Mortgage purchase apps reach 6-month high

Mortgage purchase apps reach 6-month high

November 24, 2010 08:30AM

Mortgage applications for purchases spiked 14 percent during the week that ended Nov. 19, to their highest level since May, according to the latest weekly survey from the Mortgage Bankers Association. According to Michael Fratantoni, vice president of research and economics for the MBA, "the increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation." Meanwhile, refinancing applications fell 1 percent week-over-week, to their lowest level since June, as the interest rate for the 30-year fixed-rate mortgage rose to 4.5 percent -- its highest since September. The average contract interest rate for the 15-year fixed-rate mortgage declined to 3.83 percent from 3.87 percent one week ago. TRD

Posted via email from jyllkata's posterous

Mortgage purchase apps reach 6-month high

Mortgage purchase apps reach 6-month high

November 24, 2010 08:30AM

Mortgage applications for purchases spiked 14 percent during the week that ended Nov. 19, to their highest level since May, according to the latest weekly survey from the Mortgage Bankers Association. According to Michael Fratantoni, vice president of research and economics for the MBA, "the increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation." Meanwhile, refinancing applications fell 1 percent week-over-week, to their lowest level since June, as the interest rate for the 30-year fixed-rate mortgage rose to 4.5 percent -- its highest since September. The average contract interest rate for the 15-year fixed-rate mortgage declined to 3.83 percent from 3.87 percent one week ago. TRD

Posted via email from jyllkata's posterous

Homeowner net worth 41 times renters'

Homeowner net worth 41 times renters'

November 18, 2010 03:30PM

Has the path to homeownership become more treacherous? Perhaps, if a study on homeownership and net worth from the Federal Reserve Survey of Consumer Finances is to be believed. While the median net worth of homeowners was 31 times that of the "typical renter" in 1998, the report shows that that figure climbed steadily over the years, with median net worth among homeowners 46 times that of renters in 2007. While that amount has likely declined somewhat since the real estate market downturn, the National Association of Realtors estimates homeowner net worth is still 41 times that of renters, today. TRD

 

Posted via email from jyllkata's posterous

Homeowner net worth 41 times renters'

Homeowner net worth 41 times renters'

November 18, 2010 03:30PM

Has the path to homeownership become more treacherous? Perhaps, if a study on homeownership and net worth from the Federal Reserve Survey of Consumer Finances is to be believed. While the median net worth of homeowners was 31 times that of the "typical renter" in 1998, the report shows that that figure climbed steadily over the years, with median net worth among homeowners 46 times that of renters in 2007. While that amount has likely declined somewhat since the real estate market downturn, the National Association of Realtors estimates homeowner net worth is still 41 times that of renters, today. TRD

 

Posted via email from jyllkata's posterous

Homeowner net worth 41 times renters'

Homeowner net worth 41 times renters'

November 18, 2010 03:30PM

Has the path to homeownership become more treacherous? Perhaps, if a study on homeownership and net worth from the Federal Reserve Survey of Consumer Finances is to be believed. While the median net worth of homeowners was 31 times that of the "typical renter" in 1998, the report shows that that figure climbed steadily over the years, with median net worth among homeowners 46 times that of renters in 2007. While that amount has likely declined somewhat since the real estate market downturn, the National Association of Realtors estimates homeowner net worth is still 41 times that of renters, today. TRD

Posted via email from jyllkata's posterous

Mortgage purchase apps reach 6-month high

Mortgage purchase apps reach 6-month high

November 24, 2010 08:30AM

Mortgage applications for purchases spiked 14 percent during the week that ended Nov. 19, to their highest level since May, according to the latest weekly survey from the Mortgage Bankers Association. According to Michael Fratantoni, vice president of research and economics for the MBA, "the increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation." Meanwhile, refinancing applications fell 1 percent week-over-week, to their lowest level since June, as the interest rate for the 30-year fixed-rate mortgage rose to 4.5 percent -- its highest since September. The average contract interest rate for the 15-year fixed-rate mortgage declined to 3.83 percent from 3.87 percent one week ago. TRD

Posted via email from jyllkata's posterous

Tools For Design : Visualize Your Home In Different Colors

In home design, the exterior is as important as the interior. The exterior are your home's first impression while performing the double-duty of protecting living space from damage and Mother Nature.

And, occasionally, you may want to make upgrades.

For some people, visualizing changes to a home's exterior is easy. For others, though, there's the Better Homes and Gardens Color-a-Home tool.

Color-a-Home is a website via which homeowners can test different exterior home designs and color combinations.  Using a series of drop-down menus and mix-and-match swatch colors, homeowners can build home exterior mock-ups featuring:

• New roofing
• New siding
• New windows
• New shutters and doors

 

Better than a mental picture of your home -- get an actual picture.

The Better Homes and Gardens site requires basic site registration to use its Color This! product suite. Color This! is also available for home interiors and window treatments.

Avoiding Common Mortgage Scams

Despite tougher mortgage guidelines and better loan disclosures for consumers, mortgage fraud is on the rise, according to the FBI.

Fraud has many varieties and it's estimated cost to the nation is between $4-6 billion annually.  Today, common mortgage fraud scams target homeowners behind in their mortgage payments and/or facing foreclosure. And, despite the hordes of legitimate organizations that dedicate themselves to helping consumers, mortgage fraudsters proliferate.

In this 3-minute piece from NBC's The Today Show, you'll learn to spot common frauds, and to avoid them.

Some of the frauds highlighted include:

1. The Rent-to-Buy arrangement
2. The Bait-and-Switch
3. The "Phantom fees"

With respect to mortgage paperwork, it's always wise to read what you're signing, and to take time to understand what it means. If you're uncomfortable reading mortgage documents, ask for an attorney's help. And don't worry if you don't have the budget -- many states offer free or discounted help via advocacy groups.

Bank Reposessions Top 100,000 In A Month For The First Time Ever

The number of foreclosure filings rose 3 percent in September, according to foreclosure-tracking firm RealtyTrac. The term "foreclosure filing" is a catch-all word for housing, comprising default notices, scheduled auctions, and bank repossessions.

September marked the 19th straight month that the number of filings topped 300,000, and the first month in which 100,000 repossessions were logged.

As usual, a small number of states dominated the national foreclosure figures, accounting for more than half of all repossessions.

1. California : 17% of all repossessions
2. Florida : 13% of all repossessions
3. Michigan : 7% of all repossessions
4. Arizona : 7% of all repossessions
5. Texas : 5% of all repossessions
6. Georgia : 5% of all repossessions

Thankfully for home sellers, mortgage servicers appear to be metering the pace at these newly bank-owned homes are made available to the public. RealtyTrac notes that, in doing so, servicers prevent "the further erosion of home prices".

That said, distressed properties still sell at a steep discount.

In the second quarter of 2010, the average sale price of homes in the foreclosure process was 26 percent lower than the average sale price of homes not in the foreclosure process. It's no surprise, therefore, that, based on RealtyTrac's preliminary data, 31 percent of all homes sold in September were "distressed".

There's lot of good deals out there, in other words, but they come with certain risks.

Buying a foreclosed home is not the same as buying a non-foreclosed home. Specifically, you're buying from a corporation and not from a "person". Contracts may vary, and so may terms.

Therefore, home buyers -- even experienced ones -- should talk with a real estate agent before making an offer. It's important to understand the foreclosure-buying process.

Fed Minutes Edge Mortgage Rates Higher

The Federal Reserve released its September 21, 2010 meeting minutes Tuesday afternoon. Mortgage rates are slightly higher today.

It's unwelcome news for this season's home buyers, and existing homeowners with plans to grab lower rates. Mortgage rates made new lows last week and may have reached a turn-around point.

The "Fed Minutes" is published 8 times annually, and is the official meeting recap for the Federal Open Market Committee. Similar to the meeting minutes released after a corporate conference or condo association gathering, the Fed Minutes details the conversation and debate between meeting attendees.

Minutes are the lengthy companion to the Fed's brief, post-meeting press release.

Because of its content, the Fed Minutes is closely read by Wall Street and economists. It's insight into the talk that shapes our nation's monetary policy and, within the text, there's often clues about the Fed's next move.

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

• On inflation : It's running at lower-than-optimal levels
• On housing : Post-tax credit, housing stalled in July
• On stimulus : The Fed may intervene in open markets within the next few months

 

The over-riding theme within the minutes was that the U.S. economy is growing a steady pace, albeit slower than what's optimal. The Fed is prepared to push things along if the economy slows further and news like that is helping stock markets.

Bond markets are losing. Rates are rising.

For now, mortgage rates hover near all-time lows.  If you haven't locked a mortgage rate yet, your window may be closing.  Once the economy turns around for certain, mortgage rates will be among the first of the casualties.

Homeowner Maintenance : Twice-Annual Gutter Cleaning

Gutters are designed to funnel rainwater away from a home. Properly working gutters help keep a home's basement from filling with water, and protect a home's foundation from long-term, structural damage, and keep a roof in tip-top shape.

In other words, keeping clean gutters is essential for homeowners. Thankfully, gutter maintenance can be a do-it-yourself job.

There are four main steps in gutter cleaning, summarized cleanly in this 4-minute video from Lowe's.

1. Gather your tools. You'll need a ladder, a bucket, a hose, and a trowel.
2. Scoop large debris from the gutter, using the trowel for hard-to-reach places smaller sticks and leaves
3. Flush the gutters using a garden hose and spray attachment
4. Remove clogs in the downspout and check for proper sloping

Gutter maintenance is a twice a year task and the Lowe's video offers helpful safety tips, too.  Of course, if you're uncomfortable on a ladder, or prefer to hire a professional, reach out to me anytime.

I'm happy to make a local gutter-cleaning recommendation.

Jobs Data Shows Private Sector Growth, Hints At Lower Mortgage Rates

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report from the month prior.  This month, though, because the first Friday of the month was also the first day of the month, the report was delayed one week.

The report hit the wires at 8:30 AM ET this morning.

More commonly called "the jobs report", the government's non-farm payrolls data influences stock and bond markets, and, in the process, swings a big stick with home affordability figures nationwide.

Especially in today's economic climate.

Although the recession has been deemed over, Wall Street remains unconvinced. Data fails to show the economy moving strongly in one direction or the other and, absent job creation, economists believe growth to be illusionary.

Consider:

1. With job creation comes more income, and more spending.
2. With more spending comes growth in business
3. With growth in business comes more job creation

And the cycle continues.

The prevailing thought is that, without jobs, consumer spending can't sustain and consumer spending accounts for two-thirds of the economy. No job growth, no economy recovery.

But there's another angle to the jobs report, too; one that connects to the housing market. As the jobs market recovers, today's renters are more likely to become tomorrow's homeowners, and today's homeowners are more likely to "move-up" to bigger homes. This means more competition for homes at all price points and, therefore, higher home values.

And that brings us to today's jobs data.

According to the government, 95,000 jobs were lost in September. Economists expected a net loss of 5,000.  However, if public sector jobs are excluded from the final figures, jobs grew by 64,000.  This is a positive for the private-sector, but still trailed expectations.

Wall Street is voting with its dollars right now and mortgage bonds are gaining, improving mortgage pricing.

So, although the September 2010 jobs report doesn't reflect well on the economy overall, home affordability around the country should improve as a result. 

Fannie Mae Rolls Out New Lending Rules December 13, 2010

Starting Monday, December 13, 2010, Fannie Mae is changing its mortgage lending guidelines.

For some mortgage applicants , the loan approval process will simplify. For others, it will toughen. How you'll be affected personally will depend on your credit profile and your loan characteristics.

Among the biggest changes from Fannie Mae is a new set of guidelines for gift funds. When the new rules roll out, accepting cash gifts for downpayment will be easier.

Undetr the new guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) can forgo Fannie Mae's typical, minimum 5% personal downpayment contribution. Downpayments on homes meeting the above criteria can be comprised of 100% gifted and/or granted funds.

Buyers of second homes and multi-unit properties, however, are not exempt.

There's also two changes pending with respect to revolving debt.

1. Debt with less than 10 payments remaining may no longer be waived in debt-to-income ratio calculations
2. Debt lacking a monthly payment on credit must be assigned a payment equal to 5% of the outstanding balance

Both of the above should increase the number of loan denials in 2011.

And, lastly, Fannie Mae changes some of its documentation requirements, the most noticeable of which will be with respect to income verification. Salaried workers and applicants whose commission/bonus accounts for less than a quarter of their income will have fewer paystubs to produce for underwriting.

Loan applications taken prior to December 13, 2010 are exempt from the new rules.

Fannie Mae's complete guideline changes are available online at http://efanniemae.com.

2011 Conforming Loan Limits : No Change From 2010

Conforming mortgages is so named because, literally, they conform to the mortgage guidelines set forth by Fannie Mae and Freddie Mac.

Of the many traits of a conforming mortgage, one is "loan size" and loan sizes have limits. Mortgages exceeding this loan size limit cannot be securitized as a conforming mortgage and, therefore, are ineligible for conforming mortgage rates.

Conforming mortgage rates are often the cheapest source of mortgage money , all things equal.

Each year, the government re-evaluates its maximum allowable loan size based on "typical" housing costs nationwide. Loans in excess of this amount are often called "jumbo".

Between 1980 and 2006, as home prices increased, so did conforming loan limits -- from $93,750 to $417,000.  Since 2006, however, home prices have retreated but the conforming loan limit has not.

In 2011, for the 6th consecutive year, $417,000 will be the country's conforming mortgage loan limit.

Conforming loan limits very by property type. The complete breakdown is as follows:

• 1-unit properties : $417,000
• 2-unit properties : $533,850
• 3-unit properties : $645,300
• 4-unit properties : $801,950

Despite the limits, some parts of the country get "loan limit exceptions". In areas considered "high cost", conforming loan limits range from $417,001 to $729,750. High-cost is defined by the median sales price of a region.

Los Angeles County, for example, is a high-cost region, along with a lot of California. There are less than 200 such areas nationwide, though.

You can verify your local market's loan limit via the Fannie Mae website. A complete county-by-county list is published online.

Pending Home Sales Data Points To Higher Home Prices This Fall

Consistent with calls of a housing rebound, the Pending Home Sales Index rose again in August. It marks the second straight month of improvement after May's post-tax credit drop-off.

A "pending home" is an existing home under contract to sell, but not yet closed.

According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days. For this reason, the Pending Home Sales Index is an excellent forward-indicator for housing.

As a real-life illustration, after July's 27% plunge to an 11-year low, Existing Home Sales recovered 8 percent in August. This was not a surprise, though, because July's Pending Home Sales Index predicted it.

Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:

• Northeast : -2.9% from July
• Midwest : +2.1% from July
• South : +6.7% from July
• West : + 6.4% from July

That said, real estate markets aren't "regional" -- they're local. Just as there are improving markets within the Northeast Region, there's worsening markets in the West.

Overall, buyers are being drawn into housing by low mortgage rates, affordable homes, and ample supply. If the August Pending Home Sales Index is foreshadowing the fall housing market, home prices appear slated to rise.

With The Start Of Autumn, An Easy Way To Save On Energy Bills

With the start of autumn comes a chill in the air, plus a simple way to drop your home's energy bill. For homeowners with ceiling fans, it's as simple as moving a button.

In this vintage video from The Weather Channel, you'll learn how the blades of ceiling fan are meant to work, and how they amplify a home's heating and cooling systems. You'll also learn the optimal settings for blade rotation, and how to reverse your room's air flow to take advantage.

A quick "cheat sheet":

• When a home's heating system is on, rotate fan blades clockwise
• When a home's cooling system is on, rotate fan blades counter-clockwise

Running a ceiling fan consumes a nominal amount of energy as compared to adjusting your home's overall temperature. On a warm day, for example, running a ceiling fan creates a "windchill effect", reducing a room's effective temperature by 4 degrees -- all with the equivalent power of a 100-watt light bulb.

On a cold day, the fan pushes hot air back from the ceiling where it tends to collect.

If your home is without ceiling fans, installing them is inexpensive and easy.  There's videos online to walk you through the steps, or you can call a qualified electrician. Need an electricians name? Call or email me -- I'm happy to offer a referral.

America's Most Expensive ZIP Codes (2010 Edition)

The value of a home is based on the basic economic principle of Supply and Demand. When the number of buyers exceeds the number of sellers, home prices rise. Conversely, when sellers outnumber buyers, home prices fall.

There's always a opening price point for negotiation and that figure often factors in specifics like square footage, number of rooms, and finishes and amenities. Location matters, too.

On a ZIP code-by-ZIP code basis, prices can vary wildly and it's tiny, tony 91008 -- located in Duarte, California -- that tops the 2010 Forbes list of America's Most Expensive ZIP Codes. Home to fewer than 1,400 residents of Los Angeles County, the ZIP code's median home cost is $4,276,462.

By contrast, the median home cost across all of Duarte's ZIP codes is just $358,454.

As listed by Forbes, America's 10 most expensive ZIP codes are:

1. Duarte, CA (91008) : $4,276,462
2. Atherton, CA (94027) : $4,010,200
3. Rolling Hills, CA (92074) : $3,892,456
4. Alpine, NJ (07620) : $3,814,885
5. New York, NY (10014) : $3,785,445
6. Beverly Hills, CA (90210) : $3,684,150
7. New York, NY (10065) : $3,626,001
8. Belvedere (94920) : $3,283,269
9. New York, NY (10012) : $3,221,371
10. Santa Barbara (93108) : $3,151,220

The real estate market is a local one, as evidenced by the Forbes list. Even within large cities like New York, there are areas that stand out from the pack in terms of cost and affordability and the same is true for all cities.

Therefore, when you need local market data , look past the "national statistics".  Talk to a real estate agent with local market knowledge instead. It's the most reliable way to get data that matters.

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.

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.

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.

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.

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.

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.

Mortgage Rates May Be Low, But They're Tough To Pin Down -- Especially This Week

Mortgage rates are low right now but pinning them down this week could be a challenge. As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause mortgage rates to get jumpy.

As mortgage rates change, so does the long-term cost of owning a home. Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between "vacation days" and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

1. Conforming mortgage rates are based on the price of mortgage-backed bonds
2. Mortgage-backed bonds can't trade without a buyer and a seller at a specific price

So, as the week progresses and more traders leave for their respective "extended" 3-day weekends, there's fewer buyers and sellers left on Wall Street to connect for a trade.  As a result, mortgage bond prices move across larger gaps than on a "normal" day which, in turn, translates into faster, larger changes in rates.

This phenomenon can be exaggerated during periods of economic uncertainty -- like what we're in now -- and, furthermore, there's a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week. The presence of Labor Day just piles on.

Mortgage rates may rise this week, or they may fall.  Either way, if you have a chance to lock something favorable and within your budget, consider doing it.  Rates are at all-time lows and likely won't last.

How To Reduce Home Energy Costs By Sealing Air Leaks

With Labor Day looming, the autumn and winter months aren't far behind. It's a good time to reflect on your home's heating and cooling costs, and take steps to lower your energy bills. Finding air leaks may be a perfect first project.

According to the U.S. Department of Energy, up to 30 percent can be cut from a home's energy costs just by reducing drafts. For example, a 1/16-inch gap unsealed gap around a window is equivalent to leaving the window 3 inches open. 

That's a lot of wasted air.

The good news is that air leaks are rather simple to identify, and simple to fix. The key is to know where to look. And, to make the job easier, the government offers a complete DIY Guide To Sealing and Insulating a home.

Some of the key tips include:

• Focus on the attic and basement, where most air is lost
• Locate problem areas on a chimney
• Check recessed lights which allow air flow between conditioned and unconditioned air

The government's website also provides a 13-page PDF with detailed images, instructions, and recommendation to help you with the work.

However, if the job is beyond your skill set, be sure to call a qualified contractor. Sealing your home from air leaks will reduce your monthly energy bill and the money spent to pay a professional will be just a fraction of what you'll save over time.

(Image courtesy: US Department of Energy)

Home Affordability Rankings For 225 Metropolitan Statistical Areas

With home prices holding firm and mortgage rates still dropping, home affordability is reaching new heights.

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

It's a slightly higher reading as compared to last quarter, and the second highest reading in the survey's history.

As with all aspects of real estate, however, home affordability varies by locale. 

For example, 97.2% of homes sold in Syracuse were affordable for families making the area's median income, earning the New York city its first "Most Affordable Major City" designation.  Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter.  Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it's ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

New Home Sales Drop In July -- Just Like Existing Home Sales

One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months.  At July's rate of sales, the nation's new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It's all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April.  A "housing start" is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down.  The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there's two sides to the story. Although the New Home Sales data looks bad for builders, it can be terrific  for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home may have just become cheaper.

Existing Home Sales Plummet In July; Home Buyers Gain Leverage

The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors®' Existing Home Sales report.

It's a drop of 27 percent from June; single-family home resales are at the report's lowest levels since May 1999.

Furthermore, because of the sharp drop in sales volume, home inventories are spiking.

Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.

Home supply was just 8.9 months in June.

For home sellers , the Existing Home Sales report is a bit of bad news.  Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices.  It may also increase time-on-market.

For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.

It helps that home affordability is up, too. 

Although there's reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today's rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.

Mortgage rates are down 0.75 percent since mid-April.

Bank Mortgage Lending Policies Appear To be Easing

The tightening in mortgage-lending policies that characterized the last 3 years appears to be slowing.

According to the Federal Reserve's quarterly survey of senior bank loan officers, roughly 1 in 10 lenders added mortgage qualification hurdles between April and June. It's a huge departure from just 2 years ago when the mortgage industry was facing its first wave of challenges. 

During that period, eight in 10 lenders added hurdles.

For mortgage applicants , this quarter's Fed survey results signals that mortgage lending may have reached its limits of restriction.

Since 2007, mortgage guidelines have become increasingly restrictive. There's extra scrutiny on assets and tax returns; employment history is given more weight; loan purpose matters.  There's a bevy of traits that can stand between you and an approval that didn't exist a few years ago.

That said, lots of homeowners are still getting loans.

 

Verifiable income, good credit scores and equity are the "magic formula" and banks want to lend to good credit risks. And the best news for those that qualify is that mortgage rates are fantastic right now.

According to Freddie Mac, mortgage rates are as low as they've been in history.

So, if you're among the many wondering if now is the right time to buy a home -- or refinance one -- remember that, although mortgage guidelines likely won't get worse, mortgage rates probably will.

How To Re-Grout And Caulk Bathroom Tiles

Over time, the grout in a shower can become dirty and discolored, and start to separate from its grout lines. This is a potentially dangerous condition for a home because broken grout lines allow water to seep into the walls, which can then lead to the growth of mold spores.

Fortunately, keeping your grout in tip-top shape is simple.

In this 2-minute video, you'll learn how to clean the existing grout in your shower and to prepare for a new coating. You'll also learn how to replace its caulk.

The video's tips include:

• Why you should remove excess grout diagonally with a sponge
• How to protect your tub from damage while the re-grout is in process
• Choosing the right caulk for the job

The North American Tile Cleaning Association also offers helpful grout-cleaning advice. Visit their website at http://www.tilecleaning.org.

Mortgage Rates Make New Lows For The 9th Week In A Row

Another week, another new low for conforming mortgage rates.  In fact, this week marks the 9th time in a row it's happened.

Mortgage rates are (again) at their lowest levels in history.

The data comes from the Freddie Mac, a government group and major loan securitizer for the U.S. mortgage market. Freddie Mac's weekly survey is among the most widely-cited reports on mortgage rates and is the data used in home affordability models, among other statistics.

The 30-year fixed rate is averaging 4.42% nationally with an accompanying cost of 0.7 points. 1 point is equal to 1 percent of the loan size.  This week's reported rate is lower by 0.02 percent from last week, and lower by 0.70 percent from one year ago.

On a region-by-region basis, though, "average" 30-year fixed mortgage rates are different.

• Northeast : 4.44 with 0.6 points
• Southeast : 4.44 with 0.8 points
• N. Central : 4.42 with 0.4 points
• Southeast : 4.46 with 0.5 points
• West : 4.35 with 0.8 points

But this isn't to say that mortgage pricing is better in, say, California as compared to Florida. Note that the West Region -- with the lowest average rate -- has the highest required points.  This is because mortgage rates and mortgage fees move in opposite directions.  The type of low-rate/high fee structure common in the West may be right for some home buyers and would-be refinancers, but may not be right for others.

What's important to remember is that, as a rate-shopper , it's always your choice on how your loan is structured. Banks offer multiple set-ups -- with or without points -- to meet every applicant's budget.

As mortgage rates continue to slide and touch new lows, it's an excellent opportunity to see what your lender can do for you. Low rates won't last forever.

How Much Should You Expect To Pay In Mortgage Closing Costs?

How much does a mortgage cost? The answer depends on where you live. But no matter which your locale, chances are strong that you'll pay more for a mortgage in 2010 as compared to 2009.

According to Bankrate.com and its annual Closing Cost Survey, a typical $200,000, purchase mortgage now carries an average $3,741 in closing costs -- up nearly 37 percent from last year.

As defined by Bankrate.com, "closing costs" is defined as the sum of two numbers.  The first group is labeled "origination charges", a category that includes such items as underwriting fees, application fees and processing fees.  These fees are paid directly to the loan originator's company at the time of closing.

The second grouping of costs is labeled "third-party fees".  Third-party fees include appraisals, credit reports, settlement fees and title searches -- items paid in connection with the loan, but not paid to the lending bank or broker.

It's unclear why closing costs appear to have escalated into 2010, but Bankrate.com suggest that recently-enacted federal lending laws are a culprit:

1. The new law requires loan officers to be accountable to a Good Faith Estimate's accuracy. Bankrate.com's prior-year surveys may have been "understated", therefore, because of a lack of accountability.
2. The cost of federal compliance is high, and banks may be passing on compliance costs to consumers

To see the complete list of closing costs by state, visit the Bankrate.com website.

Single-Family Housing Starts Fade In July

Sometimes, you need to look deeper than the headlines to get the news that matters. This basic truth's latest example comes from the July Housing Starts data, as published by the U.S. Census Bureau.

According to the newspapers, Housing Starts improved last month:

• US Housing Starts Make Modest Rebound (FT)
• Housing Starts Rise Slightly (MoneyWatch)
• Housing Starts Tick Higher In July (MarketWatch)

However, these stories are speaking in terms of all housing starts -- not just the single-family ones. This is a major point of difference for home buyers because the most people don't buy the multi-unit homes and apartment buildings that's also a part of the Housing Starts data. 

The overwhelming majority of buyers buy single-family homes and in July, as in the previous 3 months, the number of single-family housing starts fell.

In fact, single-family housing starts are down by nearly 25 percent since April and are now at their lowest levels since May 2009.

This is a much different message from the headlines above.

It's not surprising that single-family housing starts are down; builder confidence is down as well and the two metrics tend to trend in the same direction.

Furthermore, building permits for single-family homes fell in July, too.

As a home buyer, the drop in Housing Starts should help reduce housing inventory in the months ahead.  This may lead home prices to rise because home values are based on supply and demand.  For home sellers, falling starts should help reduce competition for buyers.

Each real estate market is unique and supply levels will vary from ZIP code to ZIP code. For up-to-the-minute inventory levels, make sure to talk with your real estate agent.