As Homebuilder Confidence Stagnates, Deals Abound

Home builder confidence held firm this month, according to the National Association of Home Builders' monthly Housing Market Index. September's reading of 13 equaled a 17-month low.
The HMI is on a 1-100 scale. A value of 50 or better indicates "favorable conditions" for home builders.
Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys which measures current single-family sales; projected single-family sales; and foot traffic of prospective buyers.
None of the 3 September surveys improved from August:

• Single-Family Sales : 13 (unchanged from August)
• Projected Single-Family Sales : 18 (unchanged from August)
• Buyer Foot Traffic : 9 (from 10 in August)

Builder confidence is lower in 2010 than at any point in recorded history.
For home buyers , the drop in sentiment creates opportunity. With builders feeling "down", there's a greater likelihood for discounts and free upgrades. It can mean more house for your home buying money.
Plus, with the supply of both new and existing homes elevated, and foreclosures still hitting the market, conditions aren't soon likely to change.
Then, couple all that with all-time low mortgage rates and monthly housing payments look as affordable as ever.
If your plans call for buying a home in the early part of 2011, you may want to consider moving up your time frame. Today's market looks ripe for a good deal.

Case-Shiller Shows Slowing Growth In Home Prices... Two Months Ago

For the 17th straight month, the Case-Shiller Index reports that home values are rising across the United States. As compared to June, July's prices were up by 4 percent.
However, despite the improvement, July's Case-Shiller Index showed weaker as compared to prior months.

• In June, just 3 cities posted year-to-year reductions in home value. In July, 10 of 20 did.
• In June, just 1 city posted a month-to-month reduction in home value. In July, 7 of 20 did.

As a spokesperson for Case-Shiller said, values "crept forward" in July. But not that it matters -- the Case-Shiller Index is a better tool for economists than it is for homeowners. This is for 3 reasons.
First, the Case-Shiller Index is on a 60-day delay but real estate sales are based on prices today. A lot can change in 60 days, and it often does. Therefore, the Case-Shiller Index is a better snapshot of the former market than the current one.
Second, the Case-Shiller Index is geographically-limited. It tracks just 20 cities, ignoring some of the largest metropolitan areas in the country including Houston, Philadelphia, and San Jose. Smaller cities like Tampa are included.
And, lastly, national real estate data remains somewhat useless anyway. All real estate is local, rendering citywide statistics too broad to have any real meaning to an individual. To find out what's happening on a neighborhood-by-neighborhood level, you can't look to a national survey -- you have to look to a local real estate agent instead.

Rid Your Kitchen Of Hidden Dirt And Grime

A kitchen is often a home's busiest room -- a meeting place for meals and conversation. It's also among the home's most grimy rooms. Bacteria, dirt and germs collect on floors, on countertops, and inside appliances.

In this 4-minute clip from NBC's The Today Show, you'll learn how to rid your kitchen of "nastiness".  The featured fixes use nothing but basic household cleansers and elbow grease, and they include:

• How to clean and restore wooden cutting boards and bowls
• How to remove "burn stains" from the side of a frying pan
• How to eliminate pervasive dishwasher odors

The segment also tackles why you should choose loofah over sponge, and how to catch fruit flies.

For as much time as you spend in your kitchen, it's best to keep it clean and sanitized.

Existing Home Sales Rebound In August, Give Hope For Autumn

Sales of existing homes in recovered in August, perhaps the result of a post-tax credit normalization.

As compared to July, Existing Home Sales rose 8 percent in August, buoyed by falling interest rates and slow-to-rise home prices. There's lot of "good deals" out there and home buyers are taking advantage.

The housing gains are relative, however. August's total units sold barely crossed 4 million and still trails the average figures of the last few years by close to 1 million units.

Despite that, the August Existing Home Sales report can be considered a strong one. This is for several reasons:

1. Sales volume increased in August without tax credit or government intervention
2. Sales growth is not limited by geography. All 4 regions -- Northeast, Southeast, Midwest, and West -- showed improvement last month.
3. Repeat buyers are driving the market, representing 48 percent of sales, up from forty-three percent in July.

And, perhaps most important to the housing market market, the number of available home resales dropped by almost one full month last month.  At the current sales pace, the national inventory would be depleted in 11.6 months.

For home buyers, the data presents an interesting opportunity. With average mortgage rates rising from their best levels ever and home affordability cresting , this autumn may represent the turn-around point for the housing market nationwide.

If you're planning to move in early-2011, consider moving up your time frame.

Housing Starts Rise In August, But By Less Than The Headlines Report

The number of single-family Housing Starts rebounded in August, climbing 4 percent from July's 14-month low.

A "Housing Start" is defined as a home on which construction has started and the August increase represents 18,000 single-family units nationwide.

If you only read the headlines, however, you would think the data was stronger. This is because the Housing Starts data is actually a composite of 3 types of homes -- single-family, multi-family, and apartments -- but  the press tends to lump them all three together.

As a sampling, here are a some headlines on the story:

• US Stock Futures Rise After Housing Starts Surge (WSJ)
• Housing Starts At 4-Month High, Hint At Stability (Fox)
• Housing Starts Jump 10.5% In August (Marketwatch)

Now, it's not that the news is wrong, per se, it's just not necessarily relevant.  Few home buyers  are buying multi-family homes or entire apartment complexes. Most buy single-family and, for the first time since April, single-family starts are on the rise -- just not by as much as you'd believe from the papers.

Even still, we can't be entirely sure that the August Housing Starts data is accurate anyway.

A footnote in the Department of Commerce report shows that, although single-family starts are said to have increased 4 percent, the data's margin of error exceeds its actual measurement, meaning the data has "zero confidence".

In other words, starts may have dropped in August, but it's something we won't know for sure until revisions are made later this year.

A Simple Explanation Of The Federal Reserve Statement (September 21, 2010 Edition)

Today, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged. 

The Fed Funds Rate remains at a historical low, within a Fed's target range of 0.000-0.250 percent.

In its press release, the FOMC said that the pace of economic recovery "has slowed" in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.

For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year's worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be "modest in the near-term".

This outlook is consistent with recent research showing that the recession is over, and that growth has resumed -- albeit at a slower pace than what was originally expected.

The Fed also highlighted strengths in the economy:

1. Growth is ongoing on a national level
2. Inflation levels remain exceedingly low
3. Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period".

There were no surprises in the Fed’s statement so, as a result, the mortgage market's reaction to the release has been neutral. Mortgage rates are thus far unchanged this afternoon.

The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.

The Federal Reserve Meets Today. Should You Lock Your Rate Before It Adjourns?

The Federal Open Market Committee adjourns from its 6th scheduled meeting of the year today, and 7th overall.

Upon adjournment, Federal Reserve Chairman Ben Bernanke will release a formal statement to the market. In it, the Fed is expected to announce "no change" to the Fed Funds Rate.

Currently, the Fed Funds Rate is within a target range of 0.000-0.250 percent.  It's been at this same level since December 2008.

Note that the Feds Funds Rate is not "a mortgage rate" -- nor is it a a consumer rate of any kind. The Fed Funds Rate is a rate that defines the cost of an overnight loan between banks. And, although the Fed Funds Rate has little direct consequence to everyday homeowners, it is the basis for Prime Rate, the interest rate on which most consumer cards are based, plus many business loans, too.

Therefore, because the Fed Funds Rate won't change today, neither will credit card rates.  Mortgage rates, however, are a different story.  Mortgage rates should change today -- regardless of what the Fed does.

It's more about what the Fed says.

In its statement, the Federal Reserve will highlight strengths and weaknesses in the economy, and threats to growth over the next few quarters. Depending on how Wall Street interprets these remarks, mortgage rates may rise or fall.

If the Fed's comments signal better-than-expected growth, bond markets should lose and mortgage rates should rise. Conversely, if the Fed's comments signal worse-than-expected growth, mortgage rates should fall.

If you're actively shopping for a mortgage, it may be prudent to lock your rate ahead of the Fed's announcement today. The Fed adjourns at 2:15 PM ET.  Call your loan officer to lock your rate.

The Fed meets 8 times annually.

Unique Homes Across The Country

If a home is an expression of personality, then these 10 homes say something unique about their owners. 

Culled by Zillow, this list of one-of-a-kind properties make for excellent party conversation. There's the "round house", the geodesic dome, the firehouse home, and the earth-ship, among others.

Some highlights from the collection:

• The Shoe House (Hallham, PA) : The Shoe House was completed in 1949. It's pink, it's made of stucco, it's 25-feet tall, and in the shape of a workboot. Oh, and every window is decorated with a stained glass shoe.
• The Cave House (Festus, MO) : This 15,000 square foot home is tucked inside a mountain, and consists of three chambers -- one for the bedrooms, one for laundry and storage, and one where musicians like Bob Seger once performed. Because of geothermal and passive solar heat, this home is extremely energy-efficient.
• The Decommissioned Missile Site House (Othello, WA) : If you've ever dreamed of owning a decommissioned Titan 1 missile complex, than this is the home for you. Located roughly 3 hours east of Seattle, this home is built to withstand nuclear blasts. It's a 6-story descent to the 125-foot diameter "center room" with 65-foot ceilings.  Missiles not included.

A few of the properties as listed by Zillow are for sale and most have accompanying pictures. Unfortunately, buyers of the homes should expect to pay cash because getting a mortgage for a unique home can be veritable challenge.

(Image courtesy: Zillow)

Rent A Home Or Buy A Home : The Case For Both Sides

Is it better to rent a home, or to buy one? The answer may not be as clear-cut as you think. In this balanced, 3-minute joint interview from NBC's The Today Show, you'll hear the case for both sides.

From the pro-renting part of the talk, there's valid points about the economic impact of low credit scores and/or no cash for downpayment, and the ongoing, annual cost of home maintenance -- estimated at 2% of a home's value.  Plus, renters have the ability to "follow a job" to a new town or region whereas a homeowner may be restricted, somewhat.

From the pro-purchase part, however, there's excellent points that were made, too:

• Mortgage rates are low and each 1% drop to rates equates to a 9% drop to home price
• Buyers can zero in on a particular area with particular schools or walkability, for example, better than renters
• A home can a piggybank over the long-term; a place for "forced savings" for families that want it

The segment then closes with 5 of the best cities in which to rent, and 5 of the best cities in which to buy.

Whether buying or renting, don't try to go at it alone. There's lot of resources online, and an email to a local real estate or mortgage pro can set you in the right direction.

Home Defaults Dropped For The 7th Month In A Row In August

According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings climbed 4 percent in August from the month prior. A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

Despite the number of filings surpassing 300,000 for the 18th straight month, RealtyTrac's report shows some bright spots for housing.

1. The number of default notices served per month fell for the 7th time this year
2. Foreclosure activity in Nevada, the nation's leading foreclosure state, is down 25% from last August
3. Foreclosure activity has not materially increased since early-2009, pointing to a stabilization

In addition, each of the 10 leading metro areas for foreclosures posted year-over-year declines for the second month in a row.

But, perhaps, most important, is that mortgage lenders and servicers appear to be managing their REO more effectively, making properties available for sale at a measured pace as opposed to flooding markets with new homes.  As noted by RealtyTrac, the probable reason is "to prevent further erosion of home prices".

For home sellers, it's a welcome development.

Foreclosures have had a hand in falling home values across the country. And, although it's self-serving for banks to meter the release of homes under ownership, everyday homeowners benefit, too.  Fewer homes on the market helps to provide a floor for housing values.

If you have an interest in buying foreclosed homes, be sure to talk with a real estate agent first. The process of buying a home from a bank is different from buying from "a person". Having the help of a professional should work to your benefit.

What's Going On In The Market?

I have been getting so many emails and phone calls lately with questions about Real Estate recently that I have decided to put together a brief video each week answering some of the questions. If you have a specific question just let me know and I will include it in the upcoming weeks.

Home Affordability Gets A Boost From Weak Back-to-School Retail Receipts

The recent rise in mortgage rates was slowed this week after the government released its Retail Sales report for August.

Prior to Tuesday, mortgage rates had been spiking on the resurgent hope for U.S. economic recovery. The sentiment shift was rooted in reports including the Pending Home Sales Index and Initial Jobless Claims, both of which showed surprising strength last week.

August's Retail Sales, though, after removing motor vehicles, auto parts and gasoline sales, failed to maintain the momentum. Its figures were actually in-line with expectations -- it's just that expectations weren't all that high.

Wall Street now wonders whether the weak Back-to-School shopping season will trend forward into the holidays.

The doubt spells good news for mortgage rates and home affordability.

Because Retail Sales is tied to consumer spending and consumer spending accounts for two-thirds of the economy, a weak reading tends to drag down stock markets and pump up bonds, and when bonds are in demand, mortgage rates fall.

This is exactly what happened Tuesday. The soft Retail Sales data eased stock markets down, and generated new demand for mortgage bonds. This demand caused bond prices to rise, which, in turn, caused mortgage rates to fall.

Mortgage rates did not cut new lows this week, but they're very, very close.

With mortgage rates at historical lows, it's an excellent time to look at a refinance, or gauge what financing a new home would cost. Low rates like this can't last forever.

The Math Of Choosing A Great Closing Date

Want a lower mortgage rate on your upcoming home buy? Think about moving up the closing date.

The reason is rooted in "rate locks", a bank's guarantee to honor a specific mortgage rate for a specific, finite period of time. Rate locks allow home buyers to reserve mortgage rates today even though their respective closings may be scheduled as far as a year into the future.

A rate lock is a contract. No matter what the "current market rate" is at the time of closing, the bank will honor the terms of the original rate lock.

It would be like making an agreement to buy Microsoft stock at a specific price 60 days from now. No matter what the price, you already know what you're paying for it.

In this sense, rate locks are predictions about the future and, meanwhile, as we all know, the future can be a challenge to forecast. Lenders know this, too, of course, so it's easy to understand why longer rate locks tend to be more expensive than shorter ones.

The longer the rate lock, the more risk to the bank.

To compensate for this "time risk", therefore, lenders typically step-up pricing for rate lock guarantees as lock period lengthen.

• 15-day rate lock : The best of all pricing
• 30-day rate lock : 1/8 percent extra cost versus the 15-day rate lock
• 45-day rate lock : 1/4 percent extra cost versus the 15-day rate lock
• 60-day rate lock : 3/8 percent extra cost versus the 15-day rate lock

One percent of "extra cost" is defined as one percent of the borrowed amount.

Now, this incremental price chart is just a rough guideline; exact spreads vary from lender-to-lender. Overall, however, it's fairly close.

That's why it's important to manage your closing date vis-a-vis your mortgage rate. Closing in 30 days versus 31 can save you an eighth-percent in closing costs. Assuming a loan size of $200,000, that's $2,500 saved.

So, when negotiating a closing date on a contract, keep in mind the math of mortgage rate locks. The shorter its length, the more money you might save.

White Distilled Vinegar : An Environmentally-Friendly Home Cleaning Solution

Supermarket aisles are filled with specialty cleansers -- some for the kitchen, some for the bathroom, some for the carpets. Loaded with chemicals, these cleansers can be tough on the environment and costly, too.

If you're in search of an alternative, consider white distilled vinegar.  It's inexpensive, safe to store, and highly effective as a household cleanser.

White vinegar's strength comes from its acidity, roughly 8%. It's acidity kills most mold, germs, and bacteria, and can remove minerals deposits from coffee makers and glass surfaces.

Some uses for white distilled vinegar include:

• Cleaning the garbage disposal : 1/2 cup hot white distilled vinegar + 1/2 cup baking soda. Pour down drain and let sit for 5 minutes. Run hot water to flush it.
• Removing lunch box odors : Soak bread slice in white distilled vinegar. Place it in lunch box overnight.
• Remove dark spots on aluminum pots : Mix 1 cup white distilled vinegar + 1 cup hot water.  Boil in pot.
• Brighten carpets : Mix solution of 1 cup white distilled vinegar + 1 gallon water. Test on inconspicuous area first.
• Remove water rings from wood : Mix solution of 1/4 cup white distilled vinegar + 1/4 cup vegetable oil. Rub with the grain.

White distilled vinegar is extremely versatile, but it can strip finish from counter-tops and floors if left to soak. Be sure to exercise care, therefore, when using vinegar at home.

Your ARM Is Adjusting Lower. Is There A Downside To Letting It?

When adjustable-rate mortgages are on the verge of adjusting, a common concern among homeowners is that their mortgage rates will adjust higher.
Well, this year, because of the math of how ARMs adjust, homeowners around the country are seeing that mortgage rates on ARMs can sometimes adjust lower, too.
Adjusting conforming mortgages are adjusting to as low as 3 percent.
As a quick review, here's the timeline for most conforming adjustable-rate mortgages:

1. There's a "starter period" in which the interest rate remains fixed. This can range from 1-10 years.
2. There's a rate change after the starter period. It's called the "first adjustment".
3. Subsequent, annual adjustments follow until the loan "ends". This is usually after Year 30.

The adjustments each year are based on a math formula that's included in the contract with your lender. It's surprisingly basic.  Each year, your new, adjusted mortgage rate is equal to the sum of some constant -- usually 2.25 percent -- and some variable.  The variable is most commonly equal to 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 an interest rate at which banks borrow money from each other -- very similar to our Fed Funds Rate here in the United States. And also like our Fed Funds Rate, LIBOR has been low lately.
As a result, adjusting mortgage rates have been low, too.
In 2009, 5-year ARMs adjusted to 6 percent or higher. Today, ARMs are adjusting to 3.000%.
Based on the math, you may want to let your ARM adjust with the market year. Or, if you plan to keep your home long-term and have concerns about adjustments in 2011 and beyond, it may be a good time to open a new ARM.  The same forces that are driving down LIBOR and helping to keep mortgage rates low overall, too.
Consider talking to your loan officer and making a plan. With mortgage rates as low as they've been in history, most homeowners have options.  Just don't wait too long. LIBOR — and mortgage rates in general — are known to change quickly.

Which Model Is More Accurate : The Case-Shiller Index Or The Home Price Index?

The private-sector Case-Shiller Index reported home values up 5 percent nationwide in June. The government's own Home Price Index, however, reached a different conclusion.

According to the Federal Home Finance Agency, month-to-month home values fell 0.3 percent in June, and values are down by 1.7 percent from June 2009.

So, as a home buyer and/or homeowner , by which valuation model should you make your bets?  Perhaps neither. 

This is because both the Case-Shiller Index and the Home Price have inherent methodology flaws, the most glaring of which is their respective sample sets. 

The Case-Shiller sample set, for example, comes from just 20 cities across the country -- and they're not even the 20 most populated cities. Together, the Case-Shiller cities represent just 9 percent of the overall U.S. population. 

That's hardly representative of the housing stock overall.

By comparison, the Home Price Index tracks home sales everywhere -- every city in every state -- but it specifically excludes certain properties.  The Home Price Index does not track sales of homes for which the financing comes from agencies other than Fannie Mae or Freddie Mac. This means that as FHA loans grow in popularity, the pool of Home Price Index-eligible homes is reducing. 

The HPI ignores homes backed by "jumbo" loans, too.

Therefore, the "right" model for home values cannot come from national data at all -- it can only come locally. Neither Case-Shiller nor the government has the tools to get as granular as a neighborhood. A real estate agent in the area does, however.

The best way to get a pulse for what's happening in markets right now is to talk to somebody with good data.

Confused about Condo's?

Well, it’s no wonder. In the real estate world jargon is thrown around about multi-family, single family residence, duplex, triplex, quadraplex, freestanding condo, stacked condo, townhome condo, townhome, high-rise condominiums …. The list is endless! I hope to shed some light.

There are four types of condo structures that I am going to describe. They are free standing condos, duplex condos, townhouse condos and stacked condos.

Free-standing condos or “detached” condos (also call PUD's)are essentially a house on a small lot. No walls connect a free-standing condo to another structure i.e. the name “free-standing.” Typically this type of structure does not share walls, yard or insurance with others in the condo regime. Generally speaking, the HOA fees are negligible and usually owners have more autonomy than in other types of condo regimes. The reason for free-standing condos is a reduction in the lot size means that a house of similar size would be less expensive than a single family resident on a regular lot.

Duplex condos typically share one wall with another structure/owner and many times the shared wall is the garage. They usually have a yard and are similar to free-standing except for the one-shared wall. Many times a duplex condo is desirable for an owner who wants to live in the inner city but can’t afford the price tag of a single family residence in an urban and highly desirable location. Once again, owners do not share insurance and the HOA fees are negligible.

Townhouse condos typically share 1-2 walls and look like “row or garden style” homes. The owners share common areas including the costs associated with common area maintenance and insurance. Because of these shared costs HOA dues are usually higher and there is usually less control over what you can and cannot do with the exterior of the property.

Stacked condos typically share 2+ walls and are often called mid-rise or high-rise buildings. There is the potential for all four walls to be shared with someone living above, below and next to you on both sides. Once again, owners share insurance and common areas such as pool, fitness center, and any other community amenities. Because of this the HOA dues are higher and owners have little control of changes to the exterior of the property.

So, you might ask, “Why does any of this matter?” In my search for condo clarity I realized that it matters for both buyers and sellers. A lack of understanding about the nuances and benefits of each of these different structures limits a buyer’s opportunity to buy which in turn affects sellers. Additionally, in the current market, there is a perception that HOA’s are “bad” or take “advantage” of owners. While this might be the case in some situations, the majority of condo situations can be highly advantageous to certain types of buyers.

For example, a free-standing condo gives a buyer the opportunity to purchase a home in a highly desirable area that they might not otherwise be able to afford. With that, they have a smaller yard to maintain, lower utility bills, low maintenance fees, low HOA fees and still maintain a high level of autonomy as an owner.

My advice? Don’t be afraid to explore condos. They might be the perfect solution to living in an area that you might not otherwise be able to afford. And for those seeking lower maintenance, lower utilities and less yard work, a condo might just be the way to go.

If you still have questions please submit them as a comment.

Home Sales Are Back On The Rise After A 2-Month Pullback

Just one week after reports of Existing Home Sales and New Home Sales plunging, the housing market is signaling that auturm may fare better than did summer.

The number of homes under contract to sell rose 5 percent in July.

The data comes from the July Pending Home Sales Index, as published by the National Association of Realtors®. By definition, a "pending home sales" is a home that is sold, but not yet closed.

Historically, 80% of such homes close within 60 days which makes the Pending Home Sales Index an excellent, forward-looking indicator for the real estate market.

Indeed, the nationwide drop in home sales this summer was foreshadowed by the Pending Home Sales report.  The index dropped 30 percent in May. Then, two months later in July, it was shown that Existing Home Sales volume dropped 29 percent.

That's a strong correlation.

Now, to be fair, the July Pending Home Sales Index is still relatively low; the second-lowest on record and well below last year's numbers. But, the tick higher last month shows how housing may be stronger than than what the headlines report.

It appears that buyers took advantage of rising inventory, cheap financing, and stagnant prices, and pushed the market forward. We should expect similarly promising numbers when September's Existing Home Sales data is released.

DEAL OF THE MONTH

Who do you know who is thinking of buying or selling a house?  Here is one of the best buys in town.  It was just reduced and the seller is motivated.  If you know someone who is looking for a 4 bedroom custom home with a little land let me know.

How To Change A Showerhead

There's plenty of reasons to want to change a showerhead in your head. Perhaps you're trying to fix a leak in the faucet; or, remodeling your bathroom; or, trying to conserve water via a low-flow showerhead. 

Whatever the reason, changing a showerhead can be a basic do-it-yourself project. The tools aren't complicated and the job is a quick one.

In this 2-minute video from AOL, you'll learn:

• What tools you'll need to change the showerhead
• How to remove your old showerhead
• How to firmly attach your new showerhead to prevent leaks

If you get stuck, or just want to outsource, call a professional handyman to finish the job. Changing a showerhead should take less than a hour to complete.

FINDING YOUR DREAM HOME IS JUST THE BEGINNING

Buying a home is very different than it was ten years ago. Consumers are armed with a tremendous amount of data easily found online. Your real estate agent’s job isn’t just to help you find your home, their job is to help you buy your home. Finding the perfect dream home is really only a small part of a very complicated transaction. Realtor.com, Zillow, Trulia, or even my very own gingerproffitt.com- website, there are literally thousands of places for home buyers to find homes. A consumer can literally be inundated with data. A good agent can help you sort through all of that data.

For some home buyers, finding that perfect dream home is much more complicated than others. Do you need room for horses?  An extra long motorhome? Lots of privacy while still in the city?  Finding the perfect property can take a tremendous amount of effort and time, and required extensive research and diligence on my part. There are many homes that aren’t on the multiple listing service or on one of the 1001 home listing websites that a good agent will know about. We sell a lot of off market homes to buyers that they could never have found online, but other times clients call us and say, “Hey, we found the perfect home. We would like to buy it.” This is often when the difficult part of our job begins.

So how do you find an agent who can not only help you find your house, but also help you buy it- aka close escrow? There are a number of things you should look for:

• A skilled negotiator: The entire contract process involves a series of negotiations, even after the contract is ratified and you are in escrow. Your neighbor’s cousin who is an agent may be sweet, but can they save you money, time and aggravation by negotiating successfully for you? This doesn’t mean you hire someone who negotiates just to hear themselves negotiate which can lead to a failed purchase- a contract falling out of escrow. Negotiating successfully involves a series of give and take to reach the desired end result- a home purchase within the budget and time requirements.

• An educated real estate professional: Have they taken classes beyond the pitifully small amount required to get a real estate license? I took all of my licensing courses online. Quite honestly, the process was a joke. When I finished my licensing, my real education began. It was by trial and error that some lessons were learned.  I quickly figured out I needed agent and took extensive course work to make sure I had the skills needed to do my job. Make sure your agent gets ongoing education- this business isn’t standing still. Ask them how they stay up to date on current rules and trends.

• A business professional: She should treat you, service providers, and other agents with professionalism and respect. A good agent will not bad mouth her competition, nor her other clients, even if it is deserved.

• An organizer: Your agent is essentially your project manager to get your transaction closed. Nobody wants a sloppy project manager. A missed deadline in a contract could mean the loss of not only the transaction, but possibly an earnest money deposit for you. An average earnest money deposit is not chump change.

• Trustworthy: Are they looking out for your best interests? We talk our clients out of buying homes we think are a bad investment all the time. Make sure your agent will do the same.

• Mobile: If your agent can’t assist you while out in the field, they can’t work for you the majority of the time. Successful agents are not in their offices. Find someone who is mobile and can assist you on the go.

• Tech Savvy: If your agent is mobile, they are probably not a technological neanderthal. This is a good test. Your agent doesn’t have to be a tech guru but they need to be up to date on the latest tech tools to not only help you find your house, but manage the transaction process along the way.

• Local: We see many failed transactions with out of area agents. The majority of out of area agents don’t know the intricacies of the individual county, city and even subdivision rules that can impact a home purchase and later on, a home’s resale value. Hire a local agent who knows not only the rules and regs, but also has a pulse on the local real estate market and knows the local agents who will be influencing the transaction process.

• Good with the numbers: Buying a home can very emotional, but it is also a major financial purchase. Your agent should be providing you comparable sales and comprehensive real estate market stats, charts & reports to help guide your decision making process, and should be giving you informed advice about the value of the home.

Your agent may not be the person who finds you the dream home, but a great agent will help make the complicated home buying process successful, no matter who found the property.

August 2010 Jobs Report Pushes Mortgage Rates Higher

On the first Friday of each month, the Bureau of Labor Statistics releases Non-Farm Payrolls data for the month prior. 

The data is more commonly called "the jobs report" and it's a major factor in setting mortgage rates for homeowners everywhere. Especially today, considering the economy.

This is because, although it's believed that the recession of 2009 is over, there's emerging talk of new recession starting.

Support for the argument is mixed:

1. Job growth has been slow, but planned layoffs touch a 10-year low
2. Consumer confidence is down, but beating expectations
3. Consumer spending is weak, but not declining

In other words, the economy could go in either direction in the latter half of 2010 and the jobs market may be the key. More working Americans means more paychecks earned, more taxes paid, and more money spent; plus, the confidence to purchase a "big ticket" items such as a home.

Jobs growth can provide tremendous support for housing, too.

Today, though, jobs growth was "fair". According to the government, 54,000 jobs were lost in August, but that reflects the departure of 114,000 Census workers.  The private sector (i.e. non-government jobs), by contrast, added 67,000. 

In addition, net new jobs was revised higher for June and July by a total of 123,000.  That's a good-sized number, too.

Right now, Wall Street is reacting with enthusiasm, bidding up stocks at the expense of bonds -- including mortgage-backed bonds.  This is causing mortgage rates to rise.  Rates should be higher by about 1/8 percent this morning.

Should I Refinance?

Oh my gosh!  Have you seen what interest is doing these days??? There are Ten Year Mortgages in the 3.75% range for heaven’s sake! Yes, 3.75%!!!


So the big question is, "Should I refiance?"  Here are some things to consider:

1. Does it make financial sense?

If you are considering a “rate/payment reduction” refinance, I typically recommend that people do one simple calculation. Divide your monthly savings into the costs (out-of-pocket expenses AND any increase in your principal balance). That number will tell you how many months’ payments it will take to “break even”. Depending on how long you anticipate staying in the home, and comparing that to your “break even” month, will give some idea to what is the right decision.

2. What about a refinance to shorten the term of a mortgage?

When examining the possibility of cutting years off your mortgage, you should take a good hard look at how such a move can affect your monthly cash flow. If your payment stays the same and you save a few years of payments, many people will choose that option (rather than the monthly savings of a “rate/payment reduction” refinance). However, if your payment is going up (in order to save years), take time to analyze the impact on your monthly activities. Will you be sacrificing too much to save payments 20 year from now?

3. What will my home appraise for?

This is the biggest challenge facing most people. With so many homes underwater, there are many people who won’t be able to refinance. If you have an FHA loan, there is some hope if you qualify for their “Streamline Refinance Program” because there is an option to close the loan without an appraisal. (For a 15 minute video explaining the program, go to www.Facebook.com/FHAStreamlineRefinances ) For others, loan-to-value issues can create the need for Mortgage Insurance when it didn’t before (making “savings” harder to achieve). Understand that most lenders require you to pay for an appraisal (and maybe an application fee too) when you submit your loan request, so do your best to have a real sense of what your home will appraise for.
 
If you need the name of a lender you can trust, give me a call, I have several.

August's Fed Minutes Lead Mortgage Rates Higher

Home affordability took a slight hit this week after the Federal Reserve's release of its August 10 meeting minutes.

The "Fed Minutes" is a lengthy, detailed recap of a Federal Open Market Committee meeting, not unlike the minutes published after a corporate conference, or condo association gathering. The Federal Reserve publishes its meeting minutes 3 weeks after a FOMC get-together.

The minutes are lengthy, too.

At 6,181 words, August's Fed Minutes is thick with data about the economy, its current threats, and its deeper strengths. The minutes also recount the conversations that, ultimately, shape our nation's monetary policy.

It's for this reason that mortgage rates are rising. Wall Street didn't see much from the Fed that warranted otherwise.

Among the Fed's observations from its minutes:

• On the economy : The recession was deeper than previously believed
• On jobs : Private employment is expanding slowly
• On housing : The market was "quite soft" in June

Now, none of this was considered "news", per se. If anything, investors were expecting for harsher words from the Fed; a bleaker outlook for the economy. And, because they didn't get it, monies moved to stocks and mortgage bonds lost.

That caused mortgage rates to rise.

The Fed meets 8 times annually. Its next meeting is scheduled for September 21, 2010.  Until then, mortgage rates should remain low and home affordability should remain high. There will be ups-and-downs from day-to-day, but overall, the market is favorable.

Case-Shiller Posts 16th Straight Month Of Home Price Improvement

According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier.  It's the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.

That said, homeowners and home buyers would do well to temper Case-Shiller enthusiasm. The June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.

• Existing Home Sales are down 27 percent
• New Home Sales are down 12 percent
• Homebuilder confidence is down

Stories like these highlight a key weakness of the Case-Shiller Index -- it's out of date as soon as it's published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don't buy homes in the "60 days ago" real estate market, after all.

June is ancient real estate history.

However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street's expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.

Tuesday, mortgage rates fell.