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10.23.2009

Latest From : Atlanta RE 5 by 5

Government : Home Prices Edged Lower In August

Posted: 23 Oct 2009 07:45 AM PDT

Home Price Index month-to-month since the April 2007 peak

According to the government, home values edged lower last month.

The Federal Housing Finance Agency's Home Price Index report shows values down by 0.3 percent from the month prior -- the index's first down month since April.

The Home Price Index is based on the value of homes financed via Fannie Mae or Freddie Mac and, in this sense, the FHFA Home Price Index is more of a "national" real estate index that its private-sector cousin, the Case-Shiller Index.

But like the Case-Shiller, the HPI is as notable for what it specifically excludes as for what it includes. Most notably, the Home Price Index doesn't account for homes meeting any of the following descriptions:

Is considered new construction
Is a multi-unit property
Is financed by an entity other than Fannie Mae or Freddie Mac

Given the resurgence of FHA financing this year, this last exclusion is especially glaring. FHA represents about one-third of all mortgage loans in 2009.

Because of these exceptions, some analysts label the Home Price Index incomplete. The same could be said of every method of home valuation, however. Case-Shiller only collects data from 20 markets, for example.

In light of these shortcomings, therefore, what's most important to today's home buyers and sellers is to know that each of the "popular" home valuation reports show similar patterns -- home prices have leveled and may be starting to recover in earnest.

For a region-by-region breakdown of the Home Price Index, visit the FHFA website.

10.22.2009

Latest From : Atlanta RE 5 by 5

As Gas Prices Rise, Mortgage Rates Are Rising, Too

Posted: 22 Oct 2009 07:45 AM PDT

Gas price breakdown from DOE.gov With crude oil at its highest levels since October 2008, retail gas is up 8 cents per gallon this week.

It's bad news for home buyers and mortgage rate shoppers. The same force that's driving oil higher is linked to rising mortgage rates.

We're talking about the weakening U.S. Dollar which is now at its worst levels versus the Euro in 15 months.

Crude oil is priced in U.S. dollars, by the barrel. When the dollar loses value, more of them are needed to buy the same barrel of oil. As a result, predictably, the price of crude oil goes up.

Now, there are other reasons why crude oil is rising, but the fading U.S. dollar is one of the major ones and it's why we're addressing it.

The dollar has a similar impact on mortgage rates.

Mortgage rates are based on the price of mortgage bonds that -- like crude oil -- are also denominated in dollars. As the dollar loses value, so do mortgage bonds. This causes demand for bonds to drop and prices on bonds to fall.

Because bond prices and bond rates move in opposite directions, mortgage rates rise and thisis precisely what's happening on Wall Street today.

Since touching a 5-month low in early-October, mortgage rates have tacked on as much as 1/2 percent, depending on the product. Moreover, with the dollar showing no signs of a rebound, the upward pressure on rates should continue.

If you're trying to time the market bottom, you may have already missed it. Consider locking your mortgage rate before rates increase even more.

And your everyday signal that rates are rising? Just check your price at the pump. If gas prices are up, it's likely that mortgage rates are, too.

Housing Starts Rise In 8 Months Out Of 9 This Year

Posted: 21 Oct 2009 07:45 AM PDT

Housing Starts September 2009 Housing Starts on single-family homes gained last month, marking the 8th time that's happened this year.

A "Housing Start" is a home for which the foundation has been excavated and, considered alongside other key market metrics, September data suggests that the housing market stabilization is complete.

Momentum in housing is overwhelmingly positive:

Homes under contract are soaring
National home supplies are way down
Home values are up in a lot of markets

Despite the positive news, the press is calling September's Housing Starts data a "bummer". Citing a drop in monthly building permits, the media purports that housing will slow in the months ahead.

The conclusion may be right, but the rationale may be wrong.

The probable cause for fewer permits isn't that the housing market is overdone. It's that home builders are choosing to exercise caution given the pending expiration of the First-Time Home Buyer Tax Credit and a still-growing number of foreclosed homes.

It's unclear what housing demand will be beginning in December and the last present a builder wants for the holidays is an excess of inventory.

It makes sense that building permits are down, in other words.

Looking back at February of this year, there's a host of signs that housing is on the path to recovery. Now, that path won't be a straight line and there's bound to be setbacks, but September's Housing Starts is not one of them.

Housing Starts are up 40 percent on the year.

10.20.2009

Latest From : Atlanta RE 5 by 5

Previewing The New Good Faith Estimate

Posted: 20 Oct 2009 07:45 AM PDT

The new Good Faith Estimate

The new Good Faith Estimate makes its debut January 1, 2010.

Expanded from 1page to 3, the legislators responsible for the new Good Faith Estimate want it to be simpler for homeowners and home buyers to understand than the former version.

By most accounts, Congress will meet this goal.

The new Good Faith Estimate includes plain-English explanations of every fee, charge, and interest payment involved in a purchase or refinance. It also includes a section called "The Shopping Cart" in which applicants can compare lenders.

The new Good Faith Estimate is concise, too. Using a series of "Yes/No" checkboxes on Page 1, mortgage lenders specifically note:

The interest rate on the mortgage
Whether the interest rate can change over time
Whether the loan carries a prepayment penalty
The length of the rate lock

Currently, this information is spread across 3 separate forms.

Furthermore, the new Good Faith Estimate simplifies rate-and-fee comparisons, showing applicants how a lower rate can be available for a higher set of fees, and vice versa.

For all of its clarity, though, the new Good Faith Estimate still fails to address the issue of "suitability". As in, is this the right loan for the right borrower? That's something only a loan officer can do.

For suitable advice, talk with a loan officer who both listens to your needs and helps you plan for them. Great terms on an unsuitable loan are often worse than "good" terms on the right one.

10.19.2009

Latest From : Atlanta RE 5 by 5

What's Ahead For Mortgage Rates This Week : October 19, 2009

Posted: 19 Oct 2009 07:45 AM PDT

University of Michigan Consumer Sentiment Mortgage markets worsened last week on better than expected economic data, causing mortgage rates to rise.

Last week was the third consecutive week that mortgage rates moved higher and, since touching a multi-month low in early-October, conforming mortgage rates are up by about a half-percent.

It's likely rates will continue to rise, too. That's because the same force that held rates down for so long is now the force pulling them up -- expectations for the U.S. economy.

Over the last 6 months, it wasn't clear in what direction the country was headed. The housing sector has been gaining in strength, but the rest of the economy has been a question mark.

Last week put an end to some of those questions:

Retail Sales posted stronger-than-expected results
Consumer Sentiment matched September 2008 levels
Jobless and continuing claims fell below consensus estimates

Expectations for the U.S. economy are changing on the fly. As a result, stock markets gained last week and mortgage markets lost.

This week, rates could move higher still. There are an unusually large number of key economic reports including on housing and inflation, plus a handful of speeches from key Federal Reserve members.

With each positive announcement, mortgage rates should rise.

10.16.2009

Latest From : Atlanta RE 5 by 5

The Fed Thinks The Economy Is Improving And What It Means For Home Affordability

Posted: 16 Oct 2009 07:45 AM PDT

FOMC Minutes September 23-23 2009 Mortgage rates are higher after the Federal Reserve released the internal notes of its September 22-23, 2009 meeting.

Known as the "Fed Minutes", the report details the conversation and cross-currents that led to the Federal Reserve's decision to vote "unchanged" on the Fed Funds Rate after its last meeting.

The Fed Minutes are the lengthy companion to the more famous, succinct post-meeting press release.

As a comparison:

Press Release: 383 words
Minutes: 6934 words

The extra level of details is a big deal because Wall Street is perpetually in search of clues about what the Federal Reserve is going to do next.

In the past week, multiple Federal Reserve members hinted that the Fed Funds Rate may rise as early as April 2010. Fed Chairman Ben Bernanke even alluded to it, too.

The minutes revealed that the economy may improve even faster than was previously expected, too.

These acknowledgements are part of the reason why mortgage rates are up. Because the Fed Funds Rate rises to accommodate a growing economy, the prospect of economic recovery is drawing money into the stock market and away from mortgage-backed bonds.

Less demand for bonds means a lower prices which, in turn, leads to higher rates.

10.15.2009

Latest From : Atlanta RE 5 by 5

Foreclosure Activity Remains Concentrated In Just 4 States

Posted: 15 Oct 2009 07:45 AM PDT

Foreclosures September 2009 For the seventh consecutive month, foreclosure activity in the U.S. was dominated by a tiny subset of states.

As reported by RealtyTrac.com, more than half of September's foreclosure-related activity occurred in just 4 states:

California
Florida
Nevada
Michigan

These states represent just 22.05 percent of the total U.S. population.

Overall, foreclosures are up 29 percent from September 2008 and, while, the data seems negative, defaults are creating some interesting buying opportunities.

Foreclosed homes often sell at a discount as compared to non-foreclosed homes. Cheap prices, low mortgage rates and willing buyers have helped to spur home sales in many U.S. markets. In August, "distressed homes" accounted for one-third of all existing home sales.

That said, buying foreclosures isn't for everyone.

First off, foreclosed homes are often sold "as-is" and may be in perfect condition, or may be inhabitable. If the property falls into the latter category, it's important to get estimates for the work needed to make the home livable. Suddenly, the home may not seem like such a "steal".

And, secondly, buying a home in foreclosure can be a 3-month process or more. For some people, this is just too long.

Buying a home in foreclosure is fundamentally the same as buying a "regular" home -- there's a contract and a closing. But most of the steps in between are different.

Read the complete foreclosure report, plus take a peek at foreclosure heat maps on the RealtyTrac website. If you like what you see, talk to your real estate agent about what to do next.

10.14.2009

Latest From : Atlanta RE 5 by 5

Should Joint Homeowners Have Separate Bank Accounts?

Posted: 14 Oct 2009 07:30 AM PDT

When you own a home with a spouse or partner, the issue of what's mine, what's yours, and what's ours can be a divisive one.

Each household has its own money management methodology and, according to financial talk-show host Suze Orman, most leave significant room for improvement.

In this 4-minute piece aired on NBC's The Today Show, Orman talks about co-managing finances with topics including:

How to determine how much money goes into a "personal" spending account versus a "family" spending account
The importance of both parties taking an active role in bill-paying
How to manage the money when one partner doesn't earn an income

Being aware of money is the first step towards protecting it.

10.13.2009

Latest From : Atlanta RE 5 by 5

What's Ahead For Mortgage Rates This Week : October 13, 2009

Posted: 13 Oct 2009 07:09 AM PDT

Mortgage rates have spiked in each of the last two weeks Mortgage markets worsened last week as investors responded to a recovering global economy.

Despite briefly touching their lowest levels since May, mortgage rates ended the week dramatically higher.

It's the second straight week that rates soared on a Friday.

For several months, Wall Street has been in limbo; undecided whether the economy is truly showing signs of improvement. Negative news has tended to sink rates while positive news has tended to do the opposite.

Lately, investors have been in search of signals anywhere signals can be found. Last week -- sans hard-hitting economic data -- those signals came from the worlds' Central Banks.

Shortly after Australia raised its interest rates by one-quarter percent, Fed Chairman Ben Bernanke suggested that the Fed may raise rates sooner than expected. Stock markets rallied on the news and mortgage bond markets tanked.

When bond prices fall, rates go up.

This week, data returns. Expect more volatility.

Mortgage rates have been very low lately, but they remain jumpy. Rates change fast and if you're not ready for them when they fall, you'll likely miss your chance to catch the bottom.

Rate shoppers in need of a lock should remain in ready-position. As we've seen over the last 2 weeks, when rates start to rise, they tend to rise in a hurry.

10.09.2009

RATE ALERT!

Current Market:

10-year TSY 3.33% (+9 bps)
MBS -14/32 or -30bps
DOW + 24 points
S&P + 2 points
NAS + 9 points

Economic Calendar:

8:30 Aug trade deficit ($33B) – Improved.

Market Commentary:

As we alerted you in our pre-market edition, the treasuries and MBS sell-off continues this morning. In fact, you are now likely to lose another .250% in pricing as a result of this mornings trading. The 10-year is at 3.33% and all MBS well into the red- far enough to pass along .250 (On top of the .125 pre-market worsening) for a total of .375 price worsening this morning. Price worsening is equal across Conv and Govie at the moment. Total price worsening at .500% to .625% since the 30-year auction.

No news is driving the worsening this morning, rather just a continuation of the sell-off and a reversion to the range (upper level) after being way overbought on bonds- which we have been warning about for the past few days.

Pricing Conditions: Negative

We are negative on near-term pricing at the moment since the stock markets are also showing strength and the 10-year TSY /MBS appear to be testing a breakout of near-term resistance (more in the technical’s section below). If the stock markets level off here, we could pause on bond worsening, but if stock markets continue to forge ahead, we are heading into worse mortgage pricing in the near-term. Volatility levels still fairly low and price movements should not be large in that environment… currently we don’t see moving more than a .250% in points either way intraday at this current range… although already this morning we are edging toward .375 price worsening.

Float/Lock Recommendation: Lock.

Lots of reasons to continue our lock bias:

10-year still floating around a technical breakout to the upside
Stock market strength still forecasting an increase in bond yields/mortgage pricing
Jobless claims better than expected
Corporations continue to beat Q3 earnings estimates
Retailers continue reporting better than expected earnings and giving better Q4 guidance
While MBS have sold-off in the last 24 hours, we are still at historical high prices.

We still see this as a great opportunity for you and consumers to take advantage of attractive historical mortgage pricing. We would see an opportunity to float for better pricing if the 10-year could would pause at 3.32% with a weakening stock market and trade back under 3.28%. However, at this hour, this does not appear to be the trend.

This is the best pricing you have seen since May on the 30-year fixed and the best ever historical pricing on the 15-year fixed. We continue to hold a bias toward locking, unless we would see more negative economic news that would spur a flight to bonds.

If you decide to continue to float, you are betting on a pullback in the stock markets and Q3 corporate earnings to come in under estimates and disappointing investors. Stay close to our alerts if you are still floating.

The Technical’s:

The overall trend still remains constructive and bullish for historical mortgage pricing and the very positive mortgage pricing environment remains in tact. We are, however, now testing 3.32% resistance on the 10-year TSY and if the stock market continues gaining, we could easily jump to 3.45% level on the 10-year treasury relatively quickly.

One could even make these case that at these levels on the stock markets, the 10-year could trade up at 3.70%+…this is something to keep an eye on. We don’t see that drastic of a move soon given the amount of Fed and Asian purchasers still showing up to buy bonds and it appears the individual investors are dipping their toes back out of cash and into bonds first..

The bond markets are taking their queue from stocks and moreover, the US dollar for now. As the dollar has declined, stocks and commodities have risen, and bonds have sold off (yields and mortgage rates rising) – repeated that price action today. The dollar is testing 14 month lows and will likely give up quite a fight before it breaks through. That means that stocks and bond yields could stall in a fairly tight range here while pausing to see how the dollar story plays out. Today stocks are slightly up and the dollar is slightly up at the same time… something to watch.

We are watching the 10-year treasury closely at 3.32%. There is price resistance and 20 day moving average resistance. If the 10-year breaks above 3.32%- the next resistance level is the 50 day moving average at 3.45%. We would turn short-term bullish on mortgage pricing f the stock markets pulled back and the 10-year fell back into the range of 3.22% to 3.28%.

We are also watching the S&P and it breaks out of the 1,064 to 1,072 level, we could see another leg up on stocks and further mortgage price worsening. If the S&P breaks out the 1,072+, we could see a major back-up in bond yields and mortgage pricing increases.

Thanks,

Peter Bright,

Branch Manager

Capital City Mortgage Investments, Inc.

Serving Georgia since 1992!

Licensed by the Georgia Department of Banking and Finance.
Georgia Mortgage Residential Licensee, License # 7064
www.ATLRATES.com

404-643-4793 Direct

404-671-9565 Efax

GAMB-logo-small

THOUGHT OF THE WEEK "Don't go through life, GROW through Life"

Latest From : Atlanta RE 5 by 5

It's A Good Time To Look At Adjustable-Rate Mortgages

Posted: 09 Oct 2009 07:45 AM PDT

Comparing the 30-year fixed rate mortgage versus 5-year ARM since January 2009

According to the Freddie Mac weekly mortgage rate survey, the relative cost of a 5-year ARM is dropping versus its 30-year fixed-rate cousin.

During the first 5 months of 2009, the products ran neck-and-neck. Today, they're a half-percent apart.

On a $200,000 home loan, that's a difference of $60 per month.

Adjustable-rate mortgages aren't for everyone, but for the right household, they can be a terrific fit. A few scenarios that warrant consideration of a 5-year ARM include persons:

Buying a home with an intent to sell within 5 years
With a 30-year fixed mortgage and plans to sell within 5 years
Interested in low payments and comfortable with longer-term interest rate and payment uncertainty

Additionally, with homeowners with existing ARMs may want to consider taking on a new ARM, if only to extend their initial, fixed rate period.

Before choosing an ARM, make sure to speak with your loan officer about how adjustable-rate mortgages work, and what causes them to adjust. Although conventional ARMs are limited in how far they can adjust, it's important to know the risks.

10.08.2009

Latest From : Atlanta RE 5 by 5

Simple Real Estate Definitions : Escrow Account

Posted: 08 Oct 2009 07:45 AM PDT

Escrow reserve accounts collect 1/12 of the annual bill each month An escrow account is a designated savings account into which funds get deposited for a specific purpose.

With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments.

Escrow accounts are managed and disbursed by lenders.

When a homeowner "escrows" his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home's annual real estate tax bill plus 1/12 of the annual homeowners insurance bill.

By sending a pro rata portion of the tax and insurance bill each month, the homeowner's escrow account will always, in theory, have enough funds to make payments in full as tax bills and insurance premiums come due.

10.07.2009

Latest From : Atlanta RE 5 by 5

The FHA Is Changing Its Streamline Refinance Guidelines November 2009

Posted: 07 Oct 2009 07:45 AM PDT

New FHA Streamline Refinance guidelines Beginning November 17, 2009, the FHA will make it harder to qualify for its popular Streamline Refinance program.

Available exclusively to homeowners with existing FHA home loans, the streamline program is meant to help homeowners reduce mortgage payments as simply as possible.

As such, the program carries minimum eligibility requirements.

In fact, the FHA Streamline Refinance is more notable for what it doesn't require from applicants.

There's no income verification
There's no asset verification
There's no employment verification
There's no appraisal required

The two biggest qualifiers, really, are that the homeowner meets a minimum credit score and that the new loan doesn't exceed the original balance of the old loan.

The new program guidelines, however, are much stricter.

Effective next month, among other requirements, applicants must show evidence of employment and income, plus proof of cash required at closing.

Furthermore, homeowners can't finance closing costs into the mortgage without a complete home appraisal. In areas of declining value, this may render refinancing with the FHA impossible.

Therefore, if you're a homeowner with an FHA mortgage, consider contacting your loan officer before the November 17 deadline to explore your Streamline Refinance options. Mortgage rates are low and you never know for what you'll qualify.

The worst thing you can do is to wait too long to find out. Once the deadline passes, the old guidelines will be history.

10.06.2009

Latest From : Atlanta RE 5 by 5

Pending Homes Sales Gain For The 7th Straight Month

Posted: 06 Oct 2009 07:45 AM PDT

Pending Home Sales September 2009 Buoyed by a generous tax credit, affordable homes, and low mortgage rates, the Pending Home Sales Index posted its seventh consecutive monthly gain in August.

It's the longest winning streak in the index's history and the highest reading in 2-1/2 years.

It's also another signal that the housing market is in recovery.

"Pending home sales" are a forward-looking indicator, measuring the number homes under contract to sell, but not yet closed.

Historically, 80% of homes under contract close within 60 days. Most others close within 120 days.

It's no wonder home values are rising in so many markets.

Home buyers -- take note. If you're plan to purchase a home between now and the New Year, expect that the recent run in pending sales will turn into run of closed sales which, in turn, should pump prices up and drop home inventory.

With mortgage rates hovering near 4-month lows, the best way to find a value in housing may be to act sooner rather than later.

10.05.2009

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What's Ahead For Mortgage Rates This Week : October 5, 2009

Posted: 05 Oct 2009 07:45 AM PDT

Non-Farm Payrolls September 2009 Mortgage markets rallied for most of last week, but ended Friday on a sour note.

After touching their lowest levels since Memorial Day, mortgage rates spiked to close out the week.

Despite pricing getting worse by 1/4 percent Friday afternoon, however, mortgage rates still managed to fall for the second consecutive week.

There were two main storylines last week on Wall Street. The first was data-driven.

After several months of better-than-expected results, the September Non-Farm Payrolls report fell well short of expectations.

According to the government, another quarter-million jobs were lost last month, raising the 12-month tally to 5.75 million. Additionally, consumer confidence figures dropped.

The stories are related and it brings us to the second storyline. Without job growth, some analysts are openly wondering how the economy will ever start to expand. Especially with the Holiday Shopping season getting underway.

The negative vibes were enough to shake off an overwhelmingly positive series of housing reports. Both Pending Home Sales and the Case-Shiller Index continue to gain.

This week, without much economic data set to release, look for market psychology to play an important role in the direction of mortgage rates. The last two times that mortgage rates fell to these levels, they quickly reversed.

All the pieces are in place for that to happen again.

10.02.2009

Latest From : Atlanta RE 5 by 5

The Sellers' Deadly Sins : How To Keep Your Home From Selling At Maximum Dollar

Posted: 02 Oct 2009 07:45 AM PDT

It's a sensational headline -- "The Sellers' Deadly Sins" -- but the message is clear. Home sellers make mistakes that not only cost themselves thousands, but sometimes cost the sale, too.

NBC's The Today Show lays it out cleanly in this 5-minute video:

How to respond to an "insulting offer"
How to handle the first purchase offer you receive
What do when you can't leave your home for its Open House
What room in the home should be kept the neatest

But, be aware. At the video's end, there's a piece of advice that may sound extremely self-serving coming from a real estate professional. Don't let it turn you off. The video's overall message is spot-on and the advice is real-world tested.

Selling a home is a process. Make sure to do it properly.

10.01.2009

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You've Got 15 More Days To Use The First-Time Home Buyer Tax Credit

Posted: 01 Oct 2009 06:45 AM PDT

The government's First-Time Home Buyer Tax Credit program expires November 30, 2009 -- a scant 60 days from today.

Considering it can take up to 60 days to close on a home, first-time buyers have 2 weeks at most to find a home.

Buyers not under contract by October 15 have little chance of meeting the November 30 deadline and, therefore, little chance of claiming the tax credit.

This is especially true for purchases involving short sales and foreclosures.

Congress passed the First-Time Homebuyer Tax Credit program as part of the 2009 economic stimulus plan. IRS Form 5405 outlines the program criteria and includes the following stipulations:

Buyer may not have owned a "main home" in the past 36 months
The home may not be purchased from a parent, spouse, or child
Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers

The credit is capped at $8,000 or 10% of the purchase price, whichever is less. And don't forget -- the First-Time Home Buyer Tax Credit is a true tax credit. It's not a deduction.

This means that a tax filer who claims the full $8,000 and whose "normal" tax liability is $5,000 would receive $3,000 cash from the US Treasury when their tax return is processed by the IRS.

If you can't close by November 30, 2009, though, you can't claim the credit.

The clock is ticking. If you're planning to use the First-Time Home Buyer Tax Credit, the time to act is now.