Saturday, July 31, 2010

Cafe Rio Pork

Pork Tacos

1 pork loin
2 cups pace medium salsa
2 cups brown sugar
Tortillas, your favorite toppings: lettuce, tomatoes, cheese, avocado, sour cream, etc.

Put in your slow cooker for 6-8 hours on low. Shred and let sit for one more hour. Serve in crunchy or soft taco, top with your favorite toppings

Lime Rice
3 cups of rice
3 cups of water
1/2 onion
1/2 bunch cilantro
1 can green chilies
4 t garlic- minced
4 t chicken bouillon
1/2 t salt
1 T butter
4 T lime juice

Blend/Chop onion, cilantro, and chilies in a food processor (or you can just chop onion and cilantro by hand). Then put all ingredients in with the rice and cook; either on stove or in a rice cooker. Stove top: Bring to a boil, lower heat and cook 15 minutes with cover on pot, do not remove cover. Let sit for 10 minutes with cover on. Stir with fork or follow directions on rice cooker.

Friday, July 30, 2010

30-Year Mortgage Rates Make New Lows, But Look Ready To Spike

Freddie Mac mortgage rates (January - July 2010)

No doubt you've heard that mortgage rates are low. They're lower than they've ever been in history.  The news is everywhere.

Just check out some of these headlines from the last 24 hours:

  • Mortgage rates set new lows for the 6th straight week (Reuters)
  • Mortgage rates fall again; 30-year fixed at 4.54% (Wall Street Journal)
  • Mortgage rates hit another low : 4.54% (NPR)

Fixed mortgage rates are now down more than 1/2 percent from the start of the year, and 3/4 percent from just 1 year ago. The drop has dramatically improved home affordability for home buyers while creating refinance opportunities for existing homeowners.

From a payment perspective, a conforming, 30-year fixed rate mortgage is now cheaper by $41.94 per month per $100,000 borrowed versus July 2009.

A homeowner with a $300,000 mortgage, therefore, is saving $45,295.20 over 30 years.

Low mortgage rates rarely last long and rates appear to have troughed. After a big downhill between April and July, they're now flat. This could mean rates have finished falling, or that they're gearing up for another drop lower. Either way, if you haven't talked to your real estate agent about home affordability, or your loan officer about refinancing, it may be time to make that call.

If today's market marks the end of low rates, rates are expected to rise quickly.

Thursday, July 29, 2010

Falling Consumer Confidence Helps Drag Mortgage Rates Lower. For Now.

Consumer Confidence Index July 2008-July 2010For the second consecutive month, U.S. consumer confidence is plunging. July's official reading is its lowest since July of last year and the figures run in stark contrast to just two months ago, when the index touched a multi-year high.

According to The Conference Board, July's figures are reflective of a more pessimistic consumer; one concerned about "business conditions and the labor market".

Falling confidence numbers are presumed to be poor for the economy. For homeowner and home buyers , however, they can create opportunity.  Low confidence can influence the mortgage market in a positive manner, driving mortgage rates down.

Mortgage rates are already at their lowest levels of all-time.

The link between consumer confidence and everyday mortgage rates roots in consumer spending.

Consumer spending accounts for close to 70% of the overall U.S. economy so, the thought goes that, a less confident consumer is less likely to spend money, thereby retarding economic growth. This harms the stock markets and drives cash to bonds, including mortgage-backed bonds.

More bond demand leads bond prices to rise which, in turn, pushes mortgage rates lower.

The other side of lagging confidence is that Americans may be less likely to take new financial risks when they're feeling unsure, including buying a new home. This can then drag on the housing market, negatively impacting home prices.

Falling home values can help buyers, harm sellers, and stymie would-be refinancers.

It's tough to predict how consumer confidence data will work its way through the economy, but in the near-term, it appears to be helping mortgage rates stay low. If you're floating a mortgage rate with your lender, or contemplating a refinance, the time may be right to lock in a rate.

Low rates can't last forever.

Wednesday, July 28, 2010

Case-Shiller Shows Home Price Improvement In 95% Of Cities

Case-Shiller Change In Home Values April-May 2010

Standard & Poors released its Case-Shiller Index Tuesday. On a seasonally-adjusted basis, between April and May 2010, home prices rose in 19 of Case-Shiller's 20 tracked markets.  It's the second straight month of strong Case-Shiller findings.

Also, May's numbers are a mirror-image of February's. In February, 19 of 20 markets lost value.

In its press release, the Case-Shiller staff resisted calling May's data proof of a housing recovery, noting that home values remain flat as compared to October of last year. However, there are some noteworthy numbers in the Case-Shiller report.

  1. 13 of the 20 tracked cities are showing home price improvement year-over-year
  2. Foreclosure posterchlld San Diego has now shown 13 straight months of improvement
  3. San Diego, San Francisco and Minneapolis are showing double-digit annual growth

These are all good signs for the housing market, but the Case-Shiller Index is not without its flaws. Most notably, the data is limited to just 20 cities nationwide -- and they're not even the 20 largest ones

Cities like Houston, Philadelphia, and San Jose are excluded from Case-Shiller, while cities like Tampa (#54) are not.

Another Case-Shiller flaw is that it reports on a 2-month delay.

Therefore, today is several days from the start of August but we're now reflecting on data from May. Given the speed at which the real estate market can change, May's data is almost ancient.  Today's values may be higher or lower than what Case-Shiller reports.

For home buyers, reports like the Case-Shiller Index may not be useful in making a "Buy or Not Buy" decision, but can aid in watching longer-term trends in housing.  For real-time data, talk to a real estate agent with access to local figures instead.

Tuesday, July 27, 2010

5 Reasons Why You Should Buy a Home Today

Homeownership almost seems like a dirty word in today's society. People are blogging, tweeting and facebooking their belief that buying a home is just plain stupid. I respect their opinion on the issue though I totally disagree. Why?
This might be the best time to buy a home in American real estate history.

Some might think I’m crazy. Cynics might think that I am saying this because I still hold a real estate license (though I have not listed nor sold a home in ten years). My reason for saying it is actually quite simple. Owning a home makes more sense than not owning a home for the vast majority of families in this country. Let me give you five reasons why.
1. Real Estate is a Great Long Term Investment

Don’t take my word on this. This is what Mike Mandel, former chief economist at BusinessWeek and current Senior Fellow at Wharton’s Mack Center for Technological Innovation, had to say:

We’ve just had the biggest boom and bust in real history in recent history. Nevertheless, real estate has still greatly outperformed the stock market over the past ten years.

Below is his chart actually showing the difference between real estate and the stock market.

2. A Home Is a Better Place to Raise a Family

Don’t take my word on this. When Fannie Mae asked current renters for the major reason to buy a house in their National Housing Survey 2010, these were the answers renters gave (they could pick multiple answers):

78% said it was a good place to raise children

75% said because they would feel safe

70% said because you have control of your own space

3. A Home Creates a Sense of Community

Don’t take my word on this. The Federal Reserve Bank of New York just published a paper The Homeownership Gap. The paper explained:

Because owners have a financial interest in their property, they have incentives to take measures that will maintain or increase the value of that property. Some of these measures—such as fixing a leaky roof—are closely related to the house itself. Others, such as investing resources in the betterment of the neighborhood and the community, have broader beneficial effects on the local area, creating what economists call “positive externalities.”

4. It’s Cheaper to Own Than Rent in Many Parts of the Country

Don’t take my word on this. Housing Wire just reported on a Credit Suisse study:

While a segment of the renting population continues to rent, many are looking to dip their toes in the homeownership waters. Credit Suisse said the percentage of median household income needed to pay the mortgage on a median priced home is at a 30-year low… Low mortgage rates and property values makes homeownership more attractive than renting for many. In many markets — including Washington DC, California’s Inland Empire, Las Vegas and Phoenix — paying for a mortgage is less expensive than renting.

And here is a graph from the study:
5.  People who do buy a home don't regret it.
Don’t take my word on this. Probably the best people to ask if buying a home makes sense are the people who currently own homes. A recent national poll commissioned by found:

Ninety percent of homeowners say they don’t regret buying their home despite a nationwide tsunami of foreclosures, short sales and loan modifications.

It’s a great long term investment. It’s a great place to raise a family. It gives you a greater sense of community. It’s less expensive than renting. People who currently own have no regrets. Buying a home seems like a no brainer to me.

New Homes Sales Gain in June, But Gains Are Relative

New Home Supply June 2009 - June 2010

After a down month in May, the sales of newly-built homes appears back on track.

As published by the Census Bureau, June's New Home Sales report showed:

  1. A 24 percent sales volume increase from the month prior
  2. A 2-month drop in the supply of newly-built home

There are now just 210,000 new homes for sale nationwide.

June's data is a major improvement over May, but it's possible that the true "new home market" may be softer than the statistics suggest.  This is for several reasons.

First, we're comparing June's sales data to the worst month in New Home Sales history.

In May, sales of new homes totaled just 267,000 units nationwide. That's one-quarter fewer sales than in the previous worst month in New Home Sales history. May's sales levels were awful by any measure but June's improvement to 330,000 units remains second-worst sales levels ever posted.

Second, although much improved, June's new home supply of 7.6 months is elevated versus the historical norm near 6.0 months.  The last year has averaged 7.7 months.

For buyers of new homes , this combination of low sales volume and higher-than-normal inventory may be a positive.  It's the main reason why homebuilder confidence is reeling and the downturn has opened some doors for big discounts and deals. Free upgrades and closing cost credits can make a well-priced home even more attractive.

Plus, with mortgage rates at all-time lows and expected to rise, home affordability is may never be better.

Monday, July 26, 2010

How To Prevent Mercury Poisoning With CFL Light Bulbs

CFL bulbs require care when handling

According to the EPA, if every household in America replaced one "traditional" bulb with an energy-saving compact fluorescent lamp (CFL) light bulb, it would result in $700 million in energy cost savings each year, plus a greenhouse gas savings equivalent to that of 800,000 automobiles.

They're expensive, but CFL bulbs tend to pay for themselves in less a year, and often last for several. It's no wonder they're so popular.  But, CFLs also come with health risks.


Namely, CFL bulbs contain mercury -- an average of 4 milligrams per bulb.


The mere presence of mercury doesn't make CFLs dangerous. It just means that you should exercise care when handling them, and take certain precautions when disposing of them.

The Environment Protection Agency offers some tips:

  1. Screw/unscrew the bulb from the base and not the bulb to prevent breakage
  2. Never force a CFL bulb into a light socket
  3. When the bulb burns out, bring it to one of 3,106 recycling centers

The EPA website also give guidance for dealing with broken bulbs. Among the recommendations: Don’t wash mercury-covered clothing to prevent contaminating other clothing, too, and don't vacuum up the poison, either. There are special handling instructions to prevent poisoning yourself and others in your household.

The EPA's CFL safety PDF is 3 pages long and can be viewed on its Web site.

CFLs provide long-term energy and environment cost savings. And, with some common sense care, their risks to your health can be minimized.

Friday, July 23, 2010

Existing Home Sales Drop In June But Hint At Support For Higher Price Tiers

Existing Home Supply (June 2009 - June 2010)Consistent with most post-home buyer tax credit housing news, the National Association of Realtors® says Existing Home Sales eased lower last month.

An "existing home" is a home that cannot be considered new construction.

The 5 percent drop in sales from May to June was expected, but a closer look at the month's data reveals some interesting trends.

First, repeat buyers accounted for 44 percent of home resales in June, up from 40 percent in May. That's a healthy increase for just 4 weeks' time and the tax credit is a likely catalyst. First-timer buyers bought starter homes owned by former first-timers, who were then free to "move up" to larger, more expensive property.

Housing markets can be trickle-up and, not coincidentally, the jumbo/luxury housing market is now in the midst of rebound.

Second, June's "distressed sales" accounted for 32 percent of all home resales, up from 31 percent in May.

A figure like this hints at the large role foreclosures continue to play in a home buyer's home search strategy.  And why not? The National Association of Realtors® suggests that distressed homes are sold at a 15 percent discount.

Lastly, take note that home inventories are rising. June's 8.9 months of supply is the highest in 10 months. Excess supply leads home prices lower, all things equal.

Overall, the Existing Home Sales data from June is a mixed bag. There's support for the middle- and upper-price tiers, but a growing overhang of supply. The market looks favorable for buyers given low mortgage rates and strong negotiation leverage.

Thursday, July 22, 2010

Yes, You Can Still Get A Mortgage If You're Pregnant

The New York Times ran an important story this week concerning pregnancy and mortgage approvals. Titled "Need a Mortgage? Don't Get Pregnant", the article discussed the difficulties that expecting and recently-expanded families are having with their mortgage financing.

NBC's The Today Show picked up the story as well, as shown in the 3-minute clip above.

The crux of the issue is that maternity/paternity leave often leads to a change in household income and mortgage lenders will no longer assume one or both parents will go back to work full-time.  The loss of income can raise a household's debt-to-income ratio to unlendable levels.

Now, your loan officer cannot ask you about a pregnancy; such questions would be in violation of Equal Credit Opportunity Act. But he can ask if whether you expect your future employment and income situation to change. This would be a perfect time to broach the topic. And you should. If you're found to have withheld employment and income information from your lender at a later date, it could result in an immediate loan denial plus a loss of earnest monies paid.

Across both pieces, though, the prevailing message is this: Families concurrently planning to (1) have a baby and (2) buy a home should be up-front and forthcoming with their loan officers. Financing is often still available for families expecting an addition -- there's just some extra paperwork though which to work.

Be prepared for that paperwork and you're more likely to get your loan.

Wednesday, July 21, 2010

What Will My House Be Worth Next Month?

We always want to be sure that we get at least a fair price for anything we are selling. Truth be told, we hope we get top dollar and would not be upset if a buyer was willing to pay a premium above that. The same dynamics come into place when we are selling a home. We want at least a fair price. We usually list our house for a price above that hoping to either find a buyer willing to overpay or, at least, leave ourselves with some room to negotiate.

That is a dangerous strategy in today’s real estate market. The concept above depends on one of two things:

Prices are stable and, if I do have to lower my asking price at some future point in time, I will still be able to sell it for today’s current value.

Prices are appreciating and, if I can’t get my price right now, I just have to wait until the market catches up.

Neither one of those scenarios exist today. Individual home prices are decreasing in almost every market and as we move forward depreciation will actually accelerate. All pricing is dependent on supply and demand. Let’s look at how both will impact prices as we go through the next few months.

Many housing analysts now believe that the Home Buyer Tax Credit did not increase demand. It seems what the credit did was drag demand forward. A percentage of the people who would have purchased in the second half of the year decided to move their plans up to take advantage of the ‘free’ money.

The Wall Street Journal reported:
There are clear signs that demand was pulled forward from the late spring and summer into March and April.

Housing Wire reported:

The tax credit pulled sales forward in April but “left a vacuum of demand” that will persist through the summer.

Demand, at best, will remain stable through the next several months.

The other end of the pricing equation (supply) looks much more troubling as we move forward. A great guideline to use to determine future pricing is month’s supply of inventory.

1-4 month’s inventory is a sellers’ market where appreciation usually occurs.

5-6 months is a normal market with prices staying just ahead of inflation.

7+ months creates a buyers’ market where depreciation usually occurs.

The increase in sales at the original expiration of the tax credit (Nov 30, 2009) drove down the month’s supply of housing inventory to normal levels (6.5 months). However, the extension of the tax credit did not have the same impact on supply as the inventory currently stands at 8.3 months.

Couple that with the fact that banks will repossess approximately a million foreclosed homes this year and you realize the supply of housing inventory could jump to numbers close to those we experienced when home prices were falling dramatically.

What does this mean to you?

If you plan to sell this year, the value of your home is probably highest right now. You will continue to lose value as the year closes out.
Source: KCM

Housing Starts Ease 0.7 Percent In June -- 7x Better Than The Headline Data

Housing starts July 2008 - June 2010

Single-family Housing Starts eased lower last month, falling by 0.7 percent from May, or 3,000 units nationwide.

A "housing start" is a home on which construction has started.

June's Housing Starts data is somewhat soft and may partially explain why home builder confidence dropped to its lowest level since April 2009, but for buyers and sellers , the Housing Starts report is not nearly as bad as headlines say.

This is because when the press reports on Housing Starts, it doesn't single out single-family homes. The press lumps every type of home into a single, giant reading. As a result, news outlets are reporting Housing Starts down 5 percent -- a somewhat misleading figure.

The 5 percent figure is actually a combination of 3 separate housing types:

  1. Single-Family Housing Starts
  2. Multi-Unit Housing Starts (2-4 Units)
  3. Apartment Building Housing Starts (5 or more units)

But, single-family homes are what most Americans purchase. This is why the single-family starts data is more relevant than the combined figure commonly reported by the press. 2-4 units and apartment buildings are a different realm of buyer.

That said, though, we can't even be sure that June's Single-Family Housing Starts report is accurate. As noted in the Department of Commerce's press release, the data's margin of error is 10.7 percent which means the reported results are of "no confidence".

In other words, there is no statistical evidence to prove the actual change was different from zero.

If Housing Starts did, in fact, drop in June, it will help to reduce the housing inventory, which will provide support for local home values. For home sellers, this could be good news. Fewer homes for sale means less competition for buyers.

Tuesday, July 20, 2010

Sagging Homebuilder Confidence Opens The Door For Good Deals

NAHB Housing Market Index July 2008-2010Builder confidence in the housing market slipped this month, according to the National Association of Homebuilders' monthly Housing Market Index.

The Housing Market Index is actually a weighted composite of 3 separate surveys. One measures current single-family sales; one measures projected single-family sales; and one measures traffic of prospective buyers.

All three surveys were down in July:

  • Single-Family Sales : From 17 (June) to 15 (July)
  • Single-Family Project : From 22 (June) to 21 (July)
  • Buyer Foot Traffic : From 13 (June) to 10 (July)

The HMI's July reading of 14 puts confidence at its lowest point since April 2009.

For home buyers , a drop in builder confidence could create an opportunity for negotiation.

Remember, it wasn't too long ago that most builders were flush with home inventory, unable to find willing buyers. To help move product at that time, builders dropped prices and offered incentives including free upgrades. If confidence continues to sag going forward, home purchase deals of that nature may return -- especially as the foreclosure market gets larger.

See, in the past, builders' main competition for buyers were the existing home sellers.  Today, builders compete with the existing home sellers and the banks with REO. 

It's a terrific time to be a home buyer, in other words -- sellers are fighting for you. It's no wonder sellers have little leverage anymore. Couple that with all-time low mortgage rates and affordability for homes is at an all-time high.

If you're planning to buy a home later this year, you may want to consider moving up your time frame. The market looks ripe for good deals this summer.

Monday, July 19, 2010

25 Cities In Which To Get A Bang For Your Homebuying Buck

Affordable cities for homebuyersHome affordability is at an all-time high. Home values are still in recovery while mortgage rates continue to make new lows. But where are homes the most affordable? recently ran a piece titled "Where Homes Are Affordable", listing 25 communities around the U.S. in which median incomes are relatively high and median homes are relatively low.  It's a housing market "bank for your buck" list.

The top 10 cities as listed by the editors:

  1. Deerfield Beach, FL
  2. Lafayette, IN
  3. San Antonio, TX
  4. Deltona, FL
  5. Spring, TX
  6. Glendale, AZ
  7. Avondale, AZ
  8. Bolingbrook, IL
  9. Fishers, IN
  10. Des Moines, IA

Of the top 10, 2 picks are from the Southeast; 4 are from the Midwest; and 4 are from the Southwest.  2 are "major" cities and the rest are suburbs of bigger cities.  Lafayette stands lone as a college town.

The rest of's 25 cities follow a similar pattern -- larger suburbs geographically concentrated in the Midwest and Southwest. Surprisingly, though, New Jersey and Virginia do find themselves represented.  Even the expensive Eastern Seaboard has its good buys.

Saturday, July 17, 2010

Walk Away and Fannie Mae Will Chase You Down

Many lending institutions are beginning to take action against those who decide to walk away. Fannie Mae, according to an article in Housing Wire, announced:
  • Borrowers who are determined to have the ability to make their monthly payments but walk away from their homes will not be able to secure a Fannie Mae backed mortgage for seven years after the foreclosure.
  • Fannie Mae will also take legal action against borrowers who strategically default in order to recoup mortgage debt.

What does this mean to you?

Considering a strategic default? Know the ramifications before ‘walking away’ from your mortgage obligation.

Friday, July 16, 2010

The Fed's June Minutes Keep Mortgage Rates In Rally-Mode

FOMC June 2010 MinutesAccording to Freddie Mac, mortgage rates made new all-time lows this week and the good news is that rates look poised to fall even more.
Since the Federal Reserve's release of its June 2010 meeting minutes Wednesday, mortgage rates are dipping even more and one of the main reasons why is because of some choice Fed words.
  1. The Fed expects below normal growth through 2012
  2. The Fed's outlook for employment has dipped
  3. Credit conditions are easing only slowly
Overall, the economic optimism the Fed displayed earlier this year appears to be waning. The economy is moving forward -- just not as quickly as expected.  That should bode well for mortgage rates and home shopping.
Mortgage rates were down Wednesday afternoon and Thursday and remain historically low. All it would take to reverse rates, however, is a run of positive news on jobs, growth, and consumer spending.  Therefore, if you know you need to lock a mortgage rate in the near-term, it may be a good time to make the call.
Lock your mortgage rate and move on.

Thursday, July 15, 2010

Dad Life

Foreclosure Activity Slows Again In June 2010

Foreclosures per capita, June 2010

313,841 foreclosure filings were made in June, according to foreclosure-tracking firm RealtyTrac. The figure represents a 3 percent drop from May and 7 percent drop from June of last year. However, foreclosure filings remain relatively high nationwide.

June marks the 16th straight month the filings topped 300,000. 1 in every 411 U.S. homes received some form of notice last month with foreclosure density varying wildly from state-to-state.

Like everything else in real estate, it seems, foreclosures are a local phenomenon.

The states with the highest foreclosures per capita were:

  • Nevada : 1 foreclosure filing per 88 homes
  • Florida : 1 foreclosure filing per 171 homes
  • Arizona : 1 foreclosure filing per 189 homes

The states with the lowest foreclosures per capita were:

  • Vermont : 1 foreclosure filing per 26,051 homes
  • West Virgina : 1 foreclosure filing per 8,058 homes
  • South Dakota : 1 foreclosure filing per 6,528 homes

Overall, 40 states beat the national Foreclosure Per Capita average and 10 states fell below. The sheer volume of REO, though, is creating interesting buying opportunities for first-timer buyers, move-up buyers, and real estate investors.

Homes bought from banks are usually less expensive than non-foreclosure homes. This is one of the major reasons why distressed sales account for roughly 30 percent of all home resales. Less expensive, though, doesn't always mean "cheaper". Foreclosed homes are often sold as-is and may be defective or otherwise uninhabitable.

Making repairs to get these homes into "living condition" can be costly.

Therefore, if you're buying a foreclosed home, make sure you know what you're buying before you make your bid. Have a certified professional inspect the home to check for damage, and consider enlisting the help of a real estate agent to assist with negotiations and management of the contract.

The process of buying a foreclosed home is different from buying a typical resale. Make sure you do your homework.

Wednesday, July 14, 2010

Mandatory Loan Fees Keep Borrowers From Getting Their Absolute Lowest Rate

Loan-level pricing adjustments add to mortgage costsConforming mortgage rates may be posting all-time lows this week, but that doesn't mean you'll be eligible for them. You may have already called your loan officer and found this out the hard way.

It's because of a federally-mandated mortgage-pricing scheme known as "loan-level pricing adjustments".

In effect since April 2009, loan-level pricing adjustments are changes to a loan's base rate and/or fee structure based on that loan's inherent risk to Wall Street. It's similar to auto insurance pricing adjustment in that a sports car, all things equal, will cost more to insure than a comparably-priced minivan.

More risk, more cost.

In mortgage lending, loan risk can be loosely grouped into 5 categories. Mortgage applications featuring any of the five traits are subject to price adjustments:

  1. Credit Score (i.e. the borrower's FICO is below 740)
  2. Property Type (i.e. the subject property is a multi-unit home)
  3. Occupancy (i.e. the subject property is an investment home)
  4. Structure (i.e. there is a subordinate/junior lien on title)
  5. Equity (i.e. mortgage insurance is required by the lender)

Furthermore, loan-level pricing adjustments are cumulative.

A 3-unit investment home will face larger adjustments than an owner-occupied 3-unit home, for example. It's these adjustments that explain why you may not be eligible for the rates you see advertised online and in the newspapers -- your particular loan may be subject to this risk-based pricing that raises your mortgage rate and closing costs.

The government's loan-level pricing adjustment schedule is public information. See what your lender and how your loan quote is made at the Fannie Mae website. Or, if you find the charts confusing, just call or email your loan officer for help with interpretation.

Tuesday, July 13, 2010

Should You Refinance Your ARM, Or Let It Adjust Lower?

ARM adjustment schedule 2008-2010

If your adjustable rate mortgage is due to adjust this year, don't go rushing to replace it just yet. Your soon-to-adjust mortgage rate may actually go lower. It's related to the math behind the ARM.

Conventional, adjustable-rate mortgages share a common life cycle:

  1. There's a "starter period" in which the interest rate remains fixed
  2. There's an initial adjustment period after the starter period called the "first adjustment"
  3. There's a subsequent annual adjustment until the loan's term expires -- usually at Year 30.

The starter period will vary from 1 to 10 years, but at the point of first adjustment, conventional ARMs become the same. A homeowner's new, adjusted mortgage rate is determined by the sum of some constant, and a variable. The constant is most often 2.25% and the variable is most often the 12-month LIBOR.

As a formula, the math looks like this:

(Adjusted Mortgage Rates) = (12-Month LIBOR) + (2.250 Percent)

LIBOR is an acronym standing for London Interbank Offered Rate. It's the rate at which banks borrow money from each other and, lately, LIBOR has been low. As a result, adjusting mortgage rates have been low, too.

Last year, 5-year ARMs were adjusting to 6 percent or higher. Today, they're adjusting to 3.375%.

Based on the math, it may be wise to just let your ARM adjust this year. Or, depending on how long you plan to stay in your home, consider a refinance to a new ARM.  Starter rates on today's adjustable rate mortgages are exceptionally low , as are the rates for fixed rate loans.

Either way, talk to your loan officer about making a plan. With mortgage rates as low as they've ever been in history, homeowners have some interesting options. Just don't wait too long. LIBOR -- and mortgage rates in general -- are known to change quickly.

Monday, July 12, 2010

How To Install A Ceiling Fan In Your Home

Up to 50% of your home's energy bill can be tied to heating and cooling costs.  Thankfully, it's easy to lower those bills. The addition of a ceiling fan can cut your household energy bills dramatically.

Plus, the installation may be simpler than you think.

In this 4-minute video from the Lowe's YouTube collection, you'll learn how to measure, mount and install a ceiling fan, step-by-step:

  1. Choose the right-sized fan for your room based on its "longest wall"
  2. Cut the power to your room, and test that the power is off
  3. Assemble a ceiling fan
  4. Secure a ceiling fan motor to the ceiling
  5. Restore power to the room

If you're uncomfortable around electricity, or feel the video's instructions are "too complicated", by all means, call an electrician. The money you spend on installation will be dwarfed by what you save in energy bills.

For an electrician referral , reach out to me anytime by phone or email. I am happy to help you.

Friday, July 9, 2010

The Flawed Home Price Index Shows Home Values Up 0.8 Percent

Monthly change in Home Price Index from April 2007 peak

Last week, the Case-Shiller Index reported home values up 0.8 percent across 20 tracked markets. The public-sector Federal Housing Finance Agency has reached a similar conclusion.

Reporting on a two-month lag, the government's Home Price Index shows home values up 0.8 percent in April, buoyed by the expiring federal home buyer tax credit and low mortgage rates.  It's a positive signal for a recovering housing market.

But just because the Home Price Index says home values are rising, that doesn't mean they are. The Home Price Index methodology is flawed on multiple fronts.

First, the Home Price Index reports on a 60-day delay. This two-month lag turns the HPI a trailing indicator for the housing market instead of a forward-looking one. If you're a home buyer looking for direction, HPI won't give it to you -- you'll have to get that analysis from your real estate agent.

Second, HPI only accounts for home values in which the home's attached mortgage is backed by Fannie Mae or Freddie Mac.  As the FHA market share grows, fewer homes get included in the HPI sample set, and HPI values may be skewed high or low.

And, third, HPI doesn't account for new home sales -- only repeat ones.  This, too, eliminates a major segment of the market.

All of that said, though, the Home Price Index remains important to housing.  It's still the most comprehensive home valuation model in print and it's been giving strong readings since the start of year.  You can't ignore that on any level.

It's July and you may have missed the "rock bottom" home prices from earlier in the year, but homes are still relatively inexpensive. Couple that with all-time low mortgage rates and home affordability looks excellent. Consider making an offer while the terms are right.

Thursday, July 8, 2010

Household Finances : Which Bills Should I Pay First?

Morning television can be "light", but as far as personal finance interviews go, this Suze Orman segment from The Today Show is loaded with practical financial planning advice.

Titled "What Should You Do First?", Ms. Orman addressed the real-life, money management conundrums households face, such as:

  • Should I pay off credit card bills, or create an emergency cash fund?
  • Should I pay off student loan debt, or pay off credit card bills?
  • Should I save for a child's college tuition, or save for my retirement?

In 5 minutes, the segment covers a half-dozen scenarios like the ones above, explaining what to do, and why to do it.

Ms. Orman's style may not interest you and financial advice is rarely universal, but the piece is worth watching.

Watch the clip on the NBC website.


Wednesday, July 7, 2010

June's Jobs Report Wasn't As Bad As The Headlines (And How You Can Take Advantage)

Net Job Gains July 2008 - June 2010In June, for the first time since December 2009, the U.S. workforce shrank.

According to the Bureau of Labor Statistics, the economy shed 125,000 jobs last month even as the Unemployment Rate dropped to 9.5 percent. The drop in the Unemployment Rate is being attributed to fewer Americans looking for work.

At first glance, the jobs report looks weak but a deeper look shows something different.

Excluding the 225,000 government Census workers that recently left the workforce, the total number of employed persons actually grew by 83,000 in June. That's 50,000 more working Americans as compared to May.

And, since the start of the year, the U.S. workforce has grown by 857,000.

Jobs growth is closely tied to economic growth because more working Americans means more disposable income which, in turn, stokes consumer spending. Job growth is better than job loss.

Consumer spending makes up the majority of the U.S. economy so as consumer spending grows, investor mentality tends to shifts toward "return on principal" (i.e. stock markets) from "safety of principal" (i.e. bond markets).

A move like this is often bad for home affordability because falling demand for bonds is tied to higher mortgage rates. In addition, with the growing number of Americans earning a paycheck, demand for homes is likely to increase, thereby helping to push home prices higher.

Overall, therefore, the jobs report should be bad for rate shoppers and home buyers in. Except, the markets aren't reacting that way. For now, mortgage rates are slightly improved since the jobs report's release.

Perhaps Wall Street is watching the wrong figures, but don't let that be your loss. If you're shopping for a mortgage, a home, or both, now may be your best time to make a move; while rates are still low; with home prices down; before traders change their tune.

Because when markets change, it'll likely happen fast.

Tuesday, July 6, 2010

How To Improve Your Home's Indoor Air Quality

VOCs are present in dry cleaningAn EPA study shows that close to dozen common air pollutants are 2 to 5 times more concentrated indoors versus outdoors, regardless of whether the home is is located in Rural America, or in an industrial zone.

The cause is volatile organic compounds, more commonly known as VOCs.

VOCs are gases emitted from certain liquids and solids including paints, cleaning supplies, pesticides, air fresheners and permanent markers, among others. In the short-term, can cause respiratory irritation. In the long-term, VOCs can lead to "Sick Building Syndrome", cancer and other illnesses.

There are a number of ways to keep VOC levels in your home to minimum and the EPA published some tips to help with home health safety. The advice includes:

  1. Meet or exceed all product label precautions
  2. When buying paints and chemicals, don't buy bulk. Buy only what you need. Dispose of the rest.
  3. If a product label says "use in well-ventilated area", move to the outdoors or use a fan

VOC levels can remain elevated for long periods of time even after the VOC-generating activity is completed.  Therefore, take care to protect your home and your health.

Read the EPA's complete guide to volatile organic compounds on its website.

Friday, July 2, 2010

Was The Pending Home Sales Report Really That Bad? It Depends Who You Ask -- Buyer Or Seller.

Pending Home Sales Nov 2008 to May 2010The Pending Home Sales Index plunged in May 2010, just one month after the expiration of the federal home buyer tax credit program.

The Pending Home Sales Index is now at a record-low level.

A "pending home sale" is an existing home under contract to sell, but not yet closed. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days.

Because of this timeline, we can expect the summer's Existing Home Sales to be weak, too. With fewer homes going under contract, fewer homes can close.

On the surface, May's Pending Home Sales Index looks like terrible news for housing. And, if you're a seller, it just might be. But, if you're a buyer, the story reads differently.  Just consider the market conditions. 

A broad look at the housing market shows:

  1. Home supplies are rising in most markets
  2. Home sales are falling in most markets
  3. Mortgage rates are at all-time lows

In other words, in most markets, more sellers are competing for fewer buyers, and the "winning" buyers are financing their homes at the lowest rates in history.

It's an excellent time to be a home buyer.

Thursday, July 1, 2010

Home Cooking - Chicken Curry Salad.

This is always a crowd pleaser! Perfect for warm summer nights!

Chicken Curry Salad
2 cups Cooked Chicken
1 1/2 Cups Mayonnaise
1 tsp Curry Powder
1/2 tsp. Salt
1/4 tsp Pepper
1/4 Cup Green Onions
1 1/2 Cup Cooked Rice
1 Can Mandarin Oranges
1 Cup Slivered Almonds
1 Cup Celery

Cook Chicken, cool, cut into bite size pieces. Cook Rice. Chop Green Onions and celery. Mix together Mayonnaise, Curry Powder, Salt, Pepper. Mix together Chicken, Cooled Rice, Green Onions, Celery, Almonds. Gently fold in Mayo mixture. Gently stir in Oranges.

Serving. Can be served plain or for a nice twist serve on a lettuce leaf with a slice of cantalope, cut in a circle. Scoop salad in the hole of cantalope.

The Year Is Half-Over. How Did The Housing Experts Fare On Their Predictions?

Housing and mortgage rate forecastsAs 2009 was ending, the "experts" were busy making forecasts about the U.S. economy and what to expect in 2010.

With respect to the housing markets, two predictions were made again and again:

  1. Home prices would fall in the first half of 2010
  2. Mortgage rates would be higher in 2010

Well, it's July 1 and the year is half-over.  Both predictions are proving to be incorrect. Home values are rising in most markets and mortgage rates are down. Way down

It reminds us that economists are much more skilled with analysis of the past versus predictions of the future.

A pile of data can only get you so far.

Think of housing market predictions like watching a local weather forecast. A meteorologist can look at the radar and tell you that rain is coming, but it's never with 100% certainty.  There is always a chance of change.

The housing market is the same way.  Just as the U.S. economy is unpredictable, so are housing prices, and so are mortgage rates. 

Therefore, when you have a personal finance decision to make, evaluate your options based on the information at hand today rather than an educated guess about the future. The future, after all, is subject to change -- despite what the experts forecast.