Mortgage Fees Explained Part 2

Earlier, we talked about lender fees and third party fees.  Today, we’ll talk about mortgage fees, and other fees that aren’t covered in the three other categories, but are important for you to know.

Mortgage Fees

• Title Search -This fee is charged by your bank or lender and is sometimes called an underwriting, administration, or processing fee.  It’s designed to cover the costs of processing and evaluating a loan for you, such as legal costs, notary fees, and overhead.
• Title Insurance -Title insurance guards you and the lender against an error in the title search. If a previously-undiscovered problem pops up down the line, this policy protects the lender.  If you want to protect yourself, you will need to purchase an owner’s title insurance policy.
• Processing Fee -This is a fee the mortgage broker charges to compile paperwork and submit the loan on your behalf. Some companies charge this fee others do not.
• FHA, VA, and RHS fees - The Federal Housing Administration (FHA) offers insured mortgages and the Veterans Administration (VA) and the Rural Housing Service (RHS) offer mortgage guarantees. If you are getting a mortgage insured by the FHA or guaranteed by the VA or the RHS, you will have to pay FHA mortgage insurance premiums or VA or RHS guarantee fees.

Other Fees

Points – A point is 1% of the loan amount.  What that means to you is that points are a one-time charge that may be negotiated with the lender, usually to reduce the interest rate you pay over the life of your loan. For example, one point on a $100,000 loan would be $1,000. In some cases, especially in refinancing, points can be financed by adding them to the amount that you borrow. However, if you pay the points at settlement, they are deductible on your income taxes in the year they are paid.

Prepaid Interest – Your first regular mortgage payment is usually due about six to eight weeks after you settle (for example, if you settle in March, your first regular payment will be due on May 1, and this May payment covers the cost of borrowing the money for the month of April). Interest costs, however, start as soon as you settle. The lender will calculate how much interest you owe for the part of the month in which you settle (for example, if you settle on March 16, you would owe interest for 16 days–March 16 through 31).  The lender will want this up front.

Private Mortgage Insurance (PMI) – If your down payment is less than 20% of your home’s value, the lender may want you to purchase PMI to cover its losses in case you default on the payments.  Typically, you will pay a PMI monthly along with each month’s mortgage payment. Your PMI can be canceled at your request, in writing, when you reach 20% equity in your home based on your original purchase price if your mortgage payments are current and you have a good payment history. By federal law your PMI payments will automatically stop when you acquire 22% equity in your home based on the original appraised value of the house as long as your mortgage payments are current.

Flood Determination Fee – A fee the lender may charge to determine if your home is in a flood zone, and if you’ll need to buy flood insurance.

Homeowners’ Insurance – The insurance policy that protects against fire, vandalism, wind, natural disasters (other than floods), and other hazards that can damage your home.  Lenders require that you have this to protect their investment.  You should also consider looking into additional insurance to cover your furnishings and belongings.

Escrow (or reserve) funds – You may be asked to add in money at closing to put in an escrow account to cover property taxes, insurance, and other costs.  Even if you don’t pay this at closing, part of your monthly mortgage payment will probably go toward escrow.   When the bills for taxes and insurance come due, the lender takes the money out of escrow and pays them for you.

Conclusion

Be cautious of “bundled fees” if they don’t expressly mention what is bundled.  Some lenders offer a package deal that could be less then if you paid for all separately.  However, you want to be able to compare apples to apples when you’re shopping around.

If there are any fees listed you don’t understand, ask for an explanation.  Also realize that many fees, especially application and processing fees, are negotiable.  Ask your lender to reduce or waive these fees; alternatively, the seller may be willing to pay them.  Don’t be afraid to ask – after all, this is the biggest purchase you’ll ever make.

Tagged as: mortgage fees, settlement costs

Mortgage Fees Explained

Whether you’re a first timer or a re-financer, you want to know where your money is going.  When you’re signing all of the forms, a good loan officer recommends you read each page, but seeing all of those numbers can make your eyes cross.  Thankfully, mortgage paperwork has gotten simpler over the years, and fees can be grouped into a few categories.  Mortgage fees are also called settlement costs and vary quite a lot amongst lenders.

Lender Fees

These are fees asked for by the lender.

Application Fee – The fee charged by your bank or lender to apply for a loan used to cover initial processing costs and a credit check.  If they pull your credit report from all three bureaus, the fee will be higher.

Loan Origination Fee – This fee is designed to cover the costs of processing and evaluating a loan for you, such as legal costs, notary fees, and overhead. It’s sometimes called an underwriting, administration, or processing fee.

Third Party Fees

These are fees paid to third parties as part of the home purchase process.

Appraisal Fees - Lenders want to ensure to the best of their ability that the purchased property is worth at least as much as the loan amount. An appraisal fee pays for a determination of the value of the home and lot you want to purchase or refinance. Some lenders and brokers include the appraisal fee in the application fee.  Make certain that you ask for a copy of the appraisal. If you are refinancing or have had a recent appraisal of the property, some lenders may waive the requirement for a new one.

Home Inspection Fee – Your lender may require you to get a home inspection to check for major structural or other damage, water quality, leaks, etc.   The most common inspection is for termites.  In rural areas, there may be a test of the septic system as well as a quality test on the water supply. Even if it’s not required, a home inspection is a good idea for your peace of mind.  If nothing else, you’ll be able to plan when you will have to make investments into the property such as a new roof.

Property Survey Fee – Some lenders require a simple survey to confirm locations of boundaries and easements as well as the location of buildings and improvements.  If there are questions as to the legality of these issues, such as a boundary line dispute with neighbors, the lender will require a complete, and more costly, survey.

Tomorrow, we’ll finish up with Mortgage Fees and Other Fees.  Are there any fees that you’re curious about?

Tagged as: mortgage fees, settlement costs

Preparing Your Yard for Winter

Welcome to part 3 of our 4 part series on preparing your home for winter. Here in the Great Northwest, need to prepare for frost, ice, snow and heavy rains. Some meteorologists are predicting that we’ll be getting an El Nino year. So the good news is it will be a warmer winter (unless you enjoy snow sports), but the bad news is that we will get more rain which could also be considered good news since we would be filling up our reservoirs and aquifers.

So here’s what you can do to get your yard ready for frost and heavy rains:

Remove Debris

First things first, you need to remove the debris before winter arrives including leaves, rocks, sticks, trash, and dead flowers. This will keep your yard and flowerbeds looking nice throughout the fall and winter months, as well as reducing the amount of yard work you will need to do in the spring.

Bushes

Roses, azaleas, and hibiscus will need to be protected against the cold weather. You can get creative with cardboard or garbage bags if you know there is a frost warning. Make certain you hold the cover down in place with stakes, bricks or heavy rocks.

Add mulch around the roots, but make sure it doesn’t touch the base of the plant. Give the plants a good watering before you turn off your sprinklers.

Trees

While the weather is still pleasant, put mulch around the base of the trees to help the tree retain water in the roots, and keep the soil at a steady temperature. This also cuts down on the weeds you will have to pull in the spring.

Mulch can be bark chippings, straw, pine needles, or a mixture of things. You can get free chippings by contacting your local tree removers and asking if they’ll drop off some mulch. But be aware that they may have a minimum amount that they drop off.

In a few weeks, you will want to trim your trees, bushes and roses. But, don’t prune now because the buds that will open in the spring have already formed, and you might clip them off accidentally. So what should you trim? Snip off unhealthy or dead sections, and trim off dead flowers.

Also, check to see if branches are close to your house. If they are, trim them back as you don’t want them banging against the house during strong winds.

Garden

If you have strawberry plants, they should be covered with layers of straw to keep them protected from getting frostbitten. Plant those bulbs now before the ground gets too hard to dig. You will be well rewarded in the Spring.

You can pull out your summer vegetable garden, or you can leave it to overwinter and see what pops up in the spring.

Consider planting a few cold weather flowers to brighten up your garden.

Sprinklers

If you know you’re not going to turn on your sprinklers at all during the winter, then drain them of any water. You would turn off the water supply going to the sprinklers, and then open the drains including the backflow to get all of the water out. Leave the drains open for several hours to ensure it’s completely drained. You can remove the sprinkler heads to allow the water to drain more easily, and you can hook up an air compressor to blow air through the system. Make certain that you’ve set the controller to Off or Rain.

If you’d like more detailed information, check out Irrigation Tutorials’s winterizing directions. There are detailed instructions for both temperate and cold weather.

Hoses

Make sure your hoses are drained completely, roll them up, and store them away in a shed or garage. Keeping them out of the elements will also prolong the life of the hose.

When do you expect the frost to hit in your area?

If you missed the other two blogs in our series, you can find them here:
Part 1: Fall Maintenance, Top to Bottom
Part 2: Storing Your Outdoor Items for Winter

Spotting Hidden Problems in Older Homes

Are you looking into buying an older home? If so, grab your camera and a flashlight before you look. Home inspections can be very good at identifying problems. Nothing beats taking a close look yourself before you have the money spent on an inspection.

Two big and obvious problems

In this article on spotting hidden problems, the author focuses on the problem:

Problems in older homes are often well hidden. More often than not, serious damage doesn’t show any symptoms until the damage is significant and expensive.

There are clues, but even trained eyes sometimes have difficulty telling normal wear and tear from the signs of serious underlying problems.

Most old-home problems, however, have predictable causes and if you know where to look you can find hints that might lead you to discover concealed damage.

You’ll want to read the article. The author felt that the two major problems are:

1. Water damage from where the home settled and water pooled
2. Outdated electrical system being overused in our modern age

If you find a home that needs new wiring, or water damage repair, you will want to weigh that against the cost of the home.

6 Signs it could be a lemon

MSN had a great list of the 6 signs that the house could be a lemon as well as details on the signs (how to know what you’re looking at), and how much it could cost to fix.

The article also brought up aging roofs, foundation cracks, failed sidings, and sticky doors and windows, but one that we thought was interesting was on sloping floors.
Sloping floors
Sloping floors are not uncommon in older homes, especially turn-of-the-century houses. “I’ve seen houses with as much as five inches difference from one side of the house to the other,” Balin says. Don’t let a seller pass the problem on to you, because it’ll cost you when it’s your turn to sell. “You think it’s not going to make a difference in the price of the house?” Balin says. “Of course it will.”

A sloping floor may signal weakness in the home’s supporting structures. But that’s not always the case, Juneau says. Sometimes it’s just the result of an imperfect repair. In replacing floor joists, for example, the floor may not have been correctly re-leveled.

Signs of trouble

• Look at the house from the street. Is everything — the front entrance, the windows, outside doors, foundation and walls — straight and square?
• Place your marble or level on the floor. Does it roll to one wall? Does your carpenter’s level indicate a subtle tilt?
• Notice how the floor feels beneath your feet: Humps beneath doorways and bounce can indicate failing supports.
• Be alert to ridges under a carpet. In a house with a slab-on-grade foundation, irregularities in the floor may be your clue to a crack or break in the slab.
The fixes
As with leaks, different causes will require different types of repairs. For example:

• A rotten or damaged floor joist can cause the floor to slant. Repairs may run as little as $300 or as much as tens of thousands of dollars, depending on the scope.
• A cracked concrete slab is repaired by drilling holes and injecting concrete. It’s called “slab jacking” and it typically costs several thousand dollars.
• Re-leveling a floor over a crawl space involves slowly lifting the house and making the support beams level. Costs start at about $3,000.

Mold and Mildew

Additionally, MSN detailed mold and water stains. You may smell it as soon as you walk in or head to a corner. Don’t be afraid to gently poke at a wall to see if it feels squishy. Black mold could be very expensive to clean up, and might impact your homeowner’s insurance.
Mold and water stains on ceilings and walls
The cause of mold and rot is simple: Water got in where it shouldn’t have. The pros call it “moisture penetration.” The longer it’s there, the more damage it creates.

Signs of trouble

• When touring a home, use your nose. If you encounter moldy or dank smells, politely ask the agent or owner about its origin.
• Check walls and ceilings — particularly under bathrooms and kitchens — for water stains, mold and mushy drywall.
• Check for signs of repairs or remodeling by holding your flashlight parallel to the wall or ceiling. The light casts shadows on every irregularity, repair, patches and a telltale difference in surface sheen. Start at the highest point and work your way down all interior walls. Do the same with the ceiling.
• Inquire about repairs. They are fine if done well. Ask what went wrong, what exactly was done to fix it and when. Satisfy yourself and the experts helping you that the problem was fixed adequately. Ask to see any documentation available.
The fix

• Fixing a leak may involve only replacing a missing piece of flashing. Cost: $10 to $20.
• The same leak, left undetected, can result in a nightmare of rot and mold. “I’ve seen homes where you have to take off the siding all the way around and strip the house down to its bones,” Balin says. Cost: As much as $100,000.

It’s better to identify the problems before you buy, and cheaper to identify major problems before spending time and money on inspections.

Have you ever decided against a house because of a major problem?

Tagged as: home inspection, warning signs, water damage

Rental Property As Retirement Income

Is now a good time to invest in property for passive income when you retire?  And is it even a good idea for you?

Look before you leap

The Chicago Tribune had an interesting analysis back in May that counseled that loan requirements have changed dramatically over the last 5 years, and that the investor must have realistic expectations with the focus on long-term rather then flipping.  Purchasing an investment property as a rental can provide you with a steady stream of income.  There are still tax benefits with real estate investments, and you should talk to a professional to find out how it would impact your situation.

Real estate investments also mean that you will be a landlord, and either you need to handle finding tenants and repairs, or you need to hire a management company which will reduce your profits.  But you get to sleep through the night if a pipe bursts or the tenant gets locked out.

How much income?

Rents are set by where you live.  Usually, rents will go up, but the costs involved with owning the rental property will stay fairly flat especially if you choose a fixed rate mortgage.  Some investors clear $200-1000/month for one rental home.

Some landlords will increase rents every year or two, while others increase only when changing tenants.  If your mortgage stays the same, your income will increase over the years.

There will always be people looking for rentals.  If you have a clean home in a safe neighborhood, people will pay to rent it providing you with a passive income stream.

What should I be aware of?

Renters can leave with two weeks notice, and in some cycles, it’s difficult to replace them.  Always keep six months of expenses on hand per property so you’re not caught needing to sell the investment in a down market.

Always hire an inspector to rule out any large repairs such as foundation, roof or structure of the home.

Research monthly costs.

Talk to your Realtor® about comparable home sale prices in that area to have a good understanding of your investment.

Investopedia has a great article on Tips for the Prospective Landlord. One of the best tips is to ensure your leases are legal as this could have a long term impact if you end up with a bad tenant.  Also, the tip to join the Landlord’s Association in your area is helpful as you will learn a lot from seasoned investors.

What should I look for?

Look for a larger property in case you want to renovate or add on.

Single-family homes in a good school district rent more easily.

Look for properties that can generate positive cash flow of at least 6% above costs.

If you’re new to investing, consider purchasing properties close to where you live to keep tabs on the investment even if you use a property management company.  When you’re comfortable, consider looking into purchasing properties where you wish to retire.

 So, to sum up…

Talk to a tax advisor to understand any tax implications rental property will have.  Find a reputable Realtor® and call your mortgage broker to find the best options for you.

To read more about things to look for and how to plan, read The income property: Your late-in-life retirement plan on Yahoo. The more knowledge you  have, the easier the process will be.

Have you purchased an income generating property or are you looking into one?

Now Cheaper To Buy Than To Rent

It is now considerably cheaper to own a home than to rent that same home, something unheard of since 2008.

This and other promising information about the housing market was recently released by Harvard in their annual “State of the Nation’s Housing,” an in-depth study performed by The Joint Center for Housing Studies at Harvard University.

Because of historically low mortgage rates and low home prices post-recession, it is a perfect time to buy.

On the other hand, rent prices are soaring, especially in the Bay Area. According to Trulia, San Francisco and Oakland saw the biggest jumps in rent in the United States over the last year, with increases of 14.7 percent and 11.2 percent, respectively.

“With rents up, home prices sharply down, and mortgage interest rates at record lows, mortgage costs relative to monthly rents haven’t been this favorable since the early 1970s,” said Eric S. Belsky, managing director for the Joint Center for Housing Studies at Harvard.

The report also noted that today, mortgage payments for the median priced US home are roughly half of what they were in 1990. The study showed that mortgage payments are now 23% less than rent payments for the median priced home.

This means that it is a fantastic time to be a home buyer, and to get off of the fence if you’ve been waiting for the market to turn around.

Take a look at the entire Harvard study here:

http://www.jchs.harvard.edu/research/state_nations_housing.

May 7th to 11th Market Commentary

There are only three pieces of relevant economic data scheduled for release this week that may affect mortgage rates, in addition to two important Treasury auctions. The two most important reports will be posted Friday, meaning the markets will have to rely on factors other than economic news for direction most of the week.

There is no relevant economic data due until Thursday, so expect the stock markets to be a big influence on bond trading and mortgage rates until then.

The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sale, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.

March’s Goods and Services Trade Balance report will be released early Thursday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is expected to show a $49.9 billion trade deficit, but it is the least important of this week’s data and likely will have little influence on Thursday’s mortgage rates.

Friday has the remaining two reports. April’s Producer Price Index (PPI) is the first at 8:30 AM ET. It helps us measure inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond market rally. The overall index is expected to show no change, while the core data that excludes more volatile food and energy prices has been forecasted to rise 0.2%. A decline in the core data would be ideal for mortgage shoppers because inflation is the number one nemesis for long-term securities such as mortgage-related bonds.

The last report of the week is May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident of their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 76.2, which would be a small decline from last month’s final reading. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future. That is assuming the PPI does not give us a significant surprise though. The PPI is much more important to the bond market than the sentiment index is, so look for it to be the biggest influence on Friday’s mortgage pricing.

Overall, it likely will be a moderately active week for mortgage rates. Besides the week’s economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with the PPI report on the agenda, but Wednesday’s 10-year Note auction could also heavily sway bond trading. It appears we will likely see the most movement in mortgage rates the latter part of the week unless the stock markets post sizable gains or losses the first part.

Week of April 16 to 20, 2012 Market Commentary

This week brings us the release of five economic reports that are relevant to mortgage rates, the first being the most important one. It will be posted early tomorrow morning when the Commerce Department releases March’s Retail Sales data. This piece of data gives us a measurement of consumer spending levels, which is very important because consumer spending makes up over two-thirds of the U.S. economy.

Forecasts are calling for a 0.3% increase in sales last month. If we see a larger increase in spending, the bond market will likely fall and mortgage rates will rise as it would indicate consumers are spending more than thought, fueling economic growth. However, a weaker than expected reading could push bond prices higher and mortgage rates lower tomorrow.

March’s Housing Starts is the next report, coming early Tuesday morning. It gives us a measurement of housing sector strength and mortgage credit demand by tracking starts of new home construction and the number of permits issued for future starts. This data usually doesn’t cause much movement in mortgage pricing unless it varies greatly from forecasts. It is expected to show a slight increase in construction starts of new homes. Good news for the bond market and mortgage rates would be a decline in home starts, indicating housing sector weakness.

March’s Industrial Production data will be posted at 9:15 AM ET Tuesday. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for an increase in production of 0.2%. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing. Signs of manufacturing sector strength are considered negative news for mortgage rates.
Thursday has the remaining two reports scheduled, starting with March’s Existing Homes Sales numbers from the National Association of Realtors at 10:00 AM ET. This report also gives us an indication of housing sector strength and mortgage credit demand. It is considered to be moderately important to the markets, but can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes a broader economic recovery difficult. Analysts are expecting to see an increase in sales between February and March. The larger the increase, the worse the news for bonds and mortgage rates.

The final report of the week will also be posted late Thursday morning when the Conference Board releases their Leading Economic Indicators (LEI) for March. This data attempts to measure economic activity over the next three to six months. This is considered to be a moderately important report, so we may see a slight movement in rates as a result of this data. It is expected to show an increase of 0.2%, meaning it is predicting slight growth in economic activity over the next several months. A decline would be considered good news for the bond market and could lead to slightly lower mortgage rates, assuming the housing report doesn’t show a significant surprise.

Overall, it will likely be a moderately active week for mortgage rates. However, unlike many weeks, the most important news comes during the early part of the week. Friday appears to be the best candidate for least active day, but Wednesday may also be fairly quiet. The stock markets will also influence bond trading and mortgage pricing this week as we get more corporate earnings releases. In other words, I expect to see only small changes to mortgage rates, but see them each day. At least once we get past tomorrow’s data.

This Week’s Market Commentary

Monday’s bond market has opened in positive territory following early stock weakness. As expected, the stock markets are showing sizable losses as they react for the first time to Friday’s Employment numbers. The Dow is currently down 153 points while the Nasdaq has lost 40 points. The bond market is currently up 7/32, which with Friday’s strength after pricing was issued, should improve this morning’s mortgage rates by approximately .250 of a discount point.

Worth noting is that this morning’s early selling has brought the Dow below 13,000 again. It is early in the day and a lot can happen between now and closing, but closing and staying below 13,000 should bode well for the bond market and mortgage rates. That was a threshold that was difficult to cross, so giving it up could signal further stock losses in the immediate future. This would create a flight-to-safety scenario that would likely bring funds from stocks into bonds.

There is no relevant economic news scheduled for today or tomorrow. The rest of the week brings us the release of five economic reports that are relevant to mortgage rates, in addition to a couple of Treasury auctions that have the potential to be influential on the bond market and mortgage pricing. Corporate earnings season also kicks off this week, which will be instrumental in stock market direction and possibly mortgage rate movement.

The first report of the week comes Wednesday afternoon when the Federal Reserve will post its Fed Beige Book report at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Federal Reserve region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Unexpected signs of strong economic growth or rising inflation would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be considered favorable for bonds and mortgage pricing.

Overall, look for the most movement in rates the latter part of the week due to the Producer and Consumer Price Indexes being released and the two Treasury auctions that are scheduled, but this morning was a good start. There is also a high probability that the stock markets will also influence bond trading and mortgage rates due to earning releases that could disappoint the markets. I am expecting it to be an active week for the mortgage market, so please maintain contact with your mortgage professional if still floating an interest rate.

This Week’s Market Commentary

This week brings us the release of three monthly economic reports in addition to the minutes from the most recent FOMC meeting. While three reports is usually not much of a concern, two of the week’s three are considered to be highly important to the markets and mortgage rates. Thrown in the fact that this is a holiday-shortened trading week and we have the mix for a very interesting week.

The first report comes late tomorrow morning when the Institute for Supply Management (ISM) will release their manufacturing index. This index gives us an important measurement of manufacturer sentiment by surveying trade executives and is one of the more important of this week’s data. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened. This month’s report is expected to show a reading of 53.0, which would be a decline from February’s reading of 52.4. This means that analysts think business sentiment slipped from last month’s level. That would be fairly good news for the bond market and mortgage rates. A noticeable decline would be favorable for rates while an increase would be negative.

February’s Factory Orders will be released early Tuesday morning. This data is similar to last week’s Durable Goods Orders report, except it includes orders for both durable and non-durable goods, giving us a measurement of manufacturing sector strength. It is also the least important of this week’s reports. Unless it varies greatly from forecasts of a 1.4% increase, I suspect that it will be a non-factor in the mortgage market.

The next important event comes Tuesday afternoon when the Fed releases the minutes of their last FOMC meeting. Market participants will be looking at them closely. They give us insight to the Fed’s current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release, particularly about inflation or the likelihood of a Fed move to boost economic activity, could cause afternoon volatility in the markets Tuesday and possible changes in mortgage pricing.

Wednesday doesn’t have any economic data scheduled for release from a government agency or reliable source. There are a couple of private sector employment-related reports being posted, but they are not considered highly important to the bond market or mortgage rates. These reports have not been accurate in predicting results of government reports, so they usually do not have much of an impact on bond trading or mortgage pricing. We do see some reaction to them if they reveal a surprisingly significant indication of employment strength or weakness. However, I don’t believe they deserve much concern or attention in regards to mortgage pricing.

The biggest news of the week will come early Friday morning when the Labor Department posts March’s Employment report, giving us the U.S. unemployment rate and the number of jobs added or lost during the month. This is an extremely important report to the financial and mortgage markets. It is expected to show that the unemployment rate remained at 8.3% and that approximately 200,000 payrolls were added during the month. A higher unemployment rate and a smaller than expected payroll number would be good news for bonds and would likely push mortgage rates lower Friday morning because it would indicate weakness in the employment sector of the economy.

Overall, I think it is going to be an active week for the mortgage market. The most important day is Friday, but not only because the almighty monthly Employment report is being posted. Friday is Good Friday, meaning the stock markets will be closed. However, due to the release of the Employment report, the bond market will be open until noon ET Friday. This means that bond trading will take place without the influence of stock gains or losses. Tomorrow is also going to be a big part of whether rates fall or rise for the week, so please maintain contact with your mortgage professional if still floating an interest rate.

Moving With Young Children

Moving is a highly stressful and chaotic period for any body.  For children in their preschool-age years, however, moving can be quite confusing. There are steps you can take before, during and after the move to help young kids make the transition.

Before the move

Parenting Magazine suggests in its July 2011 issue that chatting regularly about the move with your kids before it happens helps them get used to the idea. Psychologist and author of Moving With Children Tom Olkowski suggests showing the children photos of the new house, neighborhood, school, and yard ahead of time.

During the move

In this phase of the moving process, many kids are terrified of losing beloved items such as teddy bears or blankets. To help them feel more comfortable, give them a backpack for moving day filled with their favorite possessions and a snack or two.

After the move

While it is tempting to get caught up in the hustle and bustle of unpacking and decorating, it is important to remember and keep up with regular family routines.  This will help your children during the transition.
“Preschoolers adjust fairly quickly with support from parents, meeting new playmates, getting settled in a new preschool, and learning their way around a new house,” said Dr. Olkowski.

How to Ready Your Walls for Paint or Paper

Brian Santos, The Wall Wizard, gives this advice:

1. Clean the surface. Buy a 90-percent pure solution of rubbing alcohol and a self-wringing sponge mop with a scrubbing strip. Put a half gallon into a bucket and scrub the walls with an up-and-down motion. Wring the mop into an empty bucket so the solution isn’t contaminated.

Rubbing alcohol will remove dirt, fingerprints, cooking grease, nicotine stains and crayon.

2. Smooth the surface. Darken the room and put a halogen work light ($15) on the floor next to the wall. Use a wall board sanding strip to remove anything that shows up.

To fill any depression, use a vinyl surfacing compound and a drywall knife to smooth it out.

Tap in nail heads and use the compound to fill the holes and depressions made by hammer strikes.

3. Apply the first coat. Use a sealer over any remaining stains, mold, mildew, and porous surfaces, such as unpainted plaster or drywall and large areas of joint compound or patching plaster. Use a primer on all other surfaces.

If the top coat will be paint, have the primer tinted to match the finish color so you don’t have to apply a second coat.

This Week’s Market Commentary

This week brings us the release of four monthly reports for the bond market to digest, but none of them are considered to be highly important. Not that it necessarily matters of recent. As we saw last week, favorable results from what is thought to be influential economic data, apparently isn’t enough to expect bond strength and improvements in mortgage rates.

Simply put, last week was just ugly for mortgage shoppers with no clear justification for the bond sell-off and spike in mortgage pricing. I would like to say that this week is a good opportunity to recover some of those losses. Unfortunately, I don’t see anything scheduled that is likely to be that catalyst.

There is nothing of importance scheduled for release tomorrow. We saw some strength in mortgage bonds late Friday, so if your lender did not improve pricing during afternoon hours, you have an improvement of approximately .125 – .250 of a discount point awaiting tomorrow’s rate sheet. That is assuming that we don’t see a huge rally in stocks during early trading. I would like to say that the worst of the bond sell-off is well behind us, but we should proceed cautiously until there is some stabilization in the market. The fact that stocks were not able to extend their rally the latter part of the week also tells me that the sell-off in bonds was a knee-jerk reaction or some type of correction that is not likely to continue moving forward. Accordingly, I am cautiously optimistic towards mortgage rates at the moment.

The general theme of the core of this week’s economic news is housing. Three of the four reports that are scheduled give us different insights into the housing sector. They begin early Tuesday morning when February’s Housing Starts will be posted. This report tracks construction starts of new housing. It doesn’t usually cause much movement in mortgage rates and is considered one of the less important reports we see each month. It is expected to show an increase of less than 1% in housing starts, indicating slight growth in the housing sector. Good news for the bond market and mortgage rates would be a sizable decline in new starts. Also Tuesday is the first of four lectures that Fed Chairman Bernanke will make at the George Washington School of Business. The second is Thursday while the remaining two are scheduled for next week. I doubt they will lead to movement in the markets or changes to mortgage rates, but we will be watching the first one at 12:45 PM Tuesday for any impact his words may have.

February’s Existing Home Sales will be posted late Wednesday morning by the National Association of Realtors. It will also give us a measurement of housing sector strength and mortgage credit demand, but is the most likely of the three to influence mortgage rates. It is expected to reveal an increase in home resales, meaning the housing sector strengthened last month. Ideally, bond traders would prefer to see a decline in sales, pointing towards a still weakening housing sector. However, a small increase is expected, so it shouldn’t cause much alarm in the bond and mortgage markets. Bad news would be a sizable increase in sales, indicating that the housing sector is gaining momentum. That could be troublesome for the bond market and mortgage rates because housing and unemployment were the two biggest hurdles the economy had to overcome. Recent reports have some traders much more optimistic about the employment sector, so overwhelmingly strong housing news could lead to another rise in mortgage rates.

The Conference Board will post its Leading Economic Indicators (LEI) for February late Thursday morning. This index attempts to measure economic activity over the next three to six months. It is considered to be moderately important, but likely will not have a significant impact on mortgage rates. Current forecasts are calling for a 0.6% increase, meaning it is predicting that economic activity will likely expand fairly rapidly in the coming weeks. A smaller than forecasted rise, or better yet a decline would be considered good news for the bond market and mortgage rates.

Friday’s only news is the sister release to Wednesday’s Existing Home Sales report. The Commerce Department will give us February’s New Home Sales figures late Friday morning. They are expected to announce little change from January’s sales level of newly constructed homes. This report tracks a much smaller percentage of home sales than Wednesday’s report covers, so it should have a much weaker influence on the markets and mortgage pricing.

Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be Wednesday’s Existing Home Sales, but none of the week’s data is known to be a major market mover. If the stock markets move lower, we could see gains in bonds and improvements in mortgage rates. But, if stocks move higher, pressure in bonds is possible, leading to higher mortgage pricing again. Therefore, I still recommend proceeding with caution if you are floating an interest rate, at least until some more time has passed since last week’s silliness.

This Week’s Market Commentary

This week brings us the release of five relevant economic reports along with an FOMC meeting and two Treasury auctions for the markets to digest. A couple of the week’s reports are considered highly important, as is of course the FOMC meeting. There is nothing of relevance to mortgage rates being released or taking place tomorrow, so all of the week’s events are scheduled over four days.

The first thing on the calendar will come from the Commerce Department early Tuesday morning when they post February’s Retail Sales data. This data is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up over two-thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month’s report is expected to show an increase in sales of approximately 1.0%. If it reveals a larger than expected increase, the bond market will likely fall and mortgage rates will move higher as it would indicate a stronger level of economic growth than many had thought. If it reveals a much smaller than expected increase, I expect to see bond prices rise and mortgage rates improve Tuesday morning.

Also Tuesday is the Federal Open Market Committee (FOMC) meeting. This is a single-day meeting that will adjourn at 2:15 PM ET. It is widely believed that the Fed will make no change to key short-term interest rates at this meeting, but the post-meeting statement will be watched closely for any change in their feelings about the economy or any other moves they may make, such as QE3. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for a long time. An announcement of another round of Quantitative Easing to help keep long-term interest rates low could fuel a bond rally.

There are two Treasury auctions this week that could potentially affect mortgage rates. The first is the 10-year Treasury Note auction Tuesday and the 30-year bond sale will be held Wednesday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading as it would indicate that investors still have an appetite for longer-term securities. However, weak demand in the sale could lead to selling and an increase in mortgage rates.

Wednesday also has a speaking engagement by Fed Chairman Bernanke. He will be speaking to the Independent Community Bankers Association in Nashville at 9:00 AM ET. I don’t believe he will say anything that will be a market mover, especially the morning after the FOMC meeting. However, market participants always watch his words closely so any surprises will have an impact on the markets and possibly mortgage pricing.

The Labor Department will post February’s Producer Price Index (PPI) early Thursday morning. This important index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy (including gasoline) prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates Thursday morning. Current forecasts are calling for a 0.5% increase in the overall reading and a 0.2% increase in the core data.

Friday has the remaining three economic reports scheduled. February’s Consumer Price Index (CPI) will be released early Friday morning, which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.4% increase in the overall index and a 0.2% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall Friday.

Friday’s next report will come mid-morning when February’s Industrial Production report is posted. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.5% increase from January’s level. A decline would be considered extremely favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness and a broader economic recovery is more difficult if manufacturing activity is slipping.

The week’s final piece of data is the University of Michigan’s Index of Consumer Sentiment for March just before 10:00 AM ET Friday. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates, assuming the CPI matches forecasts. Bad news for bonds and mortgage rates would be rising confidence. It is expected to show a reading of 76.0, which would be an increase from February’s final reading 75.3.

Overall, look for Tuesday or Friday to be the most important day of the week due to the importance of those day’s reports and the FOMC meeting. Tomorrow will likely be the least active day for mortgage rates, but we could see plenty of movement in the markets and mortgage pricing several days this week. Therefore, please be attentive to the markets and maintain contact with your mortgage professional if still floating an interest rate.

This Week’s Market Commentary

This week has four government-compiled economic reports for the markets to digest. Only one is considered to be highly important, but it is a big one. The rest of the reports are moderately important to the markets, meaning they have the potential to affect mortgage rates but usually don’t cause a noticeable change. The most important data comes the matter part of the week, but sizable moves in stocks can impact bond trading and mortgage rates any day.

The week’s first data comes tomorrow with the release of January’s Factory Orders during late morning hours, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for a drop in new orders of approximately 1.9%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates since it would point towards economic weakness.

There is nothing of relevance scheduled for Tuesday, but Wednesday has a couple of releases that are considered moderately important. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed an annual growth rate of 0.7% in worker output. Analysts are expecting to see an upward revision of 0.2% to last month’s initial reading. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. However, since this data is quite aged now, it likely will have little impact on Wednesday’s mortgage rates unless it shows a significant change.

Wednesday also has a couple of private sector employment-related reports due to be posted. The biggest one comes from payroll processor ADP who will announce their change in payrolls processed last month. Since it is not a government agency report, it isn’t considered to be highly important, but as with any employment-related data, it does draw some attention. This is especially true for this report because it is posted just before monthly employment figures are released by the Labor Department.

Thursday has nothing to be concerned with but Friday is a different story. The biggest news of the week comes early Friday morning when one of the single most important monthly reports we see will be posted. The Labor Department will release February’s Employment report at 8:30 AM ET Friday. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller increase in payrolls than expected and little or no increase in earnings. Current forecasts are calling for no change in the unemployment rate of 8.3% and approximately 207,000 new jobs added to the economy. Stronger than expected readings will likely fuel a stock market rally and selling bonds that would cause a sizable upward revision to mortgage rates. On the other hand, disappointing numbers would raise concerns about the economy’s ability to continue to grow at its current pace that would have an opposite impact on the markets and mortgage pricing.

January’s Goods and Services Trade Balance report will also be released early Friday morning, but it will likely draw little interest from market participants. It will give us the size of the U.S. trade deficit, but often does not directly impact mortgage rates and is the week’s least important piece of news. Current forecasts are calling for a $48.1 billion trade deficit during January, but we will need to see a large variance from this estimate and little surprise in the employment figures for this news to influence bond trading enough to affect mortgage pricing. It is highly likely that this report will be a non-factor in Friday’s pricing.

Overall, look for a fairly active week in the markets and mortgage rates. I suspect there will be some optimism leading up to Friday’s Employment report, which could lead to support in stocks and pressure in bonds as we get closer to Friday. That day is undoubtedly the biggest of the week and we can label Tuesday as the least important. Please be careful this week if still floating an interest rate, especially the latter part of the week.

5 Reasons it’s Time for a Home in 2012

It’s true that money can’t buy happiness, but knowing that the value of your assets will grow over time does give you peace of mind.

Negative press is leaving some home buyers stuck on the fence, but here are a few reasons to climb down.

1. In the long run you come out ahead; in the short run you enjoy your home. The paper value of your home won’t rise much in the next couple of years. But if you want a home where you can raise your children or retire for the rest of your life, the paper value will rise significantly, or probably double or triple during that time.

2. The recent survey by the Hartford/MIT Lab’s Home for a Lifetime survey shows that half of all homeowners prefer their current home for retirement. Another 10 percent may choose to retire there, but aren’t yet sure.

3. A home is like a savings account. Your initial costs of home buying will come back to you many times over during the life of your mortgage. Your stake in the home builds every month. You’ll have more than rent receipts in the future.

4. Mortgage payments are fixed; rental payments rise. On a fixed-rate mortgage, you know what your payment will be each month for years to come. (As inflation rises, you’ll be making those payments with less expensive dollars.)

5. Apartment rents through the third quarter of 2010 were up 2.4 percent nationwide for the year and up twice that amount in larger cities. Nice apartments were hard to find because the national vacancy rate is the lowest since 2006, according to a study by real estate research firm Reis, Inc.
There are many more reasons for having a home of your own, reasons that have little to do with the financial aspects.

Stability and community. You get to know the neighbors. Your kids won’t have to change schools. They can keep their friends. You get to know their teachers and which parks, neighborhood facilities and merchants are best for you. Studies show that as people develop positive relationships with neighbors, they have more happiness and less stress.

You get to be the boss. Dealing with a landlord and negotiating repairs are hassles you won’t have to deal with. As the boss of your own place, you can paint, renovate and redecorate as much as you want and in any color or style you want.

This Week’s Market Commentary

This week brings us the release of six economic reports to be concerned with in addition to some very important testimony from Fed Chairman Bernanke.

One of the reports is considered to be very important, but nearly all of the week’s releases have the potential to affect mortgage rates. There is nothing of relevance scheduled for release tomorrow or Friday, so the middle part of the week should be extremely active for mortgage rates.

The week’s first piece of data is January’s Durable Goods Orders data early Tuesday morning. It gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A larger decline than the 1.3% that is expected would be good news for the bond market and mortgage rates as it would point towards manufacturing sector weakness. This data is known to be quite volatile from month-to-month, so large swings are fairly normal. A small variance from forecasts would not be a big deal.

Tuesday also brings us the release of February’s Consumer Confidence Index (CCI) during late morning trading. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show an increase in confidence from 61.1 in January to 62.5 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future.

The first of two revisions to the 4th Quarter GDP reading is scheduled for release Wednesday morning. Analysts’ forecasts currently call for an annual rate of growth of 2.8%, matching the initial estimate that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a sizable downward revision would be good news and could lead to improvements in mortgage pricing.

Fed Chairman Bernanke will deliver the Fed’s semi-annual testimony on the status of the economy late Wednesday and Thursday mornings. He will be speaking to the House Financial Services Committee Wednesday and the Senate Banking Committee Thursday morning. Market participants will watch his words very closely. He is required to deliver this testimony twice a year, which is considered to be of extreme importance to the financial markets. We almost always see the markets move as a result of what he says during this testimony. Look for him to address the unemployment and housing sectors along with Europe’s financial issues specifically and their impact on the overall economy. His testimony begins at 10:00 AM ET with a prepared statement then is followed by Q & A with committee members. I am expecting to see the markets fluctuate during this session, possibly affecting mortgage rates also.

The Fed Beige Book is the next report scheduled for release and it will be posted Wednesday afternoon. This report details economic activity throughout the country by Fed region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading Wednesday. It probably will not cause a major sell off in the stock or bond markets, partly because Mr. Bernanke will have access to this info when testifying to Congress. However, it could give us some finer details that we won’t hear directly from Chairman Bernanke, so it is worth looking at.

January’s Personal Income and Outlays data will be released at 8:30 AM ET Thursday, which gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to rise 0.3%. A larger than expected increase in spending would be bad news for the bond market and could drive mortgage rates higher because it would mean consumers spent more than thought. Since consumer spending makes up over two-thirds of the U.S. economy, the bond market does better when spending is slowing. Good news would be a smaller than expected increase, or better yet, a decline in both readings.

The Institute for Supply Management (ISM) will release their manufacturing index for February late Thursday morning. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a small increase from January’s 54.1 to 54.5 this month. This is important because a reading above 50.0 means more surveyed manufacturers felt business improved during the month than those who felt it had worsened, meaning growth is likely in the manufacturing sector. If we see a weaker than expected reading, the bond market could rally. But, a higher than forecasted reading could lead to major selling in bonds, causing mortgage rates to rise Thursday morning.

Overall, look for a pretty active week for mortgage rates. Wednesday will likely be the biggest day of the week, but Tuesday may also bring noticeable movement in mortgage rates. The least important day will probably end up being today or Friday unless stocks stage a significant rally or sell-off. However, we may see movement in rates several days this week, so please maintain contact with your mortgage professional if still floating an interest rate.