get approved" articles that advise against things like buying a car before closing, or opening a bunch of new credit cards, the MSN Money piece addresses more uncommon factors that can lead to a similar loan turndown.

For example, a home may be unfundable if it's unsuitable for human habitation -- a condition you may not discover until after a thorough home inspection's been made. Broken windows, lack of plumbing, and/or major foundation damage are all deal-breakers with a lender. 

Either fix the home prior to closing, or don't close at all.

Homes in "declining markets" have danger spots, too. Especially for conforming mortgage applicants with less than 20% equity.

Because of how private mortgage insurers operate, some homes carry tougher, ZIP code-based PMI eligibility requirements. As a mortgage applicant, it's important to understand this because you may be PMI-eligible in one neighborhood, but not in another.

There's others ways in which a mortgage approval can go bad, too:

  • You're self-employed and your income was lower last year versus the year prior
  • Your tax return shows large amounts of unreimbursed employee expenses
  • You failed to return required paperwork to the lender within a reasonable time frame

Mortgage approvals are delicate and, despite an improving economy, lenders still operate with caution. Talk with your real estate agent and your loan officer and put together a game plan.

The best way to beat the mortgage system is to know the rules before you start to play.

Thursday, May 13, 2010

Foreclosure Activity Slows For The First Time In Several Years

Foreclosure concentration, by state (April 2010)The national foreclosure rate is finally falling.

According to foreclosure-tracking firm, the number of foreclosure notices dropped 2 percent between April 2009 and April 2010.

2 percent may not seem like much, but it's the first time in the history of the RealtyTrac report that the annual foreclosure rate has dropped.

To be sure, foreclosure rates remain elevated -- more than 300,000 were reported last month, but default notices appear to be approaching a plateau.

The RealtyTrac report shows some other interesting statistics, too:

  • 6 states accounted for more than half of April's bank repossessions nationwide
  • For the 40th month in a row, Nevada topped the nation's foreclosure rate
  • Foreclosure rates dropped in both California and Arizona, 2 foreclosure hot-spots through 2009

The good news for housing doesn't stop there.  9 of the top 10 leading metropolitan areas for foreclosure-related activity showed a drop in annual activity.  Only Reno, Nevada showed an increase.

Buying distressed homes is big business, according to the National Association of Realtors®, accounting for 35 percent of all home resales with a typical discount ranging near 15 percent on value.

But with the discount comes some caution. You need to know how buying a foreclosed can be different from buying a non-foreclosed home.

For example, distressed properties are often sold as-is and may have defects that render them "un-lendable".  Secondly, "quick closings" aren't usually possible with bank-owned homes -- you're often at the bank's schedule and mercy.

And, lastly, not all foreclosed homes are searchable online. You'll usually find more stock if you work with a real estate agent versus searching online.

The RealtyTrac foreclosure report is thorough and can help you gauge what's happening on a state-by-state level, and in the nation's largest metropolitan areas.  Once you've done your research, talk to your real estate agent about what to do next.

There's still good deals in the foreclosure market — you just have to know where to find them.

Wednesday, May 12, 2010

Relocate America's Top 100 Places To Live (2010 Edition)

Relocate America Top 100 Places To LiveRelocate America recently released its 2010 list of Top 100 Places To Live In America. The rankings are topped by some cities you may expect, and some you may not.

According to Relocate America, the rankings highlight communities "moving in the right direction", defined as having a combination of strong leadership, job opportunities, improving real estate markets, recreational options and a good quality of life.

It's not a bad formula and topping the list of Top 100 Places To Live In America is Huntsville, Alabama.  Huntsville was chosen for its low levels of unemployment, stable housing stock, and low cost of living.  Last year, Huntsville placed fifth on the Relocate America list.

The Top 10 cities in which to live, as selected by Relocate America are:

  1. Huntsville, AL
  2. Washington, DC
  3. Austin, TX
  4. San Diego, CA
  5. San Antonio, TX
  6. Tulsa, OK
  7. Charlotte, NC
  8. Raleigh, NC
  9. Boulder, CO
  10. Minneapolis, MN

View the complete Top 100 Places To Live In America 2010 list at the Relocate America website.

Relocate America's Top 100 Places To Live (2010 Edition)

Relocate America Top 100 Places To LiveRelocate America recently released its 2010 list of Top 100 Places To Live In America. The rankings are topped by some cities you may expect, and some you may not.

According to Relocate America, the rankings highlight communities "moving in the right direction", defined as having a combination of strong leadership, job opportunities, improving real estate markets, recreational options and a good quality of life.

It's not a bad formula and topping the list of Top 100 Places To Live In America is Huntsville, Alabama.  Huntsville was chosen for its low levels of unemployment, stable housing stock, and low cost of living.  Last year, Huntsville placed fifth on the Relocate America list.

The Top 10 cities in which to live, as selected by Relocate America are:

  1. Huntsville, AL
  2. Washington, DC
  3. Austin, TX
  4. San Diego, CA
  5. San Antonio, TX
  6. Tulsa, OK
  7. Charlotte, NC
  8. Raleigh, NC
  9. Boulder, CO
  10. Minneapolis, MN

View the complete Top 100 Places To Live In America 2010 list at the Relocate America website.

Tuesday, May 11, 2010

Shopping For Mortgage Rates Is Part Research Skills, Part Luck

Good luck charms and mortgage ratesShopping multiple lenders for a "good mortgage rate" can sometimes save you 1/8 percent on your rate and/or a few hundred dollars in fees. However, when it comes to getting the best mortgage rate, you're going to more than good research skills.

You're going to need some luck.

Mortgage rates are unpredictable, ever-changing, and rarely change as expected.

For example, when the Federal Reserve left the mortgage market March 31, 2010, analysts said that mortgage rates would rise by a half-percent or more. It was practically stated as fact on TV.  When April 1 came around, though, rates didn't rise.

Instead, a volcano erupted and mortgage rates dropped on safe haven buying.

Then, a week later, as  the volcano ash cleared, mortgage rates were supposed to resume their rise. Only they didn't. Instead, a debt crisis emerged in the Eurozone and mortgage rates dropped.

Since March 31, conforming mortgage rates are lower by roughly 0.125 percent, according to Freddie Mac's weekly mortgage rate survey.  At today's rates, the savings are roughly $20 per month per $200,000 borrowed -- or $100 per month based on their original, post-March 31 forecast.

It brings us to one of the most important axioms in rate shopping: You can't shop for good luck.

  • On some days, rates go higher
  • On some days, rates go lower
  • On some days, rates stay the same

Occasionally, there are days when rates do all three.

As a home buyer or would-be refinancer, what rate you get depends on at what time of day you do your shopping.

You can't predict what will happen next in mortgage markets -- even just an hour from now. Therefore, the smartest move, sometimes, is just lock your rate now.  At least that way, you've got a guarantee.

Monday, May 10, 2010

Your Microwave Wastes $70 Per Year And Other Vampire Energy Facts

Even when they're not "on", a multitude of everyday home appliances continue to draw power from the grid, raising home energy bills and increasing atmospheric emissions. These so-called "Energy Vampires" cost U.S. homeowners $4 billion, collectively, in 2005.

In 2010, that figure is likely higher.

In the video above, some of the more common Energy Vampires are highlighted. As an example of how costly standby power can be, researchers show that idle microwave ovens consume enough energy each day to pop an entire bag of microwave popcorn. Annually, the kind of energy consumption wastes close to $70 per household.

Other household Energy Vampires include:

  • Idle battery chargers
  • Computers in "standby" mode
  • Remote control sensors

Simply being aware of home energy-suckers is one easy way to reduce your electricity bill and do something good for the environment. The video shows you how you can both.

Friday, May 7, 2010

Mother's Day Spa Lunch

Creating a Special Day for the Mom (Or Moms) In Your Life.
Mother's Day is just a few days away. If you've yet to plan a celebration for the mom or moms in your life, you'll definitely want to stick with this article. It may be too late to make reservations at a restaurant, but it's not too late to put together an incredible lunch that you can serve right in your own home.

Our moms play such an important role in all our lives, so it's only fitting that we create a special celebration on the day that honors them. Before we get into the subject of the food, let's talk a little about the day as a whole.

In addition to giving us life, moms do a whole lot for us. They are an example to their daughters of how to be a strong woman, as well as to their sons of the caliber of woman they should strive to have in their lives. They push us to do better as individuals, while at the same time provide comfort when we are vulnerable. Moms are the ultimate multi-taskers, oftentimes juggling careers with household and family responsibilities. In general, moms have very few moments to themselves. The reason – their job is 24/7, 365!

Today is mom's day to relax…completely. One duty she need not take on is planning her own Mother's Day celebration. That's going to be your job and I am going to help you do it. Don't worry. It's going to be fun. What do you say we get started?

Considering the amount of pampering our moms do for us, it's only fair we return the favor on her big day. This may sound like a big job, but I'm going to simplify it for you by giving you two words to remember – spa day.

You'd be hard-pressed to find a mom that would not enjoy having a day of beauty. I'm serious when I say you really can't go wrong with this. Send her to the spa for a massage or a facial, or the salon to get her hair done. Even the nail salon for a manicure and pedicure, or a yoga class would work. The key is to find something she enjoys and that fits into your budget. Make her a mid-morning appointment on Mother's Day and get her out of the house for a few hours. This will give her a chance to decompress, and you a chance to put the finishing touches on a great spa-like meal.

It's not uncommon for a spa day to include a healthy yet satisfying lunch, as there is nothing like eating great food after a massage and a sauna. The difference on Mother's Day is that instead of mom eating that lunch at a restaurant, she'll be able to do it in the comfort of her own home…without having to do any of the work.

Try a Mother's Day Shrimp Salad,    My favorite is butter lettuce, shrimp, grapefruit slices, avocado slices.  Arrange on plate and top with thousand island dressing or your favorite dressing.
For dessert: Try Delicious Balsamic Berries with Vanilla Gelato (serves two)

2 C fresh strawberries, green stems removed and sliced
1 C fresh blueberries or raspberries or a mixture of all three.
1.5 Tbsp balsamic vinegar (good quality)
3 Tsp sugar
Vanilla gelato
Freshly ground black pepper (optional)

In a bowl, combine strawberries, blueberries, vinegar, and sugar. Mix well and allow the berries to sit at room temperature for 15 minutes.  Spoon vanilla gelato into bowls and top it with the desired amount of berries and the accumulated sauce. For an interesting finish, top the berries with a little coarsely ground black pepper. I know it sounds weird but trust me it's delicious.

For a beverage, Spa Water (makes 1 gallon).  Very refreshing.

1 lemon, sliced crosswise very thinly, 1/2 English or hothouse cucumber, sliced crosswise thinly, 1 gallon purified water

Place the lemon and cucumber slices in a gallon-sized pitcher and add water. Refrigerate for 3 hours before serving.

Markets Ignore The April Jobs Report And It's Good News For Mortgage Rates

Unemployment Rate 2007-2010On the first Friday of every month, the U.S. government releases its Non-Farm Payrolls report. 

More commonly called "the jobs report", Non-Farm Payrolls is a major market mover. The number of working Americans is directly tied to the health of the economy which, in turn, drives the stock and bond markets.

In general, when jobs numbers improve, it's good for stocks and bad for mortgage bonds. It follows, therefore, that conforming mortgage rates rise because rates always move opposite of mortgage bond prices.

Conversely, when jobs numbers worsen, it tends to be bad for stocks and good for mortgage bonds.  Mortgage rates fall.

Today, markets are behaving a bit differently.

Despite 290,000 jobs created in April 2010 -- nearly twice the expected amount -- and a 40 percent upward revision of March's numbers, mortgage rates are essentially unchanged. 

In a normal environment, rates would be higher.  Today is not normal.

Today is a departure because, for all of the jobs report's import to Wall Street, it's less important to markets than what's happening in Greece right now.

Greece is struggling to meet its debt obligations and its citizens are rioting.

Until a debt solution for Greece is made that sticks, unrest in the region will drive safe haven buying both domestically and abroad. U.S. mortgage bonds will gain on that movement because mortgage bonds are "safe", and mortgage rates will fall.

Indeed, this is exactly what's been happening since the start of April. Mortgage markets have been rallying for 5 weeks.

So, today's jobs news is terrific for the economy and mortgage rates should be rising because of it.  But, they're not. Consider taking advantage -- lock in a rate.

Thursday, May 6, 2010

1 In 8 Banks Tightened Prime Mortgage Standards Last Quarter

Senior Loan Officer Opinion Survey on Bank Lending PracticesThe Federal Reserve says that financial markets "remain supportive of economic growth". Residential mortgage guidelines, however, continue to tighten.

If you've applied for a home loan recently, you probably felt it; extra scrutiny on income, assets and credit scores, among other things.  The hard proof of the changes, however, can be found in the Federal Reserve's quarterly survey of its member banks.

Every 3 months, the Federal Reserve asks senior bank loan officers around the country whether their respective banks' "prime" residential mortgage guidelines tightened since the last survey.

For the period January-March 2010, 1 in 8 banks surveyed toughened their qualification standards

Only 4% loosened them.

When we account for the Fed's survey in conjunction with new underwriting standards from Fannie Mae and FHA, it's clear that getting approved for a mortgage in 2010 is more difficult than at any time in recent memory.

Today's homeowners and home buyers have taller hurdles to leap:

  • Minimum FICO scores are higher
  • Downpayment/equity requirements are larger
  • Debt-to-Income thresholds are smaller

In other words, mortgage rates may stay low throughout 2010, but that won't matter to homeowners failing to meet the new, minimum eligibility standards as set forth by the lenders.

If you're among the many people wondering if now is the right time to buy or refinance a home, remember that -- along with a probable increase in mortgage rates -- mortgage approvals are getting more scarce.

The best home price or mortgage rate in the world won't matter if you're ineligible for financing.

Wednesday, May 5, 2010

March Pending Home Sales Point To Stronger Spring Market

Pending Home Sales September 2008 March 2010The Pending Home Sales Index moved higher in March as home sales were spurred by low mortgage rates and an expiring tax credit.

A "pending home" is a property that is under contract to sell, but not yet closed.

March marks the second straight month in which the Pending Home Sales Index improved after a series of weak showings this past winter.

March showed a 5 percent increase over the month, but the Pending Home Sales Index is still off its October 2009's peak.  October 2009 is a comparable period to March 2010 in that it marked the 1-month deadline before the home buyer tax credit's initial expiration date. The credit was later extended to April 2010, of course.

That said, March's surge in sales is being felt on the street.

Home buyers no doubt noticed the change in activity. Around the country, anecdotally, multiple offer situations were more common last month and "right-priced" homes tended to go under contract quickly.

The increase in March's Pending Home Sales is diminishing the nation's home supply which, in turn, should cause prices to rise in most markets.

Today's buyers should consider making an offer sooner rather than later.  Looking at the data, it appears the best time to have found a "deal" on a home may have been in February.

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Tuesday, May 4, 2010

Tip for Screening Home Inspectors

Tip for Screening Home Inspectors
A sample report is worth a thousand words...

When you are searching for thorough home inspectors, asking for a sample report is a sure fire way to compare inspectors in a short amount of time. An inspection report should provide concise details surrounding any observable issues as well as photographs. Recommendations for solving problems should also be included in a brief, clear manner.

How the inspector handles your request for a sample report will clue you in to the level of professionalism you can come to expect in the future. A quality inspector will always be glad to provide a representative sample for review. If they resist or put you off, move on to the other names on your list.
No list of inspectors yet? Call me I have a list of proven inspectors.  Naturally, personal referral is a great way to find a good inspector. However, if you're interested in learning more about inspection details or need help finding professional inspectors, definitely check out InterNACHI, the International Association of Certified Home Inspectors:

The site features videos, guides, and help finding reputable inspectors. It can't hurt to educate yourself on some of the particulars of home inspection.

Fannie Mae Tightens Guidelines On ARMs And Interest Only Products

Fannie Mae tightens its mortgage guidelinesFor the first time this year, Fannie Mae announced significant updates to its mortgage underwriting guidelines.

The changes include newer, harsher ARM qualification standards, the elimination of a once-popular loan product, and tighter rules for interest only mortgages. 

Fannie Mae made its official announcement April 30, 2010.  The changes will roll out to home buyers and homeowners over the next 12 weeks.

The first guideline change is tied to ARMs of 5 years or less. 

Mortgage applicants must now qualify based on a mortgage rate 2% higher than their note rate.  For example, if your mortgage rate is 5 percent, for qualification purposes, your rate would be 7 percent.

The elevated qualification payment will disqualify borrowers whose debt-to-income levels are borderline.

The second change is Fannie Mae's elimination of the standard 7-year balloon mortgage.  Balloon mortgages were popular early last decade.  Lately, few borrowers have chosen them, though.  Mostly because rates have been relative high as compared to a comparable 7-year ARM.

And, lastly, Fannie Mae is changing its interest only mortgages guidelines.

Effective June 19, 2010, Fannie Mae interest only mortgages must meet the following criteria:

  1. The home must be a 1-unit property
  2. The home must be a primary residence, or vacation home
  3. The borrower's FICO must be 720 or higher
  4. The mortgage must be a purchase, or rate-and-term refinance. No "cash out" allowed.

Furthermore, borrowers using interest only mortgages must show two full years of mortgage payments "in the bank" at the time of closing.

Earlier this year, Fannie Mae-sister Freddie Mac announced that as of September 2010, it will stop offering interest only loans altogether.

Between Fannie Mae, Freddie Mac, the FHA, and other government-supported entities, the U.S. government now backs 96.5% of the U.S. mortgage market.  So long as mortgage default rates are high, expect approvals for all borrower types to continue to toughen.

Monday, May 3, 2010

Shopping For Mattresses, Or How Buy A Good Night's Sleep

NBC's The Today Show hosted Consumer Reports for its take on mattresses. Some of the results may surprise you.

At 7 minutes, the video is long, but it's stuffed with helpful comfort tips, including the scientific reason why a mattress should be replaced every 8 years or so.  Some of the other advice includes:

  • How to reduce morning aches and pains with proper pillow choices
  • Why "hot sleepers" should stay away from memory foam
  • How to properly test a mattress in the store before you buy it

After its testing and a series of interviews with consumer and industry workers, Consumer Reports also concludes that -- for a queen-sized bed -- a $1,000 list price is going to give you "a lot of bed"; there's little need to spend more.  And, furthermore, because mattress prices are usually negotiable by half-off or more off, you could buy that $1,000 mattress at a significant discount.

More than 70% of people successfully negotiate lower mattress prices.

Consumer Reports acknowledges that there's no "#1 mattress", per se, because mattresses are a personal fit in terms of both firmness and size.  With respect to durability, however, most will last for years.

Saturday, May 1, 2010

Portable, Foldable Speakers Are Perfect For Your Office, Your Hotel, And The Beach

OrigAudio cityscape speakersFold-up speakers for your MP3 players?  You better believe it.  OrigAudio's eco-friendly Fold-N-Play speakers let you take your favorite playlists on the road to your office, hotel rooms and the beach.

Made from recycled materials, the Fold-N-Play speakers and arrives in a similarly-recycled box. It's two, flat pieces of cardboard with embedded speakers and an attached cable.  There's no batteries. 

All you need is a headphone jack.

Follow the enclosed instructions to convert the speakers into 3-inch cubes of sound.  Then, when you're done, fold them back up and slip them into your laptop sleeve.  The 1-watt sound won't rival a home stereo system, but will outperform most internal laptop speaker sets.

The OrigAudio Fold-N-Play made Time Magazine's list of 50 Best Inventions of 2009. It sells for $20 per set, or $80 for all 6 available styles.

Visit the OrigAudio website at